##### 



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________

FORM 10-Q

(Mark One)

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|ý |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|  |  | For the quarterly period ended September 30, 2002                                       
|  |  | OR                                                                                      
|  |  |                                                                                         
| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|  |  | For the transition period from ____________to ____________                              

Commission File Number: 000-50066

HARRINGTON WEST FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of incorporation or organization) |  | 48-1175170
(I.R.S. Employer Identification No.)

610 Alamo Pintado Road
Solvang, California
(Address of principal executive offices)

93463
(Zip Code)

(805) 688-6644
(Registrants telephone number, including area code)

____________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for 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                        
ý No

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date:

4,327,951 shares of Common Stock, par value $0.01 per share, outstanding
as of December 18, 2002.

1



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##### 



HARRINGTON WEST FINANCIAL GROUP, INC.

INDEX

|                               |                                                            |                                                                                                                                                       |  |    |   | 
|------------------------------ | ---------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- |  | -- | - | 
|Part I  Financial Information |                                                            |                                                                                                                                                       |  |   
|                               |                                                            | Page                                                                                                                                                 
|                               |                                                            |                                                                                                                                                       |  |   
|Item 1.                        | Consolidated Financial Statements                          |                                                                                                                                                       |  | 3  |  
|                               |                                                            |                                                                                                                                                       |  |   
|                               |                                                            | Consolidated Statements of Financial Condition as of
September 30, 2002 (Unaudited) and December 31, 2001                                             |  |    | 3 | 
|                               |                                                            |                                                                                                                                                       |  |   
|                               |                                                            | Consolidated Statements of Income for the Three and Nine
Months Ended September 30, 2002 and 2001 (Unaudited)                                         |  |    | 4 | 
|                               |                                                            |                                                                                                                                                       |  |   
|                               |                                                            | Consolidated Statements of Shareholders Equity and Comprehensive
Income for the Nine Months Ended September 30, 2002
and Year Ended 2001 (Unaudited) |  |    | 5 | 
|                               |                                                            |                                                                                                                                                       |  |   
|                               |                                                            | Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2002 and 2001 (Unaudited)                                               |  |    | 6 | 
|                               |                                                            |                                                                                                                                                       |  |   
|                               |                                                            | Notes to Unaudited Consolidated Financial Statements                                                                                                  |  |    | 7 | 
|                               |                                                            |                                                                                                                                                       |  |   
|Item 2.                        | Managements Discussion and Analysis                       |                                                                                                                                                       |  | 9  |  
|                               |                                                            |                                                                                                                                                       |  |   
|Item 3.                        | Quantitative and Qualitative Disclosures about Market Risk |                                                                                                                                                       |  | 16 |  
|                               |                                                            |                                                                                                                                                       |  |   
|Item 4.                        | Controls and Procedures                                    |                                                                                                                                                       |  | 16 |  
|                               |                                                            |                                                                                                                                                       |  |   
|Part II  Other Information    |                                                            |                                                                                                                                                       |  |   
|                               |                                                            |                                                                                                                                                       |  |   
|Item 1.                        | Legal Proceedings                                          |                                                                                                                                                       |  | 18 |  
|                               |                                                            |                                                                                                                                                       |  |   
|Item 2.                        | Changes in Securities and Use of Proceeds                  |                                                                                                                                                       |  | 18 |  
|                               |                                                            |                                                                                                                                                       |  |   
|Item 3.                        | Defaults upon Senior Securities                            |                                                                                                                                                       |  | 18 |  
|                               |                                                            |                                                                                                                                                       |  |   
|Item 4.                        | Submission of Matters to a Vote of Security Holders        |                                                                                                                                                       |  | 18 |  
|                               |                                                            |                                                                                                                                                       |  |   
|Item 5.                        | Other Information                                          |                                                                                                                                                       |  | 19 |  
|                               |                                                            |                                                                                                                                                       |  |   
|Item 6.                        | Exhibits and Reports on Form 8-K                           |                                                                                                                                                       |  | 19 |  
|                               |                                                            |                                                                                                                                                       |  |   
|                               | Signatures                                                 |                                                                                                                                                       |  | 20 |  
|                               |                                                            |                                                                                                                                                       |  |   
|                               | Certification                                              |                                                                                                                                                       |  | 21 |  

2



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##### 



PART 1-FINANCIAL INFORMATION

ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
HARRINGTON WEST FINANCIAL GROUP, INC.CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands, except share data)

---

|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         |  |         | 
|---------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | -------------------------------------------------------------------------------------- | ------- | ------------------ | ------- | ----------------- | ------- |  | ------- | 
|                                                                                                                                         |                             |                                                                                        |         | September 30, 2002 |         | December 31, 2001
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                  
|ASSETS                                                                                                                                   |                             | (unaudited)                                                                            |         |                    |         |                  
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|Cash and cash equivalents                                                                                                                |                             | $                                                                                      | 13,948  |                    |         | $                 | 11,107  | 
|Trading account assets                                                                                                                   |                             |                                                                                        | 2,008   |                    |         |                   | 2,751   | 
|Securities available for sale                                                                                                            |                             |                                                                                        | 314,770 |                    |         |                   | 181,627 | 
|Securities held to maturity                                                                                                              |                             |                                                                                        | 2,464   |                    |         |                   | 2,617   | 
|Loans receivable, net (net of allowance for loan losses of $4,061
and $3,736 for September 30, 2002 and December 31, 2002, respectively) |                             |                                                                                        | 421,349 |                    |         |                   | 449,709 | 
|Accrued interest receivable                                                                                                              |                             |                                                                                        | 3,679   |                    |         |                   | 3,567   | 
|Premises and equipment, net                                                                                                              |                             |                                                                                        | 4,135   |                    |         |                   | 3,688   | 
|Prepaid expenses and other assets                                                                                                        |                             |                                                                                        | 1,808   |                    |         |                   | 1,937   | 
|Investment in FHLB stock, at cost                                                                                                        |                             |                                                                                        | 10,450  |                    |         |                   | 7,834   | 
|Deferred tax asset                                                                                                                       |                             |                                                                                        | 1,344   |                    |         |                   |        | 
|Goodwill                                                                                                                                 |                             |                                                                                        | 3,981   |                    |         |                   | 3,981   | 
|Core deposit intangible, net                                                                                                             |                             |                                                                                        | 1,359   |                    |         |                   | 1,505   | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|TOTAL ASSETS                                                                                                                             |                             | $                                                                                      | 781,295 |                    |         | $                 | 670,323 | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|Deposits:                                                                                                                                |                             |                                                                                        |         |                    |         |                   |         | 
|                                                                                                                                         |                             | Interest bearing                                                                       |         |                    | 492,984 |                   |         |  | 508,476 | 
|                                                                                                                                         |                             | Non-interest bearing                                                                   |         |                    | 17,613  |                   |         |  | 12,382  | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|Total Deposits                                                                                                                           |                             |                                                                                        | 510,597 |                    |         |                   | 520,858 | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|FHLB advances                                                                                                                            |                             |                                                                                        | 209,000 |                    |         |                   | 96,403  | 
|Securities sold under repurchase agreements                                                                                              |                             |                                                                                        | 575     |                    |         |                   | 365     | 
|Note payable                                                                                                                             |                             |                                                                                        | 20,800  |                    |         |                   | 18,000  | 
|Accounts payable and accrued expenses                                                                                                    |                             |                                                                                        | 8,647   |                    |         |                   | 3,566   | 
|Income taxes payable                                                                                                                     |                             |                                                                                        | 232     |                    |         |                   | 339     | 
|Deferred income taxes                                                                                                                    |                             |                                                                                        |        |                    |         |                   | 648     | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|TOTAL LIABILITIES                                                                                                                        |                             |                                                                                        | 749,851 |                    |         |                   | 640,179 | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|STOCKHOLDERS EQUITY                                                                                                                     |                             |                                                                                        |         |                    |         |                   |         | 
|Preferred stock, $.01 par value: 1,000,000 shares authorized:                                                                            |                             |                                                                                        |         |                    |         |                   |         | 
|                                                                                                                                         | none issued and outstanding |                                                                                        |         |                    |         |                   |         |  |        
|Common stock, $.01 par value; 9,000,000 shares authorized:                                                                               |                             |                                                                                        |         |                    |         |                   |         | 
|                                                                                                                                         |                             | 3,354,336 shares issued and outstanding as of September 30, 2002
and December 31, 2001 |         |                    | 34      |                   |         |  | 34      | 
|Additional paid-in capital                                                                                                               |                             |                                                                                        | 20,305  |                    |         |                   | 20,305  | 
|Retained earnings                                                                                                                        |                             |                                                                                        | 12,540  |                    |         |                   | 9,175   | 
|Accumulated other comprehensive income, net of tax of $(844)
and $358 at September 30, 2002 and December 31, 2001, respectively          |                             |                                                                                        | (1,435  | )                  |         |                   | 630     | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|Total Stockholders Equity                                                                                                               |                             |                                                                                        | 31,444  |                    |         |                   | 30,144  | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 
|TOTAL LIABILITIES & STOCKHOLDERS EQUITY                                                                                                 |                             | $                                                                                      | 781,295 |                    |         | $                 | 670,323 | 
|                                                                                                                                         |                             |                                                                                        |         |                    |         |                   |         | 

The accompanying notes are an integral part of these statements.

