UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

      (Mark One)

|X|   QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005

|_|   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM           TO

                       COMMISSION FILE NUMBER: 333-118883

                             VALLEY COMMERCE BANCORP
           (Name of small business issuer as specified in its charter)

          California                                         46-1981399
 (State or other jurisdiction of                         (I.R.S. Employer
  incorporation or organization)                          Identification No.)

                             200 South Court Street
                            Visalia, California 93291
                    (Address of principal executive offices)


                                 (559) 622-9000
                           (Issuer's telephone number)

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

The number of shares  outstanding of the issuer's  Common Stock was 2,087,508 as
of August 12, 2005.

Transitional Small Business Disclosure Format (check one)
Yes  |_|     No  |X|


                                        1
<PAGE>

INDEX

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

Consolidated Balance Sheet (unaudited) at June 30, 2005 and December 31, 2004
Consolidated  Statement of Income  (unaudited)  for the Six Month  Periods ended
June 30, 2005 and 2004
Consolidated Statement of Cash Flows (unaudited) for the Six Month Periods ended
June 30, 2005 and 2004.
Notes to Consolidated Financial Statements

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS

ITEM 3 - CONTROLS AND PROCEDURES

PART II - OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

ITEM 5 OTHER INFORMATION

ITEM 6 EXHIBITS

SIGNATURES


                                        2
<PAGE>

                                     PART I

                           Forward-Looking Information

Certain matters discussed in this Quarterly Report on Form 10-QSB including, but
not limited to, those described in Item 2 - Management's Discussion and Analysis
or Plan of Operation,  are forward-looking  statements that are subject to risks
and  uncertainties  that could cause actual  results to differ  materially  from
those projected in the forward-looking  statements. Such risks and uncertainties
include,  among others: (1) significant increases in competitive pressure in the
banking and  financial  services  industries;  (2) changes in the interest  rate
environment,  which could reduce  anticipated or actual margins;  (3) changes in
the regulatory environment;  (4) general economic conditions,  either nationally
or regionally and  especially in the Company's  primary  service area,  becoming
less  favorable   than  expected  and  resulting  in,  among  other  things,   a
deterioration  in  credit  quality;   (5)  operational  risks,   including  data
processing  systems  failures or fraud;  (6) changes in business  conditions and
inflation;  (7)changes in technology;  (8) changes in monetary and tax policies;
and (9)changes in the securities markets.  Therefore,  the information set forth
in  such   forward-looking   statements  should  be  carefully  considered  when
evaluating the business prospects of the Company.

When  the  Company  uses in this  Quarterly  Report  on Form  10-QSB  the  words
"anticipate," "estimate," "expect," "project," "intend," "commit," "believe" and
similar expressions, the Company intends to identify forward-looking statements.
Such  statements are not  guarantees of  performance  and are subject to certain
risks,  uncertainties  and  assumptions,   including  those  described  in  this
Quarterly  Report  on  Form  10-QSB.  Should  one or  more  of  these  risks  or
uncertainties  materialize,  or should  underlying  assumptions prove incorrect,
actual results may vary materially from those anticipated,  estimated, expected,
projected,  intended,  committed or believed. The future results and shareholder
values of the  Company  may  differ  materially  from those  expressed  in these
forward-looking  statements.  Many of the  factors  that  will  determine  these
results and values are beyond the Company's  ability to control or predict.  The
Company  undertakes no  obligation to revise or publicly  release the results of
any revision to these  forward-looking  statements.  For those  statements,  the
Company claims the protection of the safe harbor for forward-looking  statements
contained in the Private Securities Litigation Reform Act of 1995.


                                        3
<PAGE>

ITEM 1 - FINANCIAL STATEMENTS

                                              VALLEY COMMERCE BANCORP
                                            CONSOLIDATED BALANCE SHEET
                                                    (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                            June 30,       December 31,
                                                                                              2005             2004
                                                                                         -------------    -------------
<S>                                                                                      <C>              <C>
Assets
------
Cash and due from banks                                                                  $   9,466,275    $   9,036,062
Federal funds sold                                                                           1,340,000       17,750,000
                                                                                         -------------    -------------
     Total cash and cash equivalents                                                        10,806,275       26,786,062
Available-for-sale investment securities                                                    50,813,000       38,099,000
Loans, less allowance for loan losses of $1,611,347 at June 30, 2005 and $1,400,818 at
   December 31, 2004                                                                       131,994,494      114,834,245
Bank premises and equipment, net                                                             1,101,221        1,033,586
Cash surrender value of bank-owned life insurance                                            2,729,255        2,677,318
Accrued interest receivable and other assets                                                 2,947,640        2,576,391
                                                                                         -------------    -------------
         Total assets                                                                    $ 200,391,885    $ 186,006,602
                                                                                         =============    =============

Liabilities and Shareholders' Equity
------------------------------------
Deposits:
  Non-interest-bearing                                                                   $  63,503,454    $  58,394,071
  Interest-bearing                                                                          60,945,360       54,689,181
  Time                                                                                      41,700,190       43,340,652
                                                                                         -------------    -------------
     Total deposits                                                                        166,149,004      156,423,904
Accrued interest payable and other liabilities                                                 927,778          834,588
Long-term debt                                                                               9,232,159        9,322,472
Junior subordinated deferrable interest debentures                                           3,093,000        3,093,000
                                                                                         -------------    -------------
       Total liabilities                                                                   179,401,941      169,673,964
                                                                                         -------------    -------------

Commitments and contingencies (Note 7)

Shareholders' equity (Note 2 and 6):
  Serial preferred stock - no par value; 10,000,000 shares authorized, none issued                  --               --
  Common stock - no par value; 30,000,000 shares authorized; issued and outstanding -
     2,087,508 shares at June 30, 2005 and 1,788,258 shares at December 31, 2004            18,332,289       14,451,969
  Retained earnings                                                                          2,809,924        1,959,281
  Accumulated other comprehensive loss, net of taxes (Note 6)                                 (152,269)         (78,612)
                                                                                         -------------    -------------
       Total shareholders' equity                                                           20,989,944       16,332,638
                                                                                         -------------    -------------
          Total liabilities and shareholders' equity                                     $ 200,391,885    $ 186,006,602
                                                                                         =============    =============

                               See notes to unaudited consolidated financial statements.
</TABLE>


                                                        4
<PAGE>


                                              VALLEY COMMERCE BANCORP
                                         CONSOLIDATED STATEMENT OF INCOME
                                                    (UNAUDITED)
<TABLE>
<CAPTION>
                                                                    For the Three Months       For the Six Months
                                                                       Ended June 30,            Ended June 30,
                                                                  -----------------------   -----------------------
                                                                     2005         2004         2005         2004
                                                                  ----------   ----------   ----------   ----------
Interest Income:                                                               (restated)                (restated)
<S>                                                               <C>          <C>          <C>          <C>
  Interest and fees on loans                                      $2,433,804   $1,751,001   $4,525,736   $3,470,258
  Interest on investment securities:
     Taxable                                                         387,902      148,876      709,303      309,403
     Exempt from Federal income taxes                                 53,163       33,818       95,968       51,697
  Interest on Federal funds sold                                      47,729       16,719      171,234       31,023
  Interest on deposits in banks                                           --            3           --        1,768
                                                                  ----------   ----------   ----------   ----------
       Total interest income                                       2,922,598    1,950,417    5,502,241    3,864,149
                                                                  ----------   ----------   ----------   ----------
Interest Expense:
  Interest on deposits                                               454,885      272,351      857,634      530,338
  Interest on borrowings                                              98,479       67,061      196,739      123,819
  Interest on junior subordinated deferrable interest
    debentures                                                        50,108       34,703       95,890       69,276
                                                                  ----------   ----------   ----------   ----------
           Total interest expense                                    603,472      374,115    1,150,263      723,433
                                                                  ----------   ----------   ----------   ----------

              Net interest income before provision for loan
                losses                                             2,319,126    1,576,302    4,351,978    3,140,716
Provision for loan losses                                            181,000           --      212,000       35,000
                                                                  ----------   ----------   ----------   ----------
              Net interest income after provision for loan
                losses                                             2,138,126    1,576,302    4,139,978    3,105,716
Non-Interest Income:
  Service charges                                                    134,349      129,301      258,173      246,237
  Gain on sale of available-for-sale investment securities, net           --           --           --        7,390
  Mortgage loan brokerage fees                                        30,265       41,183       69,437       78,870
  Earnings on cash surrender value of life insurance policies         25,906       24,814       51,937       43,328
  Other                                                               47,416       52,169       85,788       85,537
                                                                  ----------   ----------   ----------   ----------
           Total non-interest income                                 237,936      247,467      465,335      461,362
                                                                  ----------   ----------   ----------   ----------
Non-Interest Expense:
   Salaries and employee benefits                                    866,735      757,062    1,765,112    1,456,724
   Occupancy and equipment                                           178,366      153,547      353,359      300,113
   Other                                                             569,180      479,832    1,103,199      928,999
                                                                  ----------   ----------   ----------   ----------
           Total non-interest expense                              1,614,281    1,390,441    3,221,670    2,685,836
                                                                  ----------   ----------   ----------   ----------

