##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2003OR

o     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.     x     Yes     o      No

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934).     o     Yes     x     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 May 9, 2003.





---

TABLE OF CONTENTS



|                                                                   |                                                                                                                                                              |  |  |  |  |  |  | 
|------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  |  |  |  | 
|PART 1-FINANCIAL INFORMATION                                      
|Item 1: Condensed Consolidated Financial Statements               
|                                                                   | Condensed Consolidated Statements of Financial Condition as of March 31, 2003 (Unaudited) and December 31, 2002                                             
|                                                                   | Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2003 and 2002 (Unaudited)                                                  
|                                                                   | Condensed Consolidated Statements of Shareholders Equity and Comprehensive Income for the Three Months Ended March 31, 2003 and Year Ended 2002 (Unaudited)
|                                                                   | Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002 (Unaudited)                                              
|                                                                   | Notes to Unaudited Condensed Consolidated Financial Statements                                                                                              
|Item 2: Managements Discussion and Analysis                      
|Item 3: Quantitative and Qualitative Disclosures about Market Risk
|Item 4: Controls and Procedures                                   
|PART II   OTHER INFORMATION                                      
|Item 1: Legal Proceedings                                         
|Item 2: Changes in Securities and Use of Proceeds                 
|Item 3: Defaults Upon Senior Securities                           
|Item 4: Submission of Matters to a Vote of Security Holders       
|Item 5: Other Information                                         
|Item 6: Exhibits and Reports on Form 8-K                          
|                                                                   | SIGNATURES                                                                                                                                                  
|                                                                   | CERTIFICATIONS                                                                                                                                              
|EXHIBIT 99.1                                                      



---



##### Table of Contents



HARRINGTON WEST FINANCIAL GROUP, INC.

INDEX

Part I  Financial Information

|                            |  |                                                                                                                                                              |    |  |      | 
|--------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------ | -- |  | ---- | 
|                            |  |                                                                                                                                                              |    |  | Page | 
|                            |  |                                                                                                                                                              |    |  |      | 
|Item 1.                     |  | Condensed Consolidated Financial Statements                                                                                                                  |    |  | 2    | 
|                            |  | Condensed Consolidated Statements of Financial Condition as of
March 31, 2003 (Unaudited) and December 31, 2002                                              |    |  | 3    | 
|                            |  | Condensed Consolidated Statements of Income for the Three
Months Ended March 31, 2003 and 2002 (Unaudited)                                                   |    |  | 4    | 
|                            |  | Condensed Consolidated Statements of Shareholders Equity and Comprehensive
Income for the Three Months Ended March 31, 2003
and Year Ended 2002 (Unaudited) |    |  | 5    | 
|                            |  | Condensed Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2003 and 2002 (Unaudited)                                               |    |  | 6    | 
|                            |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                                                               |    |  | 7    | 
|Item 2.                     |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                        |    |  | 8    | 
|Item 3.                     |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                                   |    |  | 18   | 
|Item 4.                     |  | Controls and Procedures                                                                                                                                      |    |  | 19   | 
|Part II  Other Information |  |                                                                                                                                                              |    | 
|Item 1.                     |  | Legal Proceedings                                                                                                                                            |    |  | 20   | 
|Item 2.                     |  | Changes in Securities and Use of Proceeds                                                                                                                    |    |  | 20   | 
|Item 3.                     |  | Defaults upon Senior Securities                                                                                                                              |    |  | 20   | 
|Item 4.                     |  | Submission of Matters to a Vote of Security Holders                                                                                                          |    |  | 20   | 
|Item 5.                     |  | Other Information                                                                                                                                            |    |  | 21   | 
|Item 6.                     |  | Exhibits and Reports on Form 8-K                                                                                                                             |    |  | 21   | 
|Signatures                  |  |                                                                                                                                                              | 22 | 
|Certification               |  |                                                                                                                                                              | 23 | 

1



---



##### Table of Contents






PART 1-FINANCIAL INFORMATION




Item 1: Condensed Consolidated Financial Statements




HARRINGTON WEST FINANCIAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

|                                                                                                                                  |                      |   |                |         |                   |   |         |         | 
|--------------------------------------------------------------------------------------------------------------------------------- | -------------------- | - | -------------- | ------- | ----------------- | - | ------- | ------- | 
|(Dollars in thousands, except share data)                                                                                         |                      |   |                |         |                   |   |         |        
|                                                                                                                                  |                      |   | March 31, 2003 |         | December 31, 2002
|                                                                                                                                  |                      |   |                |         |                  
|                                                                                                                                  |                      |   | (unaudited)    |         |                   |   |        
|ASSETS                                                                                                                            |                      |   |                |         |                   |   |         |        
|Cash and cash equivalents                                                                                                         |                      | $ | 12,348         |         |                   | $ | 19,212  |        
|Trading account assets                                                                                                            |                      |   | 2,061          |         |                   |   | 1,934   |        
|Securities available for sale                                                                                                     |                      |   | 313,965        |         |                   |   | 324,530 |        
|Securities held to maturity                                                                                                       |                      |   | 2,334          |         |                   |   | 2,368   |        
|Loans receivable, (net of allowance for loan losses of $4,157
and $3,797 for March 31, 2003 and December 31, 2002, respectively)  |                      |   | 475,241        |         |                   |   | 448,050 |        
|Accrued interest receivable                                                                                                       |                      |   | 3,411          |         |                   |   | 3,526   |        
|Premises and equipment, net                                                                                                       |                      |   | 5,382          |         |                   |   | 4,469   |        
|Prepaid expenses and other assets                                                                                                 |                      |   | 1,389          |         |                   |   | 1,761   |        
|Investment in FHLB stock, at cost                                                                                                 |                      |   | 12,745         |         |                   |   | 11,750  |        
|Income taxes receivable                                                                                                           |                      |   |               |         |                   |   | 252     |        
|Deferred tax asset                                                                                                                |                      |   | 871            |         |                   |   | 1,187   |        
|Goodwill                                                                                                                          |                      |   | 3,981          |         |                   |   | 3,981   |        
|Core deposit intangible, net                                                                                                      |                      |   | 1,263          |         |                   |   | 1,311   |        
|                                                                                                                                  |                      |   |                |         |                   |   |         |        
|TOTAL ASSETS                                                                                                                      |                      | $ | 834,991        |         |                   | $ | 824,331 |        
|                                                                                                                                  |                      |   |                |         |                   |   |         |        
|Deposits:                                                                                                                         |                      |   |                |         |                   |   |         |        
|                                                                                                                                  | Interest bearing     |   |                | 505,094 |                   |   |         | 505,165 | 
|                                                                                                                                  | Non-interest bearing |   |                | 20,026  |                   |   |         | 20,106  | 
|                                                                                                                                  |                      |   |                |         |                   |   |         |        
|Total Deposits                                                                                                                    |                      |   | 525,120        |         |                   |   | 525,271 |        
|FHLB advances                                                                                                                     |                      |   | 239,000        |         |                   |   | 235,000 |        
|Securities sold under repurchase agreements                                                                                       |                      |   | 1,056          |         |                   |   | 517     |        
|Note payable                                                                                                                      |                      |   | 11,600         |         |                   |   | 11,300  |        
|Accounts payable and accrued expenses                                                                                             |                      |   | 13,679         |         |                   |   | 9,771   |        
|Income taxes payable                                                                                                              |                      |   | 603            |         |                   |   |        |        
|                                                                                                                                  |                      |   |                |         |                   |   |         |        
|TOTAL LIABILITIES                                                                                                                 |                      |   | 791,058        |         |                   |   | 781,859 |        
|                                                                                                                                  |                      |   |                |         |                   |   |         |        
|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:                                                                        |                      |   |                |         |                   |   |         |        
|4,327,951 shares issued and outstanding as of March 31, 2003
and December 31, 2002                                                |                      |   | 43             |         |                   |   | 43      |        
|Additional paid-in capital                                                                                                        |                      |   | 30,641         |         |                   |   | 30,641  |        
|Retained earnings                                                                                                                 |                      |   | 15,226         |         |                   |   | 13,795  |        
|Accumulated other comprehensive income, net of tax of $(1,680)
and $(1,759) at March 31, 2003 and December 31, 2002, respectively |                      |   | (1,977         | )       |                   |   | (2,007  | )      
|                                                                                                                                  |                      |   |                |         |                   |   |         |        
|Total Stockholders Equity                                                                                                        |                      |   | 43,933         |         |                   |   | 42,472  |        
|                                                                                                                                  |                      |   |                |         |                   |   |         |        
|TOTAL LIABILITIES & STOCKHOLDERS EQUITY                                                                                          |                      | $ | 834,991        |         |                   | $ | 824,331 |        
|                                                                                                                                  |                      |   |                |         |                   |   |         |        

The accompanying notes are an integral part of these condensed statements.

