U.S.
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  FORM 10-QSB  QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934  For
the quarterly period ended March 31, 2001 Commission File Number: 0-15982  NATIONAL MERCANTILE BANCORP(Exact name of small
  business issuer as specified in its charter)
  California
  95-3819685(State or other
  jurisdiction of
  (I.R.S. Employerincorporation or
  organization)
  Identification No.)
  1840
  Century Park East, Los Angeles, California
  90067(Address of principal
  executive offices)
  (Zip Code)
 Issuer's telephone
number, including area code (310) 277-2265 Indicate
by check mark whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES
  x
  NO
  o
 APPLICABLE ONLY TO CORPORATE ISSUERS: The
number of shares outstanding of the issuer's Common Stock, no par value, as of
May 1, 2001was 1,605,882.


NATIONAL MERCANTILE BANCORP AND
SUBSIDIARY
CONSOLIDATED BALANCE SHEETS  March
  31,
  2001
  (Unaudited)
  December
  31,
  2000(Dollars
  in thousands)ASSETSCash
  and due from banks-demand
  $9,316
  $7,897Federal
  funds sold and securities purchased under agreements to resell
  28,900
  19,700Cash and cash equivalents
  38,216
  27,597Securities
  available-for-sale, at fair value; aggregate amortized cost of $60,368 and
  $64,953 at March 31, 2001 and December 31, 2000, respectively
  60,348
  64,417FRB
  and other stock, at cost
  2,769
  2,733Loans
  receivable
  107,109
  110,248Allowance for credit losses
  (2,452)
  (2,597)Net loans receivable
  104,657
  107,651Premises
  and equipment, net
  611
  526Accrued
  interest receivable and other assets
  1,826
  1,919Total
  assets
  $208,427
  $204,843LIABILITIES
  AND SHAREHOLDERS' EQUITYDeposits:Noninterest-bearing demand
  $61,545
  $59,935Interest-bearing demand
  7,644
  9,004Money market
  34,038
  32,351Savings
  1,344
  1,144Time certificates of deposit:$100,000 or more
  33,144
  25,865Under $100,000
  6,266
  6,248Total deposits
  143,981
  134,547Federal
  funds purchased and securities sold under agreements to repurchase
  5,000
  7,500Other
  borrowings
  36,000
  40,000Accrued
  interest payable and other liabilities
  1,561
  2,093Total liabilities
  186,542
  184,140Shareholders'
  equity:Preferred stock, no par value: (10,000
  shares undesignated) Series A non-cumulative convertible perpetual preferred
  stock; authorized 990,000 shares; issued and outstanding 750,680 shares and
  770,423 shares at March 31, 2001 and December 31, 2000, respectively
  6,131
  6,292Common stock, no par value; authorized
  10,000,000 shares; issued and outstanding 1,600,082 shares and 1,547,429
  shares at March 31, 2001 and December 31, 2000, respectively
  30,129
  29,905Accumulated deficit
  (14,355)
  (14,958)Accumulated other comprehensive loss
  (20)
  (536)Total shareholders' equity
  21,885
  20,703Total liabilities and shareholders'
  equity
  $208,427
  $204,843See
  accompanying notes to consolidated financial statements.   NATIONAL MERCANTILE BANCORP AND SUBSIDIARYCONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)

For
  the three months
  ended March 31,2001
  2000(Dollars
  in thousands except
  per share amounts)Interest
  income:Loans, including fees
  $2,590
  $1,800Securities available-for-sale
  1,090
  1,209Federal funds sold and securities
  purchased under agreements to resell
  152
  82Total interest income
  3,832
  3,091Interest
  expense:Interest-bearing demand
  22
  27Money market and savings
  290
  231Time certificate of deposits:$100,000 or more
  406
  245Under $100,000
  118
  88Total interest expense on deposits
  836
  591Federal funds purchased and securities
  sold under agreements to repurchase
  6
  1Other borrowings
  461
  455Total interest expense
  1,303
  1,047Net interest income before provision
  for credit losses
  2,529
  2,044Provision
  for credit losses
  -
  -Net interest income after provision for
  credit losses
  2,529
  2,044Other
  operating income:Net gain on sale of securities
  available-for-sale
  50
  -International services
  6
  28Investment division
  23
  20Deposit-related and other customer
  services
  130
  136Gain on sale of OREO and fixed assets
  -
  10Total other operating income
  209
  194Other
  operating expenses:Salaries and related benefits
  1,097
  910Net occupancy
  243
  249Furniture and equipment
  73
  54Printing and communications
  71
  70Insurance and regulatory assessments
  81
  70Customer services
  203
  197Computer data processing
  114
  76Legal services
  30
  49Other professional services
  137
  114Other real estate owned expenses
  -
  3Promotion and other expenses
  73
  64Total other operating expenses
  2,122
  1,856Net income before provision for income
  taxes
  616
  382Provision
  for income taxes
  13
  7Net income
  $603
  $375Earnings per share:Basic
  $0.38
  $0.47Diluted
  $0.19
  $0.15See
  accompanying notes to consolidated financial statements

NATIONAL MERCANTILE
BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)

