<PAGE>


                     SECURITIES AND EXCHANGE COMMISSION

                          WASHINGTON, D. C.   20549

                                   FORM 10-Q


                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF

                      THE SECURITIES EXCHANGE ACT OF 1934


              FOR QUARTER ENDED:               SEPTEMBER 30, 1998

                       COMMISSION FILE NUMBER:  0-11108


                            SUMMIT BANCSHARES, INC.


                STATE OF CALIFORNIA    I.R.S. IDENTIFICATION
                               NUMBER 94-2767067

                  2969 BROADWAY, OAKLAND CALIFORNIA   94611

                                (510)  839-8800

Indicate by the 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__________

The number of shares outstanding of the registrant's common stock was 

                  438,035 shares of no par value common stock

                        issued as of September 30, 1998

<PAGE>

PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>

ITEM 1                                                           PAGE
<S>                                                              <C>
SUMMIT BANCSHARES, INC. AND SUBSIDIARY FINANCIAL STATEMENTS

              Consolidated Balance Sheets ......................  3

              Consolidated Statements of Income ................  4

              Consolidated Statement of Cash Flows .............  5

              Consolidated Statement of Changes in Shareholders'
              Equity............................................  6

              Notes to Financial Statements.....................  7-8

              Interest Rate Risk Reporting Schedule.............  9-12


ITEM 2

               Management's Discussion and Analysis of Financial
               Condition and Results of Operations ..............  13-22



                      PART II - OTHER INFORMATION

ITEMS 1-6 .......................................................  23

</TABLE>

<PAGE>

SUMMIT BANCSHARES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
             (UNAUDITED)

<TABLE>
<CAPTION>

ASSETS                                                                      09/30/98                       12/31/97
--------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                           <C>
Cash and due from banks                                                 $  5,500,807                   $  8,664,015
Federal funds sold                                                        26,740,000                     12,910,000
                                                                        ------------                  -------------
Cash and cash equivalents                                                 32,240,807                     21,574,015
Time deposits with other financial institutions                           13,945,742                      5,644,000
Investment securities (fair value of $13,516,393 at
  September 30, 1998 and $12,515,656 at
  December 31, 1997 ) held to maturity                                    13,499,259                     12,496,651
Loans, net of allowance for loan losses of
  $1,318,201 at September 30,1998 and
  $1,240,649 at December 31, 1997                                         54,110,592                     60,832,859
Other real estate owned                                                    1,359,342                      1,222,080
Premises and equipment, net                                                1,031,759                        872,619
Interest receivable and other assets                                       4,212,964                      1,699,307
                                                                        ------------                  -------------
Total Assets                                                            $120,400,465                   $104,341,531
                                                                        ------------                  -------------
                                                                        ------------                  -------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand                                                                  $ 36,466,099                   $ 31,062,481
Interest-bearing transaction accounts                                     33,991,313                     33,012,655
Savings                                                                    2,986,083                      2,264,538
Time certificates $100,000 and over                                       28,045,455                     18,828,044
Other time certificates                                                    3,684,349                      5,264,024
                                                                        ------------                  -------------
Total Deposits                                                           105,173,299                     90,431,742
Interest payable and other liabilities                                     1,358,855                      1,031,120
                                                                        ------------                  -------------
Total Liabilities                                                        106,532,154                     91,462,862

SHAREHOLDERS' EQUITY 
Preferred Stock, no par value:
 2,000,000 shares authorized, no shares outstanding                                0                              0
Common Stock, no par value
 3,000,000 shares authorized;
 438,035 shares outstanding at September 30, 1998 and
 436,565 shares outstanding at December 31, 1997                           3,721,630                      3,709,145
Retained Earnings                                                         10,146,681                      9,169,524
                                                                        ------------                  -------------
Total Shareholders' Equity                                                13,868,311                     12,878,669

Total Liabilities and Shareholders' Equity                              $120,400,465                   $104,341,531
                                                                        ------------                  -------------
                                                                        ------------                  -------------

</TABLE>

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

                                                                              3

<PAGE>

SUMMIT BANCSHARES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF
INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997


<TABLE>
<CAPTION>

                                          THREE MONTHS          THREE MONTHS          NINE MONTHS          NINE MONTHS
                                          ENDED 9-30-98         ENDED 9-30-97         ENDED 9-30-98        ENDED 9-30-97
<S>                                       <C>                  <C>                   <C>                <C>
INTEREST INCOME:
Interest and fees on loans                  $1,494,579         $   1,734,955         $   4,637,926      $    4,862,668
Interest on time deposits with other
  financial institutions                       128,126               109,901               311,401             361,721

Interest on U.S. government
  treasury securities                          197,020               164,809               574,862             476,864
Interest on federal funds sold                 403,006               123,935               891,124             403,649
                                           -----------         -------------          ------------      --------------
Total interest income                        2,222,731             2,133,600             6,415,313           6,104,902