2



---



##### Table of Contents






HARRINGTON WEST FINANCIAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

|                                                     |                                                |                    |           |       |      |   |           |       |  
|---------------------------------------------------- | ---------------------------------------------- | ------------------ | --------- | ----- | ---- | - | --------- | ----- | -
|Dollars in thousands, except per share data          |                                                |                    |           |       |      |   |           |      
|                                                     |                                                | Three months ended
|                                                     |                                                |                    | March 31,
|                                                     |                                                |                    |          
|                                                     |                                                |                    | 2003      |       | 2002
|                                                     |                                                |                    |           |       |     
|Interest income                                      |                                                |                    |           |       |      |   |           |      
|                                                     | Interest on loans                              |                    | $         | 7,955 |      |   | $         | 8,219 |  
|                                                     | Interest and dividends on securities           |                    |           | 3,403 |      |   |           | 2,578 |  
|                                                     |                                                |                    |           |       |      |   |           |      
|Total interest income                                |                                                |                    | 11,358    |       |      |   | 10,797    |      
|                                                     |                                                |                    |           |       |      |   |           |       |  
|Interest expense                                     |                                                |                    |           |       |      |   |           |      
|                                                     | Interest on deposits                           |                    |           | 2,666 |      |   |           | 4,206 |  
|                                                     | Interest on FHLB advances and other borrowings |                    |           | 2,455 |      |   |           | 1,665 |  
|                                                     |                                                |                    |           |       |      |   |           |      
|Total interest expense                               |                                                |                    | 5,121     |       |      |   | 5,871     |      
|                                                     |                                                |                    |           |       |      |   |           |      
|NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES |                                                |                    | 6,237     |       |      |   | 4,926     |      
|PROVISION FOR LOAN LOSSES                            |                                                |                    | 360       |       |      |   | 200       |      
|                                                     |                                                |                    |           |       |      |   |           |       |  
|NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES  |                                                |                    | 5,877     |       |      |   | 4,726     |      
|                                                     |                                                |                    |           |       |      |   |           |       |  
|Other income (loss)                                  |                                                |                    |           |       |      |   |           |      
|                                                     | Income (loss) from trading assets              |                    |           | 576   |      |   |           | 23    |  
|                                                     | Loss on extinguishment of debt                 |                    |           | (531  | )    |   |           |      |  
|                                                     | Other income gain (loss)                       |                    |           | 89    |      |   |           | (6    | )
|                                                     | Banking fee income                             |                    |           | 1,024 |      |   |           | 532   |  
|                                                     |                                                |                    |           |       |      |   |           |       |  
|Total other income                                   |                                                |                    | 1,158     |       |      |   | 549       |      
|                                                     |                                                |                    |           |       |      |   |           |       |  
|Other expenses                                       |                                                |                    |           |       |      |   |           |      
|                                                     | Salaries & employee benefits                   |                    |           | 2,391 |      |   |           | 1,915 |  
|                                                     | Premises & equipment                           |                    |           | 652   |      |   |           | 494   |  
|                                                     | Insurance premiums                             |                    |           | 68    |      |   |           | 58    |  
|                                                     | Marketing                                      |                    |           | 99    |      |   |           | 61    |  
|                                                     | Computer services                              |                    |           | 160   |      |   |           | 129   |  
|                                                     | Consulting fees                                |                    |           | 247   |      |   |           | 145   |  
|                                                     | Office expenses & supplies                     |                    |           | 176   |      |   |           | 144   |  
|                                                     | Other                                          |                    |           | 500   |      |   |           | 487   |  
|                                                     |                                                |                    |           |       |      |   |           |       |  
|Total other expenses                                 |                                                |                    | 4,293     |       |      |   | 3,433     |      
|                                                     |                                                |                    |           |       |      |   |           |       |  
|Income before income taxes                           |                                                |                    | 2,742     |       |      |   | 1,842     |      
|Income taxes                                         |                                                |                    | 1,138     |       |      |   | 757       |      
|                                                     |                                                |                    |           |       |      |   |           |       |  
|NET INCOME                                           |                                                | $                  | 1,604     |       |      | $ | 1,085     |      
|                                                     |                                                |                    |           |       |      |   |           |       |  
|Basic earnings per share                             |                                                | $                  | .37       |       |      | $ | .32       |      
|                                                     |                                                |                    |           |       |      |   |           |       |  
|Diluted earnings per share                           |                                                | $                  | .36       |       |      | $ | .31       |      
|                                                     |                                                |                    |           |       |      |   |           |       |  
|Basic weighted average shares outstanding            |                                                |                    | 4,327,951 |       |      |   | 3,354,336 |      
|                                                     |                                                |                    |           |       |      |   |           |       |  
|Diluted weighted average shares outstanding          |                                                |                    | 4,487,908 |       |      |   | 3,467,037 |      
|                                                     |                                                |                    |           |       |      |   |           |       |  

The accompanying notes are an integral part of these condensed statements.

3



---



##### Table of Contents



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

|                                       |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   |        |        |   | 
|-------------------------------------- | ------------------------------------------------------------- | -------------------------- | --------- | ------ |  | ----- | -- | ------- |  | -------- | ------ | ------------- |  | ------------- | ------ | ------------- |  | - | ----- | ------ | ----- | ----- | ------- | ------ | - | - | ------ | ------ | - | 
|                                       |                                                               |                            |           |        |  |       |    |         |  |          |        | Additional    |  |               |        |               |  |   |       |        |       | Other |         | Total 
|                                       |                                                               |                            |           | Common |  | Stock |    | Paid-in |  | Retained |        | Comprehensive |  | Comprehensive |        | Shareholders
|                                       |                                                               |                            |           | Stock  |  | Amt   |    | Capital |  | Earnings |        | Income        |  | Income        |        | Equity       
|                                       |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |              
|Balance, December 31, 2001             |                                                               |                            | 3,354,336 |        |  | $     | 34 |         |  | $        | 20,305 |               |  | $             | 9,175  |               |  |   |       |        |       | $     | 630     |        |   | $ | 30,144 |       
|Comprehensive income                   |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               | 5,045  |               |  | $ | 5,045 |        |       |       |         |        |   |   | 5,045  |       
|                                       | Net income                                                    |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   |        |        |  
|Other comprehensive income, net of tax |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   |        |       
|                                       | Unrealized gains on securities                                |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       | 671    |       |       |         | 671    |   |   |        | 671    |  
|                                       | Effective portion in change in
fair value of cash flow hedges |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       | (3,308 | )     |       |         | (3,308 | ) |   |        | (3,308 | )
|                                       |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   |        |        |   | 
|Total comprehensive income             |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  | $ | 2,408 |        |       |       |         |        |   |   |        |       
|                                       |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   |        |       
|Initial public offering                |                                                               |                            | 973,615   |        |  |       | 9  |         |  |          | 10,212 |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   | 10,221 |       
|Stock options                          |                                                               |                            |           |        |  |       |    |         |  |          | 124    |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   | 124    |       
|Dividends on common stock              |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               | (425   | )             |  |   |       |        |       |       |         |        |   |   | (425   | )     
|                                       |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   |        |       
|Balance, December 31, 2002             |                                                               |                            | 4,327,951 |        |  |       | 43 |         |  |          | 30,641 |               |  |               | 13,795 |               |  |   |       |        |       |       | (2,007  | )      |   |   | 42,472 |       
|Comprehensive income                   |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               | 1,604  |               |  |   | 1,604 |        |       |       |         |        |   |   | 1,604  |       
|Net income                             |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   |        |       
|Other comprehensive income, net of tax |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   |        |       
|                                       | Unrealized gains on securities                                |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       | 210    |       |       |         | 210    |   |   |        | 210    |  
|                                       | Effective portion in change in fair value of cash flow hedges |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       | (180   | )     |       |         | (180   | ) |   |        | (180   | )
|                                       |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   |        |       
|                                       |                                                               | Total comprehensive income |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       | $      | 1,634 |       |         |        |   |   |        |        |   | 
|                                       |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   |        |       
|Dividends on common stock              |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               | (173   | )             |  |   |       |        |       |       |         |        |   |   | (173   | )     
|                                       |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   |        |       
|Balance, March 31, 2003                |                                                               |                            | 4,327,951 |        |  | $     | 43 |         |  | $        | 30,641 |               |  | $             | 15,226 |               |  |   |       |        |       |       | ($1,977 | )      |   | $ | 43,933 |       
|                                       |                                                               |                            |           |        |  |       |    |         |  |          |        |               |  |               |        |               |  |   |       |        |       |       |         |        |   |   |        |       

The accompanying notes are an integral part of these condensed statements.

