---




SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549








FORM 10-Q





(Mark one)


|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|- |  | -------------------------------------------------------

| |  | SECURITIES AND EXCHANGE ACT OF 1934
| |  | -----------------------------------




| |  | For the quarterly period endedMarch 31, 2003
| |  | --------------------------------------------




| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|- |  | --------------------------------------------------------

| |  | SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
| |  | -------------------------------------------------




| |  | For the transition period
from    to  .
| |  | ---------------------------------------




Commission file number  0-25418








CENTRAL COAST BANCORP


(Exact name of registrant as specified in its charter)





California

77-0367061(State or other jurisdiction of Incorporation or organization)

(I.R.S. Employer Identification No.)





301 Main Street, Salinas, California

93901(Address of principal executive offices)

(Zip Code)





(831) 422-6642(Registrants telephone number, including area code)








Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x  No  Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act). Yes  x  No  Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:  ̈





No par value Common Stock - 9,918,376 shares outstanding at May 8, 2003.Page 1 of 29





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|PART
I - FINANCIAL INFORMATION  Item 1. FINANCIAL STATEMENTS:  CENTRAL COAST BANCORP AND
SUBSIDIARY  CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
|------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                              |  |           
|----------------------------------------------------------------------------- |  | ----------
|                                                                              |  | March     
|In thousands (except share data)                                              |  | 2003      
|                                                                              | 
|Assets                                                                        | 
|Cash and due from banks                                                       |  | $   48,108
|Federal funds sold                                                            |  | 72,000    
|                                                                             
|Total cash and equivalents                                                    |  | 120,108   
|                                                                              | 
|Available-for-sale securities at fair value (amortized cost of $93,484        |  | 96,241    
|at March 31, 2003 and $104,925 at December 31, 2002)                          |  |           
|                                                                              | 
|Loans:                                                                        | 
|Commercial                                                                    |  | 213,488   
|Real estate-construction                                                      |  | 57,598    
|Real estate-other                                                             |  | 435,645   
|Consumer                                                                      |  | 12,928    
|Deferred loan fees, net                                                       |  | (996      
|                                                                             
|Total loans                                                                   |  | 718,663   
|Allowance for loan losses                                                     |  | (15,304   
|                                                                             
|Net Loans                                                                     |  | 703,359   
|                                                                             
|Premises and equipment, net                                                   |  | 3,063     
|Accrued interest receivable and other assets                                  |  | 11,895    
|                                                                             
|Total assets                                                                  |  | $ 934,666 
|                                                                             
|Liabilities and Shareholders' Equity                                          | 
|Deposits:                                                                     | 
|Demand, noninterest bearing                                                   |  | $ 214,249 
|Demand, interest bearing                                                      |  | 125,679   
|Savings                                                                       |  | 208,113   
|Time                                                                          |  | 292,720   
|                                                                             
|Total Deposits                                                                |  | 840,761   
|Accrued interest payable and other liabilities                                |  | 12,650    
|                                                                             
|Total liabilities                                                             |  | 853,411   
|                                                                             
|Commitments and contingencies (Note 3)                                        | 
|Shareholders' Equity:                                                         | 
|Preferred stock - no par value; authorized 1,000,000 shares; none outstanding | 
|Common stock - no par value; authorized 25,000,000 shares; issued and         | 
|outstanding: 9,917,241 shares at March 31, 2003                               | 
|and 9,015,675 shares at December 31, 2002                                     |  | 51,290    
|Shares held in deferred compensation trust (411,191 at March 31, 2003         | 
|and 373,810 as of December 31, 2002), net of deferred obligation              |  | -         
|Retained earnings                                                             |  | 28,352    
|Accumulated other comprehensive income - net of taxes                         | 
|of $1,144 at March 31, 2003 and $994 at December 31, 2002                     |  | 1,613     
|                                                                             
|Total shareholders' equity                                                    |  | 81,255    
|                                                                             
|Total liabilities and shareholders' equity                                    |  | $ 934,666 
|                                                                             

See
Notes to Consolidated Condensed Financial Statements

---

|CENTRAL
COAST BANCORP AND SUBSIDIARY  CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
|---------------------------------------------------------------------------------------------

|                                         | Three Months Ended March 31,
|---------------------------------------- | ----------------------------
|                                         |                             
|In thousands (except per share data)     |                             
|                                         |                             
|Interest Income                          |                             
|Loans (including fees)                   |                             
|Investment securities                    |                             
|Other                                    |                             
|                                        
|Total interest income                    |                             
|                                        
|Interest Expense                         |                             
|Interest on deposits                     |                             
|Other                                    |                             
|                                        
|Total interest expense                   |                             
|                                        
|Net Interest Income                      |                             
|Provision for Loan Losses                |                             
|                                        
|Net Interest Income after                |                             
|Provision for Loan Losses                |                             
|                                        
|Noninterest Income                       |                             
|Service charges on deposits              |                             
|Other income                             |                             
|                                        
|Total noninterest income                 |                             
|                                        
|Noninterest Expenses                     |                             
|Salaries and benefits                    |                             
|Occupancy                                |                             
|Furniture and equipment                  |                             
|Other                                    |                             
|                                        
|Total noninterest expenses               |                             
|                                        
|Income Before Provision for Income Taxes |                             
|Provision for Income Taxes               |                             
|                                        
|Net Income                               |                             
|                                        
|Basic Earnings per Share                 |                             
|Diluted Earnings per Share               |                             

See
Notes to Consolidated Condensed Financial Statements

---

|CENTRAL
COAST BANCORP AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
|------------------------------------------------------------------------------------------------

