<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON D.C. 20549

                                   FORM 10-QSB




          X    Quarterly report under Section 13 or 15(d) of the Securities
        -----  Exchange Act of 1934 for the quarterly period ended September 30,
               1998

               Transition report under Section 13 or 15(d) of the Securities
        -----  Exchange Act of 1934 (No fee required) for the period from
               _______________ to ______________


                         Commission File Number 0-27666


                        NORTHERN CALIFORNIA BANCORP, INC.

                 (Name of Small Business Issuer in its Charter)


                     Incorporated in the State of California

                  IRS Employer Identification Number 77-0421107

                 Address: 601 Munras Avenue, Monterey, CA 93940

                            Telephone: (408) 649-4600




     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X       No
   ----       ----


     As of November 3, 1998, the Corporation had 855,044 shares of common stock
outstanding.


                                                                              

<PAGE>

                           PART I-FINANCIAL INFORMATION

ITEM 1.        FINANCIAL STATEMENTS

                        NORTHERN CALIFORNIA BANCORP, INC.
                                 AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                                     SEPTEMBER 30        DECEMBER 31
                                                                                         1998               1997
                                                                                     -----------         -----------
<S>                                                                                  <C>                 <C>
ASSETS:

Cash and Cash Equivalents                                                              2,828,200          11,060,600
Due From Bank - Time Deposits                                                            100,000             100,000
Investment Securities, available for sale (Note 1)                                       594,500             480,200
Investment Securities, held to maturity (Note 1)                                       7,265,600           5,495,300
Federal Funds Sold                                                                     6,690,000                   0
Loans Held for Sale                                                                    1,097,500             543,400
Gross Loans (Note 2)                                                                  27,088,200          25,370,800
Allowance for Possible Loan Losses (Note 3)                                             (288,200)           (269,100)
Deferred Origination Fees                                                                (33,900)            (39,600)
                                                                                     -----------         -----------
  Net Loans                                                                           26,766,100          25,062,100
Bank Premises and Equipment, Net                                                       1,863,100           1,898,900
Interest Receivable and Other Assets                                                   2,013,800           1,472,100
                                                                                     -----------         -----------
    Total Assets                                                                      49,218,800          46,112,600
                                                                                     -----------         -----------
                                                                                     -----------         -----------

LIABILITIES AND SHAREHOLDERS' EQUITY:

Total Deposits (Note 4)                                                               41,265,800          39,205,600
Borrowed Funds                                                                         4,000,000           3,000,000
Interest Payable and Other Liabilities                                                   643,000             876,800
                                                                                     -----------         -----------
    Total Liabilities                                                                 45,908,800          43,082,400
                                                                                     -----------         -----------

Shareholders' Equity:

  Common Stock - No Par Value
    Authorized: 2,500,000 in 1998 and 1997
    Outstanding:858,526 in 1998 and 1997                                               2,716,800           2,716,800
  Retained Earnings                                                                      568,700             241,200
  Unrealized Gain (Loss) Available
      for Sale Securities                                                                 24,500              72,200
                                                                                     -----------         -----------
    Total Shareholders' Equity                                                         3,310,000           3,030,200
                                                                                     -----------         -----------
    Total Liabilities & Shareholders' Equity                                          49,218,800          46,112,600
                                                                                     -----------         -----------
                                                                                     -----------         -----------
</TABLE>


                                                                              2

<PAGE>

                        NORTHERN CALIFORNIA BANCORP, INC.
                                 AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                        Three Months Ended                Nine Months Ended
                                                           September 30                      September 30
                                                     --------------------------       --------------------------
                                                         1998          1997               1998          1997
                                                     ------------   -----------       ------------  ------------
<S>                                                  <C>            <C>               <C>           <C>         
INTEREST INCOME:
  Interest and Fees on Loans                             753,500       717,400          2,197,700     2,054,800
  Interest on Time Deposits with
    Financial Institutions                                 1,500             0              4,600             0
  Interest on Investment Securities                      111,400        89,000            368,200       239,000
  Interest on Federal Funds                               80,600        76,800            218,000       197,600
                                                     ------------   -----------       ------------  ------------
    Total Interest Income                                947,000       883,200          2,788,500     2,491,400
                                                     ------------   -----------       ------------  ------------

INTEREST EXPENSE:
  Interest on Interest-Bearing
    Transaction Accounts                                  26,700        31,300             81,400        89,500
  Interest on Savings Accounts                            17,700        12,600             44,700        36,800
  Interest on Time Deposits                              295,500       292,400            892,900       845,300
  Interest on Other Borrowed Funds                        62,000        46,000            182,900        80,000
                                                     ------------   -----------       ------------  ------------
    Total Interest Expense                               401,900       382,300          1,201,900     1,051,600
                                                     ------------   -----------       ------------  ------------

    Net Interest Income                                  545,100       500,900          1,586,600     1,439,800
                                                     ------------   -----------       ------------  ------------
PROVISION FOR POSSIBLE LOAN LOSSES                             0        60,000             80,000       120,000
                                                     ------------   -----------       ------------  ------------
    Net Interest Income After
      Provision for Possible Loan Losses                 545,100       440,900          1,506,600     1,319,800
                                                     ------------   -----------       ------------  ------------

NONINTEREST INCOME:
  Service Charges on Deposit Accounts                    100,300        76,600            271,000       254,800
  SBA Loan Sales & Servicing Income                      108,300       107,100            245,900       224,700
  Other Operating Income                                 400,100       122,700            976,500       896,100
                                                     ------------   -----------       ------------  ------------
    Total Noninterest Income                             608,700       306,400          1,493,400     1,375,600
                                                     ------------   -----------       ------------  ------------