                Income before provision for income taxes             761,781      433,328    1,383,643      881,242
Provision for income taxes                                           293,000      176,000      533,000      340,000
                                                                  ----------   ----------   ----------   ----------
            Net income                                            $  468,781   $  257,328   $  850,643   $  541,242
                                                                  ==========   ==========   ==========   ==========

Basic earnings per share (Notes 2 and 5)                          $     0.23   $     0.18   $     0.42   $     0.38
Diluted earnings per share (Notes 2 and 5)                        $     0.22   $     0.16   $     0.39   $     0.35

                                See notes to unaudited consolidated financial statements.
</TABLE>


                                                        5
<PAGE>

                                              VALLEY COMMERCE BANCORP
                                       CONSOLIDATED STATEMENT OF CASH FLOWS
                                                    (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                           For the Six Months
                                                                                             Ended June 30,
                                                                                      ----------------------------
                                                                                          2005            2004
                                                                                      ------------    ------------
                                                                                                       (restated)
<S>                                                                                   <C>             <C>
Cash Flows from Operating Activities:
  Net income                                                                          $    850,643    $    541,242
  Adjustments to reconcile net income to net cash provided by operating activities:
  Provision for loan losses                                                                212,000          35,000
  Increase in deferred loan origination fees, net                                          125,044          97,892
  Depreciation                                                                              92,725          75,101
  Amortization of intangibles                                                               31,269          40,269
  Net gain on sale of available-for-sale investment securities                                  --          (7,390)
  Amortization and accretion of investment securities, net                                 317,645         104,899
  Net loss on sale of premises and equipment                                                    --             450
  Increase in cash surrender value of bank-owned life insurance                            (51,937)        (43,695)
  Decrease (Increase) in accrued interest receivable and other assets                     (229,054)       (681,375)
  Increase in accrued interest payable and other liabilities                                93,190         529,521
                                                                                      ------------    ------------
  Net cash provided by operating activities                                              1,441,525         691,914
                                                                                      ------------    ------------

Cash Flows from Investing Activities:
  Proceeds from matured and called available-for-sale investment securities              2,500,000       1,400,000
  Proceeds from sales of available-for-sale investment securities                               --       4,289,610
  Purchases of available-for-sale investment securities                                (16,748,008)    (13,820,901)
  Proceeds from principal repayments from available-for-sale
  mortgage-backed securities                                                             1,094,842       1,260,963
  Purchase of Federal Home Loan Bank Stock                                                (125,600)       (342,700)
  Decrease in interest-bearing deposits with banks                                              --         198,000
  Net increase in loans                                                                (17,497,293)     (5,030,480)
  Purchase of premises and equipment                                                      (160,360)       (112,910)
  Life insurance policy deposit                                                                 --      (1,000,000)
                                                                                      ------------    ------------
Net cash used in investing activities                                                  (30,936,419)    (13,158,418)
                                                                                      ------------    ------------
</TABLE>

                                              Continued on next page.


                                                        6
<PAGE>

                                         VALLEY COMMERCE BANCORP
                                  CONSOLIDATED STATEMENT OF CASH FLOWS
                                               (UNAUDITED)
                                               (Continued)
<TABLE>
<CAPTION>
                                                                               For the Six Months
                                                                                 Ended June 30,
                                                                          ----------------------------
                                                                              2005            2004
                                                                          ------------    ------------
                                                                                           (restated)
<S>                                                                       <C>             <C>
Cash Flows from Financing Activities:
Net increase in non-interest-bearing and interest-bearing deposits        $ 11,365,562    $  7,539,589
Net increase in time deposits                                               (1,640,462)      3,417,015
Proceeds from the issuance of stock                                          3,880,320              --
Proceeds from Federal Home Loan Bank term advances                                  --       1,600,000
Payments on Federal Home Loan Bank term advances                               (90,313)         (9,626)
Cash paid to repurchase fractional shares                                           --          (4,256)
                                                                          ------------    ------------
          Net cash provided by financing activities                         13,515,107      12,542,722
                                                                          ------------    ------------

          Increase (decrease) in cash and cash equivalents                 (15,979,787)         76,218
Cash and Cash Equivalents at Beginning of Year                              26,786,062      11,754,585
                                                                          ------------    ------------
Cash and Cash Equivalents at End of Period                                $ 10,806,275    $ 11,830,803
                                                                          ============    ============

Supplemental Disclosure of Cash Flow Information:
  Cash paid during the period for:
     Interest expense                                                     $  1,106,211    $    738,460
     Income taxes                                                         $    480,000    $    310,000

Non-Cash Investing Activities:
  Net change in unrealized loss on available-for-sale securities          $   (121,521)   $   (464,819)
  Real estate acquired through foreclosure                                          --    $    636,245

                            See notes to unaudited consolidated financial statements.
</TABLE>


                                                        7
<PAGE>

                             VALLEY COMMERCE BANCORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.    GENERAL

Valley Commerce Bancorp (the "Company") was incorporated on February 2, 2002 and
subsequently  obtained  approval from various state and federal agencies to be a
bank  holding  company in  connection  with the merger of Valley  Business  Bank
(formerly Bank of Visalia).  The Company became the sole shareholder of the Bank
on November 21, 2002 pursuant to a Plan of  Reorganization  and Merger Agreement
dated April 3, 2002.  Pursuant to that plan,  on June 21, 2002 each  outstanding
share of the Bank's  common stock was exchanged for one share of common stock of
the Company.  The Company formed Valley Commerce Trust I for the sole purpose of
issuing trust preferred securities on March 19, 2003.

Valley  Business  Bank  (the  "Bank")  operates  four  branches  in  California,
including branches in Visalia,  Fresno, Woodlake and Tipton. The Bank's deposits
are insured by the Federal Deposit Insurance Corporation (FDIC) up to applicable
legal limits.  The Bank's  primary source of revenue is generated from providing
loans to customers who are  predominately  small and middle market  business and
individuals residing in the surrounding areas.

2.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The  condensed  consolidated  financial  statements  include the accounts of the
Company and the accounts of its wholly-owned  subsidiary,  Valley Business Bank.
Valley  Commerce  Trust I is not  consolidated  into the Company's  consolidated
financial statements and, accordingly, is accounted for under the equity method.
In the opinion of management,  the unaudited  condensed  consolidated  financial
statements  contain  all  adjustments   (consisting  of  only  normal  recurring
adjustments)  necessary to present  fairly the Company's  financial  position at
June 30, 2005 and  December 31, 2004 and the results of  operations  and for the
three-month  and  six-month  periods ended June 30, 2005 and 2004 and cash flows
for the  six-month  periods  ended June 30, 2005 and 2004.  Certain  disclosures
normally presented in the notes to the annual consolidated  financial statements
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America have been omitted. These interim consolidated financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  and notes thereto  included in the  Company's  2004 Annual Report to
Shareholders  on Form 10-KSB.  The results of operations  and cash flows for the
periods presented are not necessarily indicative of the results for a full year.
Certain  reclassifications  have been made to prior periods' balances to conform
to classifications used in 2005.

The unaudited condensed  consolidated  financial  statements of the Company have
been  prepared  pursuant  to the rules and  regulations  of the  Securities  and
Exchange  Commission ("SEC") for interim reporting on Form 10-QSB.  Accordingly,
certain  disclosures  normally  presented  in  the  notes  to  the  consolidated
financial statements prepared in accordance with accounting principles generally
accepted  in the  United  States of America  have been  omitted.  These  interim
financial  statements  should  be  read in  conjunction  with  the  consolidated
financial  statements  and notes thereto  included in the Company's  2004 Annual
Report to Shareholders on Form 10-KSB.  The Company  reported its second quarter
2004 results in a press  release  dated July 30, 2004 and also in a  preliminary
prospectus dated October 27, 2004. Second quarter 2004 net income was originally
reported in the amount of $341,328,  but was later  restated to  $257,328.  This
restatement resulted from a change in accounting for a collateral-dependent real
estate  loan and the  foreclosure  on the  underlying  collateral  in the second
quarter of 2004. The restatement  caused the Company's second quarter net income
to decrease,  and its third quarter net income to increase,  by $84,000 form the
amounts originally reported for these periods. In addition, the balance of Other
Real Estate at June 30, 2004,  originally reported at $765,245,  was restated to
$636,245. The restatement had no impact on the financial position of the Company
as of December  31, 2004 or results of  operations  for the twelve  months ended
December  31,  2004  as  reported  in  the  Company's  2004  Aunnual  Report  to
Shareholders on Form 10-KSB.