4



---



##### Table of Contents






HARRINGTON WEST FINANCIAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

|                                                                                                       |                                                 |                                                             |      |                    |      |      |     |   |     | 
|------------------------------------------------------------------------------------------------------ | ----------------------------------------------- | ----------------------------------------------------------- | ---- | ------------------ | ---- | ---- | --- | - | --- | 
|(Dollars in thousands, except share data)                                                              |                                                 |                                                             |      |                    |      |      |     |  
|                                                                                                       |                                                 |                                                             |      | Three months ended
|                                                                                                       |                                                 |                                                             |      | March 31,         
|                                                                                                       |                                                 |                                                             |      |                   
|                                                                                                       |                                                 |                                                             |      | 2003               |      | 2002
|                                                                                                       |                                                 |                                                             |      |                    |      |     
|DISCLOSURE OF RECLASSIFICATION AMOUNT:                                                                 |                                                 |                                                             |      |                    |      |      |     |  
|                                                                                                       | Unrealized holding gains arising during period, |                                                             |      |                    |      |      |     |   |    
|                                                                                                       |                                                 | net of tax expense of $319 and $106 for                     |      | $                  | 450  |      |     | $ | 147 | 
|                                                                                                       |                                                 | March 31, 2003 and 2002, respectively                       |      |                    |      |      |     |   |     | 
|Less: Reclassification adjustment for gains included                                                   |                                                 |                                                             |      |                    |      |      |     |  
|                                                                                                       |                                                 | in net income, net of tax expense of $170 and               |      |                    |      |      |     |   |     | 
|                                                                                                       |                                                 | $0 for March 31, 2003 and 2002, respectively                |      |                    | (240 | )    |     |   |    | 
|                                                                                                       |                                                 |                                                             |      |                    |      |      |     |   |     | 
|Net unrealized gain on securities, net of tax expense of                                               |                                                 |                                                             |      |                    |      |      |     |  
|                                                                                                       |                                                 | $149 and $106 for March 31, 2003 and 2002, respectively     |      | $                  | 210  |      |     | $ | 147 | 
|                                                                                                       |                                                 |                                                             |      |                    |      |      |     |   |     | 
|Unrealized net (loss) gain on cash flow hedges, net of tax                                             |                                                 |                                                             |      |                    |      |      |     |  
|                                                                                                       |                                                 | (benefit) expense of $(135) for March 31, 2003 and $280 for |      |                    |      |      |     |   |     | 
|                                                                                                       |                                                 | March 31, 2002                                              |      | $                  | (180 | )    |     | $ | 381 | 
|Less: Reclassification adjustment for net gains on cash
flow hedges included in net income, net of tax |                                                 |                                                             |      |                    |      |      |     |  
|                                                                                                       |                                                 | expense of $0 for March 31, 2003 and $5 for                 |      |                    |      |      |     |   |     | 
|                                                                                                       |                                                 | March 31, 2002                                              |      |                    |     |      |     |   | 6   | 
|                                                                                                       |                                                 |                                                             |      |                    |      |      |     |   |     | 
|Net unrealized loss on cash flow hedges                                                                |                                                 | $                                                           | (180 | )                  |      | $    | 387 |  
|                                                                                                       |                                                 |                                                             |      |                    |      |      |     |   |     | 

The accompanying notes are an integral part of these condensed statements.

5



---



##### Table of Contents






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

|                                                                                     |                                                                                   |                    |                                                                           |                                                     |       |           |         |           |       |        |       | 
|------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------- | ------------------ | ------------------------------------------------------------------------- | --------------------------------------------------- | ----- | --------- | ------- | --------- | ----- | ------ | ----- | 
|Dollars in thousands                                                                 |                                                                                   |                    |                                                                           |                                                     |       |           |         |          
|                                                                                     |                                                                                   | Three months ended |                                                                           | Three months ended                                 
|                                                                                     |                                                                                   |                    |                                                                           |                                                     |       | March 31, |         | March 31,
|                                                                                     |                                                                                   |                    |                                                                           |                                                     |       | 2003      |         | 2002     
|                                                                                     |                                                                                   |                    |                                                                           |                                                     |       |           |         |          
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                |                                                                                   |                    |                                                                           |                                                     |       |           |         |          
|                                                                                     | Net income                                                                        |                    | $                                                                         | 1,604                                               |       |           | $       | 1,085     |      
|                                                                                     | Adjustments to reconcile net income
to net cash provided by operating activities: |                    |                                                                           |                                                     |       |           |         |           |      
|                                                                                     |                                                                                   |                    | Accretion of deferred loan fees and costs                                 |                                                     |       | (551      | )       |           |       | (189   | )    
|                                                                                     |                                                                                   |                    | Depreciation and amortization                                             |                                                     |       | 266       |         |           |       | 571    |      
|                                                                                     |                                                                                   |                    | Amortization of premiums and discounts on loans
receivable and securities |                                                     |       | 1,336     |         |           |       | 1,044  |      
|                                                                                     |                                                                                   |                    | Provision for loan losses                                                 |                                                     |       | 360       |         |           |       | 200    |      
|                                                                                     |                                                                                   |                    | Activity in securities held for trading                                   |                                                     |       | (538      | )       |           |       | 528    |      
|                                                                                     |                                                                                   |                    | FHLB stock dividend                                                       |                                                     |       | (145      | )       |           |       | (118   | )    
|                                                                                     |                                                                                   |                    | Decrease in accrued interest receivable                                   |                                                     |       | 115       |         |           |       | 11     |      
|                                                                                     |                                                                                   |                    | Increase in income taxes payable                                          |                                                     |       | 855       |         |           |       | 762    |      
|                                                                                     |                                                                                   |                    | Deferred income taxes                                                     |                                                     |       | 316       |         |           |       | (58    | )    
|                                                                                     |                                                                                   |                    | Decrease in prepaid expenses                                              |                                                     |       | 370       |         |           |       | 311    |      
|                                                                                     |                                                                                   |                    | Decrease in accounts payable                                              |                                                     |       | (826      | )       |           |       | (1,127 | )    
|                                                                                     |                                                                                   |                    |                                                                           |                                                     |       |           |         |           |      
|                                                                                     |                                                                                   |                    |                                                                           | Net cash provided by operating activities           |       |           | 3,162   |           |       |        | 3,020 | 
|                                                                                     |                                                                                   |                    |                                                                           |                                                     |       |           |         |           |      
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                |                                                                                   |                    |                                                                           |                                                     |       |           |         |          
|                                                                                     | Net (increase) decrease in loans receivable                                       |                    |                                                                           | (27,114                                             | )     |           |         | 14,535    |      
|                                                                                     | Proceeds from sales of securities available for sale                              |                    |                                                                           | 11,649                                              |       |           |         | 0         |      
|                                                                                     | Principal paydowns on securities available for sale                               |                    |                                                                           | 48,750                                              |       |           |         | 21,454    |      
|                                                                                     | Principal paydowns on securities held to maturity                                 |                    |                                                                           | 30                                                  |       |           |         | 103       |      
|                                                                                     | Purchases of securities available for sale                                        |                    |                                                                           | (46,108                                             | )     |           |         | (28,354   | )    
|                                                                                     | Purchase of premises and equipment                                                |                    |                                                                           | (1,130                                              | )     |           |         | (569      | )    
|                                                                                     | (Purchase) sale of FHLB Stock                                                     |                    |                                                                           | (850                                                | )     |           |         | 2,300     |      
|                                                                                     |                                                                                   |                    |                                                                           |                                                     |       |           |         |           |      
|                                                                                     |                                                                                   |                    |                                                                           | Net cash (used in) provided by investing activities |       |           | (14,773 | )         |       |        | 9,469 | 
|                                                                                     |                                                                                   |                    |                                                                           |                                                     |       |           |         |           |      
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                |                                                                                   |                    |                                                                           |                                                     |       |           |         |          
|                                                                                     | Net increase (decrease) in deposits                                               |                    |                                                                           | 81                                                  |       |           |         | (15,153   | )    
|                                                                                     | Increase (decrease) in securities sold under agreements to repurchase             |                    |                                                                           | 539                                                 |       |           |         | (560      | )    
|                                                                                     | Increase in FHLB advances                                                         |                    |                                                                           | 4,000                                               |       |           |         | 5,000     |      
|                                                                                     | Advances on note payable                                                          |                    |                                                                           | 300                                                 |       |           |         | 300       |      
|                                                                                     | Dividends paid on common stock                                                    |                    |                                                                           | (173                                                | )     |           |         | (90       | )    
|                                                                                     |                                                                                   |                    |                                                                           |                                                     |       |           |         |           |      
|                                                                                     | Net cash provided by (used in) financing activities                               |                    |                                                                           | 4,747                                               |       |           |         | (10,503   | )    
|                                                                                     |                                                                                   |                    |                                                                           |                                                     |       |           |         |           |      
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                 |                                                                                   |                    | (6,864                                                                    | )                                                   |       |           | 1,985   |          
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                       |                                                                                   |                    | 19,212                                                                    |                                                     |       |           | 11,107  |          
|                                                                                     |                                                                                   |                    |                                                                           |                                                     |       |           |         |           |      
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                             |                                                                                   | $                  | 12,348                                                                    |                                                     |       | $         | 13,093  |          
|                                                                                     |                                                                                   |                    |                                                                           |                                                     |       |           |         |           |      
|SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION 
Cash paid during the period for: |                                                                                   |                    |                                                                           |                                                     |       |           |         |          
|                                                                                     |                                                                                   | Interest           |                                                                           | $                                                   | 4,878 |           |         | $         | 5,757 |       
|                                                                                     |                                                                                   | Income Taxes       |                                                                           | $                                                   | 0     |           |         | $         | 425   |       

The accompanying notes are an integral part of these condensed statements.