NONINTEREST EXPENSE:
  Salaries and Employee Benefits                         355,600       300,900          1,087,800       914,400
  Occupancy and Equipment Expense                         77,400        68,900            213,200       187,000
  Professional Fees                                       17,800        11,100           (23,000)        66,300
  Data Processing                                         49,000        40,800            143,600       129,200
  FDIC & State Assessments                                 3,300         4,900             10,900        15,900
  Other Operating Expenses                               421,500       148,800          1,108,100     1,032,700
   Income Tax Expense                                     76,200        19,600            131,900        67,600
                                                     ------------   -----------       ------------  ------------
    Total Noninterest Expense                          1,000,800       595,000          2,672,500     2,413,100
                                                     ------------   -----------       ------------  ------------
    NET INCOME (LOSS)                                    153,000       152,300            327,500       282,300
                                                     ------------   -----------       ------------  ------------
                                                     ------------   -----------       ------------  ------------

Earnings Per Common Share
   Primary                                                  0.18          0.17               0.38          0.32
   Diluted                                                  0.15          0.15               0.33          0.27
</TABLE>


                                                                            3

<PAGE>

                        NORTHERN CALIFORNIA BANCORP, INC.
                                 AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

<TABLE>
<CAPTION>

                                                                   1998               1997
                                                              -----------         ----------
<S>                                                           <C>                 <C> 
NET INCOME                                                        327,500            282,300
Adjustments to net income:
  Depreciation and amortization expense                           101,800             80,900
  Amortization/Accretion on investments                             3,000               (500)
  (Gain) loss on sale of securities                                     0                  0
  Provision for possible loan losses                               80,000            120,000
  Increase in deferred servicing premium                                0            (51,500)
  Amortization of deferred servicing premium                       25,500             15,100
  Amortization of deferred income                                  (3,000)            (3,300)
  Increase (decrease) in accrued expenses                        (152,500)          (184,400)
  (Increase) decrease in prepaid expenses                        (505,200)           175,900
  Increase (decrease) in interest payable                         (65,800)          (138,000)
  (Increase) decrease in interest receivable                      (53,400)            24,900
  (Increase) decrease in loans held for sale                     (382,200)          (200,100)
                                                              -----------         ----------
  Total adjustments to net income                                (951,800)          (161,000)
                                                              -----------         ----------
                                                              -----------         ----------
Net cash provided (used) by operations                           (624,300)           121,300

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from maturity of investments                                 0                  0
  Proceeds from sale of investments                                     0                  0
  Principal payments on investments                             2,995,000          2,000,000
  Purchase of securities                                       (4,882,600)        (3,667,700)
  Unrealized gain (loss) available for sale securities            (48,100)            73,700
  Net (increase) decrease in loans                             (1,955,800)        (1,229,200)
  Proceeds from sale of equipment                                   2,800                  0
  Capital expenditures                                            (68,700)          (320,400)
  Stock Repurchase                                                      0            (62,800)
                                                              -----------         ----------
Net cash provided (used) in investing activities               (3,957,400)        (3,206,400)
                                                              -----------         ----------
                                                              -----------         ----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase (decrease) in deposit accounts                   2,061,700          1,056,500
  Net increase (decrease) in borrowed funds                     1,000,000          2,000,000
                                                              -----------         ----------
Net cash provided (used) by financing activities                3,061,700          3,056,500
                                                              -----------         ----------
                                                              -----------         ----------

Net increase (decrease) in cash & cash equivalents             (1,542,400)           (28,900)
Cash & cash equivalents - beginning of year                    11,160,600          9,820,100
                                                              -----------         ----------
                                                              -----------         ----------

Cash & cash equivalents - end of period                         9,618,200          9,791,200
</TABLE>


                                                                             4

<PAGE>

NOTES TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                    SEPTEMBER 30      DECEMBER 31
                                                                        1998              1997
                                                                    ------------      -----------
<S>                                                                 <C>               <C>
(NOTE 1) INVESTMENT SECURITIES:

Available for sale:
  Other Securities                                                     594,500           480,200
                                                                    -----------       -----------
                                                                    -----------       -----------

Held to maturity:

  US Treasury Securities                                                     0           499,900
  US Government Securities                                           2,500,200         4,995,400
  State and Local Agency Securities                                  4,765,400            ---
                                                                    -----------       -----------
                                                                     7,265,600         5,495,300
                                                                    -----------       -----------
                                                                    -----------       -----------

(NOTE 2) GROSS LOANS:

  Commercial and Industrial                                         11,457,300        10,299,500
  Construction                                                         182,700           346,500
  Real Estate - Mortgage                                            14,663,600        13,920,900
  Installment                                                          623,200           519,900
  Government Guaranteed Loans Purchased                                161,400           284,000
                                                                    -----------       -----------
  Gross Loans                                                       27,088,200        25,370,800

(NOTE 3) ALLOWANCE FOR POSSIBLE LOAN LOSSES:

  Balance at Beginning of Period                                       269,100           253,500
  Recoveries                                                             9,000             1,800
  Provision for Possible Loan Losses                                    80,000           120,000
  Loans Charged Off                                                    (69,900)         (106,200)
                                                                    -----------       -----------
  Balance at End of Period                                             288,200           269,100

(NOTE 4) DEPOSITS:

  Demand                                                            10,916,400         8,734,200
  Interest-Bearing Transaction                                       7,303,200         7,483,900
  Savings                                                            3,356,000         2,145,300
  Time Under $100,000                                               11,981,800        12,742,700
  Time Equal to or Greater than $100,000                             7,708,400         8,099,500
                                                                    -----------       -----------
                                                                    41,265,800        39,205,600

(NOTE 5) SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

  Payments during the period ending:                                  9/30/98            9/30/97
                                                                    -----------       -----------
    Interest                                                         1,084,800           971,700
    Income Taxes                                                       140,500            67,600

</TABLE>

                                                                             5
<PAGE>

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

OVERVIEW

     The following discussion reviews and analyzes the operating results and
financial condition of the Corporation, focusing on the Bank. It should be read
in conjunction with the financial statements and the other financial data
presented elsewhere herein. The Corporation has had no activities other than its
organization.