For the three-months
  ended March 31,2001
  2000(Dollars in thousands)Cash
  flows from operating activities:Net income
  $603
  $375Adjustments to reconcile net income to
  net cash provided by operating activities:Depreciation and amortization
  58
  48Gain on sale of other real estate owned
  -
  (10)Gain on sale securities avaiable-for-sale
  (50)Net accretion of discount on securities
  available-for-sale
  (8)
  (8)Net accretion of discounts on loans
  purchased
  (9)
  (9)Decrease in accrued interest receivable
  and other assets
  93
  103(Decrease) increase in accrued interest
  payable and other liabilities
  (532)
  8Net cash provided by operating
  activities
  155
  507Cash
  flows from investing activities:Purchase of securities available-for-sale
  (2,033)
  (464)Proceeds from sale of securities
  available-for-sale
  3,951Proceeds from repayments and maturities
  of securities available-for-sale
  2,689
  995Loan originations and principal
  collections, net
  3,003
  (5,496)Proceeds from sale of other real estate
  owned
  -
  186Purchases of premises and equipment
  (143)
  (12)Net cash provided by (used in)
  investing activities
  7,467
  (4,791)Cash
  flows from financing activities:Net increase in demand deposits, money
  market and savings accounts
  2,137
  17,827Net increase (decrease) in time
  certificates of deposit
  7,297
  (865)Net decrease in securities sold under
  agreements to repurchase and federal funds purchased
  (2,500)
  -Net decrease in other borrowings
  (4,000)
  (3,700)Net proceeds from exercise of stock
  options
  63
  -Net cash provided by financing
  activities
  2,997
  13,262Net
  increase in cash and cash equivalents
  10,619
  8,978Cash
  and cash equivalents, January 1
  27,597
  10,239Cash
  and cash equivalents, March 31
  $38,216
  $19,217Supplemental
  cash flow information:Cash paid for interest
  $1,355
  $1,071Non-cash investing and financing
  transactions:Transfer to OREO and other assets-SBA
  guaranteed loans from loans receivable, net
  -
  235See
  accompanying notes to consolidated financial statements.

NATIONAL MERCANTILE BANCORP AND
SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)

Preferred Stock
  Common Stock
  Accumulated
  Deficit
  Accumulated
  Other
  Comprehensive
  Income (Loss)
  TotalShares
  Amount
  Shares
  Amount(Dollars in thousands except
  share data)Balance
  at January 1, 2001
  770,423
  $6,292
  1,547,429
  $29,905
  $(14,958)
  $(536)
  $20,703Preferred stock converted into     common stock on a 2:1 basis
  (19,743)
  (161)
  39,486
  161
  
  
  -Stock options exercised
  
  
  13,167
  63
  
  
  63Comprehensive income:Other comprehensive income:Unrealized holding gain during        the period
  
  
  
  
  
  566
  566Less: Reclassification adjustment        for gain included in net
  income
  
  
  
  
  
  (50)
  (50)Net income
  
  
  
  
  603
  
  603Comprehensive income
  
  
  
  
  
  
  1,119Balance
  at March 31, 2001
  750,680
  $6,131
  1,600,082
  $30,129
  $(14,355)
  $(20)
  $21,885See accompanying notes to consolidated
  financial statements.

NATIONAL MERCANTILE BANCORP AND SUBSIDIARYNOTES TO
THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1BASIS OF PRESENTATION AND
MANAGEMENT REPRESENTATIONS

The
unaudited consolidated financial statements include the accounts of National
Mercantile Bancorp (the ''Company'') and its wholly owned subsidiary,
Mercantile National Bank.  The unaudited
consolidated financial statements reflect all interim adjustments, which are of
a normal recurring nature and which, in management's opinion, are necessary for
the fair presentation of the Company's consolidated financial position and
results of operations and cash flows for such interim periods. The results for
the quarter ended March 31, 2001 are not necessarily indicative of the results
expected for any subsequent period or for the full year ending December 31,
2001. The unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements included in the
Companys Annual Report on Form 10-KSB for the year ended December 31, 2000.

NOTE 2EARNINGS PER SHARE

Basic
earnings per share is computed using the weighted average number of common
shares outstanding during the period. 
The weighted average number of common shares outstanding used in
computing basic earnings per share for the three months ended March 31, 2001
and 2000 was 1,574,440 and 798,318, respectively.  The weighted average number of common shares and common share
equivalents outstanding used in computing diluted earnings per share for the
three months ended March 31, 2001 and 2000 was 3,195,073 and 2,482,406,
respectively.

The following table is a
reconciliation of income and shares used in the computation of basic and
diluted earnings per share:

Net
  Income
  Shares
  Per
  share
  amount(in
  thousands)For the three months ended March 31, 2001:Basic EPS
  $603
  1,574,440
  $0.38Effect of dilutive securities:Options and warrants
  
  119,273Convertible preferred stock
  
  1,501,360Diluted EPS
  $603
  3,195,073
  $0.19For the three months ended March 31, 2000:Basic EPS
  $375
  798,318
  $0.47Effect of dilutive securities:Options and warrants
  
  113,238Convertible preferred stock
  
  1,570,850Diluted EPS
  $375
  2,482,406
  $0.15



NOTE 3CASH AND CASH EQUIVALENTS

For
purposes of reporting cash flows, cash and cash equivalents include cash and
due from banks-demand, federal funds sold and securities sold under agreements
to resell.