The results of operations for the three-month  and six-month  periods ended June
30, 2005 and 2004 may not necessarily be indicative of future operating results.
In preparing such financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of
the  date of the  balance  sheet  and  revenues  and  expenses  for the  periods
reported. Actual results could differ significantly from those estimates.

Management has determined that since all of the commercial  banking products and
services  offered by the Company are  available in each branch of the Bank,  all
branches are located within the same economic  environment  and management  does
not  allocate  resources  based  on the  performance  of  different  lending  or
transaction  activities,  it is  appropriate  to aggregate the Bank branches and
report them as a single operating segment.


                                        8
<PAGE>

3.    IMPACT OF NEW FINANCIAL ACCOUNTING STANDARDS

In December 2004 the FASB issued  Statement  Number 123 (revised  2004) (FAS 123
(R)),  Share-Based  Payments.  FAS 123 (R)  requires  all  entities to recognize
compensation  expense  in an  amount  equal  to the fair  value  of  share-based
payments such as stock options granted to employees.  The Company is required to
apply FAS 123 (R) on a  modified  prospective  method.  Under this  method,  the
Company is required to record compensation  expense (as previous awards continue
to vest) for the  unvested  portion of  previously  granted  awards  that remain
outstanding at the date of adoption. In addition, the Company may elect to adopt
FAS 123 (R) by restating  previously  issued  financial  statements,  basing the
expense on that previously  reported in their pro forma disclosures  required by
FAS 123. In April 2005, the Securities  and Exchange  Commission  adopted a rule
that  defers  the  compliance  of FAS  123(R)  from the first  reporting  period
beginning  after  December  15, 2005 to the first  fiscal year  beginning  after
December 15, 2005, January 1 2006 for the Company.  Management has not completed
its  evaluation of the effect that FAS 123 (R) will have,  but believes that the
effect will be consistent with its previous pro forma disclosures.

4.    STOCK-BASED COMPENSATION

At June 30, 2005, the Company had one stock-based  compensation  plan, for which
346,784  shares of common  stock are  reserved  for  issuance to  employees  and
directors under incentive and non-statutory  agreements.  On April 26, 2005, the
shareholders  approved a  proposal  to  increase  the number of shares for which
options  may be granted by 97,500  shares.  The Company  accounts  for this plan
under  the  recognition  and  measurement  principles  of APB  Opinion  No.  25,
Accounting  for Stock  Issued to  Employees,  and  related  Interpretations.  No
stock-based compensation cost is reflected in net income, as all options granted
under  these  plans  had an  exercise  price  equal to the  market  value of the
underlying common stock on the date of grant.

During the three and  six-month  periods  ended June 30,  2005,  no options were
awarded by the  Company to its  officers  and  directors.  During the  six-month
period  ended June 30,  2004,  options  for 34,205  shares of common  stock were
awarded by the Company to its officers and directors.  The  calculated  weighted
average  fair  value of the  options  granted  in the 2004  period was $4.10 per
option.

A summary of the pro forma effects to reported net income and earnings per share
as if the Company had elected to recognize  compensation  cost based on the fair
value of the options granted as prescribed by SFAS No. 123 is as follows:

<TABLE>
<CAPTION>
                                                                   For the Three Months       For the Six Months
                                                                      Ended June 30,            Ended June 30,
                                                               -----------------------------------------------------
                                                                   2005         2004          2005          2004
                                                               -----------   -----------   -----------   -----------
                                                                              (restated)                  (restated)
<S>                                                            <C>           <C>           <C>           <C>
Net income as reported                                         $   468,781   $   257,328   $   850,643   $   541,242
Deduct:  Total stock-based compensation expense determined
    under the fair value based method for all awards, net of
    related tax effects                                              7,250         8,500        14,500        17,000
                                                               -----------   -----------   -----------   -----------
    Pro forma net income                                       $   461,531   $   248,828   $   836,143   $   524,242
                                                               ===========   ===========   ===========   ===========

Basic earnings per share - as reported                         $      0.23   $      0.18   $      0.42   $      0.38
                                                               -----------   -----------   -----------   -----------
Basic earnings per share - pro forma                           $      0.23   $      0.17   $      0.41   $      0.36
                                                               ===========   ===========   ===========   ===========

Diluted earnings per share - as reported                       $      0.22   $      0.16   $      0.39   $      0.35
                                                               ===========   ===========   ===========   ===========
Diluted earnings per share - pro forma                         $      0.22   $      0.16   $      0.39   $      0.34
                                                               ===========   ===========   ===========   ===========
</TABLE>

5.    EARNINGS PER SHARE COMPUTATION

Basic  earnings  per share are  computed by dividing  net income by the weighted
average common shares  outstanding  for the period.  Diluted  earnings per share
reflect the  potential  dilution that could occur if  outstanding  stock options
were exercised.  Diluted  earnings per share are computed by dividing net income
by the  weighted  average  common  shares  outstanding  for the period  plus the
dilutive effect of options.


                                        9
<PAGE>

Earnings  per share  computations  have been  retroactively  adjusted  for stock
splits and stock dividends for all periods presented.

<TABLE>
<CAPTION>
                                                      For the Three Months           For the Six Months
                                                         Ended June 30,                Ended June 30,
                                                 -----------------------------   -----------------------------
                                                     2005            2004            2005            2004
                                                 -------------   -------------   -------------   -------------
                                                                  (restated)                        (restated)
<S>                                              <C>             <C>             <C>             <C>
Earnings Per Share:
  Basic earnings per share                       $        0.23   $        0.18   $        0.42   $        0.38
  Diluted earnings per share                     $        0.22   $        0.16   $        0.39   $        0.35
Weighted Average Number of Shares Outstanding:
  Basic shares                                       2,037,909       1,437,508       2,037,909       1,437,508
  Diluted shares                                     2,160,313       1,529,346       2,160,313       1,529,346
</TABLE>

Shares for common stock options with  exercise  prices that are greater then the
average market price are not included in the computation of diluted earnings per
share due to their  antidilutive  effect.  A total of 34,205  shares  for common
stock options are not included in the computation of diluted  earnings per share
for the three and six month periods ended June 30, 2004. All exercise  prices of
shares for common stock  options were greater than the average  market price and
are  included in the  computation  of  earnings  per share for the three and six
month periods ended June 30, 2005.

6.    COMPREHENSIVE INCOME

Total  comprehensive  income for the  six-month  periods ended June 30, 2005 and
2004  totaled  $776,986 and  $258,667,  respectively.  Comprehensive  income was
comprised of net income for the respective periods and net changes in unrealized
losses, net of taxes, on available-for-sale investment securities, which totaled
$73,657 and $282,575  for the  six-month  periods  ended June 30, 2005 and 2004,
respectively.  Total  comprehensive  income (loss) for three-month periods ended
June  30,  2005  and  2004  totaled   $798,881  and  $(126,678),   respectively.
Comprehensive  income  (loss) was  comprised  of net  income for the  respective
periods   and  net   changes   in   unrealized   losses,   net  of   taxes,   on
available-for-sale  investment securities, which totaled $330,100 and $(384,006)
for the three-month periods ended June 30, 2005 and 2004, respectively.  At June
30, 2005 and December 31, 2004,  accumulated  other  comprehensive  loss, net of
taxes,  totaled  $152,269  and  $78,612,  respectively,  and was a component  of
shareholders' equity.

7.    COMMITMENTS AND CONTINGENCIES

In  the  normal  course  of  business,   the  Company  has  various  outstanding
commitments   to  extend  credit  which  are  not  reflected  in  the  financial
statements,  including  loan  commitments of $40.1 million and $28.6 million and
letters of credit of $1.5 million and $0.9 million at June 30, 2005 and December
31, 2004, respectively.

At June 30, 2005, consumer loan commitments represent  approximately 7% of total
commitments and are generally unsecured. Agricultural loan commitments represent
approximately 8% of total  commitments and are generally secured by crops and/or
real estate.  Commercial loan commitments  represent  approximately 48% of total
commitments  and are generally  secured by various assets of the borrower.  Real
estate loan commitments represent the remaining 37% of total commitments and are
generally  secured by property with a loan-to-value  ratio not to exceed 80%. In
addition,  the majority of the Bank's  commitments have variable interest rates.
Total commitments do not necessarily  represent future cash  requirements.  Each
loan  commitment  and the amount and type of  collateral  obtained,  if any, are
evaluated on an individual basis.  Collateral held varies,  but may include real
property, bank deposits, debt or equity securities or business assets.