6



---



##### Table of Contents






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

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business of the CompanyHarrington West Financial Group, Inc. (the
Company) is a diversified, community-based financial institution holding
company incorporated on August 29, 1995 to acquire and hold all of the
outstanding common stock of Los Padres Bank, FSB (the Bank), a federally
chartered savings bank which operates 11 branches serving individuals and small
to medium-sized businesses. Nine banking facilities are operated on the
California Central Coast, one banking facility is located in Scottsdale
Arizona, and one banking facility is located in Shawnee Mission, Kansas, and
operated as a division under the Harrington Bank brand. The Company also owns
Harrington Wealth Management Company, a trust and investment management company
with $123 million in assets under management or custody, and 51% of Los Padres
Mortgage Company.

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 RE/MAX 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 brokers single-family residential and
commercial real estate loans primarily 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.

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, 2002, included in the Annual Report on Form 10-K.

2. EARNINGS PER SHARE

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

7



---



##### Table of Contents



|                                 |  |                                   |       |               |  |           |           |  |  |   |      |  
|-------------------------------- |  | --------------------------------- | ----- | ------------- |  | --------- | --------- |  |  | - | ---- | -
|                                 |  | Three months ended March 31, 2003
|                                 |  |                                  
|                                 |  | Income                            |       | Shares        |  | Per-Share
|                                 |  | (Numerator)                       |       | (Denominator) |  | Amount   
|                                 |  |                                   |       |               |  |          
|Basic EPS                        |  | $                                 | 1,604 |               |  |           | 4,327,951 |  |  | $ | .37  |  
|Effect of dilutive
stock options |  |                                   |       |               |  |           | 159,957   |  |  |   | (.01 | )
|                                 |  |                                   |       |               |  |           |           |  |  |   |      |  
|Diluted EPS                      |  | $                                 | 1,604 |               |  |           | 4,487,908 |  |  | $ | .36  |  
|                                 |  |                                   |       |               |  |           |           |  |  |   |      |  

|                                 |  |                                   |       |               |  |             |           |  |  |   |      |  
|-------------------------------- |  | --------------------------------- | ----- | ------------- |  | ----------- | --------- |  |  | - | ---- | -
|                                 |  | Three months ended March 31, 2002
|                                 |  |                                  
|                                 |  | Income                            |       | Shares        |  | Per-Share  
|                                 |  | (Numerator)                       |       | (Denominator) |  | Amount     
|                                 |  |                                   |       |               |  |            
|                                 |  |                                   |       |               |  | (unaudited) |           |  |  |  
|Basic EPS                        |  | $                                 | 1,085 |               |  |             | 3,354,336 |  |  | $ | .32  |  
|Effect of dilutive
stock options |  |                                   |       |               |  |             | 112,701   |  |  |   | (.01 | )
|                                 |  |                                   |       |               |  |             |           |  |  |   |      |  
|Diluted EPS                      |  | $                                 | 1,085 |               |  |             | 3,467,037 |  |  | $ | .31  |  
|                                 |  |                                   |       |               |  |             |           |  |  |   |      |  

3. FAIR VALUE OF OPTIONS

The Company applies APB Opinion No. 25 and related interpretations in
accounting for its stock option plan. Accordingly, no compensation cost has
been recognized for its stock option plan.

Had compensation cost for the Companys stock option plan been determined based
on the fair value at the grant dates for awards under the plan consistent with
the method of SFAS No. 123, Accounting for Stock-Based Compensation, the
Companys net income and earnings per share for the years ended December 31
would have been changed to the pro forma amounts indicated below:

|                  |             |                               |             |   |                    |      |                |   |       |      | 
|----------------- | ----------- | ----------------------------- | ----------- | - | ------------------ | ---- | -------------- | - | ----- | ---- | 
|                  |             |                               |             |   | Three months ended
|                  |             |                               |             |   |                   
|                  |             |                               |             |   | March 31, 2003     |      | March 31, 2002
|                  |             |                               |             |   |                    |      |               
|Pro Forma Results |             |                               |             |   |                    |      |                |  
|                  | Net income: |                               |             |   |                    |      |                |   |      
|                  |             | As reported                   |             | $ | 1,604              |      |                | $ | 1,085 |     
|                  |             | Pro forma                     |             | $ | 1,593              |      |                | $ | 1,062 |     
|                  |             | Earnings per share  basic:   |             |   |                    |      |                |   |       |     
|                  |             |                               | As reported |   | $                  | 0.37 |                |   | $     | 0.32 | 
|                  |             |                               | Pro forma   |   | $                  | 0.37 |                |   | $     | 0.32 | 
|                  |             | Earnings per share  diluted: |             |   |                    |      |                |   |       |     
|                  |             |                               | As reported |   | $                  | 0.36 |                |   | $     | 0.31 | 
|                  |             |                               | Pro forma   |   | $                  | 0.35 |                |   | $     | 0.31 | 

The fair values of options granted under the Companys fixed stock option plan
were estimated on the date of grant using the Black-Scholes option-pricing
model, with the following weighted-average assumptions used: expected
volatility of 29.02% and 27.58% for the three months ended March 31, 2003 and
2002, respectively; risk-free interest rates of 3.95% and 4.89% for the three
months ended March 31, 2003 and 2002, respectively; and expected lives of 9
years for the three months ended March 31, 2003

8



---



##### Table of Contents



and 2002, respectively. The fair values of the 62,950 and 60,525 options
granted in the three months ended March 31, 2003 and 2002 were $3.61 and $3.74,
respectively.




Item 2: Managements Discussion and Analysis

Cautionary Statement Regarding Forward-Looking Statements

A number of the presentations and disclosures in this Form 10-Q,
including, without limitation, statements regarding the level of allowance for
loan losses, the rate of delinquencies and amounts of charge-offs, and the
rates of loan growth, and any statements preceded by, followed by or which
include the words may, could, should, will, would, hope, might,
believe, expect, anticipate, estimate, intend, plan, assume or
similar expressions constitute forward-looking statements.
These forward-looking statements, implicitly and explicitly, include the
assumptions underlying the statements and other information with respect to our
beliefs, plans, objectives, goals, expectations, anticipations, estimates,
intentions, financial condition, results of operations, future performance and
business, including our expectations and estimates with respect to our
revenues, expenses, earnings, return on equity, return on assets, efficiency
ratio, asset quality and other financial data and capital and performance
ratios.

Although we believe that the expectations reflected in our forward-looking
statements are reasonable, these statements involve risks and uncertainties
that are subject to change based on various important factors (some of which
are beyond our control). The following factors, among others, could cause our
financial performance to differ materially from our goals, plans, objectives,
intentions, expectations and other forward-looking statements:



| |  |  | the strength of the United States economy in general
and the strength of the regional and local economies within our
markets in California, Kansas and Arizona;                                                            
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | adverse changes in the local real estate market, as
most of the Companys loans are concentrated in the central coast
of California and a substantial portion of these loans have real
estate as collateral;               
|
| |  |  | the effects of, and changes in, trade, monetary and
fiscal policies and laws, including interest rate policies of the
Board of Governors of the Federal Reserve System;                                                    
|
| |  |  | inflation, interest rate, market and monetary
fluctuations;                                                                                                                                                                
|
| |  |  | adverse changes in asset quality and the resulting
credit risk-related losses and expenses;                                                                                                                                
|
| |  |  | our timely development of new products and services in
a changing environment, including the features, pricing and
quality of our products and services compared to the products and
services of our competitors;          
|
| |  |  | the willingness of users to substitute competitors
products and services for our products and services;                                                                                                                   
|
| |  |  | the impact of changes in financial services policies,
laws and regulations, including laws, regulations and policies
concerning taxes, banking, securities and insurance, and the
application thereof by regulatory bodies;
|
| |  |  | technological changes;                                                                                                                                                                                                     
|
| |  |  | changes in consumer spending and savings habits; and                                                                                                                                                                       
|
| |  |  | regulatory or judicial proceedings.                                                                                                                                                                                        

If one or more of the factors affecting our forward-looking information
and statements proves incorrect, then our actual results, performance or
achievements could differ materially from those expressed in, or implied by,
forward-looking information and statements contained in this Form 10-Q.
Therefore, we caution you not to place undue reliance on our forward-looking
information and statements.