     For the nine months ended September 30, 1998 net income was $327,500, an
increase of $45,200 when compared to the same period in 1997. The increase in
earnings during this period was the result of a $186,800 increase in net
interest income after provision for loan losses, a $117,800 increase in net
non-interest income, and a $259,400 increase in non-interest expense. Net income
for the period was significantly affected by two factors 1) the recovery of
approximately $117,000 in legal expenses associated with a trade name
infringement lawsuit and 2) a change in accounting whereby annual bonuses are
accrued quarterly rather than expensed at year end, $141,000 was accrued through
September 30, 1998.

                                                                             6
<PAGE>



     The following table sets forth certain selected financial ratios of the
Corporation at, and for the nine months ended, September 30, 1998 and 1997.

<TABLE>
<CAPTION>
                                                 For the nine months              For the nine months
                                              Ended September 30, 1998          Ended September 30, 1997
                                              ------------------------          ------------------------
                                                      (Dollars in thousands except per share data)
<S>                                           <C>                               <C>
Summary of Operating Results:

Total interest income                                    2,788                             2,492
Total interest expense                                   1,202                             1,052
                                                       --------                         ---------
Net interest income                                      1,587                             1,440
                                                                                  
Provision for possible                                                            
  loan losses                                               80                               120
                                                       --------                         ---------
Net interest income after                                                         
  provision for loan loss                                1,507                             1,320
                                                                                  
Total other income                                       1,493                               788
Total other expense                                      2,541                             1,763
                                                       --------                         ---------
                                                                                  
Income (loss) before taxes                                 459                               345
Provision for income tax                                   132                                63
                                                       --------                         ---------
                                                                                  
Net income (loss)                                          327                               282
                                                                                  
                                                                                  
Per Common Share Data:                                                            
                                                                                  
Net income - Primary (1)                                  0.38                              0.32
Net income - Diluted (2)                                  0.33                              0.27
Book value, end of period                                 3.86                              3.64
Avg shares outstanding (3)                             858,526                           871,525
                                                                                  
Balance Sheet Data:                                                               
                                                                                  
Total loans, net of                                                               
   unearned income (4)                                  28,152                            25,875
Total assets                                            49,219                            39,154
Total deposits                                          41,266                            36,029
Stockholders' equity                                     3,310                             3,125

</TABLE>

                                                                             7
<PAGE>

<TABLE>
<CAPTION>

                                                  For the nine months               For the nine months
                                                 Ended September 30, 1998         Ended September 30, 1997
                                                 ------------------------         ------------------------
<S>                                              <C>                              <C>
Selected Financial Ratios:

Return on average assets(5)                                  0.93%                             0.92%

Return on average
  stockholders' equity(6)                                   13.81%                            12.39%

Net interest spread                                          4.50%                             4.80%

Net interest margin                                          5.21%                             5.46%

Avg shareholders' equity
  to average assets                                          6.74%                             7.82%

Risked-Based capital ratios

   Tier 1                                                    9.65%                            11.73%
   Total                                                    10.50%                            10.77%
Total loans to total deposits
  at end of period                                          68.22%                            71.56%

Allowance to total loans
  at end of period                                           1.01%                             1.03%

Non-performing loans to total
  loans at end of period                                     0.95%                             1.20%

Net charge-offs to
  average loans                                              0.23%                             0.39%

</TABLE>

(1) Primary earnings per share amounts were computed on the basis of the
    weighted average number of shares of common stock outstanding during the
    year. The weighted average number of common shares used for this
    computation was 858,526 and 871,525 for September 30, 1998 and 1997,
    respectively.

(2) Diluted earnings (loss) per share amounts were computed on the basis of the
    weighted average number of shares of common stock and common stock
    equivalents outstanding during the year. Common stock equivalents include
    director/employee stock options. The weighted average number of shares used
    for this computation was 1,002,700 and 1,034,574 for September 30, 1998 and
    1997, respectively.

(3) Weighted average common shares. 
(4) Includes loans being held for sale. 
(5) Averages are of daily balances. 
(6) Calculated on an annualized basis.

                                                                             8
<PAGE>



NET INTEREST INCOME

     Net interest income, the difference between (a) interest and fees earned 
on interest-earning assets and (b) interest paid on interest-bearing 
liabilities, is the most significant component of the Bank's earnings. 
Changes in net interest income from period to period result from increases or 
decreases in the average balances of interest-earning assets portfolio, the 
availability of particular sources of funds and changes in prevailing 
interest rates.

     Net interest income for the nine month period ended September 30, 1998 
was $1,586,600 compared to $1,439,800 for the same period in 1997. The 
increase of $146,800 resulted from total interest income increasing $297,100, 
while total interest expense increased $150,300. Average interest earning 
assets increased $5,575,000 (15.92%), while the average rate earned decreased 
30 basis points. The decrease in the average interest rate earned was due to 
increased investment in instruments other than loans, which bear lower yields 
than loans. Average interest bearing liabilities increased $4,356,000 
(14.49%), while the average rate paid was unchanged.

     The following table shows the components of the Bank's net interest 
income, setting forth, for each the nine months ended September 30, 1998 and 
1997, (i) average assets, liabilities and investments, (ii) interest income 
earned on interest-earning assets and interest expense paid on 
interest-bearing liabilities, (iii) average yields earned on interest-earning 
assets and average rates paid on interest-bearing liabilities, (iv) the net 
interest spread (i.e., the average yield earned on interest-earning assets 
less the average rate paid on interest-bearing liabilities) and (v)the net 
interest yield on average interest-earning assets (i. e., net interest income 
divided by average interest-earning assets). Yields are not computed on a 
tax-equivalent basis. Non-accrual loans and overdrafts are included in 
average loan balances. Average loans are presented net of unearned income.