3



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##### 



HARRINGTON WEST FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME

Dollars in thousands, except per share data

---

|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |        | 
|---------------------------------------------------- | ---------------------------------------------- | - | ------------------ | ----- | ----------------- | - | --------- | ----- | ---- | - | --------- | ------ | - | - | --------- | ------ | 
|                                                     |                                                |   | Three months ended |       | Nine months ended
|                                                     |                                                |   | September 30,      |       | September 30,    
|                                                     |                                                |   |                    |       |                  
|                                                     |                                                |   | 2002               |       | 2001              |   | 2002      |       | 2001
|                                                     |                                                |   |                    |       |                   |   |           |       |     
|Interest income                                      |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|                                                     | Interest on loans                              |   | $                  | 7,756 |                   |   | $         | 7,521 |      |   | $         | 23,894 |   |   | $         | 23,826 | 
|                                                     | Interest and dividends on securities           |   |                    | 3,345 |                   |   |           | 3,080 |      |   |           | 8,658  |   |   |           | 6,681  | 
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|Total interest income                                |                                                |   | 11,101             |       |                   |   | 10,601    |       |      |   | 32,552    |        |   |   | 30,507    |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|Interest expense                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|                                                     | Interest on deposits                           |   |                    | 3,283 |                   |   |           | 4,830 |      |   |           | 11,048 |   |   |           | 14,303 | 
|                                                     | Interest on FHLB advances and other borrowings |   |                    | 2,127 |                   |   |           | 1,709 |      |   |           | 5,532  |   |   |           | 4,920  | 
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|Total interest expense                               |                                                |   | 5,410              |       |                   |   | 6,539     |       |      |   | 16,580    |        |   |   | 19,223    |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES |                                                |   | 5,691              |       |                   |   | 4,062     |       |      |   | 15,972    |        |   |   | 11,284    |       
|                                                    
|PROVISION FOR LOAN LOSSES                            |                                                |   | 50                 |       |                   |   |          |       |      |   | 325       |        |   |   | 1         |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES  |                                                |   | 5,641              |       |                   |   | 4,062     |       |      |   | 15,647    |        |   |   | 11,283    |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|Other income (loss)                                  |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|                                                     | Income (loss) from trading assets              |   |                    | (69   | )                 |   |           | (351  | )    |   |           | (165   | ) |   |           | 375    | 
|                                                     | Gain (loss) on sale of loans                   |   |                    |      |                   |   |           |      |      |   |           |       |   |   |           | 69     | 
|                                                     | Other income                                   |   |                    | 286   |                   |   |           | 259   |      |   |           | 1,195  |   |   |           | 627    | 
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|Total other income                                   |                                                |   | 217                |       |                   |   | (92       | )     |      |   | 1,030     |        |   |   | 1,071     |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|Other expenses                                       |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|                                                     | Salaries & employee benefits                   |   |                    | 1,997 |                   |   |           | 1,330 |      |   |           | 5,937  |   |   |           | 3,887  | 
|                                                     | Premises & equipment                           |   |                    | 556   |                   |   |           | 410   |      |   |           | 1,579  |   |   |           | 1,175  | 
|                                                     | Insurance premiums                             |   |                    | 64    |                   |   |           | 50    |      |   |           | 186    |   |   |           | 192    | 
|                                                     | Marketing                                      |   |                    | 65    |                   |   |           | 45    |      |   |           | 190    |   |   |           | 130    | 
|                                                     | Computer services                              |   |                    | 132   |                   |   |           | 120   |      |   |           | 388    |   |   |           | 333    | 
|                                                     | Consulting fees                                |   |                    | 188   |                   |   |           | 126   |      |   |           | 520    |   |   |           | 374    | 
|                                                     | Office expenses & supplies                     |   |                    | 160   |                   |   |           | 108   |      |   |           | 438    |   |   |           | 293    | 
|                                                     | Other                                          |   |                    | 429   |                   |   |           | 296   |      |   |           | 1,233  |   |   |           | 1,046  | 
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|Total other expenses                                 |                                                |   | 3,591              |       |                   |   | 2,485     |       |      |   | 10,471    |        |   |   | 7,430     |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|Income before income taxes                           |                                                |   | 2,267              |       |                   |   | 1,485     |       |      |   | 6,206     |        |   |   | 4,924     |       
|Income taxes                                         |                                                |   | 929                |       |                   |   | 621       |       |      |   | 2,550     |        |   |   | 2,058     |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|NET INCOME                                           |                                                | $ | 1,338              |       |                   | $ | 864       |       |      | $ | 3,656     |        |   | $ | 2,866     |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|Basic earnings per share                             |                                                | $ | .40                |       |                   | $ | .26       |       |      | $ | 1.09      |        |   | $ | .87       |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|Diluted earnings per share                           |                                                | $ | .38                |       |                   | $ | .25       |       |      | $ | 1.05      |        |   | $ | .85       |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|Basic weighted average shares outstanding            |                                                |   | 3,354,336          |       |                   |   | 3,354,336 |       |      |   | 3,354,336 |        |   |   | 3,310,020 |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       
|Diluted weighted average shares outstanding          |                                                |   | 3,484,511          |       |                   |   | 3,427,272 |       |      |   | 3,484,511 |        |   |   | 3,382,956 |       
|                                                     |                                                |   |                    |       |                   |   |           |       |      |   |           |        |   |   |           |       

The accompanying notes are an integral part of these statements.

4



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##### 



HARRINGTON WEST FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
AND COMPREHENSIVE INCOME

|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |       | 
|------------------------------------------------------------- | ---------- |  | ------------ |  | ------- | - | -------- |  | ------------- | - | ---------- |  | ------------- | - | ------ | ----- |  | - | ------ | ----- | ----------- | - | ------ | - |  | - | ------ | ----- | 
|                                                              |            |  |              |  |         |   |          |  |               |   | Additional |  |               |   |        |       |  |   |        |       | Accumulated |   | Total 
|                                                              |            |  | Common Stock |  | Paid-in |   | Retained |  | Comprehensive |   | Other      |  | Shareholders'
|                                                              |            |  | Stock        |  | Amt     |   | Capital  |  | Earnings      |   | Income     |  | Comprehensive |   | Equity
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  | Income        |   |       
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |       
|Balance, December 31, 2000                                    |            |  | 3,246,789    |  |         | $ | 33       |  |               | $ | 19,573     |  |               | $ | 5,726  |       |  | $ | 0      |       |             | $ | 225    |   |  | $ | 25,557 |      
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|Comprehensive income:                                         |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|                                                              | Net income |  |              |  |         |   |          |  |               |   |            |  |               |   |        | 3,802 |  |   | $      | 3,802 |             |   |        |   |  |   |        | 3,802 | 
|Other comprehensive income net of tax                         |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|Unrealized gains on securities                                |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   | 912    |       |             |   | 912    |   |  |   | 912    |      
|Effective portion of change in
fair value of cash flow hedges |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   | (507   | )     |             |   | (507   | ) |  |   | (507   | )    
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|Total comprehensive income                                    |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  | $ | 4,207  |       |             |   |        |   |  |   |        |      
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|Dividends on common stock                                     |            |  |              |  |         |   |          |  |               |   |            |  |               |   | (353   | )     |  |   |        |       |             |   |        |   |  |   | (353   | )    
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|Stock options                                                 |            |  | 107,547      |  |         |   | 1        |  |               |   | 732        |  |               |   |       |       |  |   |       |       |             |   |       |   |  |   | 733    |      
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|Balance, December 31, 2001                                    |            |  | 3,354,336    |  |         |   | 34       |  |               |   | 20,305     |  |               |   | 9,175  |       |  |   |        |       |             |   | 630    |   |  |   | 30,144 |      
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|Comprehensive income:                                         |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|                                                              | Net income |  |              |  |         |   |          |  |               |   |            |  |               |   |        | 3,656 |  |   | $      | 3,656 |             |   |        |   |  |   |        | 3,656 | 
|Other comprehensive income
 net of tax                        |            |  |              |  |         |   |          |  |               |   |            |  |               |   |       |       |  |   |        |       |             |   |        |   |  |   |        |      
|Unrealized gains on securities                                |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   | 1,010  |   |  |   | 1,010  |      
|Effective portion of change in
fair value of cash flow hedges |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   | (3,075 | )     |             |   | (3,075 | ) |  |   | (3,075 | )    
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|Total comprehensive income                                    |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  | $ | 581    |       |             |   |        |   |  |   |        |      
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|Dividends on common stock                                     |            |  |              |  |         |   |          |  |               |   |            |  |               |   | (291   | )     |  |   |        |       |             |   |        |   |  |   | (291   | )    
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      
|Balance, September 30, 2002                                   |            |  | 3,354,336    |  |         | $ | 34       |  |               | $ | 20,305     |  |               | $ | 12,540 |       |  | $ | 0      |       |             | $ | (1,435 | ) |  | $ | 31,444 |      
|                                                              |            |  |              |  |         |   |          |  |               |   |            |  |               |   |        |       |  |   |        |       |             |   |        |   |  |   |        |      

The accompanying notes are an integral part of these statements.