9



---



##### Table of Contents



We do not intend to update our forward-looking information and statements,
whether written or oral, to reflect change. All forward-looking statements
attributable to us are expressly qualified by these cautionary statements.

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 broker
single-family residential and commercial real estate loans in the
Phoenix/Scottsdale metropolitan area. The Company will open a second
Harrington Bank 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 $835.0 million at March 31, 2003,
as compared to $824.3 million at December 31, 2002, an increase of $10.7
million or 1.3%. The increase was primarily attributable to an increase loan
balances to $475.2 million at March 31, 2003, compared to $448.1 million at
December 31, 2002, an increase of $27.2 million or 6.1%. The Companys primary
focus with respect to its lending operations has historically been the direct
origination of single-family residential, multi-family residential, commercial
real estate, and consumer loans. While we continue to emphasize single-family
residential loan products that meet our customers needs, we now generally
broker such loans on behalf of third party investors in order to generate fee
income and have been increasing our emphasis on loans secured by commercial
real estate, multi-family, and commercial and industrial loans. Single-family
residential loan balances decreased to $104.0 million at March 31, 2003,
compared to $116.7 million at December 31, 2002, a decrease of $12.7 million or
10.9%, while multi-family residential, commercial real estate, and commercial and industrial loans as a group
increased to $323.2 million at

10



---



##### Table of Contents



March 31, 2003, compared to $282.8 million at December 31, 2002, an
increase of $40.4 million or 14.3%.

|                                |                                  |   |                |         |                   |  |        |       |         |   |         |         |   |  |     |       |   |   |        |         |  
|------------------------------- | -------------------------------- | - | -------------- | ------- | ----------------- |  | ------ | ----- | ------- | - | ------- | ------- | - |  | --- | ----- | - | - | ------ | ------- | -
|                                |                                  |   | March 31, 2003 |         | December 31, 2002 |  | Change
|                                |                                  |   |                |         |                   |  |       
|                                |                                  |   | Amount         |         | Percent           |  | Amount |       | Percent |   | Amount 
|                                |                                  |   |                |         |                   |  |        |       |         |   |        
|Real Estate Loans:              |                                  |   |                |         |                   |  |        |       |         |   |         |         |   |  |     |       |   |   |        |        
|                                | Single-family                    |   | $              | 103,970 |                   |  |        | 21.6  | %       |   | $       | 116,714 |   |  |     | 25.8  | % |   | $      | (12,744 | )
|                                | Multi-family                     |   |                | 81,129  |                   |  |        | 16.9  | %       |   |         | 71,856  |   |  |     | 15.9  | % |   |        | 9,273   |  
|                                | Commercial                       |   |                | 212,340 |                   |  |        | 44.3  | %       |   |         | 183,264 |   |  |     | 40.6  | % |   |        | 29,076  |  
|                                | Construction (1)                 |   |                | 28,970  |                   |  |        | 6.0   | %       |   |         | 19,666  |   |  |     | 4.3   | % |   |        | 9,304   |  
|                                | Land acquisition and development |   |                | 5,389   |                   |  |        | 1.1   | %       |   |         | 14,948  |   |  |     | 3.3   | % |   |        | (9,559  | )
|Commercial and industrial loans |                                  |   | 29,722         |         |                   |  | 6.2    | %     |         |   | 27,676  |         |   |  | 6.1 | %     |   |   | 2,046  |        
|Consumer loans                  |                                  |   | 18,204         |         |                   |  | 3.8    | %     |         |   | 17,565  |         |   |  | 3.9 | %     |   |   | 639    |        
|Other loans (2)                 |                                  |   | 507            |         |                   |  | 0.1    | %     |         |   | 503     |         |   |  | 0.1 | %     |   |   | 4      |        
|                                |                                  |   |                |         |                   |  |        |       |         |   |         |         |   |  |     |       |   |   |        |         |  
|                                | Total loans receivable           |   |                | 480,231 |                   |  |        | 100.0 | %       |   |         | 452,192 |   |  |     | 100.0 | % |   | $      | 28,039  |  
|                                |                                  |   |                |         |                   |  |        |       |         |   |         |         |   |  |     |       |   |   |        |         |  
|Less:                           |                                  |   |                |         |                   |  |        |       |         |   |         |         |   |  |     |       |   |   |        |        
|                                | Allowance for loan loss          |   |                | (4,157  | )                 |  |        |       |         |   |         | (3,797  | ) |  |     |       |   |   |        | (360    | )
|                                | Net deferred loan fees           |   |                | (1,487  | )                 |  |        |       |         |   |         | (1,332  | ) |  |     |       |   |   |        | (155    | )
|                                | Net premiums                     |   |                | 654     |                   |  |        |       |         |   |         | 987     |   |  |     |       |   |   |        | (333    | )
|                                |                                  |   |                |         |                   |  |        |       |         |   |         |         |   |  |     |       |   |   |        |         |  
|                                |                                  |   | (4,990         | )       |                   |  |        |       |         |   | (4,142  | )       |   |  |     |       |   |   | (848   | )      
|                                |                                  |   |                |         |                   |  |        |       |         |   |         |         |   |  |     |       |   |   |        |         |  
|Loans receivable, net           |                                  | $ | 475,241        |         |                   |  |        |       |         | $ | 448,050 |         |   |  |     |       |   | $ | 27,191 |        
|                                |                                  |   |                |         |                   |  |        |       |         |   |         |         |   |  |     |       |   |   |        |         |  



---

|(1) |  | Includes loans secured by residential and commercial properties.
At March 31, 2003 we had $16.9 of construction loans secured by
residential properties and $12.1 million of construction loans secured
by commercial properties.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes loans collateralized by deposits and consumer line of
credit loans.                                                                                                                                                     

Securities classified as available for sale decreased to $314.0 million at
March 31, 2003, as compared to $324.5 million at December 31, 2002, a decrease
of $10.6 million or 3.3%. The Company manages the securities portfolio in
order to enhance net interest income and net market value on a risk-adjusted
basis and deploys excess capital until such time as the Company can reinvest
such assets into loans or other community banking assets that generate higher
risk-adjusted returns and, accordingly, the investment portfolio was decreased
to provide for loan growth capacity.

Total deposits decreased slightly to $525.1 million as of March 31, 2003,
as compared to $525.3 million as of December 31, 2002, a decrease of $200,000.
The decrease in deposits was attributable to the Companys emphasis on reducing
deposit costs and the resulting decline in highly rate sensitive deposits. The
deposits of the new community banking office in Scottsdale Arizona were $26.0
million at March 31, 2003, compared to $17.5 million at December 31, 2002, an
increase of $8.5 million or 48.6%. Advances from the Federal Home Loan Bank
(FHLB) of San Francisco increased to $239.0 million at March 31, 2003, as
compared to $235.0 million at December 31, 2002, a $4.0 million or 1.7%
increase to partially fund the loan growth. Accounts payable and accrued
expenses increased significantly to $13.7 million at March 31, 2003, as
compared to $9.8 million at December 31, 2002, an increase of $3.9 million
primarily as a result of a $5.0 million increase in the due to broker account
as a result of the purchase of securities classified as available for sale
which were purchased in the quarter but not settled until after quarter-end.

Stockholders equity increased to $43.9 million at March 31, 2003, as
compared to $42.5 million at December 31, 2002, an increase of $1.5 million or
3.4%. The increase in stockholders equity was due primarily to net income
recognized during the three months ended March 31, 2003. 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.

11



---



##### Table of Contents



Results of Operations

The Company reported net income of $1.6 million for the three months ended
March 31, 2003, as compared to $1.1 million for the three months ended March
31, 2002, an increase of $519,000 or 47.8%. The increase in net income during
the three-month periods primarily reflected significant increase in net
interest income and banking fee income, which were partially offset by
increases in total other expenses during such periods. On a diluted earnings
per share basis, the Company earned $.36 for the three months ended March 31,
2003, as compared to $0.31 for the three months ended March 31, 2002.