NOTE 4INCOME TAXES

No
income tax provision was recorded during the first quarters of 2001 and 2000
(other than alternative minimum tax) due to the utilization of previously
unrecognized tax benefits to offset the current period tax liability.

For
tax purposes at December 31, 2000, the Company had: (i) federal net operating
loss carry forwards of $18.4 million, which begin to expire in the year 2009;
(ii) California net operating loss carry forwards of $1.5 million, of which
$300,000 will expire in 2002; and (iii) an alternative minimum tax credit of
$295,000 which may be carried forward indefinitely.

NOTE 5RECLASSIFICATIONS

Certain
prior year data have been reclassified to conform with current year presentation.

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

National
Mercantile Bancorp (the ''Company'') is the holding company for Mercantile
National Bank (the ''Bank''). In light of the fact that the Bank constitutes
substantially all of the business of the Company, references to the Company in
this Item 2 reflect the consolidated activities of the Company and the Bank,
unless the context expressly requires otherwise.

RESULTS OF OPERATIONS

The
Company recorded net income of $603,000, or $0.19 diluted earnings per share,
for the first quarter of 2001, compared to net income of $375,000, or $0.15
diluted earnings per share, for the first quarter of 2000.   Net income per basic share was $0.38 and
$0.47 for the first quarter of 2001 and 2000, respectively.  The increase in net income resulted
primarily from a $485,000 increase in net interest income which was partially
offset by $266,000 increase in other operating expense.

Return
on average assets during the first quarter of 2001 increased to 1.25% from
0.92% during the first quarter of 2000. Return on average equity declined from
13.15% during the first quarter of 2000 to 11.32% during the first quarter of
2001 as a result of an increase in shareholders equity primarily due to strong
core earnings performance, sale of common stock and reduction in the unrealized
loss on securities available for sale during the year 2000.

The
increase in net interest income during the first quarter of 2001 resulted
primarily from an increase of 18.5% or $28.8 million in average interest
earning assets to $185.1 million from $156.3 million during the first quarter
of 2000.  This increase was due also,
but to a much lesser extent, to an increase in the net interest margin of 28
basis points to 5.54% during the first quarter of 2001 compared to 5.26% during
the first quarter of 2000.  The increase
in average interest earning assets and net interest margin was driven by a
40.3% increase in average loans receivable, which comprised 58.3% of the total
average interest earning assets. The increase in average loans receivable was
funded by a 17.4% increase in average total deposits and an increase in
stockholders equity of $4.2 million from the sale of common stock during 2000.  The growth in average loans receivable and
average deposits was a result of the Companys efforts toward expanding and
building new customer relationships within its existing banking services
provided by business, entertainment, healthcare and community based non-profit
organizations divisions.

Average
loans receivable increased $31.0 million or 40.3% to $107.9 million during the
quarter ended March 31, 2001 compared to $76.9 million during the quarter ended
March 31, 2000. The weighted average yield on loans receivable increased to
9.73% during the quarter ended March 31, 2001 compared to 9.41% during the
quarter ended March 31, 2000 due to increased market rates.

Total average securities
available-for-sale decreased by $7.4 million to $66.2 million at March 31, 2001
compared to $73.6 million at March 31, 2000 resulting from repayments or
paydowns and sale of securities during 2000 and the first quarter of 2001.  The weighted average yield on securities
available-for-sale slightly increased to 6.67% during the first quarter of 2001
from 6.60% during the first quarter of 2000, primarily due to an increased
market interest rates which had an impact on securities yielding variable
rates.

Total average deposits increased $20.7
million or 17.4% to $140.0 million during the first quarter of 2001 compared to
$119.2 million during the first quarter of 2000.  Total average other borrowings (including federal funds purchased
and securities sold under agreements to repurchase) increased $1.3 million or
4.2% to $32.4 million during the quarter ended March 31, 2001 compared to $31.1
million during the quarter ended March 31, 2000.

The
weighted average cost of interest bearing liabilities increased to 4.61% during
the first quarter of 2001 from 4.35% the during the first quarter of 2000.  This change was a result of an increase in
weighted average cost of interest bearing deposits to 4.12% during the first
quarter of 2001 compared to 3.62% during the first quarter of 2000 due
primarily to an increase in average time certificates of deposit of $100,000 or
more which bear a higher cost than other deposit accounts.  This increase was partially offset by a
decrease in cost of other borrowings to 5.84% during the first quarter of 2001
from 5.94% during the first quarter of 2000 as a result of interest cuts by the
Federal Reserve Bank during the first quarter of 2001 affecting other
borrowings with variable rates.

There
was no provision for credit losses for the quarters ended March 31, 2001 and
2000.  Loan charge-offs during the first
quarter of 2001 were $179,000, compared to $30,000 during the first quarter of
2000.  Recoveries were $34,000 during
the first quarter of 2001, compared to $51,000 during the first quarter of
2000.

Other
operating income excluding gains and losses on the sale of securities and
assets decreased to $159,000 during the first quarter of 2001 from $184,000
during the first quarter of 2000.

The
Company realized a $50,000 net gain on sale of securities during the first
quarter of 2001 and no such sale of securities during the first quarter of
2000.  The Company did not have any OREO
activity during the first quarter of 2001 compared to a $10,000 gain on sale of
OREO during the first quarter of 2000.