                                                                             9
<PAGE>


INTEREST SPREAD ANALYSIS:

<TABLE>
<CAPTION>
                                         The Nine Months                             The Twelve Months
                                        Ended September 30,                          Ended December 31,
                                    1998                     1997                           1997
                           -----------------------  ----------------------         -----------------------
                                    Int     Avg              Int    Avg                     Int      Avg
                             Avg    Earn     %        Avg    Earn    %               Avg    Earn      %
                             Bal    Paid   Rate       Bal    Paid   Rate             Bal    Paid     Rate
                           -----------------------  ----------------------         -----------------------
                                                    (Dollars in thousands)
<S>                        <C>      <C>    <C>      <C>     <C>     <C>            <C>      <C>      <C>
Interest Earning Assets:

Int-bearing deposits
  at other banks                100     5    6.16         0     0    0.00               71      5    7.67
Invest securities             8,260   368    5.94     4,469   239    7.13            1,519     90    5.91
Federal funds sold            5,123   218    5.67     4,877   198    5.40            6,460    341    5.27
                            --------------          --------------                  --------------

Total investments            13,483   591    5.84     9,346   437    6.23            8,050    436    5.42

Loans
  Real estate                14,391 1,118   10.36    14,426 1,108   10.24           13,138  1,368   10.41
  Installment                   537    51   12.54       556    47   11.27              686     80   11.70
  Commercial                 12,189 1,029   11.25    10,698   894   11.14           10,823   1256   11.61
                            --------------          --------------                  --------------

Total loans                  27,117 2,198   10.81    25,680 2,049   10.64           24,647  2,704   10.97

Total Interest
  earning assets             40,600 2,788    9.16    35,026 2,486    9.46           32,697  3,140    9.60
                            --------------          --------------                  --------------
                            --------------          --------------                  --------------

Interest Bearing
Liabilities:

Int-bearing demand            5,904    52    1.17     5,171    55    1.41            4,534     64    1.40
Money market savings          1,665    30    2.38     1,944    35    2.38            1,911     45    2.34
Savings deposits              2,698    45    2.21     2,225    37    2.21            2,541     70    2.76
Time deposits > $100M         8,198   360    5.86     6,829   298    5.82            5,698    338    5.92
Time deposits < $100M        11,969   533    5.93    12,013   547    6.08           11,774    735    6.24
Other Borrowing               3,982   183    6.12     1,879    80    5.68            1,790     83    4.62
                            --------------          --------------                  --------------

Total interest
  bearing liabilities        34,416 1,202    4.66    30,061 1,052    4.66           28,249  1,334    4.72
                            --------------          --------------                  --------------
                            --------------          --------------                  --------------

Net interest income                 1,587                   1,434                           1,806

Net interest spread                          4.50                    4.80                            4.88

Net yield on interest
  earning assets                             5.21                    5.46                            5.52

</TABLE>

                                                                             10
<PAGE>

INTEREST SPREAD ANALYSIS (CONTINUED):

<TABLE>
<CAPTION>
                                              Nine Months                             Twelve Months
                                           Ended September 30,                      Ended December 31,
                                               1998 vs 1997                            1997 vs 1996
                                               ------------                            ------------
                                             Increase(Decrease)                      Increase(Decrease)
                                               Due to changes                          Due to Changes
                                       ------------------------------         ------------------------------
                                          Avg       Avg                        Avg        Avg
                                         Volume     Rate       Total          Volume      Rate        Total
                                       ------------------------------         ------------------------------
                                                               (Dollars in thousands)
<S>                                    <C>          <C>        <C>            <C>         <C>         <C>
Interest Earning Assets:

Int-bearing deposits
  at other banks                          5           0            5          (22)          (1)         (23)
Invest securities                       203         (74)         129           21           (7)          14
Federal funds sold                       10          10           20           75          (13)          62
                                       ------------------------------         ------------------------------

Total investments                       193         (39)         154           86          (33)          53

Loans
  Real estate                            (3)         13           10           52          (55)          (3)
  Installment                            (2)          5            4          (35)           3          (32)
  Commercial                            125          10          135           89           78          166
                                       ------------------------------         ------------------------------
  Total loans                           115          34          149          107           24          131

Total Interest Earning Assets           308          (5)         303          241          (56)         185
                                       ------------------------------         ------------------------------
                                       ------------------------------         ------------------------------

Interest Bearing Deposits:

Int-bearing demand                        8         (11)          (3)          (0)           3            3
Money market savings                     (5)          0           (5)           1            2            3
Savings deposits                          8           0            8           41           (3)          38
Time deposits > $100M                    60           3           62           41           (5)          36
Time deposits < $100M                    (2)        (13)         (15)         121            9          130
Other Borrowing                          90           6           96          (10)           0           (9)
                                       ------------------------------         ------------------------------

Total interest bearing deposits         152          (2)         150          100           51          151
                                                                              ------------------------------
                                                                              ------------------------------

Net change in net interest              156          (3)         153          141         (106)          34

</TABLE>

                                                                             11
<PAGE>

PROVISION AND ALLOWANCE FOR LOAN LOSSES

     The provision for loan losses is an expense charged against operating
income and added to the allowance for loan losses. The allowance for loan losses
represents amounts which have been set aside for the specific purpose of
absorbing losses which may occur in the Bank's loan portfolio.