The Companys net interest income after provision for loan losses
increased by $1.2 million or 24.4% to $5.9 million during the three months
ended March 31, 2003 over the prior comparable period in 2002. The increase in
the Companys net interest income during the three-month periods reflected the
continued growth in its earning assets and its increased focus on higher
spread-earning loans, primarily commercial and industrial, commercial real
estate, and multi-family residential real estate loans. In addition, the
Company recognized a 7 basis point increase in its interest rate spread during
the three months ended March 31, 2003, when compared to the same period in
2002. The increase in the interest rate spread reflects 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 following table sets forth, for the periods indicated, information
regarding (i) the total dollar amount of interest income from interest-earning
assets and the resultant average yields; (ii) the total dollar amount of
interest expense on interest-bearing liabilities and the resultant average
rate; (iii) net interest income before provision for loan losses; (iv) interest
rate spread; and (v) net interest margin. No tax equivalent adjustments were
made during the periods presented. Information is based on average daily
balances during the indicated periods.

12



---



##### Table of Contents



|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |      |      |  
|--------------------------------------------------------------------------------- | ------------------------------------------ | --------------------------------------------- | ----------------- | ------- | ---------------------------- | ------- | -------- | ----- | ---------------------- | ----- | ------- | ---- | -------- | ---- | ------ | ------- | ------- | ------- | ------ | ----- | ------ | ----- | ------- | ---- | ---- | ---- | -
|                                                                                  |                                            |                                               |                   |         | Three Months Ended March 31,
|                                                                                  |                                            |                                               |                   |         |                             
|                                                                                  |                                            |                                               |                   |         | 2003                         | 2002   
|                                                                                  |                                            |                                               |                   |         |                              |         |         
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      | Average  |      |        |         |         |         |        |       |        |       | Average
|                                                                                  |                                            |                                               |                   |         | Average                      |         |          |       |                        |       | Yield/  |      | Average  |      |        |         |         |         | Yield/
|                                                                                  |                                            |                                               |                   |         | Balance                      |         | Interest |       | Cost                   |       | Balance |      | Interest |      | Cost  
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |       
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       | (Dollars in Thousands) |       |         |      |          |      |        |         |        
|Interest-earning assets:                                                          |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |     
|                                                                                  | Loans receivable (1)                       |                                               | $                 | 460,945 |                              |         | $        | 7,955 |                        |       |         | 6.90 | %        |      | $      | 441,694 |         |         | $      | 8,219 |        |       |         | 7.44 | %   
|                                                                                  | FHLB stock                                 |                                               |                   | 12,364  |                              |         |          | 160   |                        |       |         | 5.25 | %        |      |        | 6,354   |         |         |        | 99    |        |       |         | 6.32 | %   
|                                                                                  | Securities and trading account assets (2)  |                                               |                   | 320,602 |                              |         |          | 3,189 |                        |       |         | 3.98 | %        |      |        | 182,468 |         |         |        | 2,417 |        |       |         | 5.30 | %   
|                                                                                  | Cash and cash equivalents (3)              |                                               |                   | 15,517  |                              |         |          | 54    |                        |       |         | 1.39 | %        |      |        | 15,696  |         |         |        | 62    |        |       |         | 1.57 | %   
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|                                                                                  |                                            | Total interest-earning assets                 |                   |         | 809,428                      |         |          |       | 11,358                 |       |         |      | 5.62     | %    |        |         | 646,212 |         |        |       | 10,797 |       |         |      | 6.69 | %   
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|Noninterest-earning assets                                                        |                                            |                                               | 23,529            |         |                              |         |          |       |                        |       |         |      |          |      | 18,412 |         |         |         |        |       |        |       |         |     
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|                                                                                  |                                            |                                               | Total assets      |         | $                            | 832,957 |          |       |                        |       |         |      |          |      |        |         | $       | 664,624 |        |       |        |       |         |      |      |      |  
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|Interest-bearing liabilities:                                                     |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |     
|                                                                                  | Deposits:                                  |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|                                                                                  |                                            | NOW and money market accounts                 |                   |         | 133,058                      |         |          |       | 379                    |       |         |      | 1.16     | %    |        |         | 68,609  |         |        |       | 237    |       |         |      | 1.40 | %   
|                                                                                  |                                            | Passbook accounts and certificates of deposit |                   |         | 374,892                      |         |          |       | 2,287                  |       |         |      | 2.47     | %    |        |         | 431,673 |         |        |       | 3,969  |       |         |      | 3.73 | %   
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|                                                                                  |                                            |                                               | Total deposits    |         |                              | 507,950 |          |       |                        | 2,666 |         |      |          | 2.13 | %      |         |         | 500,282 |        |       |        | 4,206 |         |      |      | 3.41 | %
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|                                                                                  | FHLB advances (4)                          |                                               |                   | 240,855 |                              |         |          | 2,348 |                        |       |         | 3.92 | %        |      |        | 97,114  |         |         |        | 1,480 |        |       |         | 5.97 | %   
|                                                                                  | Reverse Repurchase Agreements              |                                               |                   | 857     |                              |         |          | 2     |                        |       |         | 0.99 | %        |      |        | 821     |         |         |        | 2     |        |       |         | 1.10 | %   
|                                                                                  | Other borrowings (5)                       |                                               |                   | 11,370  |                              |         |          | 105   |                        |       |         | 3.71 | %        |      |        | 18,038  |         |         |        | 183   |        |       |         | 4.05 | %   
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|                                                                                  |                                            | Total interest-bearing liabilities            |                   |         | 761,032                      |         |          |       | 5,121                  |       |         |      | 2.72     | %    |        |         | 616,255 |         |        |       | 5,871  |       |         |      | 3.86 | %   
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|Non-interest-bearing deposits                                                     |                                            |                                               | 17,443            |         |                              |         |          |       |                        |       |         |      |          |      | 12,063 |         |         |         |        |       |        |       |         |     
|Non-interest-bearing liabilities                                                  |                                            |                                               | 11,279            |         |                              |         |          |       |                        |       |         |      |          |      | 5,408  |         |         |         |        |       |        |       |         |     
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|                                                                                  |                                            |                                               | Total liabilities |         |                              | 789,754 |          |       |                        |       |         |      |          |      |        |         |         | 633,726 |        |       |        |       |         |      |      |      |  
|Stockholders equity                                                              |                                            |                                               | 43,203            |         |                              |         |          |       |                        |       |         |      |          |      | 30,898 |         |         |         |        |       |        |       |         |     
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|                                                                                  | Total liabilities and stockholders equity |                                               | $                 | 832,957 |                              |         |          |       |                        |       |         |      |          |      | $      | 664,624 |         |         |        |       |        |       |         |      |     
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|Net interest-earning assets (liabilities)                                         |                                            | $                                             | 48,396            |         |                              |         |          |       |                        |       |         |      |          | $    | 29,957 |         |         |         |        |       |        |       |         |     
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|Net interest income/interest rate spread                                          |                                            |                                               |                   |         |                              | $       | 6,237    |       |                        |       | 2.90    | %    |          |      |        |         |         | $       | 4,926  |       |        |       | 2.83    | %   
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|Net interest margin                                                               |                                            |                                               |                   |         |                              |         |          |       |                        |       | 3.06    | %    |          |      |        |         |         |         |        |       |        |       | 3.01    | %   
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     
|Ratio of average interest-earnings assets to
average interest-bearing liabilities |                                            |                                               |                   |         |                              |         |          |       |                        |       | 106.36  | %    |          |      |        |         |         |         |        |       |        |       | 104.86  | %   
|                                                                                  |                                            |                                               |                   |         |                              |         |          |       |                        |       |         |      |          |      |        |         |         |         |        |       |        |       |         |      |     



---

|(1) |  | Includes non-accrual loans. Interest income includes fees earned on
loans originated.                                                                              
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Consists of securities classified as available for sale and held to
maturity and trading account assets.                                                           
|   
|(3) |  | Consists of cash and due from banks and federal funds sold.                                                                                                        
|   
|(4) |  | Interest on FHLB advances is net of hedging costs. We use interest
rate swaps to hedge the short-term repricing characteristics of our
floating-rate FHLB advances.
|   
|(5) |  | Consists of a note payable under a revolving line of credit.                                                                                                       

The following table sets forth the effects of changing rates and volumes
on our net interest income. Information is provided with respect to (i) effects
on interest income attributable to changes in rates (changes in rate multiplied
by prior volume); (ii) effects on interest income attributable to changes in
volume (changes in volume multiplied by prior rate); (iii) changes in
rate/volume (change in rate multiplied by change in volume).