|                                                                    | Three Months Ended March 31,
|------------------------------------------------------------------- | ----------------------------
|                                                                    |                             
|In thousands                                                        |                             
|                                                                    |                             
|Cash Flows from Operations:                                         |                             
|Net income                                                          |                             
|Reconciliation of net income to net cash provided                   |                             
|by operating activities:                                            |                             
|Provision for loan losses                                           |                             
|Depreciation                                                        |                             
|Amortization and accretion                                          |                             
|(Gain)Loss on sale of fixed assets                                  |                             
|(Increase) decrease in accrued interest receivable and other assets |                             
|Increase in accrued interest payable and other liabilities          |                             
|(Decrease) Increase in deferred loan fees                           |                             
|                                                                   
|Net cash provided by operations                                     |                             
|                                                                   
|Cash Flows from Investing Activities:                               |                             
|Proceeds from maturities                                            |                             
|of available-for-sale securities                                    |                             
|Purchases of available-for-sale securities                          |                             
|Net increase in loans                                               |                             
|Proceeds from sale of equipment                                     |                             
|Purchases of equipment                                              |                             
|                                                                   
|Net cash provided by (used in) investing activities                 |                             
|                                                                   
|Cash Flows from Financing Activities:                               |                             
|Net increase (decrease) in deposit accounts                         |                             
|Net increase (decrease) in other borrowings                         |                             
|Cash received for stock options exercised                           |                             
|                                                                   
|Net cash provided by financing activities                           |                             
|                                                                   
|Net increase in cash and equivalents                                |                             
|Cash and equivalents, beginning of period                           |                             
|                                                                   
|Cash and equivalents, end of period                                 |                             
|                                                                   
|Other Cash Flow Information:                                        |                             
|Interest paid                                                       |                             
|Income taxes paid                                                   |                             
|                                                                    |                             
|See Notes to Consolidated Condensed Financial Statements            |                             

---

|CENTRAL
COAST BANCORP AND SUBSIDIARY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS March
31, 2003 (Unaudited)

NOTE 1. BASIS OF PRESENTATION AND CONSOLIDATED FINANCIAL STATEMENTS

In
the opinion of management, the unaudited consolidated condensed financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly Central Coast Bancorps (the
Companys) consolidated financial position at March 31, 2003
and December 31, 2002, the results of operations and cash flows for the three
month periods ended March 31, 2003 and 2002.

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
condensed financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Companys 2002 Annual Report to Shareholders. The results of operations for
the three-month periods ended March 31, 2003 and 2002 may not necessarily be
indicative of the operating results for the full year.

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 period. Actual
results could differ significantly from those estimates. Material estimates that
are particularly susceptible to significant changes in the near term relate to
the determination of the allowance for loan losses.

Management
has determined that since all of the commercial banking products and services
offered by the Company are available in each branch of the Community Bank of
Central California, its bank subsidiary (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.

Stock
dividend  On January 27, 2003, the Board of Directors declared a 10% stock
dividend, which was distributed on February 28, 2003, to shareholders of record
as of February 14, 2003. All earnings per share data and share data related to
the stock option information have been retroactively adjusted to reflect the
stock dividend.

NOTE 2. STOCK COMPENSATION

The
Company accounts for its stock-based awards using the intrinsic value method in
accordance with Accounting Principles Board No. 25, Accounting for Stock Issued
to Employees and its related interpretations. No compensation expense has been
recognized in the financial statements for employee stock arrangements, as the
Companys stock option plans provide for the issuance of options at a price
of no less than the fair market value at the date of the grant. Statement of
Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
Compensation, requires the disclosure of pro forma net income and earnings per
share had the Company adopted the fair value method of accounting for
stock-based compensation. Under SFAS No. 123, the fair value of stock-based
awards to employees is calculated through the use of option pricing models, even
though such models were developed to estimate the fair value of freely tradable,
fully transferable options without vesting restrictions, which significantly
differ from the Companys stock option awards. These models also require
subjective assumptions, including future stock price volatility and expected
time to exercise, which greatly affect the calculated values. The Companys
calculations were made using the Black-Scholes option pricing model with the
following assumptions: expected life, four years following vesting; average
stock volatility of 16.1% for 2003 and 16.0% for 2002; risk free interest rates
ranging from 2.77% to 3.55% for 2003 and 2.92% to 6.57% for 2002; and no
dividends during the expected term for 2003 and 2002. The Companys
calculations are based on a multiple option valuation approach and forfeitures
are recognized as they occur.

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 at grant date as prescribed by SFAS No. 123 is as
follows.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                               |  |                
|---------------------------------------------- |  | ---------------
|                                              
|                                               |  |                
|In thousands (except per share data)           |  | 2003           
|                                              
|Net Income - As Reported                       |  | $      2,969   
|Compensation expense from amortization of fair | 
|value of stock awards, net of taxes of $2      | 
|and $15 in 2003 and 2002                       |  | (3             
|                                              
|Pro Forma Net Income                           |  | $      2,966   
|                                              
|Basic Earnings per Share - As Reported         |  | $             0
|Pro Forma Basic Earnings per Share             |  | $             0
|Diluted Earnings per Share - As Reported       |  | $             0
|Pro Forma Diluted Earnings per Share           |  | $             0
|                                              

| | 
| | 

|NOTE 3. COMMITMENTS AND CONTINGENCIES

In
the normal course of business there are outstanding various commitments to
extend credit which are not reflected in the financial statements, including
loan commitments of approximately $214,480,000 and standby letters of credit of
approximately $6,028,000 at March 31, 2003. However, all such commitments will
not necessarily culminate in actual extensions of credit by the Company.

Approximately
$28,071,000 of loan commitments outstanding at March 31, 2003 relate to real
estate construction loans that are expected to fund within the next twelve
months. The remaining commitments primarily relate to revolving lines of credit
or other real estate or commercial loans, and many of these commitments are expected to expire
without being drawn upon. Therefore, the total commitments do not necessarily
represent future cash requirements. Each potential borrower and the necessary
collateral are evaluated on an individual basis. Collateral varies, but may
include real property, bank deposits, debt or equity securities or business
assets.

Stand-by
letters of credit are commitments written to guarantee the performance of a
customer to a third party. These guarantees are issued primarily relating to
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. Virtually all such commitments are
collateralized.

NOTE 4. EARNINGS PER SHARE

Basic
earnings per share is computed by dividing net income by the weighted average
common shares outstanding for the period. Diluted earnings per share reflects
the potential dilution that could occur if options or other contracts to issue
common stock were exercised and converted into common stock.