5



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##### 



HARRINGTON WEST FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars in thousands

---

|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                   |   |   |          |  
|------------------------------------------------- | --------------------------------------------------------------- | -------------------------------- | --------------------------------------------- | ------------------------------------------------------------------------- | - | ----------------- | -------- | ----------------- | - | - | -------- | -
|                                                  |                                                                 |                                  |                                               |                                                                           |   | Nine months ended |          | Nine months ended
|                                                  |                                                                 |                                  |                                               |                                                                           |   | September 30,     |          | September 30,    
|                                                  |                                                                 |                                  |                                               |                                                                           |   | 2002              |          | 2001             
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|CASH FLOWS FROM OPERATING ACTIVITIES:             |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|                                                  | Net income                                                      |                                  | $                                             | 3,656                                                                     |   |                   | $        | 2,866             |  
|                                                  | Adjustments to reconcile net income                             |                                  |                                               |                                                                           |   |                   |          |                   |  
|                                                  |                                                                 |                                  | To net cash provided by operating activities: |                                                                           |   |                   |          |                   |   |   |         
|                                                  |                                                                 |                                  |                                               | Accretion of deferred loan fees and costs                                 |   |                   | (733     | )                 |   |   | (688     | )
|                                                  |                                                                 |                                  |                                               | Depreciation and amortization                                             |   |                   | 672      |                   |   |   | 537      |  
|                                                  |                                                                 |                                  |                                               | Amortization of premiums and discounts on loans
receivable and securities |   |                   | 2,992    |                   |   |   | 907      |  
|                                                  |                                                                 |                                  |                                               | Provision for loan losses                                                 |   |                   | 325      |                   |   |   | 1        |  
|                                                  |                                                                 |                                  |                                               | Activity in securities held for trading                                   |   |                   | 747      |                   |   |   | (87      | )
|                                                  |                                                                 |                                  |                                               | (Gain) loss on sale of loans                                              |   |                   | 0        |                   |   |   | 69       |  
|                                                  |                                                                 |                                  |                                               | Stock-based compensation                                                  |   |                   | 0        |                   |   |   | 106      |  
|                                                  |                                                                 |                                  |                                               | FHLB stock dividend                                                       |   |                   | (205     | )                 |   |   | (316     | )
|                                                  |                                                                 |                                  |                                               | (Increase) decrease in accrued interest receivable                        |   |                   | (112     | )                 |   |   | (909     | )
|                                                  |                                                                 |                                  |                                               | (Decrease) increase in income taxes payable                               |   |                   | (107     | )                 |   |   | 200      |  
|                                                  |                                                                 |                                  |                                               | Deferred income taxes                                                     |   |                   | (1,992   | )                 |   |   | (936     | )
|                                                  |                                                                 |                                  |                                               | Decrease in prepaid expenses and other assets                             |   |                   | 129      |                   |   |   | 500      |  
|                                                  |                                                                 |                                  |                                               | Increase in accounts payable                                              |   |                   | 2,007    |                   |   |   | 2,156    |  
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|                                                  |                                                                 |                                  |                                               | Net cash provided by operating activities                                 |   |                   | 7,379    |                   |   |   | 4,406    |  
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|CASH FLOWS FROM INVESTING ACTIVITIES:             |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|                                                  | Net (increase) decrease in loans receivable                     |                                  |                                               | 28,183                                                                    |   |                   |          | (6,521            | )
|                                                  | Proceeds from sale of loans                                     |                                  |                                               | 0                                                                         |   |                   |          | 27,471            |  
|                                                  | Proceeds from matured and called securities held to maturity    |                                  |                                               | 138                                                                       |   |                   |          | 96                |  
|                                                  | Proceeds from sales of securities available for sale            |                                  |                                               | 0                                                                         |   |                   |          | 19,712            |  
|                                                  | Purchases of securities held to maturity                        |                                  |                                               | 0                                                                         |   |                   |          | (2,055            | )
|                                                  | Purchases of securities available for sale                      |                                  |                                               | (201,360                                                                  | ) |                   |          | (195,626          | )
|                                                  | Principal paydowns on securities available for sale             |                                  |                                               | 66,133                                                                    |   |                   |          | 27,748            |  
|                                                  | Proceeds from sale of real estates acquired through foreclosure |                                  |                                               | 0                                                                         |   |                   |          | 2,000             |  
|                                                  | Purchase of premises and equipment                              |                                  |                                               | (974                                                                      | ) |                   |          | (768              | )
|                                                  | Purchase of FHLB stock                                          |                                  |                                               | (2,410                                                                    | ) |                   |          | (1,537            | )
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|                                                  |                                                                 |                                  |                                               | Net cash used in investing activities                                     |   |                   | (110,290 | )                 |   |   | (129,480 | )
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|CASH FLOWS FROM FINANCING ACTIVITIES:             |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|                                                  | Net (decrease) increase in deposits                             |                                  |                                               | (9,564                                                                    | ) |                   |          | 75,511            |  
|                                                  | Decrease in securities sold under agreements to repurchase      |                                  |                                               | 210                                                                       |   |                   |          | 0                 |  
|                                                  | Increase in FHLB advances                                       |                                  |                                               | 112,597                                                                   |   |                   |          | 49,403            |  
|                                                  | Advances on note payable                                        |                                  |                                               | 2,800                                                                     |   |                   |          | 1,000             |  
|                                                  | Exercise of stock options on common stock                       |                                  |                                               | 0                                                                         |   |                   |          | 627               |  
|                                                  | Dividends paid on common stock                                  |                                  |                                               | (291                                                                      | ) |                   |          | (264              | )
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|                                                  |                                                                 |                                  |                                               | Net cash provided by financing activities                                 |   |                   | 105,752  |                   |   |   | 126,277  |  
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|NET INCREASE IN CASH AND CASH EQUIVALENTS         |                                                                 |                                  | 2,841                                         |                                                                           |   |                   | 1,203    |                  
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD    |                                                                 |                                  | 11,107                                        |                                                                           |   |                   | 13,304   |                  
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|CASH AND CASH EQUIVALENTS, END OF PERIOD          |                                                                 | $                                | 13,948                                        |                                                                           |   | $                 | 14,507   |                  
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|                                                  |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |                                                                 |                                  |                                               |                                                                           |   |                   |          |                  
|                                                  |                                                                 | Cash paid during the period for: |                                               |                                                                           |   |                   |          |                   |   |  
|                                                  |                                                                 |                                  |                                               | Interest                                                                  |   | $                 | 16,113   |                   |   | $ | 20,317   |  
|                                                  |                                                                 |                                  |                                               | Income taxes                                                              |   |                   | 3,100    |                   |   |   | 2,552    |  

The accompanying notes are an integral part of these statements.

6



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##### 



HARRINGTON WEST FINANCIAL GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



| | 1. |  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
| | -- |  | ------------------------------------------

Business of the Company Harrington West Financial Group, Inc. (the Company)
is a savings and loan holding company incorporated on August 29, 1995 to
acquire and hold all of the outstanding common stock of Los Padres Bank (the
Bank), a federally chartered savings bank which operates 10 branches serving
individuals and small to medium-sized businesses. Nine banking facilities are
operated on the California Central Coast, and one banking facility is located
in Shawnee Mission, Kansas, and operated as a division under the Harrington
Bank brand.

