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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|(Mark One)                                        |                                                                                         
|------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                 | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|For the Quarterly Period Ended September 30, 2002
|OR                                               
|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 No. 0-31525

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

|California(State or other jurisdiction of
incorporation or organization)                          |  | 68-0479553(IRS Employer ID Number)
|------------------------------------------------------------------------------------------------- |  | ----------------------------------
|2041 Forest Avenue, Chico, California(Address of principal executive offices)                     |  | 95928(Zip code)                   
|(530) 899-2344(Registrant's telephone number, including area code)                               
|Not Applicable(Former name, former address and former fiscal year, if changed since last report.)

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

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

No
par value Common Stock2,683,830 shares outstanding at October 31, 2002.

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PART 1-FINANCIAL INFORMATION

Item 1.    FINANCIAL STATEMENTS

COMMUNITY VALLEY BANCORP  CONSOLIDATED BALANCE SHEET (Unaudited)

|(In thousands)                                                                                        |                                                                                                                                                                  | September 30,
2002         |         | December 31,
2001 |        
|----------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ----------------- | -------
|ASSETS                                                                                                |                                                                                                                                                                 
|Cash and due from banks                                                                               |                                                                                                                                                                  | $                          | 13,043  |                   | $      
|Federal funds sold                                                                                    |                                                                                                                                                                  |                            | 34,305  |                   |        
|Interest-bearing deposits in banks                                                                    |                                                                                                                                                                  |                            | 2,774   |                   |        
|Investment securities (market value of $2,875 at September 30, 2002 and $3,037 at December 31, 2001)  |                                                                                                                                                                  |                            | 2,823   |                   |        
|Loans held for sale                                                                                   |                                                                                                                                                                  |                            | 4,412   |                   |        
|Loans, less allowance for loan losses of $2,809 at September 30, 2002 and $2,400 at December 31, 2001 |                                                                                                                                                                  |                            | 224,847 |                   |        
|Bank premises and equipment, net                                                                      |                                                                                                                                                                  |                            | 6,727   |                   |        
|Accrued interest receivable and other assets                                                          |                                                                                                                                                                  |                            | 10,609  |                   |        
|                                                                                                      |                                                                                                                                                                  |                            |         |                   |        
|                                                                                                      |                                                                                                                                                                  | $                          | 299,540 |                   | $      
|                                                                                                      |                                                                                                                                                                  |                            |         |                   |        
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                  |                                                                                                                                                                 
|Deposits:                                                                                             |                                                                                                                                                                  |                            |         |                   |        
|                                                                                                      | Non-interest bearing                                                                                                                                             |                            | $       | 39,675            |        
|                                                                                                      | Interest bearing                                                                                                                                                 |                            |         | 231,089           |        
|                                                                                                      |                                                                                                                                                                  |                            |         |                   |        
|                                                                                                      |                                                                                                                                                                  | Total deposits             |         |                   | 270,764
|Long-term debt                                                                                        |                                                                                                                                                                  |                            | 763     |                   |        
|Accrued interest payable and other liabilities                                                        |                                                                                                                                                                  |                            | 3,849   |                   |        
|                                                                                                      |                                                                                                                                                                  |                            |         |                   |        
|                                                                                                      |                                                                                                                                                                  | Total liabilities          |         |                   | 275,376
|                                                                                                      |                                                                                                                                                                  |                            |         |                   |        
|Commitments and contingencies                                                                         |                                                                                                                                                                  |                            |         |                   |        
|Shareholders' equity:                                                                                 |                                                                                                                                                                  |                            |         |                   |        
|                                                                                                      | Common stockno par value; 17,777,777 shares authorized; issued and outstanding2,675,949 shares at September 30, 2002 and 2,648,577 shares at December 31, 2001 |                            |         | 6,519             |        
|                                                                                                      | Unearned ESOP shares (67,473 shares at September 30, 2002 and 73,669 shares at December 31, 2001 at cost)                                                        |                            |         | (864              | )      
|                                                                                                      | Retained earnings                                                                                                                                                |                            |         | 18,494            |        
|                                                                                                      | Accumulated other comprehensive income (Note 3)                                                                                                                  |                            |         | 15                |        
|                                                                                                      |                                                                                                                                                                  |                            |         |                   |        
|                                                                                                      |                                                                                                                                                                  | Total shareholders' equity |         |                   | 24,164 
|                                                                                                      |                                                                                                                                                                  |                            |         |                   |        
|                                                                                                      |                                                                                                                                                                  | $                          | 299,540 |                   | $      
|                                                                                                      |                                                                                                                                                                  |                            |         |                   |        

See
Notes to Unaudited Consolidated Financial Statements

2

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COMMUNITY VALLEY BANCORP  CONSOLIDATED STATEMENT OF INCOME (Unaudited)

|                                                                |                                                  | For the periods ended September 30,
|--------------------------------------------------------------- | ------------------------------------------------ | -----------------------------------
|
|
|
|Interest income:                                                |                                                  |                                    
|                                                                | Interest and fees on loans                       |                                    
|                                                                | Interest on Federal funds sold                   |                                    
|                                                                | Interest on deposits in banks                    |                                    
|                                                                | Interest and dividends on investment securities: |                                    
|                                                                |                                                  | Taxable                            
|                                                                |                                                  | Exempt from Federal income taxes   
|                                                                |                                                  | Dividends                          
|                                                                |                                                  |                                    
|                                                                |                                                  |                                    
|                                                                |                                                  |                                    
|Interest expense:                                               |                                                  |                                    
|                                                                | Interest on deposits                             |                                    
|                                                                | Interest on long-term debt                       |                                    
|                                                                |                                                  |                                    
|Total interest expense                                          |                                                  |                                    
|                                                                |                                                  |                                    
|                                                                |                                                  |                                    
|Provision for loan losses                                       |                                                  |                                    
|                                                                |                                                  |                                    
|                                                                |                                                  |                                    
|                                                                |                                                  |                                    
|Non-interest income                                             |                                                  |                                    
|                                                                |                                                  |                                    
|Non-interest expenses:                                          |                                                  |                                    
|                                                                | Salaries and employee benefits                   |                                    
|                                                                | Occupancy                                        |                                    
|                                                                | Furniture and equipment                          |                                    
|                                                                | Other expense                                    |                                    
|                                                                |                                                  |                                    
|                                                                |                                                  |                                    
|                                                                |                                                  |                                    
|                                                                |                                                  |                                    
|Income taxes                                                    |                                                  |                                    
|                                                                |                                                  |                                    
|                                                                |                                                  |                                    
|                                                                |                                                  |                                    
|Basic earnings per share (Note 2)                               |                                                  | $                                  
|                                                                |                                                  |                                    
|Diluted earnings per share (Note 2)                             |                                                  | $                                  
|                                                                |                                                  |                                    
|Cash dividends per share of issued and outstanding common stock |                                                  | $                                  
|                                                                |                                                  |                                    

See
Notes to Unaudited Consolidated Financial Statements

3

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COMMUNITY VALLEY BANCORP  CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY  (Unaudited)  (In thousands except number of shares)

|                                                  |                                         | Common Stock                                                 |                            |   |       |   |   | Accumulated
Other
Comprehensive
Income |   |   |        |      
|------------------------------------------------- | --------------------------------------- | ------------------------------------------------------------ | -------------------------- | - | ----- | - | - | -------------------------------------- | - | - | ------ | -----
|
|
|Balance, January 1, 2001                          |                                         | 2,438,649                                                    |                            | $ | 5,145 |   | $ | (671                                   | ) | $ | 12,370 |      
|Comprehensive income (Note 3):                    |                                         |                                                              |                            |   |       |   |   |                                        |   |   |        |      
|                                                  | Net income                              |                                                              |                            |   |       |   |   |                                        |   |   |        | 3,811
|                                                  |                                         |                                                              |                            |   |       |   |   |                                        |   |   |        |      
|Exercise of stock options and related tax benefit |                                         | 209,928                                                      |                            |   | 908   |   |   |                                        |   |   |        |      
|Earned ESOP shares                                |                                         |                                                              |                            |   | 78    |   |   | 61                                     |   |   |        |      
|Shares acquired by ESOP                           |                                         |                                                              |                            |   |       |   |   | (292                                   | ) |   |        |      
|Cash dividends$.30 per share                     |                                         |                                                              |                            |   |       |   |   |                                        |   |   | (590   | )    
|                                                  |                                         |                                                              |                            |   |       |   |   |                                        |   |   |        |      
|Balance, December 31, 2001                        |                                         | 2,648,577                                                    |                            |   | 6,131 |   |   | (902                                   | ) |   | 15,591 |      
|Comprehensive income (Note 3):                    |                                         |                                                              |                            |   |       |   |   |                                        |   |   |        |      
|                                                  | Net income                              |                                                              |                            |   |       |   |   |                                        |   |   |        | 3,517
|                                                  | Other comprehensive income, net of tax: |                                                              |                            |   |       |   |   |                                        |   |   |        |      
|                                                  |                                         | Unrealized gains on available-for-sale investment Securities |                            |   |       |   |   |                                        |   |   |        |      
|                                                  |                                         |                                                              |                            |   |       |   |   |                                        |   |   |        |      
|                                                  |                                         |                                                              | Total comprehensive income |   |       |   |   |                                        |   |   |        |      
|                                                  |                                         |                                                              |                            |   |       |   |   |                                        |   |   |        |      
|Exercise of stock options and related tax benefit |                                         | 27,372                                                       |                            |   | 313   |   |   |                                        |   |   |        |      
|Earned ESOP shares                                |                                         |                                                              |                            |   | 80    |   |   | 38                                     |   |   |        |      
|Cash in lieu of fractional shares                 |                                         |                                                              |                            |   | (5    | ) |   |                                        |   |   |        |      
|Cash dividends                                    |                                         |                                                              |                            |   |       |   |   |                                        |   |   | (614   | )    
|                                                  |                                         |                                                              |                            |   |       |   |   |                                        |   |   |        |      
|Balance, September 30, 2002                       |                                         | 2,675,949                                                    |                            | $ | 6,519 |   | $ | (864                                   | ) | $ | 18,494 |      
|                                                  |                                         |                                                              |                            |   |       |   |   |                                        |   |   |        |      