INTEREST EXPENSE:
Interest on deposits                           605,167               490,047             1,622,908           1,412,622
                                           -----------         -------------          ------------      --------------
Total interest expense                         605,167               490,047             1,622,908           1,412,622
                                           -----------         -------------          ------------      --------------
Net interest income                          1,617,564             1,643,553             4,792,405           4,692,280
Provision for loan losses                          -                  65,000               100,000             165,000
                                           -----------         -------------          ------------      --------------
Net interest income
after provision for loan losses              1,617,564             1,578,553             4,692,405           4,527,280


NON-INTEREST INCOME:
Service charges on deposit accounts            115,837               114,789               348,861             327,930
Other customer fees and charges                 21,079                25,532                50,991              56,495
                                           -----------         -------------          ------------      --------------
Total non-interest income                      136,916               140,321               399,852             384,425

NON-INTEREST EXPENSE:
Salaries and employee benefits                 589,643               541,675             1,608,950           1,549,253
Occupancy expense                              103,257                95,497               305,341             278,115
Equipment expense                               65,147                36,239               166,275             107,389
Other                                          227,039               276,504               747,488             843,132
                                           -----------         -------------          ------------      --------------
Total non-interest expense                     985,086               949,915             2,828,054           2,777,889
Income before income taxes                     769,394               768,959             2,264,204           2,133,816
Provision for income taxes                     324,863               330,128               948,156             900,177
                                           -----------         -------------          ------------      --------------
Net Income                                    $444,531              $438,831            $1,316,048          $1,233,639
                                           -----------         -------------          ------------      --------------
                                           -----------         -------------          ------------      --------------
EARNINGS PER SHARE:
Earnings per common share                        $1.01                 $1.02                 $3.01               $2.87
Earnings per common share assuming
 dilution                                        $0.95                 $0.95                 $2.80               $2.66
Weighted average shares outstanding            438,035               429,483               437,636             429,483
Weighted avg. shrs. outsdg. assuming
 dilution                                      469,973               463,020               469,574             463,020
                                           -----------         -------------          ------------      --------------
                                           -----------         -------------          ------------      --------------

</TABLE>

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

4

<PAGE>

SUMMIT BANCSHARES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF
CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND  1997
                 (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                 NINE MONTHS             NINE MONTHS
                                                                                ENDED 9-30-97           ENDED 9-30-98
<S>                                                                             <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received                                                                $  5,511,818           $   6,050,029
Fees received                                                                         800,017                 706,317 
Interest paid                                                                      (1,395,529)             (1,623,415)
Cash paid to suppliers and employees                                               (2,464,407)             (2,717,211)
Income taxes paid                                                                    (850,000)             (1,049,365)
                                                                                 -------------          --------------
Net cash provided by operating activities                                           1,601,899               1,366,355 

CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in time deposits with
   other financial institutions                                                     3,268,000              (8,301,742)
Maturity of investment securities                                                   3,011,047              10,997,392 
Purchase of investment securities                                                  (6,296,420)            (12,000,000)
Net (increase) decrease in loans to customers                                     (10,436,646)              6,679,776
Recoveries on loans previously charged-off                                              2,250                  31,462
(Increase) decrease in premises and equipment                                        (143,920)               (337,513)
                                                                                 -------------          --------------
Net cash provided by (used in) investing activities                               (10,595,689)             (2,930,625)

CASH FLOWS FROM FINANCING ACTIVITIES:
(Increase) decrease in demand, interest
   bearing transaction, and savings deposits                                        5,781,923               7,103,821
Net increase (decrease) in time deposits                                              465,852               7,637,736
(Increase) decrease in other assets                                                   361,447              (2,184,089)
Exercise of stock options                                                                   0                  18,755
Repurchase of common stock                                                           (221,198)                 (6,270)
Dividends paid                                                                       (320,756)               (338,891)
                                                                                 -------------          --------------
Net cash provided by (used in) financing activities                                 6,067,268              12,231,062
                                                                                 -------------          --------------
Net increase (decrease) in cash and cash equivalents                               (2,926,522)             10,666,792
Cash and cash equivalents at the 
   beginning of the year                                                           19,168,515              21,574,015
                                                                                 -------------          --------------
Cash and cash equivalents at the end of the year                                 $ 16,241,993           $  32,240,807
                                                                                 -------------          --------------

RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net Income                                                                       $  1,233,639           $   1,316,047
Adjustments to reconcile net income to 
   net cash provided by operating activities:
Depreciation and amortization                                                         145,025                 178,938
Provision for loan losses and OREO losses                                             165,000                 100,000
(Increase) decrease in interest receivable                                           (150,183)                (31,434)
Increase (decrease) in unearned loan fees                                             (27,309)                (27,385)
Increase (decrease) in accrued interest payable                                        17,093                    (507)
(Increase) decrease in prepaid expenses                                               (20,678)                (85,872)
Increase (decrease) in accounts payable                                               189,136                  17,777
Increase (decrease) in income taxes payable                                            50,176                (101,209)
                                                                                 -------------          --------------
Total adjustments                                                                     368,260                  50,308
                                                                                 -------------          --------------
Net cash provided by operating activities                                        $  1,601,899           $   1,366,355
                                                                                 -------------          --------------
</TABLE>