On November 3, 2001, the Bank purchased from Harrington Bank, FSB, a $75
million bank located in Shawnee Mission, Kansas, in the heart of the Kansas
City metropolis.

In August 2002, the Bank entered into a joint venture agreement with Market
Resources, Inc., the owner of numerous ReMax brokerage agencies in the Phoenix
and Scottsdale, Arizona, metropolitan areas. Under the agreement, the Bank
established Los Padres Mortgage, LLC as a 51%-owned mortgage-banking
subsidiary. Los Padres Mortgage, LLC originates single-family residential and
commercial real estate loans primarily for sale to third party investors. The
Bank also has the opportunity to purchase select single-family and commercial
real estate loans from Los Padres Mortgage LLC for its portfolio. Los Padres
Mortgage LLC began operations in September 2002.

Basis of Presentation The unaudited consolidated financial statements are
condensed and do not contain all information required by accounting principles
generally accepted in the United States of America (generally accepted
accounting principles) to be included in a full set of financial statements.
The condensed consolidated financial statements include the Company and the
accounts of its wholly owned subsidiaries.

On February 1, 1999, the Bank purchased a 49% interest in Harrington Wealth
Management Company (HWMC). HWMC offers trust and investment management
services to the customers of Los Padres Bank. On October 31, 2001, Los Padres
Bank purchased the remaining 51% interest in HWMC. Prior to October 31, 2001,
this investment was accounted for using the equity method. Beginning in
November 2001, HWMC became a wholly-owned subsidiary of the Bank and is
consolidated into the Bank's financial statements.

All intercompany balances and transactions have been eliminated. Certain
reclassifications have been made to make information comparable between years.
The information furnished reflects all adjustments, which in the opinion of
management are necessary for a fair statement of the financial position and the
results of the operations of the Company. All such adjustments are of a normal
and recurring nature.

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

The unaudited consolidated interim financial statements of the Company and
subsidiaries presented herein should be read in conjunction with the
consolidated financial statements of the Company for the year ended December
31, 2001, included in the Registration Statement on Form S-1, as last amended,
as filed with the Securities and Exchange Commission on November 1, 2002 and
declared effective on November 4, 2002 (the Registration Statement).

7



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##### 





|2. |  | Earnings per Share
|-- |  | ------------------

The following tables represent the calculation of earnings per share (EPS)
for the periods presented.

|                                 |  |                                       |       |                                      |  |           |           |             |  |               |      |           |  |   |       |  |  |  |           |  |  |   |      |  
|-------------------------------- |  | ------------------------------------- | ----- | ------------------------------------ |  | --------- | --------- | ----------- |  | ------------- | ---- | --------- |  | - | ----- |  |  |  | --------- |  |  | - | ---- | -
|                                 |  | Three months ended September 30, 2002 |       | Nine months ended September 30, 2002
|                                 |  |                                       |       |                                     
|                                 |  | Income                                |       | Shares                               |  | Per-Share |           | Income      |  | Shares        |      | Per-Share
|                                 |  | (Numerator)                           |       | (Denominator)                        |  | Amount    |           | (Numerator) |  | (Denominator) |      | Amount   
|Basic EPS                        |  | $                                     | 1,338 |                                      |  |           | 3,354,336 |             |  | $             | .40  |           |  | $ | 3,656 |  |  |  | 3,354,336 |  |  | $ | 1.09 |  
|Effect of dilutive
stock options |  |                                       |       |                                      |  |           | 130,175   |             |  |               | (.02 | )         |  |   |       |  |  |  | 130,175   |  |  |   | (.04 | )
|                                 |  |                                       |       |                                      |  |           |           |             |  |               |      |           |  |   |       |  |  |  |           |  |  |   |      |  
|Diluted EPS                      |  | $                                     | 1,338 |                                      |  |           | 3,484,511 |             |  | $             | .38  |           |  | $ | 3,656 |  |  |  | 3,484,511 |  |  | $ | 1.05 |  
|                                 |  |                                       |       |                                      |  |           |           |             |  |               |      |           |  |   |       |  |  |  |           |  |  |   |      |  

|                                 |  |                                       |     |                                      |  |           |           |             |  |               |      |           |  |   |       |  |  |  |           |  |  |   |      |  
|-------------------------------- |  | ------------------------------------- | --- | ------------------------------------ |  | --------- | --------- | ----------- |  | ------------- | ---- | --------- |  | - | ----- |  |  |  | --------- |  |  | - | ---- | -
|                                 |  | Three months ended September 30, 2001 |     | Nine months ended September 30, 2001
|                                 |  |                                       |     |                                     
|                                 |  | Income                                |     | Shares                               |  | Per-Share |           | Income      |  | Shares        |      | Per-Share
|                                 |  | (Numerator)                           |     | (Denominator)                        |  | Amount    |           | (Numerator) |  | (Denominator) |      | Amount   
|                                 |  |                                       |     | (unaudited)                          |  |           |           |             |  | (unaudited)   |      |          
|Basic EPS                        |  | $                                     | 864 |                                      |  |           | 3,354,336 |             |  | $             | .26  |           |  | $ | 2,866 |  |  |  | 3,310,020 |  |  | $ | .87  |  
|Effect of dilutive
stock options |  |                                       |     |                                      |  |           | 72,936    |             |  |               | (.01 | )         |  |   |       |  |  |  | 72,936    |  |  |   | (.02 | )
|                                 |  |                                       |     |                                      |  |           |           |             |  |               |      |           |  |   |       |  |  |  |           |  |  |   |      |  
|Diluted EPS                      |  | $                                     | 864 |                                      |  |           | 3,427,272 |             |  | $             | .25  |           |  | $ | 2,866 |  |  |  | 3,382,956 |  |  | $ | .85  |  
|                                 |  |                                       |     |                                      |  |           |           |             |  |               |      |           |  |   |       |  |  |  |           |  |  |   |      |  



|3. |  | Subsequent Event
|-- |  | ----------------

Pursuant to the Registration Statement, 1,120,000 shares of the Companys
common stock was sold, of which 973,615 shares were sold by the Company and
146,385 shares were sold in the aggregate by selling stockholders. The net offering
proceeds to the Company were approximately $10.2 million. The Company incurred
expenses of approximately $1.5 million, consisting of approximately $800,000 in
underwriting discounts and commissions and approximately $700,000 in other
expenses related to the offering.

8



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##### 



Item 2: Managements Discussion and Analysis

General

Harrington West Financial Group, Inc. (the Company) is a diversified,
community-based, financial institution holding company headquartered in
Solvang, California with its executive offices in Overland Park, Kansas.
The Company conducts operations primarily through Los Padres Bank, FSB, a
federally chartered savings bank, and its division in the Kansas City
metropolitan area, Harrington Bank.

The Company is focused on providing its diversified products and
personalized service approach in three distinct markets: (i) the central coast
of California, (ii) the Kansas City metropolitan area and (iii) the
Phoenix/Scottsdale metropolitan area. The Company has nine offices on the
central coast of California, one office in Mission, Kansas and a new community
banking office in the Phoenix/Scottsdale, Arizona metropolitan area which
opened in November 2002. It has also established in the September 2002
quarter, Los Padres Mortgage, LLC, a mortgage banking company, which is
engaged in a joint venture with the largest RE/MAX franchise in Arizona, to
originate single-family residential and commercial real estate loans in the
Phoenix/Scottsdale metropolitan area. The Company will open a second office in
the Kansas City metropolitan area in the latter half of 2003. Each of the
Companys markets has its own local independent management team operating under
the Los Padres or Harrington names. The Companys loan underwriting, corporate
administration, and treasury functions are centralized in Solvang, California
to create operating efficiencies.

Los Padres Bank provides an array of financial products and services for
businesses and retail customers by attracting deposits from individuals and
businesses and using these deposits, together with borrowed funds, to originate
single-family and multi-family residential, commercial real estate, commercial
business and consumer loans.

The Company also maintains a portfolio of highly liquid mortgage-backed
and related securities as a means of managing its excess liquidity and
enhancing its profitability. The Company utilizes various interest rate
contracts as a means of managing its interest rate risk. The Company also
operates Harrington Wealth Management Company, which provides trust and
investment management services to individuals and small institutional clients,
by employing a customized asset allocation approach and investing predominantly
in low fee, indexed mutual funds.

On November 12, 2002, the Company completed its initial public offering.
An aggregate of 1,120,000 shares were sold to the public at $12.00 per share,
comprised of 973,615 shares sold by the Company and 146,385 shares sold by
certain stockholders of the Company.