There
was no difference in the numerator used in the calculation of basic earnings per
share and diluted earnings per share. The denominator used in the calculation of
basic earnings per share and diluted earnings per share for each of the
three-month periods ended March 31 is reconciled as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                     |  |          
|---------------------------------------------------- |  | ---------
|                                                    
|In thousands (except per share data)                 |  | 2003     
|                                                    
|Basic Earnings Per Share                             | 
|Net income                                           |  | $  2,969 
|Weighted average common shares outstanding           |  | 9,917    
|                                                    
|Basic earnings per share                             |  | $    0.30
|                                                    
|Diluted Earnings Per Share                           | 
|Net Income                                           |  | $  2,969 
|Weighted average common shares outstanding           |  | 9,917    
|Dilutive effect of outstanding options               |  | 446      
|                                                    
|Weighted average common shares outstanding - Diluted |  | 10,363   
|                                                    
|Diluted earnings per share                           |  | $    0.29
|                                                    
|                                                     | 

|NOTE 5. COMPREHENSIVE INCOME
|----------------------------

|                                                    |  |       
|--------------------------------------------------- |  | ------
|                                                   
|                                                    |  |       
|In thousands                                        |  | 2003  
|                                                   
|Net income                                          |  | $2,969
|Other comprehensive income - net unrealized         | 
|gain on available-for-sale securities, net of taxes |  | 209   
|                                                   
|Total comprehensive income                          |  | $3,178
|                                                   
|                                                    | 

|NOTE 6. STOCK REPURCHASE PLAN

The
Board of Directors has authorized a stock repurchase program under which
repurchases will be made from time to time by the Company in the open market, or
in block purchases, or in privately negotiated transactions, in compliance with
Securities and Exchange Commission rules. The Company has not repurchased any
shares in 2003. As of March 31, 2003, there were approximately 307,900 shares
remaining under the program for repurchase by the Company.

NOTE 7. SUBSEQUENT EVENT

In
April 2003, the Bank was served with an Application for a Writ of Mandate by the
City of King which seeks the return from the Bank of an approximate $4.4 million
certificate of deposit assigned to the Bank as collateral security for an
approximate $4.4 million loan made by the Bank to a private real estate
developer. The loan to the developer was made in conjunction with a
redevelopment project with the City of King and/or its Community Development
Agency. The certificate of deposit matured on March 30, 2003 and the loan became
due on April 3, 2003 and has not been paid. The Bank intends to vigorously
defend its rights in respect to the certificate of deposit, however, as the
payment on the loan has not been received, the Bank considers the loan impaired. A
second loan for $4.6 million, made to the real estate developer, is secured by a
first deed of trust. This second loan is in default and a notice of default was
filed on April 21, 2003.












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


In
addition to the historical information contained herein, this report on Form
10-Q contains certain forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially from those
projected. Changes to such risks and uncertainties, which could impact future
financial performance, include, among others, (1) competitive pressures in the
banking industry; (2) changes in the interest rate environment; (3) general
economic conditions, nationally, regionally and in operating market areas,
including a decline in real estate values in the Companys market areas;
(4) the effects of terrorism, the threat of terrorism or the impact of military
conflicts; (5) changes in the regulatory environment; (6) changes in business
conditions and inflation; (7) changes in securities markets; (8) data processing
compliance problems; (9) variances in the actual versus projected growth in
assets; (10) return on assets; (11) loan losses; (12) expenses; (13) rates
charged on loans and earned on securities investments; (14) rates paid on
deposits; and (15) fee and other noninterest income earned, as well as other
factors. This entire report should be read to put such forward-looking
statements in context. To gain a more complete understanding of the
uncertainties and risks involved in the Companys business this report
should be read in conjunction with Central Coast Bancorps annual report on
Form 10-K for the year ended December 31, 2002.


Critical
Accounting Policies

General

Central
Coast Bancorps financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America
(GAAP). The financial information contained within our statements
is, to a significant extent, financial information that is based on measures of
the financial effects of transactions and events that have already occurred. We
use historical loss factors as one factor in determining the inherent loss that
may be present in our loan portfolio. Actual losses could differ significantly
from the historical factors that we use. Other estimates that we use are related
to the expected useful lives of our depreciable assets. In addition GAAP itself
may change from one previously acceptable method to another method. Although the
economics of our transactions would be the same, the timing of events that would
impact our transactions could change.

Allowance
for Loan Losses

The
allowance for loan losses is an estimate of the losses that may be sustained in
our loan portfolio. The allowance is based on two basic principles of
accounting. (1) Statement of Financial Accountings Standards (SFAS)
No. 5 Accounting for Contingencies, which requires that losses be
accrued when they are probable of occurring and estimable and (2) SFAS No. 114,
Accounting by Creditors for Impairment of a Loan, which requires
that losses be accrued based on the differences between the value of collateral,
present value of future cash flows or values that are observable in the
secondary market and the loan balance.

Our
allowance for loan losses has three basic components: the formula allowance, the
specific allowance and the unallocated allowance. Each of these components is
determined based upon estimates that can and do change when the actual events
occur. The formula allowance uses an historical loss view as an indicator of
future losses and as a result could differ from the loss incurred in the future.
However, since this history is updated with the most recent loss information,
the errors that might otherwise occur are mitigated. The specific allowance uses
various techniques to arrive at an estimate of the expected loss. Historical
loss information and fair market value of collateral are used to estimate those
losses. The use of these values is inherently subjective and our actual losses
could be greater or less than the estimates. The unallocated allowance addresses
losses that are attributable to various factors including economic events,
industry or geographic sectors whose impact on the portfolio have occurred, but
have yet to be recognized in either the formula or specific allowances. For
further information regarding our allowance for loan losses, see Allowance
for Loan Losses discussion later in this Item.

Stock
Based Awards

The
Company accounts for its stock based awards using the intrinsic value method in
accordance with Accounting Principles Board (APB) Opinion No. 25 and
related interpretations. Since the Companys stock option plans provide for
the issuance of options at a price of no less than the fair market value at the
date of the grant, no compensation expense has been recognized in the financial
statements.


Business
Organization

Central
Coast Bancorp (the Company) is a California corporation organized in
1994, and is the parent company for Community Bank of Central California, a
state-chartered bank, headquartered in Salinas, California (the
Bank). Its investment in the Bank comprises the major business
activity of the Company. Upon prior notification to the Board of
Governors of the Federal Reserve System, the Company is authorized to
engage in a variety of activities, which are deemed closely related to the
business of banking. The Company is engaged in certain lending activities
related to the purchase of certain tax advantaged loans from the Bank.

The
Bank offers a full range of commercial banking services, including a diverse
range of traditional banking products and services to individuals, merchants,
small and medium-sized businesses, professionals and agribusiness enterprises.
Its principal markets are located in the counties of Monterey, San Benito, Santa
Clara and Santa Cruz, which are in the central coast area of California.


Overview

Central
Coast Bancorp reported record quarterly net income of $2,969,000 for the first
quarter of 2003. Net income increased 8.5% over the $2,736,000 reported in the
first quarter of 2002. Diluted earnings per share for the first quarter of 2003
increased 11.5% to $0.29 from $0.26 in the prior year period. The earnings per
share for the 2002 quarter have been adjusted for the 10% stock dividend
distributed in February 2003.