Other operating expense
increased by $266,000 to $2.1 million during the first quarter of 2001 compared
to $1.9 million during first quarter of 2000. 
This increase was brought about by the following; (i) salaries and
related benefits increased $187,000, or 20.5%; (ii) computer data processing
expense increased $38,000, or 50.0%; (iii) other professional services expense
increased $23,000, or 20.2%; (iv) furniture and equipment expense increased
$19,000, or 35.2% and (v) promotion and other expense increased $9,000, or
14.1%.  This increase in salaries and
related benefits, furniture and equipment and promotion and other expense was
due primarily to the cost associated with the Companys continued expansion of
the business banking and entertainment loan production staff including
additional staffing for new market niches of healthcare and community based
nonprofit organizations and a new branch office.  The increase in computer data processing and other professional
expense was caused by increased costs associated with conversion to a new data
service provider and costs provided for future acquisitions.

The following table presents
the components of net interest income for the quarters ended March 31, 2001 and
2000.

Average Balance Sheet and
Analysis of Net Interest Income

Three months endedMarch 31, 2001
  March 31, 2000AverageAmount
  InterestIncome/Expense
  WeightedAverageYield/Rate
  Average
  Amount
  InterestIncome/Expense
  WeightedAverageYield/Rate(Dollars in thousands)Assets:Federal
  funds sold and securities purchased under agreements to resell
  $10,939
  $152
  5.64%
  $5,709
  $82
  5.78%Securities
  available-for-sale
  66,229
  1,090
  6.67%
  73,625
  1,209
  6.60%Loans
  receivable (1) (2)
  107,925
  2,590
  9.73%
  76,922
  1,800
  9.41%Total interest earning assets
  185,093
  $3,832
  8.40%
  156,256
  $3,091
  7.96%Noninterest
  earning assets:Cash and due from banks - demand
  10,856
  
  
  8,879Other assets
  2,452
  
  
  2,761Allowance for credit losses and net
  unrealized (loss) gain           onsecurities available-for-sale
  (2,735)
  
  
  (4,801)Total
  assets
  $195,666
  
  
  $163,095Liabilities
  and shareholders' equity:Interest-bearing
  deposits:Demand
  $8,022
  $22
  1.11%
  $8,600
  $27
  1.26%Money market and savings
  36,513
  290
  3.22%
  31,171
  231
  2.98%Time certificates of deposit:$100,000 or more
  29,141
  406
  5.65%
  18,968
  245
  5.19%Under $100,000
  8,644
  118
  5.54%
  6,987
  88
  5.07%Total time certificates of
  deposit
  37,785
  524
  5.62%
  25,955
  333
  5.16%Total interest-bearing
  deposits
  82,320
  836
  4.12%
  65,726
  591
  3.62%Federal
  funds purchased and securities sold under agreements to repurchase
  361
  6
  6.74%
  33
  1
  6.09%Other
  borrowings
  32,044
  461
  5.83%
  31,075
  455
  5.89%Total interest-bearing
  liabilities
  114,725
  $1,303
  4.61%
  96,834
  $1,047
  4.35%Noninterest-bearing
  liabilities:Noninterest-bearing demand
  deposits
  57,636
  
  
  53,490Other liabilities
  1,704
  
  
  1,302Shareholders'
  equity
  21,601
  
  
  11,469Total
  liabilities and shareholders' equity
  $195,666
  
  
  $163,095Net
  interest income (spread)
  
  $2,529
  3.79%
  
  $2,044
  3.61%Net yield on earning assets
  (2)
  
  
  5.54%
  
  
  5.26%(1) Includes average balance of
nonperforming loans of $750,000 and $800,000 for 2001 and 2000, respectively.(2) Yields and amounts
earned on loans receivable include loan fees of $91,000 and $24,000 for the
three months ended March 31, 2001and 2000, respectively.

The following table sets
forth, for the periods indicated, the changes in interest earned and interest
paid resulting from changes in volume and changes in rates.  Average balances in all categories in each
reported period were used in the volume computations.  Average yields and rates in each reported period were used in
rate computations.

Increase (Decrease) in Interest
Income/Expense Due to Change in
Average Volume and Average Rate



Quarter ended March 31,2001 vs 2000Increase (decreased) due
  to(1)
  Net
  Increase
  (Decrease)Volume
  RateInterest
  Income:Federal
  funds sold and securities purchased under agreements to resell
  $73
  $(3)
  $70Securities
  available-for-sale
  (134)
  15
  (119)Loans
  receivable (2)
  729
  61
  790Total interest-earning assets
  $668
  $73
  $741Interest
  Expense:Interest-bearing
  deposits:Demand
  $(1)
  $(4)
  $(5)Money market and savings
  42
  17
  59Time certificates of deposit:$100,000 or more
  141
  20
  161Under $100,000
  22
  8
  30Total time certificates of deposit
  163
  28
  191Total interest-bearing deposits
  204
  41
  245Federal
  funds purchased and securities sold under agreements to repurchase
  5
  -
  5Other
  borrowings
  10
  (4)
  6Total interest-bearing liabilities
  $219
  $37
  $256Net interest income
  $449
  $36
  $485(1)
The change in interest income or interest expense that is attributable to both
changes in average volume and average rate has been allocated to the changes
due to (i) average volume and (ii) average rate in proportion to the
relationship of the absolute amounts of changes in each.
(2) Table does not include interest income that would have been earned on
nonaccrual loans.