See Notes to Unaudited Consolidated Financial Statements

4

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COMMUNITY VALLEY BANCORP  CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

|                                                                                  |                                                                       | For the nine months ended
September 30,          |       
|--------------------------------------------------------------------------------- | --------------------------------------------------------------------- | ------------------------------------------------ | ------
|
|
|Cash flows from operating activities:                                             |                                                                       |                                                  |       
|Net income                                                                        |                                                                       | $                                                | 3,517 
|Adjustments to reconcile net income to net cash provided by operating activities: |                                                                       |                                                  |       
|                                                                                  | Provision for loan losses                                             |                                                  |       
|                                                                                  | Deferred loan origination costs, net                                  |                                                  |       
|                                                                                  | Depreciation and amortization                                         |                                                  |       
|                                                                                  | Net decrease (increase) in loans held for sale                        |                                                  |       
|                                                                                  | Decrease (increase) in cash surrender value of life insurance         |                                                  |       
|                                                                                  | Compensation expense on cashless exchange of stock options            |                                                  |       
|                                                                                  | Gain on sale of equipment                                             |                                                  |       
|                                                                                  | Loss on sale of OREO                                                  |                                                  |       
|                                                                                  | Deferred taxes                                                        |                                                  |       
|                                                                                  | (Increase) decrease in accrued interest receivable and other assets   |                                                  |       
|                                                                                  | (Decrease) increase in accrued interest payable and other liabilities |                                                  |       
|                                                                                  |                                                                       |                                                  |       
|                                                                                  |                                                                       | Net cash provided by operating activities        |       
|                                                                                  |                                                                       |                                                  |       
|Cash flows from investing activities:                                             |                                                                       |                                                  |       
|                                                                                  | Net (increase) decrease in interest-bearing deposits in banks         |                                                  |       
|                                                                                  | Proceeds from called held-to-maturity investment securities           |                                                  |       
|                                                                                  | Purchase of held-to-maturity investment securities                    |                                                  |       
|                                                                                  | Change in bank premises and equipment                                 |                                                  |       
|                                                                                  | Net increase in loans                                                 |                                                  |       
|                                                                                  |                                                                       |                                                  |       
|                                                                                  |                                                                       | Net cash used in investing activities            |       
|                                                                                  |                                                                       |                                                  |       
|Cash flows from financing activities:                                             |                                                                       |                                                  |       
|                                                                                  | Net increase in demand, interest-bearing and savings deposits         |                                                  | $     
|                                                                                  | Net (decrease) increase in time deposits                              |                                                  |       
|                                                                                  | (Repayment of) proceeds from ESOP loan, net                           |                                                  |       
|                                                                                  | Payment of cash dividends                                             |                                                  |       
|                                                                                  | Exercise of stock options                                             |                                                  |       
|                                                                                  | Cash paid for fractional shares                                       |                                                  |       
|                                                                                  |                                                                       |                                                  |       
|                                                                                  |                                                                       | Net cash provided by financing activities        |       
|                                                                                  |                                                                       |                                                  |       
|                                                                                  |                                                                       | (Decrease) increase in cash and cash equivalents |       
|Cash and cash equivalents at beginning of year                                    |                                                                       |                                                  | 49,672
|                                                                                  |                                                                       |                                                  |       
|Cash and cash equivalents at end of period                                        |                                                                       | $                                                | 47,348
|                                                                                  |                                                                       |                                                  |       

See Notes to Unaudited Consolidated Financial Statements

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COMMUNITY VALLEY BANCORP AND SUBSIDIARY  NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION

In May 2002, shareholders of Butte Community Bank (the "Bank") approved a plan of reorganization and merger whereby the Bank became a wholly owned
subsidiary of a newly formed bank holding company, Community Valley Bancorp. Management expects that the holding company structure will facilitate growth within the banking field and in areas related
to banking, either by the creation of new subsidiaries or the acquisition of existing companies and banks.

The
accompanying unaudited consolidated financial statements of Community Valley Bancorp and subsidiary (the "Company") have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. In the opinion of management, all adjustments (which consist solely of normal recurring accruals) considered necessary for a fair presentation of the results for the
interim periods presented have been included. These interim consolidated financial statements should be read in conjunction with the financial statements and related notes contained in the Company's
2001 Annual Report to Shareholders.

The
consolidated financial statements include the accounts of the Company and its wholly owned bank subsidiary, Butte Community Bank. All significant inter-company balances and
transactions have been eliminated in consolidation. The results of operations for the three-month and nine- month periods ended September 30, 2002 may not necessarily be indicative
of the operating results for the full year 2002.

2.  EARNINGS PER SHARE COMPUTATION

Basic earnings per share are computed by dividing net income by the weighted average common shares outstanding for the period (2,655,710 and 2,650,385 shares for
the three and nine month periods ended September 30, 2002, and 2,537,889 and 2,464,928 shares for the three and nine month periods ended September 30, 2001). Diluted earnings per share
reflect the potential dilution that could occur if outstanding stock options were exercised. Diluted earnings per share is computed by dividing net income by the weighted average common shares
outstanding for the period plus the dilutive effect of options (208,918 and 198,883 shares for the three and nine month periods ended September 30, 2002 and 176,791 and 206,976 shares for the
three and nine month periods ended September 30, 2001). Earnings per share are retroactively adjusted for stock splits and dividends for all periods presented.

3.  COMPREHENSIVE INCOME

Comprehensive income is reported in addition to net income for all periods presented. Comprehensive income is made up of net income plus other comprehensive
income. Other comprehensive income, net of taxes, is comprised of changes in unrealized gains or losses, net of taxes, on available-for-sale securities, adjusted for the effect
of realized gains or losses on available-for-sale securities, net of taxes. Total comprehensive income for the three and nine month periods ended September 30, 2002 was
$1,297,000 and 3,532,000, respectively. The Company did not generate other comprehensive income in 2001. Therefore, total comprehensive income equaled net income for the three and nine month periods
ended September 30, 2001.

4.  ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Standards Accounting Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, Business
Combinationscovering elimination of pooling

6

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accounting treatment in business combinations and financial accounting and reporting for acquired goodwill and other intangible assets at acquisition. SFAS No. 141 supersedes APB Opinion
No. 16,Business Combinationsand SFAS No. 38,Accounting for Preacquisition Contingencies of Purchased
Enterprisesand is effective for transactions initiated after June 30, 2001. Under SFAS No. 141, all mergers and business combinations initiated after the
effective date must be accounted for as "purchase" transactions. Goodwill in any merger or business combination which was not initiated prior to the effective date will be recognized as an asset in
the financial statements, measured as the excess of the cost of an acquired entity over the net of the amounts assigned to identifiable assets acquired and liabilities assumed, and then tested for
impairment to assess losses and expensed against earnings only in the periods in which the recorded value of goodwill exceeded its implied fair value. The FASB concurrently adopted SFAS
No. 142,Goodwill and other Intangible Assetsto address financial accounting and reporting for acquired goodwill and other intangible assets at
acquisition in transactions other than business combinations covered by SFAS No. 141, and the accounting treatment of goodwill and other intangible assets after acquisition and initial
recognition in the financial statements. SFAS No. 142
supersedes APB Opinion No. 17,Intangible Assetsand is required to be applied at the beginning of an entity's fiscal year to all goodwill and
other intangible assets recognized in its financial statements at that date, for fiscal years beginning after December 15, 2001. The Company adopted SFAS No. 141 and No. 142 on
January 1, 2002. The adoption of these Statements did not have a material effect on the Company's financial position or results of its operations.