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


                                                                             5

<PAGE>

SUMMIT BANCSHARES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                 (UNAUDITED)

<TABLE>
<CAPTION>

                                                                   NUMBER OF
                                                                    SHARES            COMMON           RETAINED
                                                                  OUTSTANDING          STOCK           EARNINGS           TOTAL
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>               <C>               <C>               <C>
Balance at December 31, 1997                                         436,565        $3,709,145        $9,169,524        12,878,669

Stock Options Exercised                                                1,580            18,755                 0            18,755

Repurchase of Common Stock                                              (110)           (6,270)                0            (6,270)

Issuance of cash dividends of $.75 per share                               0                 0          (338,891)         (338,891)

Net Income                                                                 0                 0         1,316,048         1,316,048

Balance at September 30, 1998                                        438,035         3,721,630        10,146,681        13,868,311

Balance at December 31, 1996                                         433,209         3,830,343         8,108,800        11,939,143

Stock Options Exercised                                                9,000            90,000                 -            90,000

Repurchase of Common Stock                                            (6,644)         (221,197)                0          (221,197)

Issuance of cash dividends of $.75 per share                               0                 0          (320,756)         (320,756)

Net Income                                                                 0                 0         1,233,639         1,233,639

Balance at September 30, 1997                                        435,565         3,699,146         9,021,683        12,720,829
</TABLE>

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


6

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of management, the unaudited interim consolidated financial 
statements contain all adjustments (consisting of only normal recurring 
adjustments) necessary to present fairly the financial position at September 
30, 1998 and the results of operations for the nine months ended September 
30, 1998 and 1997 and cash flows for the nine months ended September 30, 1998 
and 1997.

Certain information and footnote disclosures presented in the Corporation's 
annual consolidated financial statements are not included in these interim 
financial statements. Accordingly, the accompanying unaudited interim 
consolidated financial statements should be read in conjunction with the 
consolidated financial statements and notes thereto included in the 
Corporation's 1997 Annual Report to Shareholders, which is incorporated by 
reference in the Company's 1997 annual report on Form 10-K. The results of 
operations for the nine months ended September 30, 1998 are not necessarily 
indicative of the operating results for the full year.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In February of 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" 
(SFAS 128). The Bank was required to adopt SFAS 128 in the fourth quarter of 
1997 and restated at that time earnings per share data for prior periods to 
conform with SFAS 128. Earlier application is not permitted.

SFAS 128 replaces current earnings per share reporting requirements and 
requires a dual presentation of basic and diluted earnings per share. 
Earnings per share excludes dilution and is computed by dividing net income 
by the weighted average common shares outstanding of 438,035 and 457,477 
during the nine months ended September 30, 1998 and 1997, respectively. 
Diluted earnings per share reflects the potential dilution that could occur 
if common shares were issued pursuant to the exercise of options under the 
Bank's Stock Option Plans. Diluted earnings per share under SFAS 128 would 
not have been significantly different than primary earnings per share 
currently reported for the periods.


                                                                          7

<PAGE>

In June of 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 130, "Reporting Comprehensive Income", 
which establishes standards for reporting and display of comprehensive income 
and its components; and No. 131, "Disclosures about Segments of an Enterprise 
and Related Information", which establishes annual and interim reporting 
standards for an enterprise's operating segments and related disclosures 
about its products, services, geographic areas, and major customers. Adoption 
of these statements will not impact the Bank's consolidated financial 
position, results of operations or cash flows, and any effect will be limited 
to the form and content of its disclosures. Both statements are effective in 
1998, with earlier application permitted.



8

<PAGE>

       INTEREST RATE SENSITIVITY/INTEREST RATE RISK ANALYSIS

                 The following table provides an interest rate sensitivity and 
       interest rate risk analysis for the quarter ended September 30, 1998.
       The table presents each major category of interest-earning assets and 
       interest bearing-liabilities.

                    INTEREST RATE RISK REPORTING SCHEDULE

       REPORTING INSTITUTION:  SUMMIT BANK              REPORTING DATE: 9-30-98

<TABLE>
<CAPTION>
                                           REMAINING TIME BEFORE MATURITY OR INTEREST RATE ADJUSTMENT
                                            ($000.00)
                                              OMITTED         UP       > 3        > 1        > 3         > 5       OVER
                                                TOTAL          3       < 1        < 3        < 5        < 10   10 YEARS
<S>                                          <C>         <C>      <C>         <C>          <C>       <C>      <C>
I.      EARNING ASSETS