The
annualized return on average equity (ROAE) and a return on average assets (ROAA)
were 15.1% and 1.33%, as compared to 16.4% and 1.37% for the same period in
2002.

During
the first quarter of 2003, the Company experienced modest growth, as total
assets increased $15,534,000 (1.7%) to $934,666,000 from the 2002 year-end
balance. On a year-over-year basis total assets increased $98,598,000 (11.8%)
from the $836,068,000 balance at March 31, 2002. At the end of the first
quarter, total loans were $718,663,000, a decrease of $26,690,000 (3.6%) from
year-end, but an increase of $99,083,000 (16.0%) on a year-over-year basis.
Deposits increased $14,259,000 (1.7%) in the first quarter of 2003 to
$840,761,000 from the 2002 year end balance. The increase in deposits includes
an $8,000,000 State of California certificate of deposit, which was originated
in January 2003. Deposits increased $86,403,000 (11.5%) on a year-over-year
basis from March 31, 2002 to March 31, 2003.

As
part of our ongoing strategy to expand the Banks base within its market
area, the Bank opened its twelfth branch in downtown Monterey in January 2003.

Central
Coast Bancorp ended the first quarter of 2003 with a Tier 1 capital ratio of
10.2% and a total risk-based capital ratio of 11.5% compared to 9.9% and 11.1%
at the end of the first quarter of 2002.

Within
the Managements Discussion and Analysis, interest income, net interest
income, net interest margin and the efficiency ratio are presented on a fully
taxable equivalent basis (FTE). These items have been adjusted to
give effect to $281,000 in taxable equivalent interest income on tax-free
investments for both of the three- month periods ending March 31, 2003 and 2002.






The
following table provides a summary of the major elements of income and expense
for the periods indicated.


Condensed
Comparative Income Statement
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                         |  |          | 
|------------------------------------------------------------------------ |  | -------- | 
|                                                                        
|                                                                         |  |          | 
|In thousands (except percentages)                                        |  | 2003     | 
|                                                                        
|Interest income (1)                                                      |  | $12,488  | 
|Interest expense                                                         |  | 3,068    | 
|                                                                        
|Net interest income                                                      |  | 9,420    | 
|Provision for loan losses                                                |  | --       | 
|                                                                        
|Net interest income after provision for loan losses                      |  | 9,420    | 
|Noninterest income                                                       |  | 1,014    | 
|Noninterest expense                                                      |  | 5,585    | 
|                                                                        
|Income before income taxes                                               |  | 4,849    | 
|Income taxes                                                             |  | 1,599    | 
|Tax equivalent adjustment                                                |  | 281      | 
|                                                                        
|Net income                                                               |  | $  2,969 | 
|                                                                        
|                                                                         | 
|1) Interest on tax-free securities is reported on a tax equivalent basis | 
|                                                                        

|Net
interest income

Net
interest income, the difference between interest earned on loans and investments
and interest paid on deposits and other borrowings, is the principal component
of the Banks earnings. The following table provides a summary of the
components of net interest income and the changes within the components for the
periods indicated. The second table sets forth a summary of the changes in
interest income and interest expense from changes in average asset and liability
balances (volume) and changes in average interest rates (rate) for the periods
indicated.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Three Months ended March 31,

|                                   |  |                 |  |             |  |              
|---------------------------------- |  | --------------- |  | ----------- |  | -------------
|(Taxable equivalent basis)         |  |                 |  | 2003        |  |              
|In thousands(except percentages)   |  | Average Balance |  | Interest    |  | Average Yield
|Assets:                            | 
|Earning assets:                    | 
|Loans (1) (2)                      |  | $711,125        |  | $  10,982   |  | 6            
|Taxable investments                |  | 56,599          |  | 593         |  | 4            
|Tax-exempt securities              | 
|(tax equiv. basis)                 |  | 49,491          |  | 841         |  | 6            
|Federal funds sold                 |  | 24,544          |  | 72          |  | 1            
|                                  
|Total earning assets               |  | 841,759         |  | $  12,488   |  | 6            
|Cash and due from banks            |  | 48,028          |  |             |  |              
|Other assets                       |  | 14,968          |  |             |  |              
|                                  
|                                   |  | $904,755        |  |             |  |              
|                                  
|Liabilities and Shareholders'      | 
|Equity:                            | 
|Interest bearing liabilities:      | 
|Demand deposits                    |  | $115,663        |  | $       197 |  | 0            
|Savings                            |  | 207,022         |  | 880         |  | 1            
|Time deposits                      |  | 279,306         |  | 1,880       |  | 2            
|Other borrowings                   |  | 8,869           |  | 111         |  | 5            
|                                  
|Total interest bearing             | 
|liabilities                        |  | 610,860         |  | 3,068       |  | 2            
|Demand deposits                    |  | 208,550         |  |             |  |              
|Other liabilities                  |  | 5,650           |  |             |  |              
|                                  
|Total liabilities                  |  | 825,060         |  |             |  |              
|Shareholders' equity               |  | 79,695          |  |             |  |              
|                                  
|                                   |  | $904,755        |  |             |  |              
|                                  
|Net interest income and margin (3) |  |                 |  | $    9,420  |  |              
|                                  

|1)
Loan interest income includes fee income of $433,000 and $386,000 for the three month
periods ended March 31, 2003  And 2002, respectively.  2)  Includes the average allowance
for loan losses of $15,294,000 and $11,954,000 and average deferred loan fees of
$977,000 and $1,058,000 for the three months ended March 31, 2003 and 2002,
respectively.  3)  Net interest margin is computed by dividing net interest income by the
total average earning assets.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 

|Volume/Rate
Analysis                        |  |         |  
|------------------------------------------- |  | ------- | -
|                                           
|Three Months Ended March 31, 2003 over 2002 |  |         |  
|                                           
|In thousands                                |  |         |  
|Increase (decrease) due to change in:       |  | Volume  |  
|                                           
|Interest-earning assets:                    | 
|Net Loans (1)(2)                            |  | $ 1,989 |  
|Taxable investment securities               |  | (439    | )
|Tax-exempt investment securities (3)        |  | (2      | )
|Federal funds sold                          |  | 26      |  
|                                           
|Total                                       |  | 1,574   |  
|                                           
|Interest-bearing liabilities:               | 
|Demand deposits                             |  | 10      |  
|Savings deposits                            |  | 373     |  
|Time deposits                               |  | (83     | )
|Other borrowings                            |  | 34      |  
|                                           
|Total                                       |  | 334     |  
|                                           
|Interest differential                       |  | $ 1,240 |  
|                                           

|1)
Loan interest income includes fee income of $433,000 and $386,000 for the three month
periods ended March 31, 2003  and 2002, respectively.  2) The average balance of
non-accruing loans is not significant as a percentage of total loans and, as such, has
been included in  net loans.  3) Includes taxable-equivalent adjustments that relate to
income on certain securities that is exempt from  federal income taxes. The effective
federal statutory tax rate was 35% for 2003 and 2002.  4) The rate / volume variance has
been included in the rate variance.