In
April 2002, the FASB issued SFAS No. 145,Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections. This Statement rescinds SFAS No. 4,Reporting Gains and Losses from Extinguishment of Debt, and an
amendment of that Statement, SFAS No. 64,Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This Statement also
rescinds SFAS No. 44,Accounting for Intangible Assets of Motor Carriers. This Statement amends SFAS No. 13, Accounting for Leases, to eliminate
an inconsistency between the required accounting for sale-leaseback transactions and the required
accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This Statement also amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. This Statement is effective for fiscal years beginning after
May 15, 2002. Adoption of this statement is not expected to have a material effect on the Company's consolidated financial statements.

In
June 2002, the FASB issued SFAS No. 146,Accounting for Costs Associated with Exit or Disposal Activities. This Statement
addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring). This Statement is effective for exit or disposal activities initiated after December 31, 2002. Adoption of this statement is not expected to have a
material effect on the Company's consolidated financial statements.

On
October 1, 2002, the FASB issued SFAS Statement No. 147,Acquisitions of Certain Financial Institutions.This statement,
which provides guidance on the accounting for the acquisition of a financial institution, applies to all acquisitions except those between two or more mutual enterprises (the Board has a separate
project on its agenda that will provide guidance on the accounting for transactions between mutual enterprises).

The
provisions of Statement 147 reflect the following conclusions:



7

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The
adoption of SFAS No. 147 is not expected to have a material effect on the Company's consolidated financial statements.

8

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Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS                OF OPERATIONS OF
COMMUNITY VALLEY BANCORP

The following is Community Valley Bancorp (the "Company") management's discussion and analysis of the significant changes in balance sheet accounts for
September 30, 2002 and December 31, 2001 and income and expense accounts for the three and nine-month periods ended September 30, 2002 and 2001. The discussion is
designed to provide a better understanding of significant trends related to the Company's financial condition, results of operations, liquidity, capital resources and interest rate sensitivity.

In
addition to the historical information contained herein, this report on Form 10-Q contains certain forward-looking statements. The reader of this report should
understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Company's actual results could differ materially from those
suggested by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, variances in the actual versus projected growth in assets,
return on assets, loan losses, expenses, rates charged on loans and earned on securities investments, rates paid on deposits, competition effects, fee and other noninterest income earned, general
economic conditions, nationally, regionally and in the operating market areas of the Company and its subsidiaries, changes in the regulatory environment, changes in business conditions and inflation,
changes in securities markets, data processing problems, a decline in real estate values in the Company's market area, the California power shortage, the effects of terrorism, including the events of
September 11, 2001 and thereafter, and the conduct of the war on terrorism by the United States and its allies, as well as other factors. This entire report should be read putting such
forward-looking statements in context.

General Development of Business

The Company is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Company was incorporated under the laws of the State
of California in 2002. As a bank holding company, the Company is authorized to engage in the activities permitted under the Bank Holding Company Act of 1956, as amended, and regulations thereunder.
Its principal office is located at 2041 Forest Avenue, Chico, California 95928 and its telephone number is (530) 899-2344.

The
Company owns 100% of the issued and outstanding common shares of Butte Community Bank. Butte Community Bank was incorporated and commenced business in Paradise and Oroville,
California, in 1990. Butte Community Bank operates seven full service offices within its primary service areas of Butte and Sutter Counties. The Bank also maintains a Loan Production Office in
Roseville. Butte Community Bank's primary business is serving the commercial banking needs of small to mid-sized businesses and consumers within those counties. Butte Community Bank
accepts checking and savings deposits, offers money market deposit accounts and certificates of deposit, makes secured and unsecured commercial, secured real estate, and other installment and term
loans and offers other customary banking services.

Overview

The Company recorded net income of $1,292,000 for the quarter ended September 30, 2002, which was a 30% increase from the $994,000 reported for the same
period of 2001. Diluted earnings per share for the third quarter of 2002 were $0.45, compared to the $0.37 recorded in the third quarter of 2001. The return on average equity (ROAE) and the return on
average assets (ROA) for the third quarter of 2002 were 21.52% and 1.79%, respectively, as compared to 19.74% and 1.53%, respectively, for the same period in 2001.

9

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Net
income for the nine months ended September 30, 2002 was $3,517,000 (up 19.2%) compared to the $2,951,000 recorded in the first nine months of 2001. Through
September 30, 2002, diluted earnings per share were $1.23, ROAE was 20.74% and ROA was 1.70% as compared to $1.10, 21.05% and 1.64%, respectively, for the same period in 2001.

Total
assets of the Company increased by $27,076,000 (9.9%) from December 31, 2001 to $299,540,000 at September 30, 2002. Net loans totaled $229,259,000, up $25,405,000
(12.5%) from the ending balances on December 31, 2001. Deposit balances at September 30, 2002 totaled $270,764,000, up $24,344,000 (9.9%) from December 31, 2001.

The
Company ended the third quarter of 2002 with a Tier 1 capital ratio of 9.91% and a total risk-based capital ratio of 11.1% versus 10.4% and 11.6%, respectively, at
December 31, 2001.

Table
One below provides a summary of the components of net income for the periods indicated:

Table One: Components of Net Income

|                                                                |  | Three months ended
September 30, |        | Nine months ended
September 30, |  
|--------------------------------------------------------------- |  | -------------------------------- | ------ | ------------------------------- | -
|
|
|Net interest income                                             |  | $                                | 3,773  |                                 | $
|Provision for loan losses                                       |  |                                  | (150   | )                               |  
|Non-interest income                                             |  |                                  | 1,300  |                                 |  
|Non-interest expense                                            |  |                                  | (2,778 | )                               |  
|Provision for income taxes                                      |  |                                  | (853   | )                               |  
|                                                                |  |                                  |        |                                 |  
|Net income                                                      |  | $                                | 1,292  |                                 | $
|                                                                |  |                                  |        |                                 |  
|Average total assets (In millions)                              |  | $                                | 286.2  |                                 | $
|Net income (annualized) as a percentage of average total assets |  |                                  | 1.79   | %                               |  

Results of Operations

Net Interest Income and Net Interest Margin

Net interest income represents the excess of interest and fees earned on interest earning assets (loans, securities, federal funds sold and investments in time
deposits) over the interest paid on deposits and borrowed funds. Net interest margin is net interest income expressed as a percentage of average earning assets.

The
Company's net interest margin was 5.78% for the three months ended September 30, 2002, 5.32% for the three months ended September 30, 2001, 5.34% for the nine months
ended September 30, 2002 and 5.69% for the nine months ended September 30, 2001. Net interest income increased $659,000 (21.2%) for the third quarter of 2002 compared to the same period
in 2001. Net interest income increased $814,000 (8.9%) for the nine months ended September 30, 2002 over the same period in 2001. The primary reason for this increase was the loan growth and
the resulting interest income and fees associated with that growth.

Interest
expense was $773,000 (41.0%) lower in the third quarter of 2002 versus the prior year period. The average balances of interest bearing liabilities were $12,257,000 (6.2%) higher
in the third quarter of 2002 versus the same quarter in 2001. Even though the interest bearing balances increased, rates paid on these liabilities decreased 171 basis points on a quarter over quarter
basis. Interest expense was $2,060,000 (36.2%) lower in the nine month period ended September 30, 2002 versus the prior year period. The average balances of interest bearing liabilities were
$20,414,000 (11.1%) higher in the nine-month period ended September 30, 2002 versus the same period in 2001. Rates paid on interest bearing liabilities decreased 177 basis points on
a year over year basis. The reason for this

10

---

decrease was the ability of the Bank to change the mix of the deposits away from higher interest rate certificates of deposit to lower rate demand deposits and to lower the average cost of
certificates of deposit as higher cost deposits were repriced.

Table
Two, Analysis of Net Interest Margin on Earning Assets, and Table Three, Analysis of Volume and Rate Changes on Net Interest Income and Expenses, are provided to enable the reader
to understand the components and past trends of the Company's interest income and expense. Table Two provides an analysis of net interest margin on earning assets setting forth average assets,
liabilities and shareholders' equity; interest income earned and interest expense paid and average rates earned and paid; and the net interest margin on earning assets.