BALANCE SHEET
ANALYSIS

INVESTMENT SECURITIES

The
following comparative period-end table sets forth certain information
concerning the estimated fair values and unrealized gains and losses of
investment securities portfolio, consisting of available-for-sale securities:

Estimated Fair Values of and UnrealizedGains
and Losses on Investment Securities

March 31, 2001
  December 31, 2000Total
  amortized
  cost
  Gross
  unrealized
  gains
  Gross
  unrealized
  loss
  Estimated
  fair
  value
  Total
  amortized
  cost
  Gross
  unrealized
  gains
  Gross
  unrealized
  loss
  Estimated
  fair
  value(Dollars in thousands)
  (Dollars in thousands)U.S.
  Treasury securities
  $2,006
  $27
  $-
  $2,033
  $2,008
  $9
  $-
  $2,017GNMA-issued/guaranteed  mortgage pass through certificates
  5,150
  161
  -
  5,311
  5,288
  118
  -
  5,406Other
  U.S. government and federal agency securities
  -
  -
  -
  -
  1,952
  42
  -
  1,994FHLMC/FNMA-issued
  mortgage pass through certificates
  12,692
  180
  -
  12,872
  15,172
  86
  36
  15,222CMO's
  and REMIC's issued by U.S. government-sponsored agencies
  36,416
  83
  355
  36,144
  36,532
  1
  669
  35,864Privately
  issued Corporate bonds, CMO's and REMIC's securities
  4,104
  2
  118
  3,988
  4,001
  -
  87
  3,914FRB
  and other equity stocks
  2,769
  -
  -
  2,769
  2,733
  -
  -
  2,733$63,137
  $453
  $473
  $63,117
  $67,686
  $256
  $792
  $67,150As
indicated in the table above, total amortized cost of investment securities
decreased $4.5 million to $63.1 million at March 31, 2001 from $67.7 million at
December 31, 2000.  This change was due
to the sale of securities and repayments or 
paydowns on principal amortizing securities during the first quarter of
2001. The Company had a net unrealized loss of $20,000 at March 31, 2001 on its
investment securities portfolio compared to a net unrealized loss of $536,000
at December 31, 2000.

As
of March 31, 2001 the Company did not hold securities of any issuer, other than
the U.S. government and U.S. government agencies and corporations, the
aggregate book value of which exceeded 10% of the Company's shareholders'
equity.

LOAN PORTFOLIO

The
following comparative period-end table sets forth certain information
concerning the composition of the loan portfolio.



Loan Portfolio CompositionMarch 31,
  2001
  December 31,
  2000Amount
  Percent
  Amount
  Percent(Dollars in thousands)Commercial loans:Secured by one-to-four family residential
  properties
  $5,809
  5%
  $6,578
  6%Secured by multifamily residential
  properties
  3,566
  3
  3,765
  3Secured by commercial real properties
  39,345
  37
  40,540
  37Other - secured and unsecured
  51,956
  49
  53,433
  48Real estate
  construction and land development
  2,344
  2
  1,890
  2Home equity lines of
  credit
  685
  1
  644
  1Consumer installment
  and unsecured loans to individuals
  3,636
  3
  3,729
  3Total loans outstanding
  107,341
  100%
  110,579
  100%Deferred net loan
  origination fees and purchased loan discount
  (232)
  
  (331)Loans receivable, net
  $107,109
  
  $110,248Total
loans outstanding decreased by $3.2 million to $107.3 million at March 31, 2001
compared to $110.6 million at December 31, 2000.  The Company experienced a higher volume of loan payoffs than loan
originations in its total commercial loans during the first quarter of 2001
from the level of its total commercial loans outstanding at December 31, 2000.

The following comparative
period-end table sets forth certain information concerning nonperforming
assets.

Nonperforming
Assets

March 31,
  2001
  December 31,
  2000(Dollars in thousands)Nonaccrual loans
  $477
  $683Troubled debt
  restructurings
  -
  -Loans contractually
  past due ninety or more days with respect to either principal or interest and
  still accruing interest
  -
  -Nonperforming loans
  477
  683Other real estate
  owned
  -
  -Other assets-SBA
  guaranteed loan
  -
  -Total nonperforming
  assets
  $477
  $683Allowance for credit
  losses as a percent of nonaccrual loans
  514.0%
  380.2%Allowance for credit
  losses as a percent of nonperforming loans
  514.0%
  380.2%Total nonperforming
  assets as a percent of loans receivabl
  0.4%
  0.6%Total nonperforming
  assets as a percent of total shareholders' equity
  2.2%
  3.3%Nonaccrual loans decreased by $206,000 at
March 31, 2001 to $477,000 from $683,000 at December 31, 2000 due primarily to
a loan charge-off of $164,000.  As a
result, the amount of nonperforming assets at March 31, 2001 decreased 30.2%
from the level at December 31, 2000.

Loan
delinquencies greater than 30 days past due increased to $2.0 million or 1.8%
of loans outstanding at March 31, 2001 from $1.3 million or 1.2% of loans
outstanding at December 31, 2000.



Allowance For Credit Losses

The
following table sets forth information concerning the Company's allowance for
credit losses for the periods indicated.