Stand-by letters of credit are conditional  commitments written to guarantee the
performance  of a customer to a third  party.  These  guarantees  are  primarily
related to the purchases of inventory by commercial  customers and are typically
short-term in nature.  Credit risk is similar to that involved in extending loan
commitments   to  customers   and,   accordingly,   evaluation   and  collateral
requirements similar to those for loan commitments are used. Stand-by letters of
credit  are   accounted  for  under   Financial   Accounting   Standards   Board
Interpretation  45,  Guarantor's  Accounting  and  Disclosure  Requirements  for
Guarantees,  Including  Indirect  Guarantees of Others (FIN 45). FIN 45 requires
that the guarantor  recognize a liability  for the  guarantee  equal to its fair
value  represented by the fees received for issuing the guarantee.  The deferred
liability  related  to the  Company's  letters  of  credit  was  not  considered
significant at June 30, 2005 or December 31, 2004.


                                       10
<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS

The following  discussion and analysis of the Company's  financial condition and
results of operations should be read together with the financial  statements and
notes  thereto  appearing  in Item 1,  Financial  Statements,  included  in this
Quarterly Report on Form 10-QSB.

Introduction

Valley Commerce Bancorp (the Company) is the holding company for Valley Business
Bank (the Bank), a California  state  chartered  bank.  The Company's  principal
business is to provide,  through its banking  subsidiary,  financial services in
its primary  market area in  California.  The Company  serves  Tulare and Fresno
Counties  and the  surrounding  area through the Bank.  The Company  derives its
income primarily from interest received on real estate related loans, commercial
loans,  and  consumer  loans and to a lesser  extent fees from the  brokerage of
loans,  interest on  investment  securities  and fees for  services  provided to
deposit  customers.  The Company's major operating expenses are interest paid on
deposits and borrowings and general operating expenses,  consisting primarily of
salaries and employee benefits and, to a lesser extent, occupancy and equipment,
data  processing  and  operations.  The Company does not  currently  conduct any
operations other than through the Bank.

The Company's  founders  opened the Bank in 1996 to serve as a community bank in
the city of Visalia, which is the primary metropolitan area of Tulare County, as
well as surrounding  areas.  The Bank operated  solely from its branch office in
Visalia  until  1998 when the Bank  purchased  two branch  offices  from Bank of
America in the Tulare County towns of Woodlake and Tipton.  In October 2003, the
Bank  acquired  the branch  facilities  and  deposits  of the  Fresno  branch of
Humboldt  Bank.  This  location was the Bank's  first  office  outside of Tulare
County  and  achieved  the  Bank's   strategic   goal  of  entering  the  Fresno
marketplace.  One of the Company's primary  strategic  objectives is to continue
expanding  within the South San Joaquin  Valley by opening de novo  branches and
loan  production  offices,  and by acquiring  branches  from other  institutions
should they become available.

Valley  Business  Bank was known as Bank of  Visalia  until July 5, 2005 when it
changed  its  name  to  reflect  its  wider  geographic  operating  area  and to
facilitate entry into new markets.

Overview

The Company earned net income of $851,000,  or $0.39 per diluted share,  for the
six months  ended June 30,  2005,  compared  to  $541,000,  or $0.35 per diluted
share,  for the six months ended June 30, 2004. The Company earned net income of
$469,000,  or $0.22 per diluted share, for the three months ended June 30, 2005,
compared to  $257,000,  or $0.16 per diluted  share,  for the three months ended
June 30, 2004.  The  annualized  return on average assets was 0.87% for 2005 and
0.76% for 2004. The annualized return on average  shareholders'  equity for 2005
and 2004 was 8.65% and 9.60%, respectively.

At June 30, 2005, the Company's total assets were $200 million, total loans, net
of the allowance for loan losses,  were $132  million,  and total  deposits were
$166  million.  Comparing  June 30, 2005 and December 31, 2004  balances,  total
assets  increased  by $14.4  million or 8%,  total net loans  increased by $17.2
million or 15%, and total deposits increased by $9.7 million or 6%.

At June 30,  2005,  the  Company's  leverage  ratio was  12.0%  while its tier 1
risk-based  capital  ratio and total  risk-based  capital  ratios were 16.4% and
17.5%,  respectively.  At December 31, 2004,  the Company's  leverage  ratio was
10.8% while its tier 1 risk-based  capital  ratio and total  risk-based  capital
ratios were 14.7% and 15.8%, respectively.

The  following   discussion  and  analysis  sets  forth  certain  financial  and
statistical  information  relating  to the  Company  as of June  30,  2005,  and
December 31, 2004,  and for the three and six month  periods ended June 30, 2005
and 2004.


                                       11
<PAGE>

Results of Operations for the Six Months Ended June 30, 2005

Net Interest Income

Total  interest  income for the  six-month  period  ended June 30, 2005 was $5.5
million,  an  increase  of $1.6  million  or 42% from the same  period  in 2004.
Average  interest-earning  assets in the 2005 period increased by $47 million or
35% compared to the 2004 period due to increases in average  Federal  funds sold
of $7.1 million or 112%, average available-for-sale  securities of $22.9 million
or 103%, and average loans of $17.2 million or 16%.

The weighted average tax-equivalent yield on total  interest-earning  assets was
6.21% in the 2005 period  compared to 5.84% in the 2004 period.  The increase in
average yield was  attributable to higher average yields for Federal funds sold,
available-for-sale  investment  securities,  and loans in the 2005 period due to
increases in the Federal funds rate and short and  medium-term  market  interest
rates in general.

Total  interest  expense for the  six-month  period ended June 30, 2005 was $1.2
million,  an increase  of $427,000 or 59% from the same period in 2004.  Average
interest-bearing  liabilities  in the 2005 period  increased by $24.2 million or
27%  compared to the 2004 period due to  increases  in average  interest-bearing
deposits of $11.9 million or 25%,  average time deposits of $8.7 million or 25%,
and average long-term debt of $3.6 million or 64%.

The weighted average rate paid on interest-bearing  liabilities was 2.02% in the
2005 period compared to 1.60% in the 2004 period. The increase in rates paid was
attributable to increased  market pressure to raise interest rates for deposits,
and increases in the three-month LIBOR rate, which is the index for subordinated
debentures.

Net interest income before  provision for loan losses increased to $4.35 million
for the 2005  period  from $3.14  million for the 2004 period due to the factors
described  above.  Increased  volume  of  net  average  interest-earning  assets
resulted in an increase in the  Company's net interest  income of  approximately
$766,000, while the increase in market interest rates caused net interest income
to increase by approximately $445,000.

The Company's net interest margin  increased 16 bps (from 4.76% to 4.92%) in the
2005 period compared to the 2004 period. The increase in net interest margin was
generally  attributable  to the impact of rising  interest  rates on loan yields
since the majority of loans in the  Company's  loan  portfolio  have  adjustable
interest   rates.  In  addition,   noninterest-bearing   deposits  were  a  more
significant  funding  source  in the 2005  period.  Average  noninterest-bearing
deposits totaled $59.9 million,  representing 37% of average deposits during the
2005 period, compared to average noninterest-bearing  deposits of $40.6 million,
representing 33% of average deposits, during the 2004 period.


                                       12
<PAGE>

The following  table presents the Company's  average  balance  sheet,  including
weighted  average  yields  and  rates  on a  taxable-equivalent  basis,  for the
six-month periods indicated:

<TABLE>
<CAPTION>
                                                                               Six Months ended June 30,
                                                        ------------------------------------------------------------------------
                                                                      2005                                 2004
                                                        ----------------------------------  ------------------------------------
                                                                    Interest     Average                Interest      Average
                                                         Average     income/     yield/      Average    income/       yield/
(dollars in thousands)                                   Balance     Expense      Cost       Balance    Expense        Cost
                                                         -------     -------      ----       -------    -------        ----
<S>                                                       <C>            <C>       <C>        <C>            <C>         <C>
ASSETS
Due from banks                                                                              $      83  $        2   $     4.82%
Federal funds sold                                      $  13,461   $     171       2.56%       6,350          31         0.98%
Available-for-sale investment securities:
         Taxable                                           40,272         709       3.55%      19,032         309         3.25%
         Non-taxable (1)                                    4,753          96       6.17%       3,138          52         5.02%
                                                        ---------   ---------   ---------   ---------  ----------   ----------
    Total securities (1)                                   45,025         805       3.83%      22,170         361         3.50%
Loans (2) (3)                                             121,792       4,526       7.49%     104,582       3,470         6.64%
                                                        ---------   ---------   ---------   ---------  ----------   ----------
      Total interest-earning assets (1)                   180,278       5,502       6.21%     133,185       3,864         5.84%
                                                        ---------                           ---------

Noninterest-earning assets, net of allowance for loan
   losses                                                  16,796                              10,813
                                                        ---------                           ---------
       Total assets                                     $ 197,074                           $ 143,998
                                                        =========                           =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
   Interest bearing                                     $  59,315   $     341       1.16%   $  47,408  $      181         0.76%
   Time deposits less than $100,000                        19,612         211       2.17%      17,688         161         1.82%
   Time deposits $100,000 or more                          23,494         306       2.63%      16,757         188         2.24%
                                                        ---------   ---------   ---------   ---------  ----------   ----------
   Total interest-bearing deposits                        102,421         858       1.69%      81,853         530         1.30%
Long-term debt                                              9,292         196       4.25%       5,666         124         4.38%
Junior subordinated deferrable interest debentures          3,093          96       6.26%       3,093          69         4.48%
                                                        ---------   ---------   ---------   ---------  ----------   ----------
      Total interest-bearing liabilities                  114,806       1,150       2.02%      90,612         723         1.60%
                                                                    ---------                          ----------