     The allowance for loan losses reflects management's ongoing evaluation of
the risks inherent in the loan portfolio, both generally and with respect to
specific loans, the state of the economy, and the level of net loan losses
experienced in the past. Management and the Board of Directors review the
results of the State Banking Department and FDIC examinations, independent
accountants' observations, and the Bank 's internal review as additional
indicators to determine if the amount in the allowance for loan losses is
adequate to protect against estimated future losses. It is the Bank 's current
practice, which could change in accordance with the factors mentioned above, to
maintain an allowance which is at least equal to the sum of the following
percentage of loan balances by loan category.

<TABLE>
<CAPTION>
         Loan Category                                    Reserve %
<S>                                                       <C>
   Classified Loans:
   Loans classified loss                                   100.00%
   Loans classified doubtful                                50.00%
   Loans classified substandard
        Real Estate Secured                                  5.00%
        Non Real Estate Secured                             20.00%

   Unclassified Loans:
   Real Estate - Loan to value 80% or less                   0.10%
   Real Estate - Loan to value over 80%                      0.50%
   Loans to Individuals                                      3.00%
   Commercial                                                3.00%
   SBA Loans - Unguaranteed portion                          2.00%
   Unfunded Loan Commitments                                  .25%
   SBA Loans - Guaranteed portion                            0.00%
   Cash Secured Loans                                        0.00%
</TABLE>

     Although no assurance can be given that actual losses will not exceed the
amount provided for in the allowance, Management believes that the allowance is
adequate to provide for all estimated credit losses in light of all known
relevant factors. At September 30, 1998 and 1997 the Bank's allowance stood at
1.01 percent and 1.03 percent of gross loans, respectively. A provision of
$80,000 was made to the allowance during the nine months ended September 30,
1998, compared to a provision of $120,000 in the same 

                                                                             12
<PAGE>

period in 1997. Charged off loans during the nine months ended September 30, 
1998 and 1997 totaled $69,900 and $102,200 respectively. Recoveries for the 
same periods were $9,000 and $1,800, respectively.

     The Bank's non-performing (delinquent 90 days or more and non-accrual)
loans as a percentage of total loans was 0.95 percent at September 30, 1998
compared with 1.19 percent at September 30, 1997 and 0.81 percent at December
31, 1997.

     Based upon statistics released by Federal and state banking authorities
regarding banks of similar size or otherwise located in California, Management
believes that the Bank 's ratios of delinquent and non performing loans to total
loans are far better than average. Prudent collection efforts, and tighter
lending controls, are responsible for the Bank's strong performance on these
measures of credit quality. However, no assurance can be given that the Bank's
loan portfolio will continue to measure well against its peers on these ratios
and quality measures, or that losses will not otherwise occur in the future.

NON-INTEREST INCOME

     Total non-interest income for the nine months ended September 30, 1998 was
$1,493,400, compared with $1,375,600 for the same period in 1997. The increase
of $117,800 was the result of a $16,200 increase in service charges on deposit
accounts, income from SBA loan sales and servicing increased $21,200 and income
from other service charges, commissions and fees increased $80,400. Merchant
credit card processing accounted for $68,900 of the increase in other service
charges, commissions and fees.

     The sale of Small Business Administration (SBA) guaranteed loans is a
significant contributor to the Bank's income. SBA guaranteed loans yield up to 3
3/4% over the New York prime rate, and the guaranteed portions can be sold at
premiums which vary with market conditions. SBA loans are guaranteed by the full
faith of the United States Government from 75 to 80 percent of the principal
amount. The guaranteed portion has risks comparable for an investor to a U. S.
Government security and can usually be sold in the secondary financial market,
either at a premium or at a yield which allows the Bank to maintain a
significant spread for itself.

     There can be no assurance that the gains on sale will continue at, or
above, the levels realized in the past three years. In addition, increasing
competition among lenders for qualified SBA borrowers makes it difficult for the
Bank to continually expand its program in this area, and may limit the level of
premium that can be earned with regard thereto. Furthermore, the SBA recently
began requiring lenders to share a portion of premiums in excess of 10% earned
on the sale of the guaranteed portions, and to pay 50 basis points on the
outstanding guaranteed balance. Management cannot predict that the impact of
these changes will not have a significant impact on SBA income.

                                                                             13
<PAGE>

NON-INTEREST EXPENSE

     Salary and benefits expense for the nine months ended September 30, 1998
increased $173,400 compared with the same period in 1997. The increase was
primarily due to employee merit pay increases and accrual of annual bonuses on a
quarterly basis in 1998 verses year end in 1997.

     Total occupancy and equipment expense for the nine months ended September
30, 1998 was $213,200 compared to $187,000 for the same period in 1997. The
increase of $26,200 was due to increases in maintenance expense ($13,200),
depreciation expense increased ($5,700), premises rent ($3,200), utilities
($4,300), janitorial services ($4,700) and property taxes ($4,100) while net
merchant terminal expense decreased ($5,600).

     Data processing expense for the nine months ended September 30, 1998
increased $14,400 compared to the same period in 1997. The increase was due to a
1.4% cost of living increase, effective July 1998 and increased numbers of
accounts and transactions.

     For the nine months ended September 30, 1998 professional fees
decreased $89,300 compared to the same period in 1997. The decrease resulted
from the recovery of legal expenses associated with a trade name infringement
lawsuit.

     Other expenses for the nine months ended September 30, 1998 totaled
$1,119,000 compared with $1,048,600 for the same period in 1997. Significant
changes occurred in the following categories with increases in merchant
processing expense ($78.300), Year 2000 expense ($19,200), loan expense
($12,200), messenger and freight ($4,400) and insurance ($3,900); decreases
occurred in business development ($15,100), telephone expense ($6,100),
donations ($5,900) and SBA loan expense ($17,000).