Analysis of Changes in Allowance for
Credit Losses

Three months endedMarch 31,
  2001
  March 31,
  2000(Dollars in thousands)Balance, beginning of
  period
  $2,597
  $1,896Loan charged off:Commercial loansOther - secured and
  unsecured
  179
  -Consumer installment and
  unsecured loans to individuals
  -
  30Total loan charge-offs
  179
  30Recoveries of loans
  previously charged off:Commercial loans:Other - secured and
  unsecured
  29
  45Consumer installment and
  unsecured loans to individuals
  5
  6Total recoveries of loans
  previously charged off
  34
  51Net charge-offs
  145
  (21)Provision for credit losses
  -
  -Balance, end of period
  $2,452
  $1,917

Recent
Accounting Pronouncements

The
Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended by SFAS No. 137, Accounting
for Derivative Instruments and Hedging Activities  Deferral of the Effective
Date of FASB Statement No. 133, and SFAS No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities  an Amendment of SFAS
No. 133.   SFAS Nos. 133 and 138
establish accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet as either an asset or as a
liability measured at its fair value and that changes in the fair value be
recognized currently in the statements of operations.  The Company adopted SFAS Nos. 133, 137 and 138 on January 1,
2001.  The impact of the adoption did
not have a material effect on the Companys financial position or result of
operations at March 31, 2001 or for the quarter then ended.

In September 2000, the FASB
issued SFAS No. 140, Accounting for Transfer and Servicing of Financial Assets
and Extinguishments of Liabilities  a replacement of FASB Statement No.
125.  As of December 31, 2000, the
Company has adopted accounting and disclosure requirements of SFAS No. 140 as
set forth in paragraphs 15 and 17 of the Statement, respectively.  All other provisions of the statement were
adopted as of March 31, 2001.  The adoption
of SFAS No. 140 did not have an impact on the financial condition or the results
of operations of the Company.

CAPITAL
ADEQUACY REQUIREMENTS

At
March 31, 2001 the Company and the Bank were in compliance with all applicable
regulatory capital requirements and the Bank was well capitalized under the
Prompt Corrective Action rules of the Office of the Comptroller of the
Currency.  The following table sets
forth the regulatory capital standards for well capitalized institutions, and
the capital ratios for the Company and the Bank as of  March 31, 2001 and 
December 31, 2000.

Regulatory Capital Information
  of the Company and BankWell Capitalized
  Standards
  March 31,
  2001
  December 31,
  2000Company:Tier 1 leverage
  N/A
  11.19%
  10.73%Tier 1 risk-based
  capital
  N/A
  17.67%
  17.00%Total risk-based
  capital
  N/A
  18.93%
  18.26%Bank:Tier 1 leverage
  5.00%
  9.70%
  9.31%Tier 1 risk-based
  capital
  6.00%
  15.26%
  14.74%Total risk-based
  capital
  10.00%
  16.52%
  16.00%

LIQUIDITY

The
Company manages its liquidity through a combination of core deposits, federal
funds purchased, repurchase agreements, collateralized borrowing lines, and a
portfolio of securities available for sale. 
Liquidity is also provided by maturing investment securities and loans.

Average
core deposits (excludes money desk and escrow deposits) and shareholders
equity comprised 80.9% of total funding in the first quarter of 2001, compared
to 79.5% in the fourth quarter of 2000.

ASSET
LIABILITY MANAGEMENT

The
following table shows that the Companys cumulative one year interest rate
sensitivity gap indicated an asset sensitive position of $51.4 million at March
31, 2001, a change from an asset sensitive position of $40.2 million at
December 31, 2000.  This improvement
resulted from the Companys continuing effort to minimize its exposure to
changes in net interest income due to rapid movements in interest rates.  During the first quarter of 2001, the
Company has increased its available-for-sale investment securities portfolio
that reprice within one year to $30.7 million at March 31, 2001 from $28.2
million at December 31, 2000, increased its portfolio of loans that reprice
within one year to $84.1 million at March 31, 2001 from $82.8 million at
December 31, 2000, and decreased its other borrowed funds that reprice within
one year to $38.5 million at March 31, 2001 from $45.0 million at December 31,
2000.  This change was offset by an
increase in interest bearing transaction deposit accounts that reprice within
one year to $53.8 million at March 31, 2001 from $45.6 million at December 31,
2000.  The Companys asset sensitive
position during a period of slowly declining interest rates is not expected to
have a significant negative impact on net interest income since rates paid on
the Companys large base of interest bearing demand, savings and money market
deposit accounts historically have not changed proportionately with changes in
interest rates.  However, since the
Company is asset sensitive, in a period of rapidly declining rates such as 150
basis point reductions by the Federal Reserve during the first quarter of 2001,
the rapid decline will have a negative effect on the Companys net interest
income in the future quarters as deposit rates are adjusted.