Noninterest bearing deposits                               59,865                              40,621
Other liabilities                                           2,507                               1,423
                                                        ---------                           ---------
    Total liabilities                                     177,178                             132,656
Shareholders' equity                                       19,896                              11,342
                                                        ---------                           ---------
    Total liabilities and shareholders' equity          $ 197,074                           $ 143,998
                                                        =========                           =========

Net interest income and margin (1)                                  $   4,352   $   4.92%              $    3,141   $     4.76%
                                                                    =========   ========               ==========   ==========
</TABLE>

(1)   Interest income is not presented on a taxable-equivalent  basis,  however,
      the average yield was calculated on a taxable- equivalent basis by using a
      marginal tax rate of 34%.
(2)   Nonaccrual loans are included in total loans.  Interest income is included
      on nonaccrual  loans only to the extent cash payments have been  received.
      No interest was received on nonaccrual loans for the periods presented.
(3)   Interest income includes amortized loan fees of $263 and $213 for 2005 and
      2004, respectively.


                                       13
<PAGE>

The following  table sets forth a summary of the changes in interest  income and
interest  expense from changes in average  earning  assets and  interest-bearing
liabilities  (volume) and changes in average  interest  rates for the  six-month
periods ended June 30, 2005 and 2004. Changes not solely  attributable to volume
or rates have been  allocated in  proportion to the  respective  volume and rate
components.

<TABLE>
<CAPTION>
                      Changes in net interest income due to changes in volumes and rates

                                                                             2005 period vs 2004 period
                                                                        Increase (decrease) due to change in:
                                                                        Average        Average
                                                                        Volume         Rate (1)        Total
                                                                      ------------    -----------    -----------
<S>                                                                    <C>             <C>           <C>
(In thousands)
Increase (decrease) in interest income:
Due from banks                                                         $       (2)     $       0     $       (2)
                                                                       ----------      ---------     ----------
Federal funds sold                                                             35            105            140
Available-for-sale investments securities                                     382             62            444
Loans                                                                         567            489          1,056
                                                                       ----------      ---------     ----------
     Total interest income                                                    982            656          1,638

(Decrease) increase in interest expense:
Interest-bearing deposits                                                      45            115            160
Time deposits less than $100,000                                               17             33             50
Time deposits $100,000 or more                                                 75             43            118
Long-term debt                                                                 79            (7)             72
Junior subordinated deferrable interest debentures                              -             27             27
                                                                       ----------      ---------     ----------
     Total interest expense                                                   216            211            427
                                                                       ----------      ---------     ----------
     Increase in net interest income                                   $      766      $     445     $    1,211
                                                                       ==========      =========     ==========

    (1)  Factors contributing to both changes in rate and volume have been attributed to changes in rates.

</TABLE>

Provision for Loan Losses

For the  six-month  periods ended June 30, 2005 and 2004,  the Company  recorded
provisions  for loan losses of $212,000  and $35,000,  respectively.  The higher
amount  recorded  in 2005  reflected  a  greater  amount  of  growth in the loan
portfolio  during 2005 compared to 2004.  Net loan charge offs totaled $1,000 in
2005 and  $111,000  in 2004.  The 2004  amount  included  a loan  charge  off of
$129,000 on a  commercial  real estate loan that had been on  nonaccrual  status
since  2001.  The  allowance  for loan  losses is based on loan  growth,  credit
experience,  portfolio  mix and  management's  ongoing  evaluation  of the  loan
portfolio  risk  and  economic  conditions.   Based  on  information   currently
available, management believes that the allowance for loan losses is adequate to
absorb potential risks in the portfolio. However, no assurance can be given that
the Company may not sustain  charge-offs which are in excess of the allowance in
any given period.  The Company's loan portfolio  composition and  non-performing
assets are further discussed under the financial condition section below.


                                       14
<PAGE>

Non-Interest Income

Non-interest  income for the  six-month  periods  ended  June 30,  2005 and 2004
totaled  $465,000 and $461,000,  respectively,  an increase of $4,000 or 1%. The
components of non-interest income during each period were as follows:

<TABLE>
<CAPTION>
                               Non-interest income
                               -------------------
                                                      Six Months ended June 30,
                                                      -------------------------     ---------
(in thousands)                                                                       Increase
                                                         2005           2004        (Decrease)
                                                      ----------     ----------     ---------
<S>                                                   <C>            <C>            <C>
Service charges                                       $      258     $      246     $      12
Gain on sale of available-for-sale investment
securities                                                     0              7            (7)
Gain on other real estate                                      0              0             0
Mortgage loan brokerage fees                                  69             79           (10)
Earnings on cash surrender value of life
insurance policies                                            52             44             8
Other                                                         86             85             1
                                                      ----------     ----------     ---------
     Total non-interest income                        $      465     $      461     $       4
                                                      ==========     ==========     =========
</TABLE>

The  increase  in  non-interest  income  was due to  increased  service  charges
resulting  from an  increase in the number of deposit  accounts,  and to greater
earnings on cash  surrender  value of life insurance  policies  caused by rising
market  interest  rates.  These were  offset by a  reduction  in  mortgage  loan
brokerage fees.

Non-Interest Expense

Non-interest  expense was $3.2 million for the  six-month  period ended June 30,
2005 compared to $2.7 million for the  six-month  period ended June 30, 2004, an
increase of $0.5 million or 20%.  The  increase  was due  primarily to increased
employee costs associated with the Company's growth.

The components of non-interest  expense for the six-month periods ended June 30,
2005 and 2004 were as follows:

<TABLE>
<CAPTION>
                                 Non-interest expense
                                 --------------------
                                                      Six Months ended June 30,
                                                      -------------------------      ---------
(in thousands)                                                                        Increase
                                                         2005            2004        (Decrease)
                                                      ----------      ---------      ---------
<S>                                                   <C>             <C>            <C>
Salaries and employee benefits                        $    1,765      $   1,457      $     308
Occupancy and equipment                                      353            300             53
Data processing                                              207            209             (2)
Operations                                                   194            185              9
Professional and legal                                       157            128             29
Advertising and business development                         117             88             29
Telephone and postal                                          79             66             13
Supplies                                                      95             54             41
Assessment and insurance                                      70             60             10
Amortization expense                                          31             31              0
Other expenses                                               154            108             46
                                                      ----------      ---------      ---------
     Total non-interest expense                       $    3,222     $    2,686      $     536
                                                      ==========     ==========      =========
</TABLE>

                                       15
<PAGE>

Provision for Income Taxes

The  provisions  for income taxes for the six-month  periods ended June 30, 2005
and 2004 was $533,000 and  $340,000,  respectively.  The effective tax rates for
these periods were 38.5%, and 38.6%, respectively.


Results of Operations for the Three Months Ended June 30, 2005

Net Interest Income

Total interest  income for the  three-month  period ended June 30, 2005 was $2.9
million,  an increase  of $972,000 or 50% from the same period in 2004.  Average
earning assets in the 2005 period  increased by $49.1 million or 37% compared to
the 2004 period due to increases  in average  available-for-sale  securities  of
$26.6 million or 120%, and average loans of $22.7 million or 22%.

The weighted average tax-equivalent yield on total  interest-earning  assets was
6.48% in the 2005 period  compared to 5.92% in the 2004 period.  The increase in
average yield was  attributable to higher average yields for Federal funds sold,
available-for-sale  investment  securities,  and loans in the 2005 period due to
increases in the Federal funds rate and short and  medium-term  market  interest
rates in general.

Total  interest  expense  for the  three-month  period  ended June 30,  2005 was
$603,000,  an increase of $229,000 or 61% from the same period in 2004.  Average
interest-bearing  liabilities  in the 2005 period  increased by $24.3 million or
26%  compared to the 2004 period due to  increases  in average  interest-bearing
deposits of $14.0 million or 29%,  average time deposits of $7.4 million or 21%,
and average long-term debt of $3.0 million or 47%.

The  average  rate paid on  interest-bearing  liabilities  was 2.08% in the 2005
period  compared  to 1.62% in the 2004  period.  The  increase in rates paid was
attributable  to increased  market pressure to raise interest rates for deposits
and increases in the three-month LIBOR rate, which is the index for subordinated
interest debentures.