Table Two: Analysis of Net Interest Margin on Earning Assets (Unaudited)

|                                    |                                      | Three Months Ended September 30, |        
|----------------------------------- | ------------------------------------ | -------------------------------- | -------
|
|
|Assets:                             |                                      |                                  |        
|Earning assets:                     |                                      |                                  |        
|                                    | Loans (1)                            |                                  | $      
|                                    | Taxable investment securities        |                                  |        
|                                    | Tax-exempt investment securities (2) |                                  |        
|                                    | Federal funds sold                   |                                  |        
|                                    | Investments in time deposits         |                                  |        
|                                    |                                      |                                  |        
|Total earning assets                |                                      |                                  | 258,847
|                                    |                                      |                                  |        
|Cash & due from banks               |                                      |                                  | 13,270 
|Other assets                        |                                      |                                  | 14,076 
|                                    |                                      |                                  |        
|                                    |                                      | $                                | 286,193
|                                    |                                      |                                  |        
|Liabilities & Shareholders' Equity: |                                      |                                  |        
|Interest bearing liabilities:       |                                      |                                  |        
|                                    | NOW & MMDA                           |                                  | $      
|                                    | Savings                              |                                  |        
|                                    | Time deposits                        |                                  |        
|                                    | Other borrowings                     |                                  |        
|                                    |                                      |                                  |        
|Total interest bearing liabilities  |                                      |                                  | 208,839
|                                    |                                      |                                  |        
|Demand deposits                     |                                      |                                  | 49,635 
|Other liabilities                   |                                      |                                  | 3,895  
|                                    |                                      |                                  |        
|Total liabilities                   |                                      |                                  | 262,369
|Shareholders' equity                |                                      |                                  | 23,824 
|                                    |                                      |                                  |        
|                                    |                                      | $                                | 286,193
|                                    |                                      |                                  |        
|Net interest income & margin (3)    |                                      |                                  |        
|                                    |                                      |                                  |        

---

11

---

|                                    |                                      | Nine Months Ended September 30, |        
|----------------------------------- | ------------------------------------ | ------------------------------- | -------
|
|
|Assets:                             |                                      |                                 |        
|Earning assets:                     |                                      |                                 |        
|                                    | Loans (1)                            |                                 | $      
|                                    | Taxable investment Securities        |                                 |        
|                                    | Tax-exempt investment securities (2) |                                 |        
|                                    | Federal funds sold                   |                                 |        
|                                    | Investments in time deposits         |                                 |        
|                                    |                                      |                                 |        
|Total earning assets                |                                      |                                 | 249,960
|                                    |                                      |                                 |        
|Cash & due from banks               |                                      |                                 | 12,673 
|Other assets                        |                                      |                                 | 13,642 
|                                    |                                      |                                 |        
|                                    |                                      | $                               | 276,275
|                                    |                                      |                                 |        
|Liabilities & Shareholders' Equity: |                                      |                                 |        
|Interest bearing liabilities:       |                                      |                                 |        
|                                    | NOW & MMDA                           |                                 | $      
|                                    | Savings                              |                                 |        
|                                    | Time deposits                        |                                 |        
|                                    | Other borrowings                     |                                 |        
|                                    |                                      |                                 |        
|Total interest bearing liabilities  |                                      |                                 | 205,070
|                                    |                                      |                                 |        
|Demand deposits                     |                                      |                                 | 44,866 
|Other liabilities                   |                                      |                                 | 3,671  
|                                    |                                      |                                 |        
|Total liabilities                   |                                      |                                 | 253,607
|Shareholders' equity                |                                      |                                 | 22,668 
|                                    |                                      |                                 |        
|                                    |                                      | $                               | 276,275
|                                    |                                      |                                 |        
|Net interest income & margin (3)    |                                      |                                 |        
|                                    |                                      |                                 |        

---

Table
Three sets forth a summary of the changes in interest income and interest expense from changes in average asset and liability balances (volume) and changes in average interest
rates. On a year to date
basis through September 30, 2002, net interest income has increased $814,000 over the same time period in 2001. Interest income from earning assets has decreased by $1,246,000. Changes in the
volume of earning assets, primarily loans, have resulted in an increase in interest income of $1,764,000 while interest income from changes in rates has decreased by $3,010,000. Interest expense for
the first nine months of 2002 is $2,060,000 less than the same time period in 2001. Changes in the volume of interest bearing liabilities, primarily the reduction of balances in certificates of
deposit and the increase in balances of demand deposits, have resulted in a net reduction of interest expense of $89,000. Changes in average rates paid primarily on certificates of deposit and demand
deposits have resulted in an interest expense reduction of $1,971,000.

12

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Table Three: Analysis of Volume and Rate Changes on Net Interest Income and Expenses (Unaudited)

|                                      |                                      | Three Months Ended
September 30, 2002 over 2001 |    
|------------------------------------- | ------------------------------------ | ----------------------------------------------- | ---
|
|
|Increase (decrease) due to change in: |                                      |                                                 |    
|Interest-earning assets:              |                                      |                                                 |    
|                                      | Net loans (1)(2)                     |                                                 | $  
|                                      | Taxable investment securities        |                                                 |    
|                                      | Tax exempt investment securities (3) |                                                 |    
|                                      | Federal funds sold                   |                                                 |    
|                                      | Investment in time deposits          |                                                 |    
|                                      |                                      |                                                 |    
|                                      |                                      | Total                                           |    
|                                      |                                      |                                                 |    
|Interest-bearing liabilities:         |                                      |                                                 |    
|                                      | Demand deposits                      |                                                 |    
|                                      | Savings deposits                     |                                                 |    
|                                      | Time deposits                        |                                                 |    
|                                      | Other borrowings                     |                                                 |    
|                                      |                                      |                                                 |    
|                                      |                                      | Total                                           |    
|                                      |                                      |                                                 |    
|Interest differential                 |                                      | $                                               | 707
|                                      |                                      |                                                 |    

|                                      |                                      | Nine Months Ended
September 30, 2002 over 2001 |      
|------------------------------------- | ------------------------------------ | ---------------------------------------------- | -----
|
|
|Increase (decrease) due to change in: |                                      |                                                |      
|Interest-earning assets:              |                                      |                                                |      
|                                      | Net loans (1)(2)                     |                                                | $    
|                                      | Taxable investment securities        |                                                |      
|                                      | Tax exempt investment securities (3) |                                                |      
|                                      | Federal funds sold                   |                                                |      
|                                      | Investment in time deposits          |                                                |      
|                                      |                                      |                                                |      
|                                      |                                      | Total                                          |      
|                                      |                                      |                                                |      
|Interest-bearing liabilities:         |                                      |                                                |      
|                                      | Demand deposits                      |                                                |      
|                                      | Savings deposits                     |                                                |      
|                                      | Time deposits                        |                                                |      
|                                      | Other borrowings                     |                                                |      
|                                      |                                      |                                                |      
|                                      |                                      | Total                                          |      
|                                      |                                      |                                                |      
|Interest differential                 |                                      | $                                              | 1,853
|                                      |                                      |                                                |      

---

13

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Provision for Loan Losses

The Company provided $150,000 for loan and lease losses for the third quarter of 2002 as compared to $100,000 for the third quarter of 2001. Net loan and lease
charge-offs/recoveries for the three months ended September 30, 2002 were $12,000 in recoveries as compared to $37,000 in charge-offs for the three months ended
September 30, 2001. For the first nine months of 2002, the Company made provisions for loan losses of $403,000 and net loan recoveries totaling $9,000. This compares to provisions for loan
losses of $475,000 and net loan charge-offs of $113,000 for the first nine months of 2001. The decrease in the provision during 2002 as compared to 2001 was primarily related to the slower
growth in the loan and lease portfolio and the year-to-date net recoveries of $9,000 compared to $113,000 in charge-offs during 2001.

Noninterest Income

Table Four below provides a summary of the components of noninterest income for the periods indicated (dollars in thousands):

Table Four: Components of Noninterest Income (Unaudited)

|                                    |                          | Three Months Ended
September 30, |     | Nine Months Ended
September 30,
|----------------------------------- | ------------------------ | -------------------------------- | --- | -------------------------------
|
|Service charges on deposit accounts |                          | $                                | 264 |                                
|Loan servicing fees                 |                          |                                  | 110 |                                
|Feesalternative investment sales   |                          |                                  | 6   |                                
|Merchant fee income                 |                          |                                  | 97  |                                
|Gain on the sale of loans           |                          |                                  | 517 |                                
|Gain on sale of other assets        |                          |                                  | 0   |                                
|Loan extension fees                 |                          |                                  | 33  |                                
|Other                               |                          |                                  | 273 |                                
|                                    |                          |                                  |     |                                
|                                    | Total noninterest income |                                  | $   | 1,300                          
|                                    |                          |                                  |     |                                

Noninterest
income was up $340,000 (35.4%) to $1,300,000 for the three months ended September 30, 2002 as compared to $960,000 for the three months ended September 30,
2001. The increase in noninterest income for the quarter can be attributed to an increase in fees from service charges (up 13.3%), loan servicing fees (up 41%), merchant fee income (up 27.6%),gain on
sale of loans (up 46.5%) and loan extension fees (up 9%). The increases were offset by decreases in fees from alternative investment sales commissions (down 50%). The increase in service charge income
was the result of additional deposit accounts opened during the third quarter. The loan servicing income increased as a result of more loans being sold on the secondary market through FNMA (Fannie
Mae), SBA (Small Business Administration) and FHMA (Farmers Home Administration) through their USDA (United States Department of Agriculture) Business and Industry program. The Company retains the
servicing of loans sold through these programs, which generates fee income. The Investment Department, which sells third-party mutual funds and annuities, experienced a decrease in fees due to a
decrease in sales during the third quarter.