Rate-Sensitive Assets and LiabilitiesMarch 31, 2001Maturing or repricing inLess
  than
  three
  months
  After three
  months
  but within
  one year
  After one
  year
  but within
  5 years
  After
  5 years
  Total(Dollars in thousands)Rate-Sensitive Assets:Federal funds sold and
  securities purchased under agreements to resell
  $28,900
  $-
  $-
  $-
  $28,900Securities
  available-for-sale, at amortized cost
  18,827
  11,841
  20,267
  9,433
  60,368FRB and other stock,
  at cost
  -
  -
  -
  2,769
  2,769Loans receivable
  68,574
  15,513
  21,383
  1,639
  107,109Total rate-sensitive assets
  116,301
  27,354
  41,650
  13,841
  199,146Rate-Sensitive
  Liabilities:(1)Interest bearing
  deposits:Demand, money market and
  savings
  4,741
  10,668
  15,074
  12,543
  43,026Time certificates of deposit
  29,231
  9,148
  678
  353
  39,410Other borrowings
  38,500
  -
  2,500
  -
  41,000Total rate-sensitive
  liabilities
  72,472
  19,816
  18,252
  12,896
  123,436Interest
  rate-sensitivity gap
  43,829
  7,538
  23,398
  945
  75,710Cumulative interest
  rate-sensitivity gap
  $43,829
  $51,367
  $74,765
  $75,710Cumulative ratio of
  rate sensitive assets to rate-sensitive liabilities
  160%
  156%
  168%
  161%(1) Deposits which are subject to
immediate withdrawal are presented as repricing within three months or less.
The distribution of other time deposits is based on scheduled maturities.



Rate-Sensitive Assets and LiabilitiesDecember 31, 2000Maturing or repricing inLess
  than
  three
  months
  After three
  months
  but within
  one year
  After one
  year
  but within
  5 years
  After
  5 years
  Total(Dollars in thousands)Rate-Sensitive Assets:Federal funds sold and
  securities purchased under agreements to resell
  $19,700
  $-
  $-
  $-
  $19,700Securities
  available-for-sale, at amortized cost
  18,014
  10,227
  24,728
  11,984
  64,953FRB and other stock,
  at cost
  -
  -
  -
  2,733
  2,733Loans receivable
  68,667
  14,149
  23,871
  3,561
  110,248Total rate-sensitive assets
  106,381
  24,376
  48,599
  18,278
  197,634Rate-Sensitive
  Liabilities:(1)Interest bearing
  deposits:Demand, money market and
  savings
  4,512
  10,152
  15,457
  12,378
  42,499Time certificates of deposit
  21,150
  9,782
  753
  428
  32,113Other borrowings
  45,000
  -
  2,500
  -
  47,500Total rate-sensitive
  liabilities
  70,662
  19,934
  18,710
  12,806
  122,112Interest
  rate-sensitivity gap
  35,719
  4,441
  29,889
  5,472
  75,522Cumulative interest
  rate-sensitivity gap
  $35,719
  $40,160
  $70,049
  $75,522Cumulative ratio of
  rate sensitive assets to rate-sensitive liabilities
  151%
  144%
  164%
  162%(1) Deposits which are subject to
immediate withdrawal are presented as repricing within three months or less.
The distribution of other time deposits is based on scheduled maturities.





FACTORS WHICH MAY AFFECT FUTURE OPERATING RESULTS

Our
results of operations and financial condition are affected by many factors,
including the following.

We face risk
from changes in interest rates.

The
success of our business depends, to a large extent, on our net interest
income.  Changes in market interest
rates can affect our net interest income by affecting the spread between our
interest-earning assets and interest-bearing liabilities.  This may be due to the different maturities
of our interest-earning assets and interest-bearing liabilities, as well as an
increase in the general level of interest rates.  Changes in market interest rates also affect, among other things:

            Our ability to originate loans;            The ability of our borrowers to make
payments on their loans;            The value of our interest-earning
assets and our ability to realize gains from the sale of these assets;            The average life of our
interest-earning assets;            Our ability to generate deposits
instead of other available funding alternatives; and            Our ability to access the wholesale
funding market.Interest
rates are highly sensitive to many factors, including governmental monetary
policies, domestic and international economic and political conditions and
other factors beyond our control.

We face risk
from possible declines in the quality of our assets.

Our
financial condition depends significantly on the quality of our assets.  While we have developed and implemented
underwriting policies and procedures to guide us in the making of loans,
compliance with these policies and procedures in making loans does not
guarantee repayment of the loans.  If
the level of our non-performing assets rises, our results of operations and
financial condition will be affected.  A
borrowers ability to pay its loan in accordance with its terms can be adversely
affected by a number of factors, such as a decrease in the borrowers revenues
and cash flows due to adverse changes in economic conditions or a decline in
the demand for the borrowers products and/or services.

Our
allowances for credit losses may be inadequate.

We
establish allowances for credit losses against each segment of our loan
portfolio.  At March 31, 2001, our
allowance for credit losses equaled 2.3% of loans receivable and 514.0% of
nonperforming loans.  Although we
believed that we had established adequate allowances for credit losses as of
March 31, 2001, the credit quality of our assets is affected by many factors
beyond our control, including local and national economic conditions, and the
possible existence of facts which are not known to us which adversely affect
the likelihood of repayment of various loans in our loan portfolio and
realization of the collateral upon a default. 
Accordingly, we can give no assurance that we will not sustain loan
losses materially in excess of the allowance for credit losses.  In addition, the Office of the Comptroller
of the Currency, as an integral part of its examination process, periodically
reviews our allowance for credit losses and could require additional provisions
for credit losses.  Material future
additions to the allowance for credit losses may also be necessary due to
increases in the size and changes in the composition of our loan
portfolio.  Increases in our provisions
for credit losses would adversely affect our results of operations.

Economic conditions may worsen.