Financial Condition

The Companys total assets increased to $781.3 million at September 30,
2002, as compared to $670.3 million at December 31, 2001, an increase of $111.0
million or 16.6%. The increase was primarily attributable to an increase in
securities classified as available for sale to $314.8 million at September 30,
2002, as compared to $181.6 million at December 31, 2001, an increase of $133.1
million or 73.3%. The Company increased its portfolio of such securities due
to favorable market opportunities during the nine months ended September 30,
2002. The increase in the Companys available for sale securities portfolio
was primarily funded by a $112.6 million or 116.8% increase in advances from
the Federal Home Loan Bank (FHLB) of San Francisco. This increase in
securities classified as available for sale was partially offset by a decline
in the Companys net loans receivable, from $449.7 million at December 31, 2001
to $421.3 million at September 30, 2002, a decrease of $28.4 million or 6.3%.

9



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##### 



Notwithstanding this decrease, the Companys multi-family residential and
commercial real estate loans and commercial and industrial loans increased as a
percent of total loans from 56.7% at December 31, 2001 to 59.9% at September
30, 2002.

Total deposits decreased to $510.6 million as of September 30, 2002 from
$520.9 million as of December 31, 2001, a decrease of $10.3 million or
approximately 2.0%. The decrease in deposits was attributable to the loss of
some higher costing deposits as the Company focused on reducing deposit costs
and increasing transaction accounts.

Stockholders equity increased to $31.4 million at September 30, 2002 from
$30.1 million at December 31, 2001, an increase of $1.3 million or 4.3%. The
increase in stockholders equity was due primarily to net income recognized
during the nine months ended September 30, 2002. The Companys stockholders
equity was also affected by unrealized gains and losses on securities and
interest rate contracts and dividends paid on the Companys common stock.

Results of Operations

The Company reported net income of $3.7 million for the nine months ended
September 30, 2002, as compared to $2.9 million for the nine months ended
September 30, 2001, an increase of $790,000 or 27.6%. The Company reported net
income of $1.3 million for the three months ended September 30, 2002, as
compared to $864,000 for the three months ended September 30, 2001, an increase
of $474,000 or 54.9%. The increases in net income during the nine and three
month periods primarily reflected significant increases in net interest income
and miscellaneous other income, which were partially offset by increases in
total other expenses during such periods. On a diluted earnings per share
basis, the Company earned $1.05 and $0.38 for the nine and three months ended
September 30, 2002, as compared to $0.85 and $0.25 for the nine and three
months ended September 30, 2001.

The Companys net interest income after provision for loan losses
increased by $4.4 million or 38.7% to $15.6 million during the nine months
ended September 30, 2002 and increased by $1.6 million or 38.9% to $5.6 million
during the three months ended September 30, 2002, in each case, over the prior
comparable periods in 2001. The increase in the Companys net interest income
during the nine and three month periods reflected the continued growth in its
earning assets and its increased focus on higher spread-earning loans,
primarily commercial and industrial and commercial real estate and multi-family
residential real estate loans. In addition, the Company recognized a 41 basis
point increase in its interest rate spread during the nine months ended
September 30, 2002 and a 44 basis point increase in its interest rate spread
during the three months ended September 30, 2002, in each case, when compared
to the same periods in 2001. The increases in the interest rate spread
reflected the change in the Companys loan mix to higher spread-earning loans
and, to a lesser extent, the benefit of the Companys liabilities repricing
faster than its assets as market interest rates declined.

The Company increased its provisions for loan losses by $324,000 during
the nine months ended September 30, 2002 and by $50,000 during the three months
ended September 30, 2002, in each case, as compared to the same periods in
2001. These provisions reflect the required reserves based upon, among other
things, the Companys analysis of the composition, credit quality and growth of
its commercial real estate and commercial and industrial loan portfolios. At
September 30, 2002, the Companys non-performing assets amounted to $2.2
million or 0.51% of total loans, as compared to $497,000 or 0.11% of total
loans as of December 31, 2001.

The Company reported interest income of $32.6 million for the nine months
ended September 30, 2002, as compared to $30.5 million for the nine months
ended September 30, 2001, an increase of $2.0 million or 6.7%. The primary
reason for the increase during the period was the increase in earning assets
in the period. The Company reported interest income of $11.1 million for the
three months ended September 30, 2002, an increase of $500,000 or 4.7% over the
interest income of $10.6 million for the three months ended September 30, 2001.
The primary reason for this increase was also the increase in earning assets
during the period.

10



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##### 



Total interest expense decreased by $2.6 million or 13.8% during the nine
months ended September 30, 2002 over the comparable period in 2002, from $19.2
million to $16.6 million. Total interest expense decreased $1.1 million or
17.3% during the three months ended September 30, 2002 over the comparable
period, from $6.5 million to $5.4 million. The decrease in interest expense
during both periods was attributable to a decrease in the average yield on
interest-bearing liabilities as a result of the repricing of interest costing
liabilities during the respective periods, which more than compensated for the
increased volume of interest-bearing liabilities.

The Companys total other income amounted to $1.0 million during both the
nine months ended September 30, 2002 and 2001 and $217,000 during the three
months ended September 30, 2002, as compared to $(92,000) during the three
months ended September 30, 2001. Miscellaneous other income, consisting
primarily of fee income from wholesale banking, trust services and deposits and
loans, increased by 90.6% to $1.2 million for the nine months ended September
30, 2002, as compared to $627,000 for the nine months ended September 30, 2001,
due to the growth of the Companys mortgage banking business and the fully
consolidated results for the Companys trust operations. Miscellaneous other
income increased by 10.4% to $286,000 for the three months ended September 30,
2002 from $259,000 for the three months ended September 30, 2001 due to the
growth in banking fee income. During the nine and three months ended September
30, 2002, miscellaneous other income included a $160,000 charge relating to the
write-off of computer equipment in connection with an operating system upgrade.
Excluding such charge, miscellaneous other income would have amounted to $1.4
million for the nine months ended September 30, 2002 and $446,000 for the three
months ended September 30, 2002. Total other income was also impacted by gains
and losses from trading account assets which fluctuate based upon changes in
market spreads.

The Companys total other expenses totaled $10.5 million during the nine
months ended September 30, 2002, an increase of $3.0 million or 40.9%, as
compared to the same period in 2001. The Companys total other expenses
totaled $3.6 million during the three months ended September 30, 2002, an
increase of $1.1 million or 44.5%, as compared to the same period in 2001.
During both the three and nine month periods ended September 30, 2002, the
increase in salaries and employee benefits over the comparable periods was
primarily due to an increase in the number of employees due to the opening of a
new California branch office in Nipomo, California in July 2001 and the
acquisition of the Harrington Bank of Kansas branch in November 2001, together
with the Companys general growth in operations. During both the three and
nine month periods ended September 30, 2002, the increase in premises and
equipment expense over the comparable periods was due to the branch openings
and acquisition of the Kansas banking operation. During both the three and
nine month periods ended September 30, 2002, the increase in other expenses
over the comparable periods, consisting primarily of computer services and
consulting fees, was due to the Companys general growth over the periods.

Liquidity and Capital Resources

Liquidity.The liquidity of Los Padres Bank, as measured by the ratio of
cash, cash equivalents (not committed, pledged or required to liquidate
specific liabilities), investments and qualifying mortgage-backed securities to
the sum of total deposits plus borrowings payable within one year, was 8.9% at
September 30, 2002. At September 30, 2002, Los Padres Banks liquid assets
totaled approximately $28.9 million.

The Companys liquidity, represented by cash and cash equivalents, is a
product of its operating, investing and financing activities. The Companys
primary sources of internal liquidity consist of deposits, prepayments and
maturities of outstanding loans and mortgage-backed and related securities,
maturities of short-term investments, sales of mortgage-backed and related
securities and funds provided from operations. The Companys external sources
of liquidity consist of borrowings, primarily advances from the FHLB of San
Francisco and a revolving line of credit loan facility which it maintains with
two banks. At September 30, 2002, the Company had $209.0 million in FHLB
advances and had $64.5 million of additional borrowing capacity with the FHLB
of San Francisco. At September 30, 2002, the

11



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Companys note payable under its revolving line of credit amounted to
$20.8 million and the Company had $4.2 million of additional borrowing
capacity under this loan facility.

On September 17, 2002, the terms of the Companys line of credit under its
loan facility were renegotiated to expand the revolving line of credit
commitment from $20 million to $25 million, and modify certain covenants.
Specifically, the covenant that restricts our ability to invest in mortgage
derivative securities has been revised to allow us to maintain a larger balance
as of the last day of the month. The covenant that restricts payment of cash
dividends has been revised to allow us to pay dividends in an aggregate amount
not to exceed the greater of (a) $300 during any fiscal quarter, or (b) up to a
maximum of 25% of consolidated net income for the quarter. Additionally, the
minimum core profitability requirements have been slightly increased, and a new
covenant requiring a ratio of non-performing assets to stockholders equity
plus loan loss reserves to not exceed .3 to 1 has been added.

Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally used to pay down short-term
borrowings. On a longer-term basis, the Company maintains a strategy of
investing in various mortgage-backed and related securities and loans. At
September 30, 2002, the total approved loan commitments outstanding amounted to
$75.3 million. Certificates of deposit scheduled to mature in one year or
less at September 30, 2002 totaled $285.2 million and FHLB borrowings that
are scheduled to mature within the same period amounted to $134.0 million.
Management believes that the Company has adequate resources to fund all of its
commitments and that the Company could either adjust the rate of certificates
of deposit in order to retain deposits in changing interest rate environments
or replace such deposits with advances from the FHLB of San Francisco if it
proved to be cost-effective to do so.

A substantial source of the Companys income from which it services its
debt, pays its obligations and from which the Company can pay dividends is the
receipt of dividends from Los Padres Bank. The availability of dividends from
Los Padres Bank is limited by various statutes and regulations. At September
30, 2002, Los Padres Bank was permitted to pay up to $1.4 million of
dividends to the Company. In order to make such dividend payment, Los Padres
Bank is required to provide 30 days advance notice to the Office of Thrift
Supervision (OTS), during which time the OTS may object to such dividend
payment. It is possible, depending upon the financial condition of Los Padres
Bank, and other factors, that the OTS could object to the payment of dividends
by Los Padres Bank on the basis that the payment of such dividends is an unsafe
or unsound practice. In addition, the Companys ability to pay dividends is
restricted under its revolving loan facility.

Capital Resources.Federally insured savings institutions such as Los
Padres Bank are required to maintain minimum levels of regulatory capital.
Under applicable regulations, an institution is well capitalized if it has a
total risk-based capital ratio of at least 10.0%, a Tier 1 risk-based capital
ratio of at least 6.0% and a leverage ratio of at least 5.0%, with no written
agreement, order, capital directive, prompt corrective action directive or
other individual requirement by the OTS to maintain a specific capital measure.
An institution is adequately capitalized if it has a total risk-based capital
ratio of at least 8.0% and a Tier 1 risk-based capital ratio of at least 4.0%
and a leverage ratio of at least 4.0% (or 3.0% if it has a composite rating of
1). The regulation also establishes three categories for institutions with
lower ratios: undercapitalized, significantly undercapitalized and critically
undercapitalized. At September 30, 2002, Los Padres Bank met the capital
requirements of a well capitalized institution under applicable OTS
regulations.

In addition, due to the Companys business strategy which has concentrated
on growth of lending operations, a shift in the Companys lending focus to more
commercial lending, and the size of the Companys securities portfolio
activities, the Company has informally agreed with the OTS that Los Padres Bank
will maintain a total risk-based capital ratio and a leverage capital ratio of
at least 11% and 6%, respectively, which is in excess of the OTS minimum
regulatory requirements. Management does not believe that Los Padres Banks
agreement with the OTS to maintain increased ratios of total risk-based and
leverage capital will limit or restrict the Companys operations. At September
30, 2002, Los Padres Bank was in compliance with these additional requirements.
To the extent that Los Padres

12



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Bank fails to comply with these additional increased capital ratios, the
OTS could take such failure to comply into consideration in connection with
further requests to have Los Padres Bank pay dividends to the Company and in
additional future branch applications. Los Padres Banks failure to comply
could also impact its overall assessment by the OTS in future regulatory
examinations, which, if adverse, could also impact its FDIC insurance
assessment.

Asset and Liability Management

In general, financial institutions are negatively affected by an increase
in interest rates to the extent that interest-bearing liabilities mature or
reprice more rapidly than interest-earning assets. The lending activities of
savings institutions have historically emphasized the origination of long-term,
fixed-rate loans secured by single-family residences, and the primary source of
funds of such institutions has been deposits, which largely mature or are
subject to repricing within a shorter period of time. This factor has
historically caused the income and market value of portfolio equity (MVPE),
of savings institutions to be more volatile than other financial institutions.

MVPE is defined as the net present value of the cash flows from an
institutions existing assets, liabilities and off-balance sheet instruments.
The MVPE is estimated by valuing our assets, liabilities and off-balance sheet
instruments under various interest rate scenarios. The extent to which assets
gain or lose value in relation to the gains or losses of liabilities determines
the appreciation or depreciation in equity on a market value basis. MVPE
analysis is intended to evaluate the impact of immediate and sustained interest
rate shifts of the current yield curve upon the market value of the current
balance sheet. While having liabilities that reprice more frequently than
assets is generally beneficial to net interest income and MVPE in times of
declining interest rates, such an asset/liability mismatch is generally
detrimental during periods of rising interest rates.

The Companys management believes that its asset and liability management
strategy, as discussed below, provides it with a competitive advantage over
other financial institutions. The Company believes that its ability to hedge
its interest rate exposure through the use of various interest rate contracts
provides it with the flexibility to acquire loans structured to meet its
customers preferences and investments that provide attractive net
risk-adjusted spreads, regardless of whether the customers loan or our
investment is fixed-rate or adjustable-rate or short-term or long-term.
Similarly, the Company can choose a cost-effective source of funds and
subsequently engage in an interest rate swap or other hedging transaction so
that the interest rate sensitivities of its interest-earning assets and
interest-bearing liabilities are more closely matched.

The Companys asset and liability management strategy is formulated and
monitored by the board of directors of Los Padres Bank. The Boards written
policies and procedures are implemented by the Asset and Liability Committee of
Los Padres Bank (ALCO), which is comprised of Los Padres Banks chief
executive officer, president, chief financial officer, controller and four
non-employee directors of Los Padres Bank. The ALCO meets at least eight times
a year to review the sensitivity of Los Padres Banks assets and liabilities to
interest rate changes, investment opportunities, the performance of the
investment portfolios, and prior purchase and sale activity of securities. The
ALCO also provides guidance to management on reducing interest rate risk and on
investment strategy and retail pricing and funding decisions with respect to
Los Padres Banks overall asset and liability composition. The ALCO reviews
Los Padres Banks liquidity, cash flow needs, interest rate sensitivity of
investments, deposits and borrowings, core deposit activity, current market
conditions and interest rates on both a local and national level in connection
with fulfilling its responsibilities.

The ALCO regularly reviews interest rate risk with respect to the impact
of alternative interest rate scenarios on net interest income and on Los Padres
Banks MVPE. The Asset and Liability Committee also reviews analyses
concerning the impact of changing market volatility, prepayment forecast error,
and changes in option-adjusted spreads and non-parallel yield curve shifts.

13



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In the absence of hedging activities, the Companys MVPE would decline as
a result of a general increase in market rates of interest. This decline would
be due to the market values of the Companys assets being more sensitive to
interest rate fluctuations than are the market values of its liabilities due to
its investment in and origination of generally longer-term assets which are
funded with shorter-term liabilities. Consequently, the elasticity (i.e.,the
change in the market value of an asset or liability as a result of a change in
interest rates) of the Companys assets is greater than the elasticity of its
liabilities.

Accordingly, the primary goal of the Companys asset and liability
management policy is to effectively increase the elasticity of its liabilities
and/or effectively contract the elasticity of its assets so that the respective
elasticities are matched as closely as possible. This elasticity adjustment
can be accomplished internally by restructuring the balance sheet or externally
by adjusting the elasticities of assets and/or liabilities through the use of
interest rate contracts. The Companys strategy is to hedge either internally
through the use of longer-term certificates of deposit or less sensitive
transaction deposits and FHLB advances or externally through the use of various
interest rate contracts.

External hedging generally involves the use of interest rate swaps, caps,
floors, options and futures. The notional amount of interest rate contracts
represents the underlying amount on which periodic cash flows are calculated
and exchanged between counterparties. However, this notional amount does not
necessarily represent the principal amount of securities that would effectively
be hedged by that interest rate contract.

In selecting the type and amount of interest rate contract to utilize, the
Company compares the elasticity of a particular contract to that of the
securities to be hedged. An interest rate contract with the appropriate
offsetting elasticity could have a notional amount much greater than the face
amount of the securities being hedged.