Net interest income before  provision for loan losses increased to $2.32 million
for the 2005  period  from $1.58  million for the 2004 period due to the factors
described  above.  Increased volume of net average earning assets resulted in an
increase in the Company's net interest income of approximately  $505,000,  while
the increase in market  interest rates caused net interest income to increase by
approximately $238,000.

The Company's net interest margin  increased 35 bps (from 5.15% to 4.80%) in the
2005 period compared to the 2004 period. The increase in net interest margin was
generally  attributable  to the impact of rising  interest  rates on loan yields
since the majority of loans in the  Company's  loan  portfolio  have  adjustable
interest   rates.  In  addition,   noninterest-bearing   deposits  were  a  more
significant  funding  source  in the 2005  period.  Average  noninterest-bearing
deposits totaled $60.4 million,  representing 37% of average deposits during the
2005 period, compared to average noninterest-bearing  deposits of $42.5 million,
representing 34% of average deposits, during the 2004 period.


                                       16
<PAGE>

The following  table presents the Company's  average  balance  sheet,  including
weighted  average  yields  and  rates  on a  taxable-equivalent  basis,  for the
three-month periods indicated:

<TABLE>
<CAPTION>
                                                                              Three Months ended June 30,
                                                        -----------------------------------------------------------------------
                                                                     2005                                 2004
                                                        ---------------------------------  ------------------------------------
                                                                    Interest     Average                Interest      Average
                                                         Average     income/     yield/      Average    income/       yield/
(dollars in thousands)                                   Balance     Expense      Cost       Balance    Expense        Cost
                                                         -------     -------      ----       -------    -------        ----
<S>                                                      <C>         <C>            <C>     <C>         <C>               <C>
ASSETS
Federal funds sold                                       $  6,640    $     48       2.90%   $   6,886   $      16         0.93%
Available-for-sale investment securities:
         Taxable                                           42,980         388       3.62%      18,117         149         3.31%
         Non-taxable (1)                                    5,793          53       5.56%       4,095          34         5.06%
                                                        ---------   ---------   ---------   ---------  ----------   ----------
    Total securities (1)                                   48,773         441       3.85%      22,212         183         3.63%
Loans (2) (3)                                             127,248       2,434       7.67%     104,481       1,751         6.74%
                                                        ---------   ---------   ---------   ---------  ----------   ----------
      Total interest-earning assets (1)                   182,661       2,923       6.48%     133,579       1,950         5.92%
                                                        ---------                           ---------

Noninterest-earning assets, net of allowance for loan
   losses                                                  16,639                              14,582
                                                        ---------                           ---------
       Total assets                                     $ 199,300                           $ 148,161
                                                        =========                           =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
   Interest bearing                                      $ 61,740    $    190       1.23%   $  47,779   $      92         0.77%
   Time deposits less than $100,000                        19,416         109       2.25%      17,688          86         1.96%
   Time deposits $100,000 or more                          23,130         156       2.71%      17,464          94         2.16%
                                                        ---------   ---------   ---------   ---------  ----------   ----------
   Total interest-bearing deposits                        104,286         455       1.75%      82,931         272         1.32%
Long-term debt                                              9,288          99       4.28%       6,313          67         4.27%
Junior subordinated deferrable interest debentures          3,093          50       6.48%       3,093          35         4.55%
                                                        ---------   ---------   ---------   ---------  ----------   ----------
      Total interest-bearing liabilities                  116,667         604       2.08%      92,337         374         1.62%
                                                                    ---------                          ----------

Noninterest bearing deposits                               60,411                              42,455
Other liabilities                                           1,588                               1,951
                                                        ---------                           ---------
    Total liabilities                                     178,666                             136,743
Shareholders' equity                                       20,634                              11,418
                                                        ---------                           ---------
    Total liabilities and shareholders' equity          $ 199,300                           $ 148,161
                                                        =========                           =========

Net interest income and margin (1)                                   $  2,319       5.15%               $   1,576         4.80%
                                                                    =========   =========              ==========   ==========
</TABLE>

(1)   Interest income is not presented on a taxable-equivalent  basis,  however,
      the average yield was calculated on a taxable- equivalent basis by using a
      marginal tax rate of 34%.
(2)   Nonaccrual loans are included in total loans.  Interest income is included
      on nonaccrual  loans only to the extent cash payments have been  received.
      No interest was received on nonaccrual loans for the periods presented.
(3)   Interest income includes amortized loan fees of $144 and $115 for 2005 and
      2004, respectively.


                                       17
<PAGE>

The following  table sets forth a summary of the changes in interest  income and
interest  expense from changes in average  earning  assets and  interest-bearing
liabilities  (volume) and changes in average  interest rates for the three-month
periods ended June 30, 2005 and 2004. Changes not solely  attributable to volume
or rates have been  allocated in  proportion to the  respective  volume and rate
components.

<TABLE>
<CAPTION>
                      Changes in net interest income due to changes in volumes and rates
                      ------------------------------------------------------------------

                                                                             2005 period vs 2004 period
                                                                        Increase (decrease) due to change in:
                                                                        Average        Average
                                                                        Volume         Rate (1)        Total
                                                                       ---------       ---------     ----------
<S>                                                                    <C>             <C>           <C>
(In thousands)
Increase (decrease) in interest income:
Federal funds sold                                                     $       (1)     $      33     $       32
Available-for-sale investments securities                                     224             34            258
Loans                                                                         378            305            683
                                                                       ----------      ---------     ----------
     Total interest income                                                    601            372            973

(Decrease) increase in interest expense:
Interest-bearing deposits                                                      27             71             98
Time deposits less than $100,000                                                8             15             23
Time deposits $100,000 or more                                                 30             32             62
Long-term debt                                                                 31              1             32
Junior subordinated deferrable interest debentures                              -             15             15
                                                                       ----------      ---------     ----------
     Total interest expense                                                    96            134            230
                                                                       ----------      ---------     ----------
     Increase in net interest income                                   $      505      $     238     $      743
                                                                       ==========      =========     ==========

      (2) Factors contributing to both changes in rate and volume have been attributed to changes in rates.

</TABLE>

Provision for Loan Losses

For the three-month  periods ended June 30, 2005 and 2004, the Company  recorded
provisions  for  loan  losses  of  $181,000  and  $0,  respectively.  Loan  loss
provisions  were  substantially  higher in 2005 due to loan volume  growing more
rapidly in 2005 than in the prior year. The company  recorded $2,000 of net loan
charge offs during the 2005 period and $130,000 of net loan  charge-offs  during
the 2004 period.  The  charge-offs  recorded  during the 2004 period  included a
$129,000  charge  off  recorded  upon  foreclosure  of  real  estate  collateral
underlying  a  commercial  real estate loan that had been on  nonaccrual  status
since 2001.  The  allowance  for loan losses,  is based on loan  growth,  credit
experience,  portfolio  mix and  management's  ongoing  evaluation  of the  loan
portfolio  risk  and  economic  conditions.   Based  on  information   currently
available, management believes that the allowance for loan losses is adequate to
absorb potential risks in the portfolio. However, no assurance can be given that
the Company may not sustain  charge-offs which are in excess of the allowance in
any given period.  The Company's loan portfolio  composition and  non-performing
assets are further discussed under the financial condition section below.


                                       18
<PAGE>

Non-Interest Income

Non-interest  income for the  three-month  periods  ended June 30, 2005 and 2004
totaled $238,000 and $247,000,  respectively, an decrease of $9,000 or 0.4%. The
components of non-interest income during each period were as follows:

<TABLE>
<CAPTION>
                                 Non-interest income
                                 -------------------
                                                      Three Months ended June 30,
                                                      --------------------------     ----------
(in thousands)                                           2005           2004         Increase
                                                                                     (Decrease)
                                                      ----------     -----------     ----------
<S>                                                   <C>            <C>             <C>
Service charges                                       $      134     $       129     $        5
Gain on sale of available-for-sale investment
  securities                                                   0               0              0
Gain on other real estate                                      0               0              0
Mortgage loan brokerage fees                                  30              41            (11)
Earnings on cash surrender value of life
insurance policies                                            26              25              1
Other                                                         48              52             (4)
                                                      ----------     -----------     ----------
     Total non-interest income                        $      238     $       247     $       (9)
                                                      ==========     ===========     ==========
</TABLE>

The decrease in non-interest income was due primarily by a reduction in mortgage
loan brokerage fees.

Non-Interest Expense

Non-interest  expense was $1.6 million and $1.4 million,  respectively,  for the
three-month periods ended June 30, 2005 and 2004, an increase of $0.2 million or
16%. The increase was due primarily to increased  employee costs associated with
the Company's growth.