LOANS

     Loans represented 66.79% of average earning assets, and 57.80% of average
total assets for the nine months ended September 30, 1998, compared with 73.32%
and 62.91%, respectively during 1997. For the nine months ended September 30,
1998 average loans increased 5.60% from $25,679,000 for the same period in 1997
to $27,117,000. Average commercial loans increased $1,492,000 (13.95%); while
average real estate loans decreased $35,000 (.24%) and average installment loans
decreased $19,000 (3.42%).

     The Bank's commercial and industrial loans are generally made for the
purpose of providing working capital, financing the purchase of equipment or
inventory, and other business purposes. Such loans generally have maturities
ranging from one year to several 

                                                                             14
<PAGE>

years. Short-term business loans are generally intended to finance current 
transactions and typically provide for monthly interest payments with 
principal being payable at maturity or at 90-day intervals. Term loans 
(usually for a term of two to five years) normally provide for monthly 
installments of principal and interest. The Bank from time to time utilizes 
accounts receivable and inventory as security for loans.

     The Bank is the recognized leader for Small Business Administration lending
in Monterey County, and holds SBA's coveted Preferred Lender Status. Generally,
SBA loans are guaranteed by the SBA for 75 to 80 percent of their principal
amount, which can be retained in portfolio or sold to investors. Such loans are
made at floating interest rates, but generally for longer terms (up to 25 years)
than are available on a conventional basis to small businesses. The unguaranteed
portion of the loans, although generally supported by collateral, is considered
to be more risky than conventional commercial loans because they may be based
upon credit standards the Bank would not otherwise apply, such as lower cash
flow coverage, or longer repayment terms.

     The Bank's real estate loan portfolio consists both of real estate
construction loans and real estate mortgage loans. The Bank has initiated a
program to generate more commercial and industrial real estate loans, which
generally yield higher returns than normal commercial loans. The Bank has also
developed a broker program for generating residential real estate loans. The
Bank does not make real estate development loans. Real estate construction loans
are made for a much shorter term, and often at higher interest rates, than
conventional single-family residential real estate loans. The cost of
administering such loans is often higher than for other real estate loans, as
principal is drawn on periodically as construction progresses.

     The Bank also makes real estate loans secured by a first deed of trust on
single family residential properties and commercial and industrial real estate.
California commercial banks are permitted, depending on the type and maturity of
the loan, to lend up to 90 percent of the fair market value of real property (or
more if the loan is insured either by private mortgage insurers or governmental
agencies). In certain instances, the appraised value may exceed the actual
amount that could be realized on foreclosure, or declines in market value
subsequent to making the loan can impair the Bank's security.

     Consumer loans are made for the purpose of financing the purchase of
various types of consumer goods, home improvement loans, auto loans and other
personal loans. Consumer installment loans generally provide for monthly
payments of principal and interest, at a fixed rate. Most of the Bank's consumer
installment loans are generally secured by the personal property being
purchased. The Bank generally makes consumer loans to those customers with a
prior banking relationship with the Bank.

                                                                             15
<PAGE>

NONPERFORMING AND NONACCRUAL LOANS

     The Bank's present policy is to cease accruing interest on loans which are
past due as to principal or interest 90 days or more, except for loans which are
well secured or when collection of interest and principal is deemed likely. When
a loan is placed on non-accrual, previously accrued and unpaid interest is
generally reversed out of income unless adequate collateral from which to
collect the principal of, and interest on, the loan appears to be available.

     The following table presents information with respect to loans which, as of
the dates indicated, were past due 90 days or more or were placed on non-accrual
status (referred to collectively as "non-performing loans"):

<TABLE>
<CAPTION>
                                                        Nine Months Ended
                                                           September 30,
                                                     1998                 1997
                                                  -----------           ----------
                                                     (Dollars in thousands)
<S>                                               <C>                   <C>
ACCRUING,
PAST DUE 90 DAYS OR MORE:

Real Estate                                               258                  195
Commercial                                                  0                    0
Installment                                                 0                    0
Other                                                       0                    0
                                                  ------------          -----------
    Total accruing                                        258                  195


NONACCRUAL LOANS:

Real Estate                                                 2                   67
Commercial                                                  0                   31
Installment                                                 7                   25
Other                                                       0                    0
                                                  ------------          -----------
    Total non-accrual                                       9                  123

    Total non-performing                                  267                  318

Total loans end of period                              28,186               26,678

Ratio of non-performing loans
    to total loans at end of period                     0.95%                1.19%

</TABLE>

                                                                             16
<PAGE>


     The ratio of non-performing loans at September 30, 1997 was significantly
impacted by one loan that represented 61% of the total non-performing. These
ratios have been maintained as a result of a strengthening of underwriting
criteria, frequent review of new and delinquent loans and a firm collection
policy (with the assistance of outside legal counsel). The Bank does not have
any foreign loans or loans for highly leveraged transactions.

SUMMARY OF LOAN LOSS EXPERIENCE

<TABLE>
<CAPTION>
                                                 Nine Months Ended                 Nine Months Ended
                                                 September 30, 1998                September 30, 1997
                                                 ------------------                ------------------
                                                                (Dollars in thousands)
<S>                                              <C>                               <C>
Average loans outstanding                               27,117                             25,680

Allowance, beginning of period                             269                                253

Loans charged off during period:

    Commercial                                              69                                101
    Installment                                              1                                  1
    Real Estate                                              0                                  0
    Other                                                    0                                  0
                                                    ----------                         -----------
    Total charge offs                                       70                                102

Recoveries during period:
    Commercial                                               8                                  1
    Installment                                              1                                  1
    Other                                                    0                                  0
                                                    ----------                         -----------
    Total recoveries                                         9                                  2

Net Loans charged off
    during the period                                       61                                100

Additions to allowance for
    possible loan losses                                    80                                120

Allowance, end of period                                   288                                273

Ratio of net loans charged off to
    average Loans outstanding
    during the period                                    0.22%                              0.39%

Ratio of allowance to total
    loans at end of period                               1.01%                              1.03%

</TABLE>

                                                                             17
<PAGE>

FUNDING SOURCES

     Average deposits for the nine months ended September 30, 1998 were
$39,220,000 an increase of 10.59% compared with the average balance for 1997.
Average certificates of deposit represented 51.42% of average deposits for the
nine months ended September 30, 1998. Average interest checking account, money
market and savings accounts as a group were 26.18% of average deposits. Average
demand deposits represented 22.40% of average deposits.