Net
interest  income for the first quarter of 2003 was  $9,420,000,  an $857,000  (10.0%)
increase from first quarter of 2002.  Interest income  increased  $300,000 (2.5%) from
the first quarter of 2002.  While average loan  balances increased  $117,069,000 (19.7%),
increasing interest income by $1,989,000,  decreases in both taxable investment balances
and the yields received on earning assets offset most of the volume increase from the
loans.  Although,  there was only a 50 basis point  decrease in the prime  interest rate
in 2002,  loan yields  received in the first quarter of 2003 were down 63 basis points
from the year earlier  quarter.  This decrease in yields  reduced interest income
$1,099,000.  The average balance of taxable investments  decreased  $33,441,000 to
$56,599,000 mostly due to very high principal  prepayments  received on mortgage
securities due to the refinancing of  home loans.  The high  prepayments  also reduced
the yield received on taxable  investments by 108 basis points.  The combination of the
volume and rate changes on taxable  investments  decreased  interest  income  $590,000.
With the continuing high levels of mortgage refinancing, we would expect the average
yield received on the Bank's taxable investment portfolio to continue to decrease from
the 4.25% received in the first quarter of 2003.

Interest
expense decreased $557,000 (15.4%) as the average rate paid on  interest-bearing
liabilities  declined 65 basis points to 2.04% for the first quarter of 2003 from 2.69%
in the year earlier period.  This decrease in  rates reduced interest expense by
$891,000.  Average balances of  interest-bearing  liabilities in the first quarter of
2003 increased by $64,660,000  (11.8%) over the prior year period.  These higher balances
added $334,000  to interest expense.

The
net interest  margin for the first  quarter of 2003 was 4.54% as compared to 4.62% in the
year earlier  period and 4.75% in the fourth  quarter of 2002.  The net interest  margin
in the first quarter of 2003 reflects the  full quarter effect of the 50 basis point
decrease in the prime interest rate in November  2002. If the interest  rates remain at
current  levels,  we would expect the net interest  margin to remain about the same
during the  second quarter. In a rising rate environment the net interest margin is
expected to improve, as the Bank's variable rate assets are expected to reprice more
quickly than the  interest-bearing  liabilities.  Conversely,  in a  declining rate
environment the net interest margin is expected to decline.

Provision
for Loan Losses

The
Bank did not make any provision  for loan losses in the first  quarter of 2003 and
provided  $223,000 in the first  quarter of 2002.  The  provision  for loan losses is
based on factors,  which  consider the loan growth,  changes in the level of
nonperforming  and  classified  assets,  changing  portfolio mix and  prevailing  local
and national  economic  conditions to establish the required  level of loan loss
reserves.  At March 31, 2003,  nonperforming and restructured loans totaled  $4,052,000
as compared to $1,808,000 at December 31, 2002 and $2,268,000 at March 31, 2002. The
ratios of the allowance for loan losses to nonperforming  loans were 378% at March  31,
2003, 843% at December 31, 2002 and 535% at March 31, 2002.  The ratio of the allowance
for loan losses to total loans was 2.13% at March 31, 2003, 2.04% at December 31, 2002
and 1.96% at March 31, 2002.

Noninterest
Income

Noninterest
income consists  primarily of service charges on deposit  accounts and fees for
miscellaneous  services.  Noninterest  income totaled  $1,014,000 in the first quarter of
2003,  which was an increase of $247,000  (32.2%) over the same period in 2002.  Service
charges on deposit  accounts were up $185,000 due to volume and certain fee increases.
Other fees and  miscellaneous  income were up $62,000 on higher volumes mostly related to
mortgage refinance activity.

Noninterest
Expense

As
compared to the first quarter of 2002,  noninterest  expenses  increased  $1,000,000
(21.8%) to a total of $5,585,000 in the first quarter of 2003.  Salary and employee
benefits  increased  $596,000  (21.7%)  because of  additional staffing for the new
Gilroy and Monterey branches,  opened in April 2002 and January 2003,  internal growth,
and normal salary increases.  In the first quarter of 2002, the Company recorded a one
time reduction to  employee health care costs of $260,000.  On a  quarter-over-quarter
basis,  occupancy  expenses  increased by $176,000 (41.8%).  Costs related to the new
Gilroy and Monterey  branches,  expansion of the Hollister branch and  enhanced branch
security  services were the main  contributors to the increase.  Furniture and equipment
expenses  increased  $40,000  (9.4%).  Other expenses for the first quarter of 2003
totaled  $1,177,000,  which was an  increase of $188,000  (19.0%) from the prior year
quarter.  Increased  costs were due to higher volumes and the new Gilroy and Monterey
branches.  The efficiency  ratio for the first quarter of 2003 was 53.5% as compared to
49.1% for the first quarter of 2002.

Provision
for Income Taxes

The
Company  recorded  income tax expense of  $1,599,000 in the first quarter of 2003 versus
$1,505,000  in the first quarter of 2002.  The effective tax rate for the three months
ended March 31, 2003 was 35.0%  compared to  35.5% for the same period in the prior year.
The effective tax rate was higher in the first quarter of 2003 due  to the decrease in
the level of investments in tax exempt securities and loans.

Securities

At
March 31, 2003,  available-for-sale  securities had a fair value of $96,241,000 with an
amortized cost basis of $93,483,000.  On an amortized cost basis, the investment
portfolio  decreased  $11,441,000 from the December  31, 2002 balance of $104,924,000.
The decrease in the portfolio  mostly resulted from the continuing high prepayments of
principal on mortgage backed  securities.  However,  even as the principal  reductions
took place, the  pretax unrealized gain on the portfolio  increased $359,000 from the
$2,399,000  balance at December 31, 2002 to total $2,758,000 at March 31, 2003. The
increase in securities  valuation resulted from lower interest rates in  the securities
markets at the end of the first quarter of 2003 as compared to December 31, 2002.