     A. INVESTMENTS:
     1. U. S. TREASURIES                       $2,499     $1,000     $1,499         $0         $0          $0         $0
     2. U. S. AGENCIES                         11,000      2,000      9,000      1,800          0           0          0
     3. FED FUNDS SOLD                         26,740     26,740          0          0          0           0          0
     4. PURCHASED CDS                          13,946        693      7,329      5,924          0           0          0
                                           ----------  ---------  ---------   --------     ------     -------    -------
        TOTAL INVESTMENTS                     $54,185    $30,433    $17,828     $7,724         $0          $0         $0

     B. LOANS                                 $53,097    $51,432       $753       $814       $106      $3,463         $0
                                           ----------  ---------  ---------   --------     ------     -------    -------
        TOTAL LOANS                           $53,097    $51,432       $753       $814       $106      $3,463         $0

     C. TOTAL EARNING ASSETS                 $107,282    $81,865    $18,581     $8,538       $106      $3,463         $0

 II.   COST OF FUNDS (DEPOSITS)

     A. CERTIFICATE OF DEPOSITS               $31,730    $23,025     $8,603        $82        $20          $0         $0
     B. MONEY MARKET ACCOUNTS                  28,575      3,897     10,986     13,692          0           0          0 
     C. TRANSACTION ACCOUNTS                    6,200        266        797      2,102      1,511       1,524          0 
     D. SAVINGS ACCOUNTS                        2,986        128        384      1,012        728         734          0 
                                           ----------  ---------  ---------   --------     ------     -------    -------
        TOTAL COST OF FUNDS                   $69,491    $27,316    $20,770    $16,888     $2,259      $2,258         $0 

 III.  INTEREST SENSITIVE ASSETS             $107,282    $81,865    $18,581     $8,538       $106      $3,463         $0 

  IV.  INTEREST SENSITIVE LIABILITIES         $69,491    $27,316    $20,770    $16,888     $2,259      $2,258         $0 
                                           ----------  ---------  ---------   --------     ------     -------    -------
   V.  GAP                                    $37,791    $54,549    ($2,189)   ($8,350)   ($2,153)     $1,205         $0 

  VI.  CUMULATIVE GAP                         $37,791    $54,549    $52,360    $44,010    $41,857     $43,062    $43,062 

 VII.  GAP RATIO                                 1.54       3.00       0.89       0.51       0.05        0.00 

VIII.  CUMULATIVE RATIO                          1.54       3.00       2.09       1.65       1.60        1.54       1.54 

  IX.  GAP AS A % OF TOTAL ASSETS               32.10      46.33      -1.86      -8.62      -1.83       -1.92       0.00 

   X.  CUMULATIVE GAP AS A % OF                 32.10      46.33      49.47      35.85      34.02       32.10      32.10 
              TOTAL ASSETS
</TABLE>


                                                                             9

<PAGE>

                         WEIGHTED AVERAGE SHARES
                   NINE MONTHS ENDED SEPTEMBER 30, 1998

<TABLE>
<CAPTION>

                                                                                               FULLY         PRIMARY

A. COMMON STOCK                                                                  ANNUAL      437636.36       437636.36
                                                                              (3RD QTR)      438035.00       438035.00
                                                             NO OF
                                                              DAYS
   <S>                             <C>                   <C>               <C>               <C>             <C>
   436565.00                       12-31-97(BAL FWD)     ---------
   436565.00                              TO 1-14-98         13.00           5675345.00
   436455.00                              TO 1-26-98         12.00           5237460.00
   437455.00                              TO 4-01-98         65.00          28434575.00
   437455.00                              TO 5-27-98         57.00          24934935.00
   438035.00                              TO 6-30-98         34.00          14893190.00
   438035.00                              TO 9-30-98         92.00          40299220.00
                                                                                   0.00
                                                                                   0.00
                                                         ---------         ------------
                                                            273.00         119474725.00

    AVERAGE SHARES OUTSTANDING
     FOR THE YEAR                                                            437636.36

    AVERAGE SHARES OUTSTANDING
     FOR THE 3RD QUARTER                                                    438035.00
</TABLE>



10

<PAGE>

                             OPTIONS-FULLY

        USE HIGHER OF YEAR END PRICE OR AVERAGE PRICE
<TABLE>
        <S>                         <C>
        YEAR END PRICE/QTR END      52.875
        AVERAGE PRICE               53.341
</TABLE>
<TABLE>
        <S>                                                 <C>        <C>
        USE YEAR END PRICE OF                               52.875     31850.59
                                                      ------------

</TABLE>

<TABLE>
<CAPTION>

           NO OF            YEAR END         OPTION           NO OF
          SHARES               PRICE          PRICE          SHARES
      -----------  -----------------      ---------    ------------
<S>     <C>                 <C>              <C>            <C>
MZ       2900.00              52.875          13.50          2,160
SN      15689.00              52.875          10.00         12,722
SN       8333.00              52.875          12.00          6,442
TW        400.00              52.875          12.25            307
SN        978.00              52.875          13.25            733
DD       2500.00              52.875          13.00          1,885
MZ       1045.00              52.875          13.00            788
AC        400.00              52.875          13.00            302
TW       1500.00              52.875          13.00          1,131
SN       4000.00              52.875          17.75          2,657
MZ       2000.00              52.875          17.75          1,329
DD       1000.00              52.875          17.75            664
TW       1000.00              52.875          17.75            664
AC        100.00              52.875          17.75             66
</TABLE>