The Company adopted SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities,on January 1, 2001. SFAS No. 133 requires that an
entity recognize all interest rate contracts as either assets or liabilities in
the statement of financial condition and measure those instruments at fair
value. If certain conditions are met, an interest rate contract may be
specifically designated as a fair value hedge, a cash flow hedge, or a hedge of
foreign currency exposure. The accounting for changes in the fair value of an
interest rate contract (that is, gains and losses) depends on the intended use
of the interest rate contract and the resulting designation. To qualify for
hedge accounting, the Company must show that, at the inception of the interest
rate contracts and on an ongoing basis, the changes in the fair value of the
interest rate contracts are expected to be highly effective in offsetting
related changes in the cash flows of the hedged liabilities. The Company has
entered into various interest rate swaps for the purpose of hedging certain of
its short-term liabilities. These interest rate swaps qualify for hedge
accounting. Accordingly, the effective portion of the accumulated change in
the fair value of the cash flow hedges is recorded in a separate component of
stockholders equity, net of tax, while the ineffective portion is recognized
in earnings immediately. The Company has also entered into various interest
rate swaps which hedge a portion of its securities portfolio. These swaps do
not qualify for hedge accounting treatment and are included in the trading
account assets and are reported at fair value with realized and unrealized
gains and losses on these instruments recognized in income (loss) from trading
account assets.

Critical Accounting Policies

General.The financial information contained in the Companys
consolidated financial statements is, to a significant extent, based on
approximate measures of the financial effects of transactions and events that
have already occurred. A variety of factors could affect the ultimate value
that is obtained either when recognizing income or expense, recovering an asset
or relieving a liability. The Company uses historical loss factors to
determine the inherent loss that may be present in its loan portfolio. Actual
losses could differ significantly from these historical factors. As of
September 30, 2002, the Company has not created any special purpose entities to
securitize assets or to obtain off-balance sheet funding. Although the Company
has sold loans in the past two years, those loans have been sold to third
parties without recourse, subject to customary representations and warranties.

14



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Allowance for loan losses.The allowance for loan losses is an estimate
of the losses that may be sustained in the Companys loan portfolio. The
allowance is based on two principles of accounting: (i) Statement of Financial
Accounting Standards, or SFAS, No. 5, Accounting for Contingencies, which
requires that losses be accrued when they are probable of occurring and
estimable; and (ii) SFAS No. 114, Accounting by Creditors for Impairment of a
Loan and SFAS No. 118, Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures, which requires that losses be accrued
based on the differences between the value of collateral, present value of
future cash flows or values that are observable in the secondary market and the
loan balance. The Companys allowance for loan losses has four components: (i)
an allocated allowance for specifically identified problem loans, (ii) a
formula allowance for non-homogenous loans, (iii) an allocated allowance for
large groups of smaller balance homogenous loans and (iv) an unallocated
allowance. Each of these components is determined based upon estimates that
can and do change when the actual events occur. The formula allowance uses a
model based on historical losses as an indicator of future losses and as a
result could differ from the losses incurred in the future; however, since this
history is updated with the most recent loss information, the differences that
might otherwise occur may be mitigated. The specific allowance uses various
techniques to arrive at an estimate of loss. Historical loss information,
discounted cash flows, fair market value of collateral and secondary market
information are all used to estimate those losses. The use of these values is
inherently subjective and actual losses could be greater or less than the
estimates. The unallocated allowance captures losses that are attributable to
various economic events, industry or geographic sectors whose impact on the
portfolio have occurred but have yet to be recognized in either the formula or
specific allowances.

Recent Legislation

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of
2002 (SOA). The stated goals of the SOA are to increase corporate
responsibility, to provide for enhanced penalties for accounting and auditing
improprieties at publicly traded companies and to protect investors by
improving the accuracy and reliability of corporate disclosures pursuant to the
securities laws.

The SOA is the most far-reaching U.S. securities legislation enacted in
some time. The SOA generally applies to all companies, both U.S. and non-U.S.,
that file or are required to file periodic reports with the Securities and
Exchange Commission (SEC), under the Securities Exchange Act of 1934 (the
Exchange Act). Given the extensive SEC role in implementing rules relating to
many of the SOAs new requirements, the final scope of these requirements
remains to be determined.

The SOA includes very specific additional disclosure requirements and new
corporate governance rules, requires the SEC and securities exchanges to adopt
extensive additional disclosure, corporate governance and other related rules
and mandates further studies of certain issues by the SEC and the Comptroller
General. The SOA represents significant federal involvement in matters
traditionally left to state regulatory systems, such as the regulation of the
accounting profession, and to state corporate law, such as the relationship
between a board of directors and management and between a board of directors
and its committees.

This SOA addresses, among other matters: audit committees; certification
of financial statements by the chief executive officer and the chief financial
officer; the forfeiture of bonuses and profits made by directors and senior
officers in the twelve month period covered by restated financial statements; a
prohibition on insider trading during pension plan black out periods;
disclosure of off-balance sheet transactions; a prohibition on personal loans
to directors and officers; expedited filing requirements for Forms 4s;
disclosure of a code of ethics and filing a Form 8-K for a change or waiver of
such code; real time filing of periodic reports; the formation of a public
accounting oversight board; auditor independence; and various increased
criminal penalties for violations of securities laws.

The SOA contains provisions which became effective upon enactment on July
30, 2002 and provisions which will become effective from within 30 days to one
year from enactment. The SEC has

15



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been delegated the task of enacting rules to implement various of the
provisions with respect to, among other matters, disclosure in periodic filings
pursuant to the Exchange Act.

Item 3: Quantitative and Qualitative Disclosures about Market Risk

The OTS requires each thrift institution to calculate the estimated change
in the institutions MVPE assuming an instantaneous, parallel shift in the
Treasury yield curve of 100 to 300 basis points either up or down in 100 basis
point increments. The OTS permits institutions to perform this MVPE analysis
using their own internal model based upon reasonable assumptions.

In estimating the market value of mortgage loans and mortgage-backed
securities, the Company utilizes various prepayment assumptions which vary, in
accordance with historical experience, based upon the term, interest rate and
other factors with respect to the underlying loans. At September 30, 2002,
these prepayment assumptions varied from 10% to 54% for fixed-rate mortgages
and mortgage-backed securities and varied from 9% to 36% for adjustable-rate
mortgages and mortgage-backed securities.

The following table sets forth at September 30, 2002 the estimated
sensitivity of Los Padres Banks MVPE to parallel yield curve shifts using the
Companys internal market value calculation. The table demonstrates the
sensitivity of the Companys assets and liabilities both before and after the
inclusion of its interest rate contracts.

|                                                                      |                                 |  |                                               |       |      |  |         |       |   |  |                        |       |      |  |      |  |  |  |         |       |   |  |         |       |   |  |         |        |  
|--------------------------------------------------------------------- | ------------------------------- |  | --------------------------------------------- | ----- | ---- |  | ------- | ----- | - |  | ---------------------- | ----- | ---- |  | ---- |  |  |  | ------- | ----- | - |  | ------- | ----- | - |  | ------- | ------ | -
|                                                                      |                                 |  | Change In Interest Rates (In Basis Points)(1)
|                                                                      |                                 |  |                                              
|                                                                      |                                 |  | -300                                          |       | -200 |  | -100    |       | - |  | +100                   |       | +200 |  | +300
|                                                                      |                                 |  |                                               |       |      |  |         |       |   |  |                        |       |      |  |     
|                                                                      |                                 |  |                                               |       |      |  |         |       |   |  | (Dollars in Thousands) |       |      |  |      |  |  |  |        
|Market value gain (loss) in assets                                    |                                 |  | 27,180                                        |       |      |  | 19,482  |       |   |  | 10,255                 |       |      |  |      |  |  |  | (12,289 | )     |   |  | (27,625 | )     |   |  | (45,688 | )     
|Market value gain (loss) of liabilities                               |                                 |  | (15,739                                       | )     |      |  | (12,419 | )     |   |  | (6,602                 | )     |      |  |      |  |  |  | 6,747   |       |   |  | 13,687  |       |   |  | 20,846  |       
|                                                                      |                                 |  |                                               |       |      |  |         |       |   |  |                        |       |      |  |      |  |  |  |         |       |   |  |         |       |   |  |         |       
|Market value gain (loss) of net assets
before interest rate contracts |                                 |  | 11,441                                        |       |      |  | 7,063   |       |   |  | 3,653                  |       |      |  |      |  |  |  | (5,542  | )     |   |  | (13,938 | )     |   |  | (24,842 | )     
|Market value gain (loss) of interest
rate contracts                   |                                 |  | (15,218                                       | )     |      |  | (9,870  | )     |   |  | (4,780                 | )     |      |  |      |  |  |  | 4,494   |       |   |  | 8,721   |       |   |  | 12,695  |       
|                                                                      |                                 |  |                                               |       |      |  |         |       |   |  |                        |       |      |  |      |  |  |  |         |       |   |  |         |       |   |  |         |       
|Total change in MVPE(2)                                               |                                 |  | (3,777                                        | )     |      |  | (2,807  | )     |   |  | (1,127                 | )     |      |  |      |  |  |  | (1,048  | )     |   |  | (5,217  | )     |   |  | (12,147 | )     
|                                                                      |                                 |  |                                               |       |      |  |         |       |   |  |                        |       |      |  |      |  |  |  |         |       |   |  |         |       |   |  |         |       
|Change in MVPE as a percent of:                                       |                                 |  |                                               |       |      |  |         |       |   |  |                        |       |      |  |      |  |  |  |         |       |   |  |         |       |   |  |         |       
|                                                                      | MVPE(2)                         |  |                                               | -6.21 | %    |  |         | -4.62 | % |  |                        | -1.85 | %    |  |      |  |  |  |         | -1.72 | % |  |         | -8.58 | % |  |         | -19.98 | %
|                                                                      | Total assets of Los Padres Bank |  |                                               | -.48  | %    |  |         | -.36  | % |  |                        | -.14  | %    |  |      |  |  |  |         | -.13  | % |  |         | -.67  | % |  |         | -1.56  | %