Loans

The
ending loan balance at March 31, 2003 was $718,663,000,  which was a decrease of
$26,690,000 (3.6%) from the year-end 2002 balance and an increase of $99,083,000  (16.0%)
from the March 31, 2002 balance.  Year-over-year,  the most  significant  percentage
change has been with the construction  loans as their balance has decreased 36.4% from
$90,612,000 at March 31, 2002 to $57,598,000 at March 31, 2003. The decrease in
construction  loans is  indicative of a lower level of economic  activity in the local
economy.  With the exception of real  estate-other  loans,  which  experienced  slight
growth in the first quarter of 2003,  all  categories of loans  decreased  compared to
the December 31, 2002  balances.  Construction  loans  accounted for $16.6 million of the
$26.7  decrease in the first  quarter of 2003 as several  large  construction  loans paid
off in the quarter from external  financing sources.  Commercial vacancy rates in
Monterey County rose slightly in 2002, but were significantly  lower than the San
Francisco Bay Area. Economic  projections for 2003 anticipate  continued low vacancy
rates due  to a lack of appropriately  zoned land,  available water and slow growth
political  pressure.  Within its primary market area, the Bank has diversified its risk
both as to property type and location.  See "Credit Risk" below  for a
discussion regarding real estate risk.

Credit
Risk

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

Ultimately,
the credit quality of the Bank's loans may be influenced by underlying trends in the
national and local economic and business cycles.  The Bank's business is mostly
concentrated in Monterey County. The County's  economy is highly  dependent on the
agricultural  and tourism  industries.  The  agricultural  industry is also a major
driver of the  economies of San Benito  County and the southern  portions of Santa Cruz
and Santa Clara  Counties, which represent the additional market areas for the Bank.  As
a result, the Bank lends money to individuals and companies dependent upon the
agricultural and tourism industries.

The
Company has  significant  extensions of credit and commitments to extend credit which are
secured by real estate, totaling approximately $551 million at March 31, 2003.
Although  management  believes this real estate  concentration has no more than the
normal risk of collectibility,  a substantial decline in the economy in general,  or a
decline in real estate values in the Bank's primary market areas in particular,  could
have an adverse  impact on the  collectibility  of these loans. The ultimate recovery of
these loans is generally  dependent on the successful  operation,  sale or refinancing of
the real estate.  The Bank monitors the effects of current and  expected market
conditions and other factors on the  collectibility of real estate loans.  When, in
management's  judgment,  these loans are impaired,  an appropriate  provision for losses
is recorded.  The more significant  assumptions management considers involve estimates of
the following:  lease, absorption and sale rates; real estate values and rates of return;
operating expenses;  inflation; and sufficiency of collateral independent of the  real
estate including,  in most instances,  personal  guarantees.  Notwithstanding  the
foregoing,  abnormally high rates of impairment due to general or local economic
conditions could adversely affect the Company's future  prospects and results of
operations.

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

Management
believes that its lending policies and underwriting standards will tend to mitigate
losses in an economic downturn;  however,  there is no assurance that losses will not
occur under such circumstances.  The Bank's  loan policies and underwriting  standards
include,  but are not limited to, the following:  1) maintaining a thorough
understanding of the Bank's service area and limiting  investments outside of this area,
2) maintaining a  thorough  understanding  of borrowers'  knowledge and capacity in their
field of expertise,  3) basing real estate  construction  loan approval not only on
salability of the project,  but also on the  borrowers'  capacity to  support the project
financially  in the event it does not sell within the original  projected  time period,
and 4)  maintaining  conforming  and prudent  loan to value and loan to cost ratios based
on  independent  outside  appraisals  and ongoing  inspection  and analysis by the Bank's
construction  lending  officers.  In addition,  the Bank strives to diversify the risk
inherent in the  construction  portfolio by avoiding  concentrations  to  individual
borrowers and on any one project.

Nonaccrual,
Past Due, Restructured Loans and Other Real Estate Owned (OREO)

Management
generally  places loans on  nonaccrual  status when they become 90 days past due,  unless
the loan is well secured and in the process of  collection.  When a loan is placed on
nonaccrual  status,  the accrued and  unpaid interest  receivable is reversed and the
loan is accounted for on the cash or cost recovery method thereafter,  until qualifying
for return to accrual status.  Generally,  a loan may be returned to accrual status when
all  delinquent  interest and  principal  become  current in accordance  with the terms
of the loan  agreement and  remaining  principal is considered  collectible  or when the
loan is both well secured and in the process of  collection.  Loans are charged off when,
in the opinion of management,  collection  appears  unlikely.  The following  table sets
forth  nonaccrual  loans,  loans past due 90 days or more,  restructured  loans
performing in  compliance with modified terms and OREO at March 31, 2003 and December 31,
2002:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                 |  |         
|---------------------------------------------------------------- |  | --------
|                                                                
|                                                                 |  | March   
|In thousands (except percentages)                                |  | 2003    
|                                                                
|Past due 90 days or more and still accruing interest:            | 
|Commercial                                                       |  | $     37
|Real estate                                                      |  | -       
|Consumer and other                                               |  | 1       
|                                                                
|                                                                 |  | 38      
|                                                                
|Nonaccrual:                                                      | 
|Commercial                                                       |  | 320     
|Real estate                                                      |  | 2,782   
|Consumer and other                                               |  | -       
|                                                                
|                                                                 |  | 3,102   
|                                                                
|Restructured (in compliance with modified                        | 
|terms) - Commercial                                              |  | 912     
|                                                                
|Total nonperforming and restructured loans                       |  | $4,052  
|                                                                
|Allowance for loan losses as a percentage of nonperforming loans |  | 378     
|Nonperforming loans to total loans                               |  | 0.58    
|                                                                 | 

|Nonperforming
and restructured loans increased $2,244,000 from the December 31, 2002 balances.
During the first quarter of 2003, the Bank classified a real estate loan with an
outstanding balance of $2.8 million into nonaccrual status. This loan is secured
by a real estate first deed of trust and is currently in the process of
foreclosure. At March 31, 2003, nonperforming and restructured loans were 0.58%
of total loans, which was up from 0.25% at December 31, 2002. The ratio of
nonperforming assets to total assets was 0.43% at March 31, 2003 versus 0.20% at
December 31, 2002.