13



---



##### Table of Contents



|                                                            |                                           |                                               |                |         |                                  |        |           |       |                |        |            |        |       |       |          |       |        |        |  
|----------------------------------------------------------- | ----------------------------------------- | --------------------------------------------- | -------------- | ------- | -------------------------------- | ------ | --------- | ----- | -------------- | ------ | ---------- | ------ | ----- | ----- | -------- | ----- | ------ | ------ | -
|                                                            |                                           |                                               |                |         | Three Months Ended               |        |           |       |               
|                                                            |                                           |                                               |                |         | March 31, 2003 vs March 31, 2002 |        |           |       |               
|                                                            |                                           |                                               |                |         |                                  |        |           |       |               
|                                                            |                                           |                                               |                |         | Increase (decrease) due to       |        | Total Net
|                                                            |                                           |                                               |                |         |                                  |        |          
|                                                            |                                           |                                               |                |         |                                  |        |           |       |                |        |            |        | Rate/ |       | Increase
|                                                            |                                           |                                               |                |         | Rate                             |        | Volume    |       | Volume         |        | (Decrease)
|                                                            |                                           |                                               |                |         |                                  |        |           |       |                |        |           
|                                                            |                                           |                                               |                |         |                                  |        |           |       | (In Thousands) |        |            |        |       |       |          |       |       
|Interest -earning assets:                                   |                                           |                                               |                |         |                                  |        |           |       |                |        |            |        |       |       |          |      
|                                                            | Loans receivable                          |                                               |                | ($2,385 | )                                |        | $         | 1,433 |                |        | $          | 689    |       |       |          | ($263 | )     
|                                                            | FHLB stock                                |                                               |                | (68     | )                                |        |           | 380   |                |        |            | (251   | )     |       |          | 61    |       
|                                                            | Securities and trading account assets (1) |                                               |                | (2,408  | )                                |        |           | 7,319 |                |        |            | (4,140 | )     |       |          | 771   |       
|                                                            | Cash and cash equivalents (2)             |                                               |                | (29     | )                                |        |           | (3    | )              |        |            | 24     |       |       |          | (8    | )     
|                                                            |                                           |                                               |                |         |                                  |        |           |       |                |        |            |        |       |       |          |       |       
|Total net change in income on
interest-earning assets       |                                           |                                               | (4,890         | )       |                                  |        | 9,129     |       |                |        | (3,678     | )      |       |       | 561      |      
|                                                            |                                           |                                               |                |         |                                  |        |           |       |                |        |            |        |       |       |          |       |       
|Interest-bearing liabilities:                               |                                           |                                               |                |         |                                  |        |           |       |                |        |            |        |       |       |          |      
|                                                            | Deposits
NOW and money market accounts    |                                               |                | (169    | )                                |        |           | 902   |                |        |            | (592   | )     |       |          | 141   |       
|                                                            |                                           | Passbook accounts and certificates of deposit |                |         | (5,419                           | )      |           |       | (2,117         | )      |            |        | 5,855 |       |          |       | (1,681 | )     
|                                                            |                                           |                                               |                |         |                                  |        |           |       |                |        |            |        |       |       |          |       |       
|                                                            |                                           |                                               | Total deposits |         |                                  | (5,588 | )         |       |                | (1,215 | )          |        |       | 5,263 |          |       |        | (1,540 | )
|                                                            | FHLB advances (3)                         |                                               |                | (1,986  | )                                |        |           | 8,575 |                |        |            | (5,721 | )     |       |          | 868   |       
|                                                            | Reverse Repurchase Agreements             |                                               |                | (1      | )                                |        |           | 0     |                |        |            | 0      |       |       |          | (1    | )     
|                                                            | Other borrowings (4)                      |                                               |                | (62     | )                                |        |           | (270  | )              |        |            | 255    |       |       |          | (77   | )     
|                                                            |                                           |                                               |                |         |                                  |        |           |       |                |        |            |        |       |       |          |       |       
|Total net change in expense on
interest-bearing liabilities |                                           |                                               | (7,637         | )       |                                  |        | 7,090     |       |                |        | (203       | )      |       |       | (750     | )    
|                                                            |                                           |                                               |                |         |                                  |        |           |       |                |        |            |        |       |       |          |       |       
|Change in net interest income                               |                                           | $                                             | 2,747          |         |                                  | $      | 2,039     |       |                |        | ($3,475    | )      |       | $     | 1,311    |      
|                                                            |                                           |                                               |                |         |                                  |        |           |       |                |        |            |        |       |       |          |       |       



---

|(1) |  | Consists of securities classified as available for sale and held
for maturity and trading account assets.                                                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Consists of cash and due from banks and federal funds sold.                                                                                                             
|   
|(3) |  | Interest on FHLB advances is net of cash flow hedging costs. We use
interest rate swaps to hedge the short-term repricing characteristics
of our floating-rate advances.
|   
|(4) |  | Consists of a note payable under a revolving line of credit.                                                                                                            

14



---



##### Table of Contents



The Company increased its provisions for loan losses by $360,000 during
the three months ended March 31, 2003, as compared to $200,000 for the three
months ended March 31, 2002, an increase of $160,000. The provision reflects
the required reserves based upon, among other things, the $27.2 million in loan
growth during the current quarter and the Companys analysis of the
composition, credit quality and growth of its commercial real estate and
commercial and industrial loan portfolios. At March 31, 2003, the Companys
non-performing assets amounted to $197,000 or 0.04% of total loans, as compared
to $218,000 or 0.05% of total loans as of December 31, 2002.

The Company reported interest income of $11.4 million for the three months
ended March 31, 2003, as compared to $10.8 million for the three months ended
March 31, 2002, an increase of $561,000 or 5.2%. The primary reason for the
increase during the period was the increase in earning assets in the period,
which more than compensated for the decrease in the average yield on
interest-bearing assets.

The Company reported interest expense of $5.1 million for the three months
ended March 31, 2003, as compared to $5.9 million for the three months ended
March 31, 2002, a decrease of $750,000 or 12.8%. 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 $1.2 million during the three
months ended March 31, 2003, as compared to $549,000 during the three months
ended March 31, 2002, an increase of $609,000 or 111.0%. Banking fee income,
consisting primarily of fee income from wholesale banking, trust services and
deposits and loans, increased by $492,000 or 92.5% to $1.0 million for the
three months ended March 31, 2003, as compared to $532,000 for the three months
ended March 31, 2002. Improving banking fee income, including loan and deposit
fees, mortgage banking fees, and investment management fees through Harrington
Wealth Management Company, is a strategic goal of the Company. All of these
sources of fee income showed growth in the three months ended March 31, 2003
over the same quarter a year ago.



| |  |  | Loan and deposit fees were $410,000 for the three
months ended March 31, 2003, as compared to $236,000 for the
three months ended March 31, 2002, an increase of $174,000 or
73.7%. Prepayment penalty fees remained strong with the lower
interest rate environment and high refinancing levels.                                                                                                                                                                                                                                                               
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Mortgage banking fees were $497,000 for the three
months ended March 31, 2003, as compared to $212,000 for the
three months ended March 31, 2002, an increase of $285,000 or
134.4%. These fees continued to build with the favorable real
estate markets and heavy refinancings. Los Padres Mortgage
Company (LPMC), a joint venture with the largest RE/MAX realty
franchise in the Arizona market, continues to increase
originations and added $209,000 to banking fee income in three
months ended March 31, 2003. LPMC began operations in September
2002.
|
| |  |  | Investment management and custody fees though
Harrington Wealth Management Company were $117,000 for the three
months ended March 31, 2003, as compared to $84,000 for the three
months ended March 31, 2002, an increase of $33,000 or 39.3%.                                                                                                                                                                                                                                                                                                                  

Gain on the sale of securities and income from trading assets was $576,000
for the three months ended March 31, 2003, as compared to $23,000 for the three
months ended March 31, 2002, an increase of $553,000. The $576,000 figure
includes a $431,000 gain on the sale of a low duration, high-coupon mortgage
backed security which the Company received a price of 5 points higher than the
Company valued the security at the previous month-end. The $145,000 balance of
the income from trading assets in the three months ended March 31, 2003 was a
result of favorable changes in market spreads. Related to the gain on the sale
of the security, the Company paid-off a $15 million FHLB advance with a 5.25%
fixed rate coupon scheduled to mature on January 14, 2004 and incurred a
$531,000 market-based prepayment loss on the extinguishment of debt during the
three months ended March 31, 2003.

15



---



##### Table of Contents



Other gain was $89,000 for the three months ended March 31, 2003, as
compared to ($6,000) for the three months ended March 31, 2002, a $95,000
increase. The $89,000 gain related to a recapture of a $160,000 charge relating
to the write-off of computer equipment in connection with an operating system
upgrade incurred in the three months ended September 30, 2002.