     The Bank has a line of credit with the Federal Home Loan Bank of San
Francisco. Three advances from the Federal Home Loan Bank with initial
maturities of more than one year totaled $4,000,000 at September 30, 1998. Each
advance is for $1,000,000 with interest rates of 4.88%, 6.53, 6.81% and 6.36%
and maturity dates of October 1998, June 2000, June 2004 and January 2028.
Management believes that these advances provide funds at a lower cost than
comparable deposits. The Bank did not utilize any short term borrowings in 1998,
1997 or 1996.

CAPITAL RESOURCES

     The Company maintains capital to comply with legal requirements, to provide
a margin of safety for its depositors and stockholders, and to provide for
future growth and the ability to pay dividends. At September 30, 1998,
stockholders' equity was $3,310,000 versus $3,030,200 at December 31, 1997. The
Company paid cash dividends of $0.12 and $0.11 per share in 1997 and 1996. The
Bank paid cash dividends totaling $20,000, $170,000 and $150,000 to the
Corporation in 1998, 1997 and 1996.

     The FDIC and Federal Reserve Board have adopted capital adequacy guidelines
for use in their examination and regulation of banks and bank holding companies.
If the capital of a bank or bank holding company falls below the minimum levels
established by these guidelines, it may be denied approval to acquire or
establish additional banks or non-bank businesses, or the FDIC or Federal
Reserve Board may take other administrative actions. The guidelines employ two
measures of capital: (1) risk-based capital and (2) leverage capital.

     Under current rules, all banks were required to maintain Tier 1 capital of
at least 4 percent and total capital of 8.0% of risk-adjusted assets. The Bank
had a Tier 1 risk-based capital ratio of 9.65% and a total risk-based capital
ratio of 10.50% at September 30, 1998 (calculated under regulatory accounting
principles), well above the minimum regulatory requirements.

     The leverage capital ratio guidelines require a minimum leverage capital
ratio of 3% of Tier 1 capital to total assets less goodwill. The Bank had a
leverage capital ratio of 6.75% at September 30, 1998 (calculated under
regulatory accounting principles).

                                                                             18
<PAGE>

LIQUIDITY

     Liquidity represents a bank's ability to provide sufficient cash flows or
cash resources in a manner that enables it to meet obligations in a timely
fashion and adequately provides for anticipated future cash needs. For the Bank,
liquidity considerations involve the capacity to meet expected and potential
requirements of depositors seeking access to balances and to provide for the
credit demands of borrowing customers. In the ordinary course of the Bank's
business, funds are generated from the repayment of loans, maturities within the
investment securities portfolio and the acquisition of deposit balances and
short-term borrowings. In addition, the Bank has a line of credit from the
Federal Home Loan Bank of San Francisco of approximately $5,500,000 and a
$1,000,000 Federal Funds borrowing line with the Pacific Coast Bankers' Bank, to
meet temporary liquidity requirements.

     As a matter of policy, the Bank seeks to maintain a level of liquid assets,
including marketable investment securities, equal to a least 15 percent of total
assets ("primary liquidity"), while maintaining sources of secondary liquidity
(borrowing lines from other institutions) equal to at least an additional 10
percent of assets. In addition, it seeks to generally limit loans to not more
than 90 percent of deposits. Within these ratios, the Bank generally has excess
funds available to sell as federal funds on a daily basis, and is able to fund
its own liquidity needs without the need of short-term borrowing. The Bank's
primary liquidity at September 30, 1998 was 35.02 percent, while its average
loan to deposit ratio for the nine months ended September 30, 1998 was 69.41
percent. The high level of liquidity has an adverse impact on interest income.

INTEREST RATE RISK

     Interest rate risk is the exposure the Bank's earnings have to changes in
interest rates. The goal is to manage the miss-match between rate-sensitive
assets and rate-sensitive liabilities, to reduce interest rate risk to an
acceptable level. Rate sensitive is defined as anything maturing or repricing
within the next twelve months. Twelve months is considered an appropriate time
frame for several reasons. Forecasting is required in order to ascertain the
volume and mix of rate-sensitive assets and liabilities for the twelve month
period. Forecasting involves making assumptions about multiple variables in the
future; interest rates, loan demand, deposit mix, bank growth, regulatory
changes, etc. As most of these variables are outside of the control of bank
management, forecasting beyond twelve months would sacrifice accuracy and
reliability and will therefore not be done. Additionally, we feel that an
analysis of twelve months gives us adequate time to recognize and adjust to any
relevant trends.

     The primary tool of management for quantifying our interest rate exposure
is or Earnings Change Ratio (ECR) analysis. The ECR analysis provides a display
of the balance sheet gap, weighted by the appropriate rate sensitivity factor,
to define the impact 

                                                                             19
<PAGE>

on the income statement from a 100 basis-point change in National Prime. The 
analysis assumes an immediate and parallel change in all rates, and 
calculates the effect of the change for the next twelve-month period.