For
the nine months ended September 30, 2002, noninterest income was up $1,944,000 (71%) to $4,680,000 as compared to the $2,736,000 total for the nine months ended
September 30, 2001. The vast majority of this increase ($1,174,000) represents the tax-free net proceeds from key man insurance policies the Bank received in March of 2002 as a
result of the death of the Company's Chief Operating Officer, John Stanton. As with the quarter-to-quarter comparison, the remainder of the increase can be attributed to
additional fees from service charges on deposit accounts (up 6.3%), loan servicing fees

14

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(up 16.2%), alternative investment sales commissions (up 217%) merchant fee income (up 17.3%), gains on the sale of loans (up 16.8%), and loan extension fees (up 62%).

Noninterest Expense

Noninterest expense increased $461,000 (19.9%) to $2,778,000 in the third quarter of 2002 versus $2,317,000 in the third quarter of 2001. On a quarter over
quarter basis, salary and employee benefits increased $315,000 (25.9%) resulting from normal cost of living raises, salaries paid to the new employees at the new Central Chico office and expanded Yuba
City office, commissions paid to Butte Community Bank's Real Estate Loan agents and staffing additions made during the year as the Company continues to grow and implement the new technology acquired
during the year. Benefit costs and employer taxes increased commensurate with the salaries. On a quarter over quarter basis, occupancy expenses were higher by $38,000 (27.9%) representing the lease
agreement on the new Central Chico office. Fixed asset expense was $231,000 in the third quarter of 2002 compared to $210,000 in the same period of 2001, representing a 10% increase. This increase
relates to technology upgrades made to our core banking system, and equipment needed for the new Central Chico office. Other expenses increased $87,000 (11.5%) to a total of $841,000 in the third
quarter of 2002 versus the third quarter of 2001. Higher professional fees accounted for the increase in other expense. The
increase in professional fees (up $132,000 or 59.5%) relates to legal fees paid to resolve problem loan credits and accounting and legal fees related to the formation of the holding company, Community
Valley Bancorp.

Noninterest
expense for the nine-month period ended September 30, 2002 was $9,260,000 versus $6,592,000 for the same period in 2001. Salaries and benefits increased
$930,000 (27.4%) due to cost of living raises and staffing additions made during the year as the Company continues to grow and to implement the new technology acquired during the year. Full time
equivalent employees increased to 147 at September 30, 2002 from 122 at September 30, 2001. Benefit costs and employer taxes increased commensurate with the salaries. Premises expense
was up $118,000 (31.7%) from the first nine months of 2001 to the first nine months of 2002. Fixed asset expense was up $6,000 (.9%). As with the quarter-to-quarter comparison,
much of the increase in premise expense is related to the lease agreement implemented during the year for the Central Chico office. Other expenses increased $1,614,000 (73.8%). As discussed in the
non-interest income section, the death of the Company's Chief Operating Officer, John Stanton, resulted in the accelerated accrual of his salary continuation plan benefits totaling
$1,081,643 that will be subsequently paid to his beneficiary. Professional fees accounted for $131,000 (59.0%) of the increase in other expense. The increase in professional fees relates to legal fees
paid to resolve problem loan credits and accounting and legal fees related to the formation of the holding company, Community Valley Bancorp.

Provision for Income Taxes

The effective tax rate for the third quarter and first nine months of 2002 was 39.8% and 29.8%, respectively, versus 40% and 39.1%, respectively, for the same two
periods of 2001. The lower effective tax rate for the first nine months of 2002 was attributable to the tax-free net proceeds from key man insurance policies previously described.

Balance Sheet Analysis

The Company's total assets were $299,540,000 at September 30, 2002 as compared to $272,464,000 at December 31, 2001, representing an increase of
9.9%. The average balance of total assets for the nine months ended September 30, 2002 was $276,275,000, which represents an increase of $35,921,000 (15%) over the $240,354,000 during the
nine-month period ended September 30, 2001. Total average assets for the third quarter of 2002 were $286,193,000 compared to $257,267,000 during the third quarter of 2001. The
source of this growth has been the increase in the Bank's loan portfolio, particularly in the third quarter of 2002.

15

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Loans

The Company concentrates its lending activities in the following principal areas: 1) commercial; 2) commercial real estate; 3) real estate
construction (both commercial and residential); 4) residential real estate; 5) agriculture; and 6) consumer loans. Commercial and residential real estate loans are generally
secured by improved property, with original maturities of 3-10 years. At September 30, 2002, these principal areas accounted for approximately 25%, 13%, 40%, 4%, 10%, and 8%,
respectively, of the Company's loan portfolio. The mix changed from December 31, 2001 in the areas of commercial loans and real estate construction. The mix at December 31, 2001 was 20%,
15%, 42%, 5%, 9%, and 9%. These changes were consistent with the Company's plan to diversify the portfolio and reduce the concentration in single-family real estate construction loans. Continuing
strong economic activity in the Company's market area, new borrowers developed through the Company's marketing efforts and credit extensions expanded to existing borrowers, offset by normal loan
paydowns and payoffs, resulted in net increases in loan balances for commercial loans ($14,623,000 or 34.6%), real estate construction ($7,078,000 or 8.2%), residential real estate ($456,000 or 4.9%),
agricultural loans ($3,561,000 or 18.4%) and consumer ($909,000 or 4.9%), and decreases in commercial real estate ($1,667,000 or 6%), Table Five below summarizes the composition of the loan portfolio
as of September 30, 2002 and December 31, 2001.

Table Five: Loan and Lease Portfolio Composition (Unaudited)

|(In thousands)                      |              | September 30,
2002 |         | December 31,
2001 |  
|----------------------------------- | ------------ | ------------------ | ------- | ----------------- | -
|Commercial                          |              | $                  | 56,889  |                   | $
|Real estate:                        |              |                    |         |                   |  
|                                    | Commercial   |                    |         | 29,066            |  
|                                    | Construction |                    |         | 93,875            |  
|                                    | Residential  |                    |         | 9,688             |  
|Agriculture                         |              |                    | 22,967  |                   |  
|Consumer                            |              |                    | 19,584  |                   |  
|                                    |              |                    |         |                   |  
|Total loans                         |              |                    | 232,069 |                   |  
|Allowance for loan and lease losses |              |                    | (2,809  | )                 |  
|Deferred loan and lease fees        |              |                    | (679    | )                 |  
|                                    |              |                    |         |                   |  
|Total net loans                     |              | $                  | 229,259 |                   | $
|                                    |              |                    |         |                   |  

The
majority of the Company's loans are direct loans made to individuals and local businesses. The Company relies substantially on local promotional activity and personal contacts by
bank officers, directors and employees to compete with other financial institutions. The Company makes loans to borrowers whose applications include a sound purpose and a viable primary repayment
source, generally supported by a secondary source of repayment.

Commercial
loans consist of credit lines for operating needs, loans for equipment purchases, working capital, and various other business loan products. Consumer loans include a range of
traditional consumer loan products such as personal lines of credit and loans to finance purchases of autos, boats, recreational vehicles, mobile homes and various other consumer items. Construction
loans are generally composed of commitments to customers within the Company's service area for construction of both commercial properties and custom and semi-custom single-family
residences. Other real estate loans consist primarily of loans secured by first trust deeds on commercial and residential properties typically with maturities from 3 to 10 years and original
loan to value ratios generally from 65% to 80%. Agriculture loans consist primarily of crop loans to farmers of peaches, prunes, walnuts, and almonds. In general, except in the case of loans with SBA
or FMHA guarantees,

16

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the Company does not make long-term mortgage loans; however, Butte Community Bank has a residential lending division to assist customers in securing most forms of longer term
single-family mortgage financing.

Risk Elements

The Company assesses and manages credit risk on an ongoing basis through a total credit culture that emphasizes excellent credit quality, extensive internal
monitoring and established formal lending policies. Additionally, the Company contracts with an outside loan review consultant to periodically review the existing loan portfolio. Management believes
its ability to identify and assess risk and return characteristics of the Company's loan portfolio is critical for profitability and growth. Management strives to continue its emphasis on credit
quality in the loan approval process, active credit administration and regular monitoring. With this in mind, management has designed and implemented a comprehensive loan review and grading system
that functions to continually assess the credit risk inherent in the loan portfolio.

Ultimately,
underlying trends in economic and business cycles may influence credit quality. The Company's business is concentrated in the Butte and Sutter County Area. The economy of
these two counties is diversified with professional services, manufacturing, agriculture and real estate investment and construction. Special emphasis is placed within the communities in which the
Company has offices (Chico, Paradise, Magalia, Oroville, Yuba City). The Company also maintains a loan production office in the city of Roseville. Single-family residential construction is the primary
lending product from this location serving the greater Sacramento area.

The
Company has significant extensions of credit and commitments to extend credit that are secured by real estate. The ultimate repayment of these loans is generally dependent on
personal or business cash flows or the sale or refinancing of the real estate. The Company monitors the effects of current and expected market conditions and other factors on the collectability of
real estate loans. The more significant factors management considers involve the following: lease, absorption and sale rates; real estate values and rates of return; operating expenses; inflation; and
sufficiency of collateral independent of the real estate including, in limited instances, personal guarantees.