                 OPTIONS-PRIMARY
                 ---------------
<TABLE>
                 <S>                                  <C>                            <C>
                 AVERAGE PRICE FOR THE YEAR                 53.341                   31937.82
                                                      ------------
</TABLE>
<TABLE>
<CAPTION>
            NO OF           YEAR END         OPTION           NO OF
           SHARES              PRICE          PRICE          SHARES
      -----------  -----------------      ---------    ------------
<S>     <C>                 <C>              <C>            <C>

SN       15689.00             53.341          10.00          12,748
SN        8333.00             53.341          12.00           6,458
MZ        2900.00             53.341          13.50           2,166
TW         400.00             53.341          12.25             308
SN         978.00             53.341          13.25             735
DD        2500.00             53.341          13.00           1,891
MZ        1045.00             53.341          13.00             790
AC         400.00             53.341          13.00             303
TW        1500.00             53.341          13.00           1,134
SN        4000.00             53.341          17.75           2,669
MZ        2000.00             53.341          17.75           1,334
DD        1000.00             53.341          17.75             667
TW        1000.00             53.341          17.75             667
AC         100.00             53.341          17.75              67

</TABLE>


                                                                             11

<PAGE>

<TABLE>
<S>                                              <C>            <C>
TOTAL SHARES 3RD QUARTER                          469885.59       469972.82

TOTAL SHARES YEAR-TO-DATE                         469486.94       469574.18

NET INCOME 3RD QUARTER                             $444,531        $444,531

NET INCOME YEAR TO DATE, 1998                    $1,316,047      $1,316,047

EARNINGS PER SHARE 3RD QUARTER                       $0.946          $0.946

EARNINGS PER SHARE, YTD                              $2.803          $2.803
</TABLE>




12

<PAGE>

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998

The registrant, Summit Bancshares, Inc. (the "Company") is a bank holding 
company whose only operating subsidiary is Summit Bank (the "Bank").  The 
following discussion primarily concerns the financial condition and results 
of operations of the Company on a consolidated basis including the subsidiary 
Bank. All adjustments made in the compilation of this information are of a 
normal recurring nature.

FINANCIAL CONDITION

LIQUIDITY MANAGEMENT

The consolidated loan-to-deposit ratio at September 30, 1998 was 51.4% which 
was a decrease from 72.3% for the same period in 1997.  Total outstanding 
loans as of September 30, 1998 decreased $7,453,000 compared to the same 
period a year ago while total deposits increased $18,416,000 versus the same 
time last year. The decrease in loans was mainly due to Summit maintaining 
it's lending standards during a period of increased competition that resulted 
in a lowering of lending standards throughout the marketplace.  The increase 
in deposits is mainly due to Bank's effort in marketing its products.  The 
average loan-to-deposit ratio for the third quarter of 1998 was 49.5%, down 
from 71.5% for the same period last year.  This decrease was caused by an 
increase in average total deposits of $1,770,000 or 21.3% while average total 
loans decreased $6,281,000 or 11.2%. Management continues to seek growth and 
acquisition of quality credits. 

Net liquid assets, which consists primarily of cash, due from banks,
interest-bearing deposits with other financial institutions, investment
securities and federal funds sold totaled $59,686,000 on September 30, 1998.
This amount represented 56.75% of total deposits in comparison to the
liquidity ratio of 39.9% as of September 30, 1997.  This increase is
primarily a result of a decline in loan growth and an increase in deposits.
It is management's belief that the current liquidity level is appropriate 
given current economic conditions and is sufficient to meet current needs.


                                                                             13

<PAGE>

The Company is not aware of any current recommendations by the regulatory 
authorities, which, if they were implemented, would have a material effect on 
the Company.

The following table sets forth book value of investments by category and the 
percent of total investments at the dates specified.

                           INVESTMENT COMPARATIVE
                              ($000.00 Omitted)


<TABLE>
<CAPTION>


                        9-30-98          %          12-31-97        %        9-30-97         %
<S>                     <C>             <C>         <C>            <C>       <C>            <C>
Fed funds sold          $26,740         49%          $12,910        42%       $6,340        26%
Interest bearing 
   deposits              13,946         26%            5,644        18%        6,339        26%
Securities               13,499         25%           12,497        40%       12,045        48%
</TABLE>


Interest bearing deposits are comprised of Time Certificates of Deposit with
other banks and savings and loan institutions with no more than $100,000 in any
institution.

Securities on September 30, 1998 were comprised of $2,499,000 in U. S. Gov't
notes and $11,000,000 in U.S. Gov't agencies.