Our
business is strongly influenced by economic conditions in our market area
(principally, the Greater Los Angeles metropolitan area) as well as regional
and national economic conditions and in our niche markets, including the
entertainment industry in Southern California. 
During the past several years economic conditions in these areas have
been favorable.  Should the economic
condition in these areas deteriorate, the financial condition of our borrowers
could weaken, which could lead to higher levels of loan defaults or a decline
in the value of collateral for our loans. 
In addition, an unfavorable economy could reduce the demand for our
loans and other products and services.

Because a
significant amount of the loans we make are to borrowers in California, our
operations could suffer as a result of local recession or natural disasters in
California.

At
March 31, 2001, approximately 46% of our loans outstanding were collateralized
by properties located in California.  Because
of this concentration in California, our financial position and results of
operations have been and are expected to continue to be influenced by general
trends in the California economy and its real estate market.  Real estate market declines may adversely
affect the values of the properties collateralizing loans.  If the principal balances of our loans,
together with any primary financing on the mortgaged properties, equal or
exceed the value of the mortgaged properties, we could incur higher losses on
sales of properties collateralizing foreclosed loans.  In addition, California historically has been vulnerable to
certain natural disaster risks, such as earthquakes and erosion-caused
mudslides, which are not typically covered by the standard hazard insurance
policies maintained by borrowers. 
Uninsured disasters may adversely impact our ability to recover losses
on properties affected by such disasters and adversely impact our results of
operations.



Our business
is very competitive.

There
is intense competition in Southern California and elsewhere in the United
States for banking customers.  We
experience competition for deposits from many sources, including credit unions,
insurance companies and money market and other mutual funds, as well as other
commercial banks and savings institutions. 
We compete for loans and deposits primarily with other commercial banks,
mortgage companies, commercial finance companies and savings institutions.  In recent years out-of-state financial
institutions have entered the California market, which has also increased
competition.  Many of our competitors
have greater financial strength, marketing capability and name recognition than
we do, and operate on a statewide or nationwide basis.  In addition, recent developments in
technology and mass marketing have permitted larger companies to market loans
more aggressively to our small business customers.  Such advantages may give our competitors opportunities to realize
greater efficiencies and economies of scale than we can.  We can provide no assurance that we will be
able to compete effectively against our competition.

Our business
is heavily regulated.

Both
National Mercantile Bancorp, as a bank holding company, and Mercantile National
Bank, as a national bank, are subject to significant governmental supervision
and regulation, which is intended primarily for the protection of
depositors.  Statutes and regulations
affecting us may be changed at any time, and the interpretation of these
statutes and regulations by examining authorities also may change.  We cannot assure you that future changes in
applicable statutes and regulations or in their interpretation will not
adversely affect our business.

Our ability to use our net operating losses
may be limited.

During
the past three years, although we have had taxable income, we have not paid any
income taxes other than alternative minimum taxes because of our net operating
loss carryforwards.  As of December 31,
2000, we had net operating loss carryforwards of $18.4 million and $1.5 million
for federal and state tax purposes, respectively.  Our federal net operating loss carryforward begins to expire in
2009.  Our state net operating loss
carryforwards continue to expire but remain available in reducing amounts
through 2002.  Our ability to use these
carryforwards in the future would be significantly limited if we experience an
ownership change within the meaning of Section 382 of the Internal Revenue
Code.  If our use of these carryforwards
is limited, we would be required to pay taxes on our taxable income to the
extent our taxable income exceeded the limited amounts which could be offset,
and our net income would be lower.

PART IIOTHER INFORMATION

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

(a)
On April 26, 2001, the Company held its annual meeting of shareholders.

(b)
At the annual meeting, the following directors were elected: Donald E. Benson,
Joseph N. Cohen, Robert E. Gipson, Antoinette Hubenette, M.D, Scott A.
Montgomery , Dion G. Morrow, Carl R. Terzian and Robert E. Thomson.

(c)
The following proposals were considered at the annual meeting and the number of
shares voting for or against such proposals are listed below.

Election
of DirectorsName
  Votes
  For
  VotesWithheldDonald E. Benson
  2,805,761
  138,289Joseph N. Cohen
  2,805,761
  138,289Robert E. Gipson
  2,805,761
  138,289Antoinette Hubenette, M.D.
  2,805,761
  138,289Scott A. Montgomery
  2,805,761
  138,289Dion G. Morrow
  2,805,761
  138,289Carl R. Terzian
  2,805,761
  138,289Robert E. Thomson
  2,805,761
  138,289



Approval of Amendment of
Section 4 of the 1996 Stock Incentive Plan to increase the number of common
shares available for grant under the Plan from 348,510 shares to 448,510
shares.

Votes For
  Votes Against
  Abstentions
  Broker
  Non-votes2,077,143
  274,385
  11,212
  581,310



Item 6.EXHIBITS AND REPORTS ON FORM 8-K

(a)
Exhibits.10.1      1996 Stock Incentive Plan, amended as of April 26, 2001

(b)
Reports
on Form 8-K.Form 8-K April 18, 2001 (Item 5).SIGNATURES

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



NATIONAL MERCANTILE BANCORP(Registrant)DATE:
  May
  11, 2001
  
  /s/  
  SCOTT A. MONTGOMERYSCOTT
  A. MONTGOMERYChief
  Executive Officer andInterim
  Principal Financial andPrincipal
  Accounting Officer