In
extending credit and commitments to borrowers, the Company generally requires collateral and/or guarantees as security. The repayment of such loans is expected to come from cash flow
or from proceeds from the sale of selected assets of the borrowers. The Company's requirement for collateral and/or guarantees is determined on a case-by-case basis in
connection with management's evaluation of the creditworthiness of the borrower. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, income-producing
properties, residences and other real property. The Company secures its collateral by perfecting its security interest in business assets, obtaining deeds of trust, or outright possession among other
means.

In
management's judgment, a concentration exists in real estate loans, which represented approximately 57.1% of the Company's loan and lease portfolio at September 30, 2002, which
reflects an improvement from the 61.2% concentration level at December 31, 2001. Management believes the concentration to have no more than the normal risk of collectability; however, a
substantial decline in the economy in general, or a decline in real estate values in the Company's primary market areas in particular, could have an adverse impact on the collectability of these loans
and require an increase in the provision for loan and lease losses which could adversely affect the Company's future prospects, results of
operations, profitability and stock price. Management believes that its lending policies and underwriting standards will tend to minimize losses in an economic downturn; however, there is no assurance
that losses will not occur under such circumstances. The Company's loan policies and underwriting standards include, but are not limited to, the following: (1) maintaining a thorough
understanding of the Company's service area and originating a significant majority of its loans within that area, (2) maintaining a thorough understanding of borrowers' knowledge, capacity, and
market

17

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position in their field of expertise, (3) basing real estate loan approvals not only on market demand for the project, but also on the borrowers' capacity to support the project financially in
the event it does not perform to expectations (whether sale or income performance), and (4) maintaining conforming and prudent loan to value and loan to cost ratios based on independent outside
appraisals and ongoing inspection and analysis by the Company's lending officers.

Nonaccrual, Past Due and Restructured Loans

Management generally places loans on nonaccrual status when they become 90 days past due, unless the loan is well secured and in the process of collection.
Loans are charged off when, in the opinion of management, collection appears unlikely.

Table
Six below sets forth nonaccrual loans and loans past due 90 days or more as of September 30, 2002 and December 31, 2001.

Table Six: Non-Performing Loans (Unaudited)

|(In thousands)                               |                    | September 30,
2002 |     | December 31,
2001
|-------------------------------------------- | ------------------ | ------------------ | --- | -----------------
|Past Due 90 days or more and still accruing: |                    |                    |     |                  
|                                             | Commercial         |                    | $   |                 
|                                             | Real estate        |                    |     |                 
|                                             | Consumer and other |                    |     |                 
|                                             |                    |                    |     |                  
|Nonaccrual:                                  |                    |                    |     |                  
|                                             | Commercial         |                    |     | 134              
|                                             | Real estate        |                    |     | 460              
|                                             | Consumer and other |                    |     | 1                
|                                             |                    |                    |     |                  
|Total non-performing loans                   |                    | $                  | 595 |                  
|                                             |                    |                    |     |                  

At
September 30, 2002, non-performing loans and leases were .26% of total loans and leases. The recorded investments in loans that were considered to be impaired
totaled three loans with balances of $595,000 at September 30, 2002 and two loans with balances of $1,765,000 at December 31, 2001. One of the three impaired loans shown for
September 30, 2002 has a U.S. Government guarantee for 90% of the loan balance. The guarantee is for $414,000. The remaining two loans have a very low potential for loss. There were no loan
concentrations in excess of 10% of total loans not otherwise disclosed as a category of loans as of September 30, 2002 or December 31, 2001. Management is not aware of any potential
problem loans, which were accruing and current at September 30, 2002, where serious doubt exists as to the ability of the borrower to comply with the present repayment terms.

Allowance for Loan Losses Activity

The provision for loan losses is based upon management's evaluation of the adequacy of the existing allowance for loans outstanding. This allowance is increased
by provisions charged to expense and recoveries, and is reduced by loan charge-offs. Management determines an appropriate provision based upon the interaction of three primary factors:
(1) loan portfolio growth, (2) a comprehensive grading and review formula for total loans outstanding, and (3) estimated inherent credit risk in the portfolio.

Management
reserves 2% of credit exposures graded "Special Mention", 15% of credits classified "Substandard" and 50% of credits classified "Doubtful". These reserve factors, which are
based on historical industry standards developed by bank regulatory agencies, may be adjusted for significant commercial and real estate loans that are individually evaluated by management for
specific risk of loss. In addition, reserve factors ranging from 0.25% to 2.50% are assigned to currently performing loans that are not otherwise graded as Special Mention, Substandard or Doubtful.
These factors are assigned

18

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based on management's assessment of the following for each identified loan type: (1) inherent credit risk, (2) historical losses and, (3) where the Company has not experienced
losses, historical losses experienced by peer banks. Finally, a residual component is maintained to cover uncertainties that
could affect management's estimate of probable losses. This residual component of the allowance reflects a margin of imprecision inherent in the underlying assumptions used to estimate losses in
specifically graded loans and expected losses in the performing portfolio.

The
Loan Committee of the Bank reviews the adequacy of the allowance for loan losses at least quarterly to include consideration of the relative risks in the portfolio and current
economic conditions. The allowance is adjusted based on that review if, in the judgment of the loan committee and management, changes are warranted. The allowance for loan losses totaled $2,809,000 or
1.21% of total loans at September 30, 2002 and $2,400,000 or 1.20% at December 31, 2001. Net recoveries to average loans were 0.0214% for the third quarter of 2002 and 0.0042% for the
nine months ended September 30, 2002. Net charge-offs through the first nine months of 2001 were less than (.07%) of average loans.

Table
Seven below summarizes, for the periods indicated, the activity in the allowance for loan losses.

Table Seven: Allowance for Loan Losses (Unaudited)

|                                                                                  |             | Three Months Ended
September 30, |         | Nine Months Ended
September 30, |  
|--------------------------------------------------------------------------------- | ----------- | -------------------------------- | ------- | ------------------------------- | -
|
|
|Average loans outstanding                                                         |             | $                                | 224,182 |                                 | $
|                                                                                  |             |                                  |         |                                 |  
|Allowance for possible loan losses at beginning of period                         |             | $                                | 2,647   |                                 | $
|Loans charged off:                                                                |             |                                  |         |                                 |  
|                                                                                  | Commercial  |                                  |         |                                |  
|                                                                                  | Real estate |                                  |         |                                |  
|                                                                                  | Consumer    |                                  |         |                                |  
|                                                                                  |             |                                  |         |                                 |  
|Total                                                                             |             |                                  |        |                                 |  
|                                                                                  |             |                                  |         |                                 |  
|Recoveries of loans previously charged off:                                       |             |                                  |         |                                 |  
|                                                                                  | Commercial  |                                  |         | 12                              |  
|                                                                                  | Real estate |                                  |         |                                |  
|                                                                                  | Consumer    |                                  |         |                                |  
|                                                                                  |             |                                  |         |                                 |  
|Total                                                                             |             |                                  | 12      |                                 |  
|                                                                                  |             |                                  |         |                                 |  
|Net loan recoveries (charge offs)                                                 |             |                                  | 12      |                                 |  
|                                                                                  |             |                                  |        |                                 |  
|Additions to allowance charged to operating expenses                              |             |                                  | 150     |                                 |  
|                                                                                  |             |                                  |         |                                 |  
|Allowance for possible loan losses at end of period                               |             | $                                | 2,809   |                                 | $
|                                                                                  |             |                                  |         |                                 |  
|Ratio of net (charge-offs) recoveries to average loans outstanding                |             |                                  | .021    | %                               |  
|Provision of allowance for possible loan losses to average loans outstanding      |             |                                  | .06     | %                               |  
|Allowance for possible loan losses to loans net of deferred fees at end of period |             |                                  | 1.21    | %                               |  

It is the policy of management to maintain the allowance for loan losses at a level adequate for known and inherent risks in the portfolio. Based
on information currently available to analyze inherent credit risk, including economic factors, overall credit quality, historical delinquencies and a history of actual charge-offs,
management believes that the provision for loan losses and the allowance are prudent and adequate. The Company generally makes monthly allocations to the allowance for loan losses. The budgeted
allocation is based on estimates of loss risk and loan growth. Adjustments may be made based on differences from estimated loan growth, the types of loans constituting this growth,

19

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changes in risk ratings within the portfolio, and general economic conditions. However, no prediction of the ultimate level of loans charged off in future years can be made with any certainty.

Other Real Estate

At September 30, 2002, the Company did not have any other real estate ("ORE") properties. At December 31, 2001, the Company had one property, a
vacant lot valued at $12,000, which was subsequently sold at a net loss of approximately $2,000.

Deposits

At September 30, 2002, total deposits were $270,764,000 representing an increase of $24,334,000 (9.9%) over the December 31, 2001 balance of
$246,430,000.

Capital Resources

The current and projected capital position of the Company and the impact of capital plans and long-term strategies are reviewed regularly by
management. The Company's capital position represents the level of capital available to support continued operations and expansion.