     The Bank's maximum exposure to interest rate risk, defined as the
difference in one-year rate-sensitive assets and one-year rate-sensitive
liabilities as a percentage of total assets is 25% when asset sensitive
(positive gap) and 15% when liability sensitive (negative gap). The following
table sets forth the Bank's interest rate risk analysis as of September 30,
1998.

<TABLE>
<CAPTION>
                                                              FALLING RATES            RISING RATES
                                                           ---------------------   --------------------
                                                            One Year   One Year    One Year
                                                Balance     Earnings    Income     Earnings      Income
                                                 Sheet       Change    Statement    Change    Statement
                                                  Gap        Ratio       Gap         Ratio          Gap
<S>                                             <C>        <C>         <C>         <C>        <C>
RATE SENSITIVE ASSETS

  DUE FROM BANKS-TIME                               100       74%           74         74%           74

  LOANS:
      Fixed rate < 1 year                         4,011       87%        3,496         87%        3,496
      Floating rate < 1 year                     12,731       91%       11,583         91%       11,583

  SECURITIES:
      Fed Funds Sold & Repos                      6,690      100%        6,690        100%        6,690
      Fixed Rate Securities - Callable < 1 year   1,500       74%        1,109          0%            0

                                                --------               --------                ---------
      Total Rate Sensitive Assets                25,032                 22,951                   21,843

RATE SENSITIVE LIABILITIES

      Savings                                     3,356       30%        1,007         30%        1,007
      Money Market Checking                       5,875       16%          916         16%          939
      Money Market Savings                        1,429       28%          397         28%          397
      CDs > $100,000                              5,737       78%        4,495         78%        4,495
      CDs < $100,000                              8,109       79%        6,418         79%        6,418
      FFP, Repos & Other Borrowing                1,000       69%          692         69%          692

                                                --------              ---------               ----------
      Total Rate Sensitive Liabilities           25,505                 13,925                   13,949

Rate Sensitivity GAP (Assets-Liabilities)          (473)                 9,026                    7,894

Total Assets                                     49,215                 49,215                   49,215

GAP as a Percentage of Total Assets               (0.96)%               18.34%                   16.04%

Estimated change in net interest margin if prime rate falls 1%:        (90.26)

Estimated change in net interest margin if prime rate rises 1%:                                   78.94

</TABLE>

                                                                             20
<PAGE>

     The Corporation has no sources of revenues or liquidity other than
dividends, tax equalization payments or management fees from the Bank. The
ability of the Bank to pay such items to the Corporation is subject to
limitations under state and Federal law.

INVESTMENT SECURITIES

     The following table sets forth the book and market value of the Bank's
investment securities as of September 30, 1998:

<TABLE>
<CAPTION>
                                                            INVESTMENT PORTFOLIO MIX

                                                               September 30, 1998
                                                             Book              Market
                                                             value             value
                                                         --------------     -------------
                                                              (Dollars in thousands)
<S>                                                      <C>                <C>
Available for sale:
Equity Securities                                              595                595

Held to maturity:
U.S. Agency securities                                       2,500              2,534
State/Local Agency securities                                4,766              4,824
                                                         ----------         ----------
Total                                                        7,861              7,953

</TABLE>


     The following table summarizes the maturity of the Bank's investment
securities at September 30, 1998:

<TABLE>
<CAPTION>
                                                    INVESTMENT PORTFOLIO MATURITIES
                                                         (Dollars in thousands)
                                                      over 1       over 3          over 5
                                        1 year        through      through        through         over
                                        or less       3 years      5 years        15 years      15 years
                                       ----------    ----------   -----------    -----------   -----------
<S>                                    <C>           <C>          <C>            <C>           <C>
U.S. Agency securities                    ---           ---          ---              2,500       ---
State/Local Agencies                      ---           ---          ---            ---             4,766
Equity Securities                            595        ---          ---            ---           ---
                                       ----------    ----------   -----------    -----------   -----------
Total                                        595        ---          ---              2,500         4,766

</TABLE>

                                                                             21
<PAGE>

                            PART II-OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

     None

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

     None

ITEM 5.  OTHER INFORMATION.

     As we approach the year 2000 we are addressing a critical issue concerning
computer systems, both hardware operating systems and software programs. The
issue involves the ability of systems to recognize date values on and after
January 1, 2000. Many operating systems and software programs were written to
recognize two digit year date values, i.e. 98 in the year field represents 1998.
As a result these systems and programs may recognize 00 in a date field as the
year 1900 rather than 2000. This issue affects all users of computer systems,
not just financial institutions.

     The Company has established a plan of action designed to ascertain the
actions necessary to address the "Year 2000" issue. The Company has received
information from each of its service providers and software vendors regarding
their Year 2000 compliance. The Company's hardware operating systems have been
tested for Year 2000 compliance, two older personal computers failed the tests
and will be replaced. All current and prospective borrowers, who may be impacted
by the Year 2000 problem, have been/will be asked to complete a questionnaire
regarding their Year 2000 readiness. In addition, efforts are being made to
increase the awareness level of all customers through direct mailings and
messages printed on bank statements and notice forms. The Company has budgeted
$28,800 for 1998 Year 2000 expense. Projections for 1999 Year 2000 expense will
be dependant in large part on the evaluation of responses received from service
providers, software vendors and borrowers.

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

<TABLE>
<CAPTION>

                                    NORTHERN CALIFORNIA BANCORP, INC.
<S>                                 <C>
Date:  November 5, 1998             By:  /s/ Charles T. Chrietzberg, Jr.
       ----------------                ---------------------------------
                                             Charles T. Chrietzberg, Jr.
                                             Chief Executive Officer
                                             and President

Date: November 5, 1998              By:  /s/ Bruce N. Warner
      ----------------                 ---------------------
                                             Bruce N. Warner
                                             Chief Financial Officer and
                                             Principal Accounting Officer
</TABLE>


                                                                             22