A
loan is impaired when, based on current information and events, it is probable
that the Company will be unable to collect all amounts due according to the
contractual terms of the loan agreement. Impaired loans are measured based on
the present value of expected future cash flows discounted at the loans
effective interest rate or, as a practical expedient, at the loans
observable market price or the fair value of the collateral if the loan is
collateral-dependent.

At
March 31, 2002, the recorded investment in loans that were considered impaired
under SFAS No. 114 was $4,851,000. The total impaired loans include $3,102,000
of nonaccrual loans and $912,000 of restructured loans and $837,000 in other
loans identified as impaired. Impaired loans had valuation allowances totaling
$1,461,000. At December 31, 2002, the recorded investment in loans considered
impaired was $2,618,000 of which $870,000 was included in nonaccrual loans and
$933,000 was included in restructured loans and $815,000 in other loans
identified as impaired. Impaired loans had valuation allowances totaling
$1,165,000. Other than for the loan discussed in the following
paragraph and the impaired loans disclosed above, management is not aware of any
other potential problem loans, which were accruing and current at March 31,
2003, where serious doubt exists as to the ability of the borrower to comply
with the present repayment terms.

On
April 2, 2003, the Bank was served with an Application for a Writ of Mandate by
the City of King which seeks the return from the Bank of an approximate $4.4
million certificate of deposit assigned to the Bank as collateral security for
an approximate $4.4 million loan made by the Bank to a private real estate
developer. The loan was made in conjunction with a redevelopment project with
the City of King and/or its Community Development Agency. The certificate of
deposit matured on March 30, 2003 and the loan became due on April 3, 2003 and
has not been paid. The Bank intends to vigorously defend its rights in respect
to the certificate of deposit, however, as the payment on the loan has not been
received, the Bank considers the loan impaired and, depending on the outcome of
the matter, may require a charge to the allowance for loan losses and potential
additional provision for loan losses. A second loan for $4.6 million, made to
the real estate developer, is secured by a first deed of trust. The second loan
is in default and a notice of default was filed on April 21, 2003. Based on
current circumstances and the collateral position of the Bank, the second loan
is not currently considered to be impaired. On April 11, 2003, the Company filed
a Form 8-K with the SEC that addressed this matter.


Allowance
for Loan Losses

The
Bank maintains an allowance for loan losses to absorb losses inherent in the
loan portfolio. The allowance is based on our regular assessments of the
probable estimated losses inherent in the loan portfolio and to a lesser extent,
unused commitments to provide financing. Determining the adequacy of the
allowance is a matter of careful judgment, which reflects consideration of all
significant factors that affect the collectibility of the portfolio as of the
evaluation date. Our methodology for measuring the appropriate level of the
allowance relies on several key elements, which include the formula allowance,
specific allowances for identified problem loans and the unallocated reserve.
The unallocated allowance contains amounts that are based on managements
evaluation of conditions that are not directly measured in the determination of
the formula and specific allowances.

The
formula allowance is calculated by applying loss factors to outstanding loans
and certain unused commitments, in each case based on the internal risk grade of
such loans and commitments. Changes in risk grades of both performing and
nonperforming loans affect the amount of the formula allowance. Loss factors are
based on our historical loss experience and may be adjusted for significant
factors that, in managements judgment, affect the collectibility of the
portfolio as of the evaluation date. At March 31, 2003, the formula allowance
was $11,170,000 compared to $12,002,000 at December 31, 2002. The decrease in
the formula allowance was primarily a result of a decrease in the balances of
loans outstanding and the level of classified loans.

In
addition to the formula allowance calculated by the application of the loss
factors to the standard loan categories, certain specific allowances may also be
calculated. Quarterly, all significant classified and criticized loans are
analyzed individually based on the source and adequacy of repayment and specific
type of collateral, and an assessment is made of the adequacy of the formula
reserve relative to the individual loan. A specific allocation either higher or
lower than the formula reserve will be calculated based on the
higher/lower-than-normal probability of loss and the adequacy of the collateral.
At March 31, 2003, the specific allowance was $1,803,000 on a loan base of
$28,864,000 compared to a specific allowance of $1,830,000 on a loan base of
$32,180,000 at December 31, 2002. The decrease in the specific allowance in the
first quarter of 2003 was due to the decrease in loans requiring specific
valuation allowances.

The
unallocated allowance contains amounts that are based on managements
evaluation of conditions that are not directly measured in the determination of
the formula and specific allowances. The evaluation of the inherent loss with
respect to these conditions is subject to a higher degree of uncertainty because
they are not identified with specific problem loans or portfolio segments. At
March 31, 2003, the unallocated allowance was $2,331,000 compared to $1,403,000
at December 31, 2002. The conditions evaluated in connection with the
unallocated allowance include the following at the balance sheet date:

o
The current national and local economic and business conditions, trends and
developments, including the condition of various market segments within our
lending area;

o
Changes in lending policies and procedures, including underwriting standards and
collection, charge-off, and recovery practices;

o
Changes in the nature, mix, concentrations and volume of the loan portfolio;

o
The effect of other external factors such as competition and legal and
regulatory requirements on the level of estimated credit losses in the
Banks current portfolio.

There
can be no assurance that the adverse impact of any of these conditions on the
Bank will not be in excess of the unallocated allowance as determined by
management at March 31, 2003 and set forth in the preceding paragraph.

The
allowance for loan losses totaled $15,304,000 or 2.13% of total loans at March
31, 2003 compared to $15,235,000 or 2.04% at December 31, 2002 and $12,144,000
or 1.96% at March 31, 2002. At these dates, the allowance represented 378%, 843%
and 535% of nonperforming loans.

It
is the policy of management to maintain the allowance for loan losses at a level
adequate for risks inherent in the loan portfolio. Based on information
currently available to analyze loan loss potential, including economic factors,
overall credit quality, historical delinquency and a history of actual
charge-offs, management believes that the loan loss provision and allowance are
adequate. However, no prediction of the ultimate level of loans charged off in
future years can be made with any certainty.