The
Board of Directors of the Company authorized the payment of a cash dividend of $.075 per share on October 25, 2001, January 28, 2002, April 25, 2002, and
July 26, 2002 and $.08 per share on October 25, 2002. The payment of dividends in the future is subject to the discretion of the Board of Directors of the Company and will depend on
earnings, the financial condition of the Company and other relevant factors. The per share amounts have been retroactively restated for the Company's 4 for 3 stock split approved by the Board of
Directors on August 20, 2002.

The
Company and its subsidiary Bank are subject to certain regulations issued by the Board of Governors of the Federal Reserve System and the FDIC which require maintenance of certain
levels of capital. There were no significant differences between the Company's capital ratios and those of the Bank at September 30, 2002. At September 30, 2002, shareholders' equity was
$24,164,000, representing an increase of $3,344,000 (16%) from $20,820,000 at December 31, 2001. The Bank's ratio of total risk-based capital to risk adjusted assets was 11.10% at
September 30, 2002 compared to 11.60% at December 31, 2001. Tier 1 risk-based capital to risk-adjusted assets was 9.91% at September 30, 2002 and 10.40% at
December 31, 2001.

Table
Eight below lists the Bank's capital ratios at September 30, 2002 and December 31, 2001, as well as the minimum ratios required under regulatory definitions of
capital adequacy.

Table Eight: Capital Ratios (Unaudited)

|Capital to Risk-Adjusted Assets |  | At
September 30,
2002 |   | At
December 31,
2001 |   | Minimum
Regulatory
Requirement |  
|------------------------------- |  | --------------------- | - | -------------------- | - | ------------------------------ | -
|Leverage ratio                  |  | 8.42                  | % | 7.70                 | % | 4.00                           | %
|Tier 1 Risk-Based Capital       |  | 9.91                  | % | 10.40                | % | 4.00                           | %
|Total Risk-Based Capital        |  | 11.10                 | % | 11.60                | % | 8.00                           | %

Capital
ratios are reviewed on a regular basis to ensure that capital exceeds the prescribed regulatory minimums and is adequate to meet future needs. All ratios are in excess of the
regulatory definition of "Minimum" at September 30, 2002 and December 31, 2001. The Bank was considered "well-capitalized" by regulatory standards, at September 30,
2002 and December 31, 2001.

20

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Item 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Management

Overview.Market risk is the risk of loss from adverse changes in market prices and rates. The Company's market risk arises
primarily from interest rate risk inherent in its loan, investment and deposit portfolios. The goal for managing the assets and liabilities of the Company is to maximize shareholder value and earnings
while maintaining a high quality balance sheet without exposing the Company to undue interest rate risk.

The
Board of Directors has overall responsibility for the interest rate risk management policies. The Bank has an Asset and Liability Management Committee (ALCO) that establishes and
monitors guidelines to control the sensitivity of earnings to changes in interest rates.

Asset/Liability Management.Activities involved in asset/liability management include, but are not limited to, lending,
accepting and placing deposits and investing in securities. Interest rate risk is the primary market risk associated with asset/liability management. Sensitivity of earnings to interest rate changes
arises when yields on assets change in a different time period or in a different amount from that of interest costs on liabilities. To mitigate interest rate risk, the structure of the balance sheet
is managed with the goal that movements of interest rates on assets and liabilities are correlated and contributes to earnings even in periods of volatile interest rates. The asset/liability
management policy sets limits on the acceptable amount of variance in net interest margin and market value of equity under changing interest environments. The Company uses simulation models to
forecast earnings, net interest margin and market value of equity.

Simulation
of earnings is the primary tool used to measure the sensitivity of earnings to interest rate changes. Using computer-modeling techniques, the Company is able to estimate the
potential impact of changing interest rates on earnings. A balance sheet forecast is prepared monthly using inputs of actual
loans, securities and interest bearing liability (i.e. deposits/borrowings) positions as the beginning base. The forecast balance sheet is processed against three interest rate scenarios. The
scenarios include a 200 basis point rising rate forecast, a flat rate forecast and a 200 basis point falling rate forecast which take place within a one year time frame. The net interest income is
measured during the year assuming a gradual change in rates over the twelve-month horizon. The Company's net interest income, as forecast below, was modeled utilizing a forecast balance sheet
projected from balances as of the date indicated.

Table
Nine below summarizes the effect on net interest income (NII) of a ±200 basis point change in interest rates as measured against a constant rate
(no change) scenario. The results shown in Table nine for the two periods, fall within the parameters of the Bank's policy for interest rate risk.

Table Nine: Interest Rate Risk Simulation of Net Interest as of September 30, 2002 and December 31, 2001 (Unaudited)

(In thousands)

$ Change in NII
from Current
12 Month Horizon
September 30, 2002

$ Change in NII
from Current
12 Month Horizon
December 31, 2001Variation from a constant rate scenario+200bp

$
(40
)
$
102-200bp

$
(532
)
$
(747
)


The
simulations of earnings do not incorporate any management actions, which might moderate the negative consequences of interest rate deviations. Therefore, they do not reflect likely
actual results, but serve as estimates of interest rate risk.

21

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Inflation

The impact of inflation on a financial institution differs significantly from that exerted on manufacturing, or other commercial concerns, primarily because its
assets and liabilities are largely monetary. In general, inflation primarily affects the Company and it subsidiaries through its effect on market rates of interest, which affects the Company's ability
to attract loan customers. Inflation affects the growth of total assets by increasing the level of loan demand, and potentially adversely affects capital adequacy because loan growth in inflationary
periods can increase at rates higher than the rate that capital grows through retention of earnings, which may be generated in the future. In addition to its effects on interest rates, inflation
increases overall operating expenses. Inflation has not had a material effect upon the results of operations of the Company and its subsidiary during the periods ended September 30, 2002 and
2001.

Liquidity

Liquidity management refers to the Company's ability to provide funds on an ongoing basis to meet fluctuations in deposit levels as well as the credit needs and
requirements of its clients. Both assets and liabilities contribute to the Company's liquidity position. Federal funds lines, short-term investments and securities, and loan repayments
contribute to liquidity, along with deposit increases, while loan funding and deposit withdrawals decrease liquidity. The Company assesses the likelihood of projected funding requirements by reviewing
historical funding patterns, current and forecasted economic conditions and individual client funding needs. Commitments to fund loans at September 30, 2002 and December 31, 2001 were
approximately $90,105,000 and $85,170,000, respectively. Such loans relate primarily to revolving lines of credit and other commercial loans, and to real estate construction loans.

The
Company's sources of liquidity consist of cash and due from correspondent banks, overnight funds sold to correspondent banks, unpledged marketable investments and loans held for
sale. On September 30, 2002, consolidated liquid assets totaled $45.5 million or 15.2% of total assets compared to $44.4 million or 16.3% of total assets on December 31,
2001. In addition to liquid assets, the Company maintains short-term lines of credit in the amount of $6,000,000 with correspondent banks. There were no borrowings outstanding under these
arrangements at September 30, 2002. The Bank also has informal agreements with various other banks to sell participations in loans, if necessary. The Company serves primarily a business and
professional customer base and, as such, its deposit base is susceptible to economic fluctuations. Accordingly, management strives to maintain a balanced position of liquid assets to volatile and
cyclical deposits.

Liquidity
is also affected by portfolio maturities and the effect of interest rate fluctuations on the marketability of both assets and liabilities. The Company can sell any of its
unpledged securities held in the available-for-sale category to meet liquidity needs.

Off-Balance Sheet Items

The Company has certain ongoing commitments under operating leases. These commitments do not significantly impact operating results. As of September 30,
2002 and December 31, 2001, commitments to extend credit and letters of credit were the only financial instruments with off-balance sheet risk. The Company has not entered into any
contracts for financial derivative instruments such as futures, swaps, options or similar instruments. Loan commitments and letters of credit were $90,105,000 and $85,170,000 at September 30,
2002 and December 31, 2001, respectively. As a percentage of net loans, these off-balance sheet items represent 38.8% and 41.3%, respectively.0

22

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Other Matters

California Power Shortage.The State of California has experienced periodic electric power shortages. It is uncertain whether
these shortages will continue. California also initiated action to supplement conservation efforts including acceleration of the approval process for development of new energy production facilities
and entering into long-term energy contracts for the supply of electricity. The Company and its subsidiaries could be materially and adversely affected either directly or indirectly by a
severe electric power shortage if such a shortage caused any of its critical data processing or computer systems and related equipment to fail, or if the local infrastructure systems such as telephone
systems should fail, or the Company's and its subsidiary's significant vendors, suppliers, service providers, customers, borrowers, or depositors are adversely impacted by their internal systems or
those of their respective customers or suppliers. Material increases in the expenses related to electric power consumption and the related increase in operating expense could also have an adverse
effect on the Company's future results of operations.