The components of noninterest expense for the three-month periods ended June 30,
2005 and 2004 were as follows:

<TABLE>
<CAPTION>
                                Non-interest expense
                                --------------------
                                                      Three Months ended June 30,
                                                      --------------------------     ---------
(in thousands)                                                                        Increase
                                                         2005            2004        (Decrease)
                                                      ----------      ----------     ---------
<S>                                                   <C>             <C>            <C>
Salaries and employee benefits                        $      867      $      757     $     110
Occupancy and equipment                                      178             154            24
Data processing                                              103             104            (1)
Operations                                                    95              95             0
Professional and legal                                        85              71            14
Advertising and business development                          64              55             9
Telephone and postal                                          42              33             9
Supplies                                                      52              29            23
Assessment and insurance                                      34              33             1
Amortization expense                                          15              15             0
Other expenses                                                79              44            35
                                                      ----------      ----------     ---------
     Total non-interest expense                       $    1,614      $    1,390     $     224
                                                      ==========      ==========     =========
</TABLE>


                                       19
<PAGE>

Provision for Income Taxes

The provision for income taxes for the  three-month  periods ended June 30, 2005
and 2004 was $293,000 and  $176,000,  respectively.  The effective tax rates for
these periods were 38.5%, and 40.6%, respectively.

Financial Condition

Investment Securities

All investment securities held by the Company on June 30, 2005 are classified as
available-for-sale    securities.    In   classifying    its    investments   as
available-for-sale, securities are reported at fair value, with unrealized gains
and losses  excluded from earnings and reported,  net of taxes,  as  accumulated
other comprehensive income within shareholders' equity.

The following  tables set forth the amortized cost and estimated market value of
available-for-sale investment securities at the dates indicated:

                                                  June 30, 2005
                                ------------------------------------------------
(in thousands)                  Amortized    Unrealized   Unrealized     Fair
                                   Cost         Gain         Loss        Value
                                   ----         ----         ----        -----
U.S. government  agencies        $26,952        $19         $(164)      $26,807
Mortgage-backed securities        11,013         13           (95)       10,931
Municipal securities               8,509         62           (21)        8,550
Corporate debt securities          4,588          -           (63)        4,525
                                 -------        ---         -----       -------
    Total                        $51,062        $94         $(343)      $50,813
                                 =======        ===         =====       =======

                                                December 31, 2004
                                ------------------------------------------------
(in thousands)                  Amortized    Unrealized   Unrealized     Fair
                                   Cost         Gain         Loss        Value
                                   ----         ----         ----        -----
U.S. government  agencies        $20,988        $ 5          $118)      $20,875
Mortgage-backed securities         8,790         12           (48)        8,754
Municipal securities               4,382         66           (31)        4,417
Corporate debt securities          4,067          4           (18)        4,053
                                 -------        ---          ----       -------
    Total                        $38,227        $87         ($215)      $38,099
                                 =======        ===          ====       =======

Management  periodically  evaluates each investment security in a loss position,
relying primarily on industry analyst reports,  observation of market conditions
and interest rate  fluctuations,  to determine if the impairment is temporary or
other-than-temporary.  Management has determined that no investment  security is
impaired other than temporarily.  Management believes it will be able to collect
all amounts due according to the contractual terms of the underlying  investment
securities and that the noted decline in fair value is due only to interest rate
fluctuations.

Loans

The Company's lending  activities are  geographically  concentrated in the South
San Joaquin Valley, primarily in Tulare and Fresno counties. The following table
sets forth the breakdown of loans  outstanding by type at the dates indicated by
amount and percentage of the portfolio:

<TABLE>
<CAPTION>

(dollars in  thousands)                      June 30, 2005                December 31, 2004
                                       --------------------------    --------------------------
<S>                                    <C>                  <C>      <C>                  <C>
Commercial                             $     35,630         27%      $     34,389         29%
Real estate - mortgage (1)                   63,597         47%            60,688         52%
Real estate - construction                   28,853         22%            14,694         13%
Agricultural                                  3,033          2%             4,535          4%
Consumer and other                            3,077          2%             2,388          2%
                                       ------------  ------------    ------------  ------------
    Subtotal                                134,190        100%           116,694        100%
                                                     ============                  ============
Deferred loan fees, net                        (585)                         (459)
Allowance for loan losses                    (1,611)                       (1,401)
                                       ------------                  ------------
    Total loans, net                   $    131,994                  $    114,834
                                       ============                  ============
</TABLE>

                                       20
<PAGE>

(1) Consists primarily of commercial mortgage loans.

Although  the first  six-months  of 2005 saw real  estate -  construction  loans
increase more rapidly that other loan portfolio  segments,  the primary focus of
the lending division is commercial loans,  including  commercial mortgage loans.
This is attributable to the rapidly growing  commercial economy in the Company's
lending territory. Tulare and Fresno counties are two of the top counties in the
United  States  for  agricultural  production,  but  the  Company  lends  in the
agricultural  sector on a very  selective  basis due to the  volatility  of that
market and other  factors.  Retail loan  products are offered  primarily for the
benefit of commercial  business owners and professionals who typically  maintain
depository and other lending relationships with the Company.

Nonperforming  Assets.  Nonperforming  assets at June 30, 2005 and  December 31,
2004 were  $27,000 and $81,000,  respectively,  and were  comprised  entirely of
nonaccrual loans.

Allowance for Loan Losses

The allowance  for loan losses  totaled $1.61 million or 1.20% of total loans at
June 30,  2005.  This  compared to $1.40  million or 1.20% at December 31, 2004.
From its periodic analysis of the allowance for loan losses, management believes
that the  allowance  for loan losses is adequate at 1.20% of total loans at both
December 31, 2004 and June 30, 2005. However, no assurance can be given that the
Company may not sustain  charge-offs which are in excess of the allowance in any
given period.

The following table  summarizes the changes in the allowance for loan losses for
the periods indicated:

                                                  Six Months ended   Year ended
                                                  ----------------   ----------
                                                      June 30,        December
                                                      --------        --------
(dollars in thousands)                                  2005            2004
                                                        ----            ----

Balance, beginning                                   $   1,401       $   1,393
Provision for  loan losses                                 212             138
Charge-offs                                                 (2)           (148)
Recoveries                                                  --              18
                                                     ---------       ---------
Balance, ending                                      $   1,611       $   1,401
                                                     =========       =========

Net charge-offs (recoveries) to average
   loans outstanding                                      0.00%           0.01%
Average loans outstanding                            $ 121,792       $ 116,695
Ending allowance to total loans outstanding               1.20%           1.20%

Deposits

Total  deposits  were $166.1  million as of June 30,  2005,  an increase of $9.7
million  or 6% from the  December  31,  2004  balance of $156.4  million.  Total
deposits at June 30, 2005  consisted of 38%  noninterest-bearing  deposits,  37%
interest-bearing  deposits, and 25% time deposits. The December 31, 2004 deposit
mix  consisted  of  37%  non-interest  bearing  deposits,  35%  interest-bearing
deposits,  and 28% time  deposits.  The  company  seeks to acquire  the  deposit
accounts  of new  customers  with an  emphasis  on  noninterest-bearing  deposit
accounts.

Borrowings

At June 30, 2005 and December  31, 2004,  long-term  debt  outstanding  from the
Federal  Home Loan Bank  remained  unchanged  at $9.3 million as no new debt was
incurred.  The balance of Junior Subordinated  Deferrable Interest


                                       21
<PAGE>

Debentures  at June 30, 2005 also remained  unchanged  from December 31, 2004 at
$3.1 million.  During the first  six-months of 2005, the Company did not utilize
its short-term unsecured borrowing arrangements with correspondent banks.

Capital Resources

At June 30, 2005 and December 31, 2004, all of the Company's capital ratios were
in excess of minimum regulatory requirements,  and Valley Business Bank exceeded
the minimum requirements of a "well capitalized" institution.

On  September  9, 2004,  the Company  filed a  registration  statement  with the
Securities and Exchange  Commission  (SEC) for the public sale of 650,000 shares
of common  stock.  The SEC  declared  the  registration  statement  effective on
December 23, 2004.  On December  29,  2004,  the Company sold 350,750  shares of
common  stock to the  Company's  underwriter,  Wedbush  Morgan  Securities;  the
remaining  299,250 shares were sold directly by the Company in January 2005. The
entire stock offering added $7.6 million to the Company's  capital.  The balance
of  stockholders'  equity  increased  from $16.3 million at December 31, 2004 to
$21.0 million at June 30, 2005. The increase reflected the proceeds from January
2005 sale of common stock and net income for the six months ended June 20, 2005.

In the second  quarter of 2003,  Valley  Commerce Trust I issued $3.0 million of
trust preferred securities.  Trust preferred securities are includable in Tier 1
capital, subject to regulatory limitation.  At June 30, 2005, and June 30, 2004,
the entire $3.0 million was included in Tier 1 capital.

The  Company  declared a  three-for-two  stock  split in August 2004 and paid 5%
stock  dividends  in 2004 and 2003.  The Company  has not  declared or paid cash
dividends  since  inception.  Stock  splits and  dividends  are not  dilutive to
capital ratios.