The Companys total other expenses totaled $4.3 million during the three
months ended March 31, 2003, as compared to $3.4 million for the three months
ended March 31, 2002, an increase of $860,000 or 25.1%. The general increase
in expenses is due largely to commission related compensation relative to
increased mortgage banking originations, the expenses associated with the
start-up and ongoing operations of Los Padres Mortgage Company and the new
Scottsdale banking operations, as well as some increases in corporate expenses
to support the Companys growth.

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 28.62%
at March 31, 2003. At March 31, 2003, Los Padres Banks liquid assets
totaled approximately $121.3 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 March 31, 2003, the Company had $239.0 million in FHLB advances
and had $53.1 million of additional borrowing capacity with the FHLB of San
Francisco. At March 31, 2003, the Companys note payable under its revolving
line of credit amounted to $11.6 million and the Company had $13.7 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. On February 19,
2003, the Companys line of credit under its loan facility was further amended
(1) allowing the Company to repurchase $2 million of its own capital stock
during the term of the agreement, and (2) increasing the minimum core
profitability from $5.0 to $6.0 million per quarter.

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
March 31, 2003, the total approved loan commitments outstanding amounted to
$92.9 million. Certificates of deposit scheduled to mature in one year or
less at March 31, 2003 totaled $297.7 million and FHLB borrowings that are
scheduled to mature within the same period amounted to $199.0 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

16



---



##### Table of Contents



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 March 31,
2003, Los Padres Bank was permitted to pay up to $2.1 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 March 31, 2003, 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 March 31,
2003, Los Padres Bank was in compliance with these additional requirements. To
the extent that Los Padres 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

17



---



##### Table of Contents



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.

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.

18



---



##### Table of Contents



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 March
31, 2003, 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.

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

19



---



##### Table of Contents



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 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,
prepayment penalties, if applicable, and other factors with respect to the
underlying loans. At March 31, 2003, 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 March 31, 2003 the estimated sensitivity
of Los Padres Banks MVPE to parallel yield curve shifts using the Companys
internal market value calculation. The table

20



---



##### Table of Contents



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                                    |                                 | $ | 21,650                                        |        |      | $ | 16,635  |       |   | $ | 10,271                 |       |      |  |      |  |  |  | ($12,742 | )     |   |  | ($28,345 | )     |   |  | ($46,845 | )     
|Market value gain (loss) of liabilities                               |                                 |   | (12,719                                       | )      |      |   | (10,078 | )     |   |   | (5,957                 | )     |      |  |      |  |  |  | 6,192    |       |   |  | 12,653   |       |   |  | 19,386   |       
|                                                                      |                                 |   |                                               |        |      |   |         |       |   |   |                        |       |      |  |      |  |  |  |          |       |   |  |          |       |   |  |          |        |  
|Market value gain (loss) of net assets
before interest rate contracts |                                 |   | 8,931                                         |        |      |   | 6,557   |       |   |   | 4,314                  |       |      |  |      |  |  |  | (6,550   | )     |   |  | (15,692  | )     |   |  | (27,459  | )     
|Market value gain (loss) of interest
rate contracts                   |                                 |   | (15,779                                       | )      |      |   | (10,650 | )     |   |   | (5,149                 | )     |      |  |      |  |  |  | 4,868    |       |   |  | 9,475    |       |   |  | 13,837   |       
|                                                                      |                                 |   |                                               |        |      |   |         |       |   |   |                        |       |      |  |      |  |  |  |          |       |   |  |          |       |   |  |          |        |  
|Total change in MVPE (2)                                              |                                 |   | ($6,848                                       | )      |      |   | ($4,093 | )     |   |   | ($835                  | )     |      |  |      |  |  |  | ($1,682  | )     |   |  | ($6,217  | )     |   |  | ($13,622 | )     
|                                                                      |                                 |   |                                               |        |      |   |         |       |   |   |                        |       |      |  |      |  |  |  |          |       |   |  |          |       |   |  |          |        |  
|Change in MVPE as a percent of:                                       |                                 |   |                                               |        |      |   |         |       |   |   |                        |       |      |  |      |  |  |  |          |       |   |  |          |       |   |  |          |       
|                                                                      | MVPE(2)                         |   |                                               | -10.32 | %    |   |         | -6.17 | % |   |                        | -1.26 | %    |  |      |  |  |  |          | -2.54 | % |  |          | -9.37 | % |  |          | -20.54 | %
|                                                                      | Total assets of Los Padres Bank |   |                                               | -.83   | %    |   |         | -.50  | % |   |                        | -.10  | %    |  |      |  |  |  |          | -.20  | % |  |          | -.75  | % |  |          | -1.65  | %



---

|(1) |  | Assumes an instantaneous parallel change in interest rates at all
maturities.
|--- |  | -----------------------------------------------------------------------------
|   
|(2) |  | Based on the Companys pre-tax MVPE of $66.3 million at March 31, 2003.      

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
(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.

21



---



##### Table of Contents






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



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




Item 3:Defaults Upon Senior Securities



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




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



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




Item 5:Other Information



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




Item 6:Exhibits and Reports on Form 8-K



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

|            |  |                                                                                                                                                                                                                                                  
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NO. |  | DESCRIPTION                                                                                                                                                                                                                                      
|3.1         |  | Certificate of Incorporation of Harrington West Financial Group, Inc. (1)                                                                                                                                                                        
|3.1.1       |  | Certificate of Amendment to Certificate of Incorporation. (1)                                                                                                                                                                                    
|3.1.2       |  | Second Certificate of Amendment to Certificate of Incorporation. (1)                                                                                                                                                                             
|3.2         |  | Bylaws of Harrington West Financial Group, Inc. (1)                                                                                                                                                                                              
|3.2.1       |  | Amendment to Bylaws. (1)                                                                                                                                                                                                                         
|4.0         |  | Specimen stock certificate of Harrington West Financial Group, Inc. (1)                                                                                                                                                                          
|10.1        |  | Harrington West Financial Group 1996 Stock Option Plan, as amended. (1)                                                                                                                                                                          
|10.2        |  | Amended and Restated Credit Agreement dated as of October 30, 1997 among
Harrington West Financial Group, Inc., the lenders party thereto and Harris Trust
and Savings Bank, as amended on October 1, 1999, May 2, 2000 and November
1, 2001. (1)
|10.2.1      |  | Fourth Amendment to Amended and Restated Credit Agreement. (1)                                                                                                                                                                                   
|10.3        |  | Investment and Interest Rate Advisory Agreement between Los Padres Savings
Bank, FSB and Smith Breeden Associates, Inc., dated February 3, 1997. (1)                                                                                             
|10.4        |  | Purchase and Assumption Agreement by and between Los Padres Bank, FSB and
Harrington Bank, FSB dated as of May 30, 2001. (1)                                                                                                                     
|10.5        |  | Los Padres Mortgage Company, LLC Operating Agreement by and between
Resource Marketing Group, Inc. and Los Padres Bank FSB dated June 13, 2002.
(1)                                                                                              
|10.6        |  | Option Agreement, dated as of April 4, 1996 by and between Smith Breeden
Associates, Inc. and Harrington West Financial Group, Inc. Assignment of
Option, dated as of January 19, 2001, by and between Craig Cerny. (1)                          

22



---



##### Table of Contents



|     |  |                                                                                                                                                                                                                                                               
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.7 |  | Stock Purchase Agreement by and between Harrington Bank, FSB and Los
Padres Bank, FSB dated as of May 30, 2001. (1)                                                                                                                                           
|99.1 |  | Section 906 Certification by Chief Executive Officer and Chief Financial Officer
(1) Incorporated by reference to the Registrants Form S-1 (File No. 333-99031)
filed with the Securities and Exchange Commission (the SEC) on August 30,
2002, as amended.



| | b) |  | Reports on Form 8-K
| | -- |  | -------------------

The Registrant filed a Current Report on Form 8-K with the SEC on January
22, 2003, announcing a press release of its earnings for the fourth quarter of
the year ended December 31, 2002.

The Registrant filed and amended a Current Report on Form 8-K with the SEC
on March 19, 2003, containing the chief executive officer and chief financial
officer certification of the Annual Report on Form 10-K for the year ended
December 31, 2002, as required by Section 906 of the Sarbanes-Oxley Act of
2002.

23



---



##### Table of Contents






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:
May 12, 2003 |  |  | 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) | 

24



---



##### Table of Contents






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; and

(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

25



---



##### Table of Contents



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: May 12, 2003 |  |                                        
|                   |  | /s/ Craig J. Cerny                     
|                   |  |                                        
|                   |  | Craig J. Cerny, Chief Executive Officer

26



---



##### Table of Contents



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

27



---



##### Table of Contents



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: May 12, 2003

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

28