CHANGES IN FINANCIAL POSITION

As of September 30, 1998, total deposits increased $14,741,000 from December 31,
1997 while at the same time total loans outstanding decreased $6,722,000.  Total
deposits as of September 30, 1998 were $105,173,000, an increase of 21.1% from
$86,757,000 as of September 30, 1997.  Total loans as of September 30, 1998 were
$54,111,000, a decrease of 13.78% from $62,758,000 as of September 30, 1997.

The following table sets forth the amount of deposits by each category and the
percent of total deposits at the dates specified.

                             DEPOSIT COMPARATIVE
                              ($000.00 Omitted)

<TABLE>
<CAPTION>

                        9-30-98     %      12-31-97     %         9-30-97     %
<S>                     <C>        <C>     <C>         <C>        <C>        <C>
Demand                  $36,466    35%      $31,062    34%        $28,365    33%

Savings                   2,986     3%        2,265     3%          2,894     3%
                                                                               
Interest bearing         33,991    32%       33,013    36%         33,685    39%
 Trans. Deposits

Other time               31,730    30%       24,092    27%         21,813    25%
</TABLE>



14

<PAGE>

The following table sets forth the amount of loans outstanding by each 
category and the percent of total loans outstanding at the dates specified.

                             LOAN COMPARATIVE
                            ($000.00 Omitted)

<TABLE>
<CAPTION>
                          9-30-98     %     12-31-97       %     9-30-97       %
<S>                       <C>        <C>    <C>           <C>    <C>          <C>
Commercial                $40,767    74%     $44,044      71%    $43,521      69%
Real estate-const           4,429     8%       7,471      12%     10,017      16%
Real estate-other           5,512    10%       4,850       8%      3,540       6%
Installment/other           4,721     8%       5,706       9%      5,680       9%
</TABLE>



NON-PERFORMING ASSETS

The following table provides information with respect to the subsidiary 
Bank's past due loans and components for non-performing assets at the dates 
indicated.

                          NON-PERFORMING ASSETS
                            ($000.00 Omitted)
<TABLE>
<CAPTION>
                                   9-30-98  12-31-97  9-30-97
<S>                                <C>      <C>       <C>
Loans 90 days or more past
 due & still accruing               $    0    $  408   $  404
Non-accrual loans                      406       176      157
Other real estate owned              1,359     1,222    1,222
                                    ------    ------   ------
   Total non-performing assets      $1,765    $1,806   $1,783
                                    ------    ------   ------
                                    ------    ------   ------
Non-performing assets to
  period end loans plus
  other real estate owned             3.11%     2.85%    2.84%

Allowance to non-performing
  loans                                325%      212%     213%

Allowance to non-performing
  assets                                75%       68%      67%

</TABLE>

The subsidiary Bank's policy is to recognize interest income on an accrual
basis unless the full collectibility of principal and interest is uncertain.
Loans that are



                                                                             15

<PAGE>

delinquent 90 days as to principal or interest are placed on a non-accrual 
basis, unless they are well secured and in the process of collection, and any 
interest earned but uncollected is reversed from income. Collectibility is 
determined by considering the borrower's financial condition, cash flow, 
quality of management, the existence of collateral or guarantees and the 
state of the local economy.

Other real estate owned ("OREO")is comprised of properties acquired through 
foreclosure.  These properties are carried at the lower of the recorded loan 
balance or their estimated fair market value based on appraisal.  When the 
loan balance plus accrued interest exceeds the fair value of the property, 
the difference is charged to the allowance for loan losses at the time of 
acquisition.  Subsequent declines in value from the recorded amount, if any, 
and gains or losses upon disposition are included in noninterest expense.  
Operating expenses related to other real estate owned are charged to 
non-interest expense in the period incurred.

The decrease in non-performing assets from September 30, 1997 to September 
30, 1998 is due primarily to a decrease in loans 90 days past due and 
non-accrual loans of $324,000 and an increase of $137,000 in OREO. Of the 
$406,000 total loans 90 days or more past due and still accruing in 1998, 
$54,000 is guaranteed by Small Business Administration.

The total OREO amount, $1,359,000, is related to three properties. One of the 
properties is vacant land in the Oakland Hills, the second property is two 
continguous parcels in the Danville/Diablo Mountain area of Alameda County. 
The third property is located on flame drive in Pacheco and consists of three 
lots. The parcel in Danville was sold after the end of the quarter for a 
modest profit, reducing the OREO balance to $212,000.  The Bank is actively 
marketing the other two parcels.



16

<PAGE>

CAPITAL POSITION

As of September 30, 1998, Shareholders' Equity was $13,868,000. This 
represents an increase of $1,147,000 or 9.0% over the same period last year.  
Since the inception of the repurchase program in 1989, the Company has 
authorized the repurchase of $2,500,000 of its stock.  As of September 30, 
1998, the Company has repurchased a total of 158,872 shares of the Company 
stock constituting 29.5% of the Company's original stock prior to the 
repurchase program, at a total cost of $2,313,438, or an average price per 
share of $14.56. The Company plans to continue its repurchase program as an 
additional avenue for liquidity for its shareholders.  The program has not 
affected the Company's liquidity or capital position or its ability to 
operate as the Company's capital growth has exceeded its asset growth.  In 
addition, the Company's subsidiary Bank remains more than well-capitalized 
under current regulations.