Effects of Terrorism.The terrorist actions on September 11, 2001 and thereafter have had significant adverse effects
upon the United States economy. Whether the terrorist activities in the future and the actions of the United States and its allies in combating terrorism on a worldwide basis will adversely impact the
Company and the extent of such impact is uncertain. However, such events have had and may continue to have an adverse effect on the economy in the Company's market areas. Such continued economic
deterioration could adversely affect the Company's future results of operations by, among other matters, reducing the demand for loans and other products and services offered by the
Company, increasing nonperforming loans and the amounts reserved for loan losses, and causing a decline in the Company's stock price.

Item 4.    CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer, based on their evaluation within 90 days prior to the date of this report of the
Company's disclosure controls and procedures (as defined in Exchange Act Rule 13a14(c)), have concluded that the Company's disclosure controls and procedures are adequate and
effective for purposes of Rule 13a14(c) in timely alerting them to material information relating to the Company required to be included in the Company's filings with the SEC under
the Securities Exchange Act of 1934. There were no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date
of their evaluation.

23

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PART IIOTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 2. Changes in Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None

Item 6. Exhibits



|Exhibit
Number |  | Document Description                                                                                                                                                                                                                                                                                                                                                        
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3.1)          |  | Articles of Incorporation incorporated by reference from the Company's Registration Statement Form S-4EF, file #333-85950.                                                                                                                                                                                                                                                  
|(3.2)          |  | Bylaws incorporated by reference from the Company's Registration Statement Form S-4EF, file #333-85950.                                                                                                                                                                                                                                                                     
|(4)            |  | Specimen of Company's Common Stock Certificate incorporated by reference from the Company's Registration Statement Form S-4EF, file #333-85950.                                                                                                                                                                                                                             
|(10.1)         |  | Employment Agreement with Keith C. Robbins dated April 27, 1995. Salary Continuation Agreement dated April 14, 1998, and Amendment to Salary Continuation Agreement dated January 10, 2002, for Keith C. Robbins. Incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.
|(10.2)         |  | Executive Supplemental Retirement Plan dated August 1, 2000, and Amendment to Executive Supplement Retirement Plan dated January 10, 2002, for Keith C. Robbins. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 2002, filed with the Commission on August 14, 2002.                                                 
|(10.3)         |  | 1997 Stock Option Agreement for Keith C. Robbins dated May 1, 1997. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.                                                                                                                                              
|(10.4)         |  | 2000 Stock Option Agreement for Keith C. Robbins dated March 14, 2000. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.                                                                                                                                           
|(10.5)         |  | Employment Agreement with John F. Coger dated April 27, 1995. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.                                                                                                                                                    
|               |  |                                                                                                                                                                                                                                                                                                                                                                             

24

---

|(10.6)  |  | Salary Continuation Agreement dated April 14, 1998, and Amendment to Salary Continuation Agreement dated January 10, 2002, for John F Coger. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002,
filed with the Commission on August 14, 2002.                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10.7)  |  | Executive Supplemental Retirement Plan dated August 1, 2000, and Amendment to Executive Supplement Retirement Plan dated January 10, 2002, for John F. Coger. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 2002, filed with the Commission on August 14, 2002.
|(10.8)  |  | 2000 Stock Option Agreement for John F. Coger dated March 14, 2000 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..                                                                                          
|(10.9)  |  | 1997 Stock Option Agreement for M. Robert Ching dated May 1, 1997 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..                                                                                           
|(10.10) |  | 2000 Stock Option Agreement for M. Robert Ching dated May 1, 2000. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.                                                                                           
|(10.11) |  | 1997 Stock Option Agreement for Eugene B. Even dated May 1, 1997 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..                                                                                            
|(10.12) |  | 2000 Stock Option Agreement for Eugene B. Even dated May 1, 2000. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.                                                                                            
|(10.13) |  | 1997 Stock Option Agreement for John D. Lanam dated May 1, 1997. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.                                                                                             
|(10.14) |  | 2000 Stock Option Agreement for John D. Lanam dated May 1, 2000. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.                                                                                             
|(10.15) |  | 1997 Stock Option Agreement for Donald W. Leforce dated May 1, 1997. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.                                                                                         
|(10.16) |  | 2000 Stock Option Agreement for Donald W. Leforce dated May 1, 2000 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..                                                                                         
|(10.17) |  | 1997 Stock Option Agreement for Ellis L. Matthews dated May 1, 1997 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..                                                                                         
|(10.18) |  | 2000 Stock Option Agreement for Ellis L. Matthews dated May 1, 2000 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                         

25

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|(10.19) |  | 1997 Stock Option Agreement for Robert L. Morgan dated May 1, 1997 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..        
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10.20) |  | 2000 Stock Option Agreement for Robert L. Morgan dated May 1, 2000 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..        
|(10.21) |  | 1997 Stock Option Agreement for James S. Rickards dated May 1, 1997. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.       
|(10.22) |  | 2000 Stock Option Agreement for James S. Rickards dated May 1, 2000 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..       
|(10.23) |  | 1997 Stock Option Agreement for Gary B. Strauss dated May 1, 1997 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..         
|(10.24) |  | 2000 Stock Option Agreement for Gary B. Strauss dated May 1, 2000. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.         
|(10.25) |  | 1997 Stock Option Agreement for Hubert I. Townshend dated May 1, 1997 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..     
|(10.26) |  | 2000 Stock Option Agreement for Hubert I. Townshend dated May 1, 2000 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..     
|(10.27) |  | Director Deferred Fee Agreement for M. Robert Ching dated April 8, 1998 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..   
|(10.28) |  | Director Retirement Agreement for M. Robert Ching dated April 14, 1998 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..    
|(10.29) |  | Director Retirement Agreement for Eugene B. Even dated April 14, 1998 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..     
|(10.30) |  | Director Retirement Agreement for John D. Lanam dated April 14, 1998. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.      
|(10.31) |  | Director Deferred Fee Agreement for Donald W. Leforce dated April 14, 1998 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..
|(10.32) |  | Director Retirement Agreement for Donald W. Leforce dated April 14, 1998 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..  
|        |  |                                                                                                                                                                                                                                       

26

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|(10.33) |  | Director Retirement Agreement for Ellis L. Matthews dated April 14, 1998. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.                                                                                                                                                        
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10.34) |  | Director Retirement Agreement for Robert L. Morgan dated April 14, 1998 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..                                                                                                                                                         
|(10.35) |  | Director Retirement Agreement James S. Rickards dated April 14, 1998 Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002..                                                                                                                                                            
|(10.36) |  | Director Retirement Agreement for Gary B. Strauss dated April 14, 1998. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.                                                                                                                                                          
|(10.37) |  | Director Retirement Agreement for Hubert I. Townshend dated April 14, 1998. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.                                                                                                                                                      
|(10.38) |  | Lease agreement between Butte Community Bank and Anna Laura Schilling Trust dated March 20, 2001, related to 900 Mangrove Ave., Chico, California. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30,
2002, filed with the Commission on August 14, 2002.                                                                               
|(10.39) |  | Lease agreement between Butte Community Bank and M&H Realty Partners IV L.P., a California limited partnership, dated January 28, 2002, related to Unit #101-37 North Valley Plaza, East and Cohasset Avenues, Chico, California. Incorporated by
reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.
|(11)    |  | See Note 2 Earnings Per Share Computation                                                                                                                                                                                                                                                                                                                                                   
|(99.1)  |  | 1991Stock Option Plan is incorporated by reference from the Company's Registration Statement Form S-8, filed August 14, 2002.                                                                                                                                                                                                                                                               
|(99.2)  |  | 1997Stock Option Plan is incorporated by reference from the Company's Registration Statement Form S-8, filed August 14, 2002.                                                                                                                                                                                                                                                               
|(99.3)  |  | 2000 Stock Option Plan is incorporated by reference from the Company's Registration Statement Form S-8, filed August 14, 2002.                                                                                                                                                                                                                                                              
|(99.4)  |  | Director Emeritus Plan dated March 20, 2001. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed with the Commission on August 14, 2002.                                                                                                                                                                                     
|(99.5)  |  | Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                             
|(99.6)  |  | Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                             





27

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SIGNATURES

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

|                  |  | COMMUNITY VALLEY BANCORP
|----------------- |  | ------------------------
|                  |  |                         
|November 13, 2002 |  | By:                     
|                  |  |                         
|November 13, 2002 |  | By:                     
|                  |  |                         

28

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Certifications: Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Keith C. Robbins, certify that:



|Date: November 13, 2002 |                                                                        | 
|----------------------- | ---------------------------------------------------------------------- | 
|                        |                                                                        | 
|By:                     | /s/KEITH C. ROBBINSKeith C. Robbins
President, Chief Executive Officer | 
|                        |                                                                        | 

29

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I, John F. Coger, certify that:



|Date: November 13, 2002 |                                                                                 | 
|----------------------- | ------------------------------------------------------------------------------- | 
|                        |                                                                                 | 
|By:                     | /s/JOHN F. COGERJohn F. Coger
Executive Vice President, Chief Financial Officer | 
|                        |                                                                                 | 

30

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