---

|(1) |  | Assumes an instantaneous parallel change in interest rates at all maturities.
|--- |  | -----------------------------------------------------------------------------
|   
|(2) |  | Based on the Companys pre-tax MVPE of $60.8 million at September 30, 2002.  

The table set forth above does not purport to show the impact of interest
rate changes on the Companys equity under generally accepted accounting
principles. Market value changes only impact the Companys income statement or
the balance sheet to the extent the affected instruments are marked to market,
and over the life of the instruments as an impact on recorded yields.

Item 4: Controls and Procedures

Within the 90 days prior to the date of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Companys management, including the Companys Chief Executive Officer along
with the Companys Chief Financial Officer, of the effectiveness of the design
and operation of the Companys disclosure controls and procedures pursuant to
Rule 13a-14 under the Exchange Act. Based upon that evaluation, the Companys
Chief Executive Officer along with the Companys Chief Financial Officer
concluded that the Companys disclosure controls and procedures are effective
in timely alerting them to material information relating to the Company

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(including its consolidated subsidiaries) required to be included in the
Companys periodic SEC filings. There have been no significant changes in the
Companys internal controls or in other factors which could significantly
affect these controls subsequent to the date the Company carried out its
evaluation.

Disclosure controls and procedures are Company controls and other
procedures that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the reports
that it files under the Exchange Act is accumulated and communicated to the
Companys management, including its Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.

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PART II  OTHER INFORMATION

Item 1:Legal Proceedings



| |                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Registrant is involved in routine legal proceedings occurring
in the ordinary course of business which, in the aggregate, are
believed by management to be immaterial to the financial condition
and results of operations of the Registrant.

Item 2:Changes in Securities and Use of Proceeds



| |                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The effective date of the Registration Statement on Form S-1 under
the Securities Act of 1933 (File No. 333 -99031), as amended, was
November 4, 2002. The Registrants Common Stock began trading on
the Nasdaq National Market on November 6, 2002. The managing
underwriter for the offering was RBC Capital Markets.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Pursuant to the Registration Statement, 1,120,000 shares of the
Companys common stock was sold, of which 973,615 shares were sold
by the Company and 146,385 shares were sold in the aggregate by
selling stockholders. The net offering proceeds to the Company
were approximately $10.2 million. The Company incurred expenses of
approximately $1.5 million, consisting of approximately $800,000 in
underwriting discounts and commissions and approximately $700,000
in other expenses related to the offering.



| |                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company will use the net proceeds of this offering primarily to
support the continued growth of its business operations and product
lines and for general corporate purposes. The Company expects to
use the net proceeds to:



| |  |  | support loan growth, including multi-family
residential and commercial mortgage loans, single-family
mortgage loans, commercial and industrial loans and consumer
loans;                                                      
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | expand Los Padres Banks retail banking
franchise, by establishing or acquiring new offices or by
acquiring other financial institutions, although no
acquisition transactions are specifically being considered at
this time;
|
| |  |  | develop new products and services; and                                                                                                                                                                                        
|
| |  |  | invest in high credit quality, fixed income and
mortgage-backed securities managed to a short duration.                                                                                                                       

Item 3:Defaults Upon Senior Securities



| |                
| | ---------------
| | Not applicable.

Item 4:Submission of Matters to a Vote of Security Holders

On August 28, 2002, a majority of the Companys stockholders approved the
following matters by written consent pursuant to Section 228 of the General
Corporation Law of Delaware: (1) an amendment to the Companys certificate of
incorporation increasing the authorized number of shares of common stock from
3,000,000 to 9,000,000, (2) an amendment to the Companys certificate of
incorporation and bylaws creating a staggered board of directors whereby the
board of directors is divided into three classes, with one class elected
annually, (3) an amendment to the bylaws eliminating the stockholders ability
to take action by written consent and (4) an amendment to the bylaws

18



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specifying what must be included in a stockholder proposal for a special or
annual meeting of stockholders..
     The votes cast by written consent for the above described matters,
collectively, were as follows:

|              |  |                    |  |            
|------------- |  | ------------------ |  | -----------
|FOR:  688,092 |  | WITHHELD:  430,020 |  | AGAINST:  0

Item 5:Other Information



| |                
| | ---------------
| | Not applicable.

Item 6:Exhibits and Reports on Form 8-K



| |            
| | -----------
| | a) Exhibits



| |      
| | -----
| | None.



| |                
| | ---------------
| | b)     Form 8-K



| |      
| | -----
| | None.

19



---



##### 



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.



|                        |  |                                                                                                                                 
|----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------
|                        |  | HARRINGTON WEST FINANCIAL GROUP, INC.                                                                                           
|Date: December 19, 2002 |  | By:/S/ CRAIG J. CERNY
Craig J. Cerny, Chief Executive Officer
(Principal Executive Officer)                                     
|                       
|                        |  | By: /S/ SEAN CALLOW

Sean Callow, Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)

20



---



##### 



CERTIFICATIONS

I, Craig J. Cerny, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of
Harrington West Financial Group, Inc.;                                                                                                                                                                                                                                  
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   
|
| | 4. |  | The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and we have:                                                                                                     
|

| | (a) |  | Designed such disclosure controls and
procedures to ensure that material information relating
to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which the
periodic report is being prepared;
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Evaluated the effectiveness of the
registrant s disclosure controls and procedures as of a
date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                               
|
| | (c) |  | Presented in this quarterly report
our conclusions about the effectiveness of the
disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                      
|

| | 5. |  | The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrants
auditors and to the audit committee of the registrants board of
directors (or persons performing the equivalent function):
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

| | (a) |  | All significant deficiencies in the
design or operation of internal controls which could
adversely affect the registrants ability to record,
process, summarize and report financial data and have
identified for the registrants auditors any material
weaknesses in internal controls;
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Any fraud, whether or not material,
that involves management or other employees who have a
significant role in the registrants internal controls;
and                                                                                                                                    

21



---



##### 





| | 6. |  | The registrants other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: December 19, 2002

| |  |                                                          
| |  | ---------------------------------------------------------
| |  | /s/ Craig J. CernyCraig J. Cerny, Chief Executive Officer

22



---



##### 



I, Sean Callow, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of
Harrington West Financial Group, Inc.;                                                                                                                                                                                                                                  
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   
|
| | 4. |  | The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and we have:                                                                                                     
|

| | (a) |  | Designed such disclosure controls and
procedures to ensure that material information relating
to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which the
periodic report is being prepared;
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Evaluated the effectiveness of the
registrant s disclosure controls and procedures as of a
date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                               
|
| | (c) |  | Presented in this quarterly report
our conclusions about the effectiveness of the
disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                      
|

| | 5. |  | The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrants
auditors and to the audit committee of the registrants board of
directors (or persons performing the equivalent function):
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

| | (a) |  | All significant deficiencies in the
design or operation of internal controls which could
adversely affect the registrants ability to record,
process, summarize and report financial data and have
identified for the registrants auditors any material
weaknesses in internal controls;
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Any fraud, whether or not material,
that involves management or other employees who have a
significant role in the registrants internal controls;
and                                                                                                                                    

23



---



##### 





| | 6. |  | The registrants other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: December 19, 2002

| |  |                                                                              
| |  | -----------------------------------------------------------------------------
| |  | /s/ Sean CallowSean Callow,
Senior Vice President and
Chief Financial Officer

24