                                       22
<PAGE>

The following  table  summarizes the Company's  risk-based  capital ratios as of
June 30, 2005 and December 31, 2004:

<TABLE>
<CAPTION>
                           Capital and capital adequacy ratios
                           -----------------------------------

                                          June 30, 2005             December 31, 2004
                                          -------------             -----------------
(dollars in thousands)                Amount         Ratio        Amount         Ratio
                                      ------         -----        ------         -----

<S>                                 <C>                 <C>              <C>         <C>
Leverage Ratio
--------------
Valley Commerce Bancorp
    and Subsidiary                  $    23,978         12.0%   $    19,216         10.8%
Minimum regulatory requirement      $     9,591          4.0%   $     7,686          4.0%

Valley Business Bank                $    23,442         11.8%   $    14,910          8.4%
Minimum requirement for "Well-
    Capitalized" institution        $    11,721          5.0%   $     7,455          5.0%
Minimum regulatory requirement      $     9,377          4.0%   $     5,964          4.0%

Tier 1 Risk-Based Capital Ratio
-------------------------------
Valley Commerce Bancorp
    and Subsidiary                  $    23,978         16.4%   $    19,216         14.7%
Minimum regulatory requirement      $     5,874          4.0%   $     5,227          4.0%

Valley Business Bank                $    23,442         16.0%   $    14,910         11.4%
Minimum requirement for "Well-
    Capitalized" institution        $     8,798          6.0%   $     7,825          6.0%
Minimum regulatory requirement      $     5,865          4.0%   $     5,217          4.0%

Total Risk-Based Capital Ratio
------------------------------
Valley Commerce Bancorp
    and Subsidiary                  $    25,589         17.5%   $    20,617         15.8%
Minimum regulatory requirement      $    11,747          8.0%   $    10,455          8.0%

Valley Business Bank                $    25,054         17.1%   $    16,311         12.5%
Minimum requirement for "Well-
    Capitalized" institution        $    14,663         10.0%   $    13,042         10.0%
Minimum regulatory requirement      $    11,730          8.0%   $    10,434          8.0%

</TABLE>

Liquidity

Liquidity is the ability to provide funds to meet  customers'  needs and to fund
operations in a timely and cost effective  manner.  The Company's primary source
of funds is deposits. On an ongoing basis,  management anticipates funding needs
for loans,  asset purchases,  maturing  deposits,  and other needs and initiates
deposit  promotions  as needed.  During  periods  when  deposit  growth  exceeds
customer needs, funds are invested in investment securities to serve as a future
source of funding.

The Company's  available-for-sale  securities portfolio, Federal funds sold, and
cash and due from banks serve as the primary  sources of liquidity.  The Company
maintains a significant  borrowing  line with the Federal Home Loan Bank secured
primarily with  available-for-sale  investment securities.  At June 30, 2005 the
Company had $37.5  million of available  credit from the Federal Home Loan Bank.
Secondary sources of liquidity include  short-term  borrowing  arrangements with
and correspondent banks.

The Company's off-balance sheet financing  arrangements are primarily limited to
commitments to extend credit and standby letters of credit,  which totaled $40.1
million and $1.5 million,  respectively,  at June 30, 2005.  Management monitors
these  arrangements  each  accounting  period in the overall  assessment  of the
Company's   liquidity  needs.  The  Company  has  no  other   off-balance  sheet
arrangements  that  are  likely  to  have a  material  effect  on its  financial
condition,


                                       23
<PAGE>

results of operations, liquidity, capital expenditures or capital resources. The
Company does not retain a repurchase option or contingent interest in any of its
loan participations.

The Company's  strategic  objectives  include  expanding  through opening of "de
novo" branches and loan production offices in the near term and acquiring branch
offices  from other  institutions  in the longer  term.  The  addition of branch
offices is expected to involve  significant  cash outlays;  e.g., for buildings,
improvements,  and equipment. The Company's planning efforts consider the impact
of such cash outlays so that sufficient liquidity is maintained for both capital
and operational needs.


ITEM 3 - CONTROLS AND PROCEDURES

(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Based on their  evaluation as of the end of the period covered by this Quarterly
Report on Form 10-QSB, the Company's  principal  executive officer and principal
financial  officer have  concluded  that the Company's  disclosure  controls and
procedures  (as defined in Rules  13a-15(e) and 15d-15(e)  under the  Securities
Exchange  Act of 1934  (the  "Exchange  Act"))  are  effective  to  ensure  that
information  required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded,  processed,  summarized and reported
within the time periods  specified in Securities and Exchange  Commission  rules
and forms.

(b) CHANGES IN INTERNAL CONTROLS

There were no changes in the Company's internal control over financial reporting
identified in connection  with the  evaluation  described in paragraph (a) above
that  occurred  during the  Company's  last fiscal  quarter that has  materially
affected,  or is reasonably likely to materially  affect, the Company's internal
control over financial reporting.


                                       24
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

From  time to time,  the  Company  is a party to claims  and  legal  proceedings
arising in the  ordinary  course of  business.  In the opinion of the  Company's
management,  the amount of ultimate  liability with respect to such  proceedings
will not have a material adverse effect on the financial condition or results of
operations of the Company.


ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)   There were no options granted or exercised  during the first six months of
      2005.

(b)   The following information is furnished with respect to the use of proceeds
      received from the Company's  public  offering that closed in December 2004
      and January 2005:


Gross proceeds to the company                                       $8,450,000

Offering expenses:

      Underwriting discount                       $227,988
      Other offering expenses                      592,314
                                                  --------
      Total offering expenses                                          820,302
                                                                    ----------

Net proceeds to the company                                         $7,629,698
                                                                    ==========

      As of the date of this  report,  the Company  used the net proceeds of the
      offering to fund working  capital and other  general  corporate  purposes.
      Over time, the additional capital will be used to expand the operations of
      Valley Business Bank, the Company's wholly-owned subsidiary.

(c)   The Company did not  repurchase  any stock  during the first six months of
      2005.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

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

The Company's 2005 Annual Meeting of Shareholders was held on April 26, 2005. At
the 2005 annual meeting, the shareholders took the following actions:

      1.    Elected  Directors  of the  Company to serve  until the 2006  Annual
            Meeting of Shareholders  and until their  successors are elected and
            qualified.  In  the  election  for  directors,  no  candidates  were
            nominated for election as a director  other than the nominees of the
            Board of Directors whose names were set forth in the Company's proxy
            statement  dated March 29, 2005.  Set forth below is a tabulation of
            the votes cast in the  election of  Directors  with  respect to each
            nominee for office:

                                                   Votes Cast
                                                  For Election         Withheld
                                                  ------------         --------

                  David B. Day                      1,482,602           19,000
                  Walter A. Dwelle                  1,482,602           19,000
                  Thomas A. Gaebe                   1,482,602           19,000
                  Donald A. Gilles                  1,480,402           21,200
                  Philip R. Hammond, Jr.            1,482,602           19,000
                  Russell F. Hurley                 1,482,602           19,000
                  Fred P. LoBue, Jr.                1,482,602           19,000
                  Kenneth H. Macklin                1,482,602           19,000
                  Stanley J. Shamoon                1,480,402           21,200

      2.    Approved  the  proposed  amendment  to the Valley  Commerce  Bancorp
            Amended and  Restated  1997 Stock Option Plan to increase the number
            of shares  available for grants of options under the Plan. The votes
            tabulated were:

                                                      Votes              Votes
                                                       For              Against
                                                     -------            -------
                                                     855,883             95,979


<PAGE>

      3.    Ratified the  appointment  by the Board of Directors of  Perry-Smith
            LLP,  independent  certified  public  accountants,  to  serve as the
            Company's auditors for the fiscal year ending December 31, 2005. The
            votes tabulated were:

                                                      Votes              Votes
                                                       For              Against
                                                     -------            -------
                                                    1,478,606            5,402

ITEM 5 - OTHER INFORMATION

None.

ITEM 6 - EXHIBITS

An  Exhibit  Index has been  attached  as part of this  quarterly  report and is
incorporated herein by reference.


                                       25
<PAGE>

                                   SIGNATURES
                                   ----------

In accordance with the requirements of the Securities  Exchange Act of 1934, the
Company  caused  this  report  to be signed  on its  behalf by the  undersigned,
thereunto duly authorized.



                                   VALLEY COMMERCE BANCORP



Date: August 12, 2005              By:  /s/ Donald A. Gilles
                                        ----------------------------------------

                                      Donald A. Gilles

                                      President and Chief Executive Officer



Date: August 12, 2005              By:  /s/Roy O. Estridge
                                        ----------------------------------------

                                        Roy O. Estridge, Chief Financial Officer



                                       26
<PAGE>


                                  Exhibit Index


31.1          Rule 13a-14(a)/15d-14(a) Certification
31.2          Rule 13a-14(a)/15d-14(a) Certification
32.1          Section 1350 Certifications



                                       27