The following table shows the risk-based capital and leverage ratios as well 
as the minimum regulatory requirements for the same as of September 30, 1998:

<TABLE>
<CAPTION>

                                           Minimum
                   Capital Ratio    Regulatory Requirement
<S>                <C>              <C>
Tier 1 Capital        18.22%                4.00%
Total Capital         20.48%                8.00%
Leverage Ratio        11.85%                3.00%
</TABLE>

The Company is not aware of any current recommendations by the regulatory 
authorities which if they were implemented would have a material effect on 
the Company.


                                                                             17

<PAGE>

RESULTS OF OPERATIONS


NET INTEREST INCOME

Total interest income including loan fees increased from $6,105,000 for the 
first nine months of 1997 to $6,415,000 for the same period in 1998. Although 
loan income decreased, the increase in deposits caused an increase in 
investment income.  Loan fees showed a decrease of $104,051 compared to the 
same period last year reflective of the decrease in loan growth.  The yield 
on loans and fees decreased 71 basis points over the same period last year.  
The increase in interest income from investments was due to an increase in 
volume as the yield decreased 10 basis points compared to the same period in 
1997. Average total investments was $12,822,000 higher than the same period 
last year due to deposit growth.

Interest expense increased from $1,413,000 at the end of the first nine 
months of 1997 to $1,623,000 in 1998.  This increase was due to an increase 
in average interest-bearing deposit accounts of $8,105,000 during the first 
nine months of 1998 versus the same period last year.  The average cost of 
funds for the period ending September 30, 1998 was 18 basis points more than 
the same period last year.  As a result of these factors, net interest margin 
for the first nine months of 1998 was 6.52% compared to 7.31% for the same 
period last year. 

For the third quarter, total interest income including loan fees increased 
from $2,134,000 in 1997 to $2,223,000 for the same period in 1998. This 
increase is due to an increase in securities income.  Average loan volume for 
the third quarter of 1998 showed a decrease of $6,281,000 from the same 
period last year. Yield on loans for the third quarter of 1998 was 11.47% 
compared to 11.96% for the same period last year. For the third quarter of 
1998, total interest income on investments increased $311,000. This increase 
was attributable to an average investment volume increase of $25,232,000 and 
an interest yield decrease from 5.78% in the third quarter of 1997 to 5.46% 
for the same period in 1998.



18

<PAGE>

For the third quarter of 1998, interest expense increased $115,000 compared 
to the same period in 1997. Average outstanding interest bearing deposits 
increased from $58,131,000 in the third quarter of 1997 to $69,424,000 in the 
third quarter of 1998. Average cost of funds for the same period was 3.73% in 
1998 compared to 3.37% in 1997. As a result of these factors, net interest 
income for the third quarter of 1998 increased $39,000, or 2.47%, compared to 
the same period in 1997.

OTHER OPERATING INCOME 

Service charges on deposit accounts as of the end of the first nine months of 
1998 increased to $349,000 versus $328,000 for the same period in 1997.  The 
increase was due to increased fees collected in service charges related to 
the collection of NSF fees on commercial accounts.

Service charges on deposit accounts for the third quarter of 1998 increased 
$1,100 compared to the same period last year due to increased collection of 
fees associated with the collection of NSF fees on commercial accounts. Other 
customer fees and charges decreased $4,500 for the present quarter associated 
with increased fees from merchant activities.  

LOAN LOSS PROVISION

The allowance for loan losses is maintained at a level that management of the 
Company considers to be adequate for losses that can be reasonably 
anticipated. The allowance is increased by charges to operating expenses and 
reduced by net-charge-offs.  The level of the allowance for loan losses is 
based on management's evaluation of potential losses in the loan portfolio, 
as well as prevailing and anticipated economic conditions.



                                                                            19

<PAGE>

Management employs a systematic methodology on a monthly basis to determine 
the adequacy of the allowance for current and future loan losses.  Each loan 
is graded at the time of extension or renewal by the credit administrator. 
Gradings are assigned a risk factor which is calculated to assess the 
adequacy of the allowance for loan losses.  Further, management considers 
other factors such as overall portfolio quality, trends in the level of 
delinquent and classified loans, specific problem loans, and current and 
anticipated economic conditions.

The following table summarizes the activity in the Bank's allowance for 
credit losses for the nine months ended September 30, 1998 and 1997.

<TABLE>
<CAPTION>

                                          NINE MONTHS  ENDED
                                          ------------------
                                           (000.00 Omitted)
                                          9-30-98    9-30-97
<S>                                       <C>        <C>
Balance, beginning of the period           $1,238     $1,070
Provision for loan losses                     100        165
Recoveries                                     31          2
Loans charged-off                             (51)      (43)
                                           ------     ------
Balance, end of the period                 $1,318     $1,194
</TABLE>


The balance in the allowance for loan losses at September 30, 1998 was 2.38% 
of total loans compared to 1.90% of total loans at September 30, 1997.

OTHER OPERATING EXPENSES

Total other operating expenses increased $50,000 as of the end of the first 
nine months of 1998 compared to the same period last year.  This increase was 
primarily due to an increase in salaries and employee expense. The Bank's 
commitment to grow increased the number of employees from 39 to 46 primarily 
in the sales area. The increase was also attributed to increase in regular 
raises in pay, increased cost of benefits and bonuses related to sales. 

For the third quarter of 1998, operating expenses increased $35,000 compared 
to the same period last year for the same reasons mentioned above.


20

<PAGE>

PROVISION FOR INCOME TAXES 

The Company's provision for income taxes as of the end of the first nine 
months of 1998 increased from $900,000 in 1997 to $948,000.  This increase is 
attributable to increased income from regular business operations. For the 
same period in 1998 the Company's total effective tax rate was 41.9% compared 
to 41.8% in 1997. 

For the third quarter of 1998, the provision for income taxes decreased 
$6,000 compared to the third quarter of 1997. The effective tax rate for this 
period was 42.3% versus 42.9% for the same period last year.

NET INCOME

Net income for the first nine months of 1998 increased to $1,316,000 from 
$1,234,000 for the same period in 1997, or an increase of 6.6%. Third quarter 
net income increased $6,000 or 1.47% over the same period last year.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

In regard to the year 2000 issue, the Company has conducted a review of its 
computer systems to identify the systems that could be affected and has 
developed an implementation plan to resolve the issue.  The year 2000 problem 
is the result of computer programs being written using two digits rather than 
four to define the applicable year.  Any of the Company's programs that have 
time sensitive software may recognize a date using "00" as the year 1900 
rather than 2000.  This could result in a major system failure or 
miscalculations including but not limited to, a temporary inability to 
process transactions, send statements, or engage in similar day to day 
business activities.  The Extent of the potential impact of the Year 2000 
Problem is not yet known and if not timely corrected, it could affect the 
global economy. 

Management has assessed the extent of vulnerability of the Bank's computer 
systems to the problem, and expects its year 2000 date conversion project to 
be completed on a timely basis.  

To date, the Company has completed approximately 50 percent of the testing 
deemed to be required on the Bank's computer systems.  Included in this 
process, was an upgrade to the Banker II system that performs the Bank's core 
processing. This upgrade has been installed and tested by several other banks 
that use the Banker II systems with no apparent problems.


                                                                            21

<PAGE>

During the execution of this project, the Company will incur internal staff 
costs as well as other expenses related to enhancements necessary to prepare 
the systems for the year 2000.  

The Company believes that, with modifications to existing software and 
conversions to new software, the Year 2000 problem will not pose a 
significant operational problem for the Company.  However, because most 
computer systems are, by their very nature, interdependent, it is possible 
that no-compliant third party computers could impact the Company's computer 
systems.  Therefore, the Company has taken steps to communicate with the 
third parties, such as wire transfer systems, telephone systems, electric 
companies and other companies with which it deals to coordinate Year 2000 
compliance but could be adversely affected if it or the unrelated third 
parties are unsuccessful.  The Company is also assessing the impact, if any, 
the Year 2000 may have on its large loan (credit risk) and deposit customers.

The expense of the year 2000 project as well as the related potential effect 
on the Company's earning is not expected to have a material effect on its 
financial position or results of operations.  As of September 30, 1998, the 
costs related to the Year 2000 project are approximately $60,000.

Contingency Plans

Management, in conjunction with its Year 2000 and Disaster Recovery program, 
is in the process of modifying its disaster recovery plans to include the 
response to a Year 2000 problem in a most likely worst case scenario.



22

<PAGE>

PART II  -  OTHER INFORMATION



ITEM 1 - LEGAL PROCEEDINGS
          No material developments from that which was
          reported in the Form 10-K dated March 31, 1998 for
          the year ended December 31, 1997.


ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
          None

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
          None

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          None

ITEM 5 - OTHER INFORMATION
          None

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

          27   Financial Data Schedule

          (b)  Reports on Form 8-K
               None





                                                                             23

<PAGE>

SIGNATURES


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


                                   SUMMIT BANCSHARES, INC.
                                   REGISTRANT



  DATE:                            BY:
       -------------------            ----------------------------
                                        SHIRLEY W. NELSON
                                        CHAIRMAN AND CEO
                                        (PRINCIPAL EXECUTIVE OFFICER)


  DATE:                            BY:
       -------------------            ----------------------------
                                        KIKUO NAKAHARA
                                        CHIEF FINANCIAL OFFICER
                                        (PRINCIPAL FINANCIAL OFFICER)




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24