The
following table summarizes activity in the allowance for loan losses for the
periods indicated:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                
|----------------------------------------------------------------
|
|                                                                
|In thousands (except percentages)                               
|                                                                
|Beginning balance                                               
|Provision charged to expense                                    
|Loans charged off                                               
|Recoveries                                                      
|                                                                
|Ending balance                                                  
|                                                                
|Ending loan portfolio                                           
|                                                                
|Allowance for loan losses as percentage of ending loan portfolio

|Liquidity

Liquidity
management refers to the Companys ability to provide funds on an ongoing
basis to meet fluctuations in deposit levels as well as the credit needs and
requirements of its clients. Both assets and liabilities contribute to the
Companys liquidity position. Federal funds lines, short-term investments
and securities, and loan repayments contribute to liquidity, along with deposit
increases, while loan funding and deposit withdrawals decrease liquidity. The
Bank assesses the likelihood of projected funding requirements by reviewing
historical funding patterns, current and forecasted economic conditions and
individual client funding needs. Commitments to fund loans and outstanding
standby letters of credit at March 31, 2003, were approximately $214,480,000 and
$6,028,000, respectively. Such loans relate primarily to revolving lines of
credit and other commercial loans, and to real estate construction loans.

The
Companys sources of liquidity consist of overnight funds sold to
correspondent banks, unpledged marketable investments, loans pledged to the
Federal Home Loan Bank of San Francisco (FHLB-SF) and sellable SBA
loans. On March 31, 2003, consolidated liquid assets totaled $151.8 million or
16.2% of total assets as compared to $102.6 million or 11.2% of total
consolidated assets on December 31, 2002. In addition to liquid assets, the Bank
maintains short-term lines of credit with correspondent banks. At March 31,
2003, the Bank had $80,000,000 available under these credit lines. Informal
agreements are also in place with various other banks to purchase participations
in loans, if necessary. The Company serves primarily a business and professional
customer base and, as such, its deposit base is susceptible to economic
fluctuations. Accordingly, management strives to maintain a balanced position of
liquid assets to volatile and cyclical deposits.


Capital
Resources

The
Companys total shareholders equity was $81,255,000 at March 31, 2003
compared to $78,076,000 at December 31, 2002. The increase is the result of the
first quarter earnings and the increase in the net unrealized gain on
available-for-sale investment securities.

The
Company and the Bank are subject to regulations issued by the Board of Governors
and the FDIC, which require maintenance of a certain level of capital. Under the
regulations, capital requirements are based upon the composition of an
institutions asset base and the risk factors assigned to those assets. The
guidelines characterize an institutions capital as being Tier
1 capital (defined to be principally shareholders equity less
intangible assets) and Tier 2 capital (defined to be principally the
allowance for loan losses, limited to one and one-fourth percent of gross risk
weighted assets). The guidelines require the Company and the Bank to maintain a
risk-based capital target ratio of 8%, one-half or more of which should be in
the form of Tier 1 capital.






The
following table shows the Companys and the Banks actual capital
amounts and ratios at March 31, 2003 and December 31, 2002 as well as the
minimum capital ratios for capital adequacy and well capitalized classifications
under the regulatory framework:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                          | Actual | For Capital Adequacy Purposes | To Be Categorized Well Capitalized Under Prompt Corrective Action Provisions
|----------------------------------------- | ------ | ----------------------------- | ----------------------------------------------------------------------------
|                                          |        |                               |                                                                             
|In thousands (except percentages)         |        | Amount                        |                                                                             
|Company                                   |       
|As of March 31, 2003:                     |       
|Total Capital (to Risk Weighted Assets):  |        | $89,209                       |                                                                             
|Tier 1 Capital (to Risk Weighted Assets): |        | 79,408                        |                                                                             
|Tier 1 Capital (to Average Assets):       |        | 79,408                        |                                                                             
|As of December 31, 2002:                  |       
|Total Capital (to Risk Weighted Assets):  |        | $86,334                       |                                                                             
|Tier 1 Capital (to Risk Weighted Assets): |        | 76,374                        |                                                                             
|Tier 1 Capital (to Average Assets):       |        | 76,374                        |                                                                             
|Community Bank                            |       
|As of March 31, 2003:                     |       
|Total Capital (to Risk Weighted Assets):  |        | $82,304                       |                                                                             
|Tier 1 Capital (to Risk Weighted Assets): |        | 72,613                        |                                                                             
|Tier 1 Capital (to Average Assets):       |        | 72,613                        |                                                                             
|As of December 31, 2002:                  |       
|Total Capital (to Risk Weighted Assets):  |        | $79,470                       |                                                                             
|Tier 1 Capital (to Risk Weighted Assets): |        | 69,621                        |                                                                             
|Tier 1 Capital (to Average Assets):       |        | 69,621                        |                                                                             
|                                          |       

|The
Bank meets the well capitalized ratio measures at both March 31,
2003 and December 31, 2002.

                                                                                Item 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Overview

The
goal for managing the assets and liabilities of the Bank is to maximize
shareholder value and earnings while maintaining a high quality balance sheet
without exposing the Bank to undue interest rate risk. The Board of Directors
has overall responsibility for the Companys interest rate risk management
policies. The Bank has an Asset and Liability Management Committee (ALCO), which
establishes and monitors guidelines to control the sensitivity of earnings to
changes in interest rates.


Asset/Liability
Management

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

Simulation
of earnings is the primary tool used to measure the sensitivity of earnings to
interest rate changes. Using
computer modeling techniques, the Company is able to estimate the potential
impact of changing interest rates on earnings. A balance sheet forecast is
prepared using inputs of actual loan, securities and interest bearing
liabilities (i.e. deposits/borrowings) positions as the beginning base. The
forecast balance sheet is processed against three interest rate scenarios. The
scenarios include a 200 basis point rising rate forecast, a flat rate forecast
and a 200 basis point falling rate forecast which take place within a one year
time frame. The net interest income is measured during the first year of the
rate changes and in the year following the rate changes. The latest simulation
forecast using December 31, 2002 balances and measuring against a flat rate
environment, calculated that in a one-year horizon an increase in interest rates
of 200 basis points would result in an increase of $4,286,000 in net interest
income. Conversely, a 200 basis point decrease would result in a decrease of
$3,747,000 in net interest income. The basic structure of the balance sheet has
not changed significantly from the last simulation run.

The
simulations of earnings do not incorporate any management actions, which might
moderate the negative consequences of interest rate deviations. Therefore, they
do not reflect likely actual results, but serve as conservative estimates of
interest rate risk. The risk profile of the Bank has not changed materially from
that at year-end 2002.

Item
4. CONTROLS AND PROCEDURES

Evaluation
of Disclosure Controls and Procedures

Based
upon an evaluation made within 90 days prior to the date of this report, the
Company's Chief Executive  Officer and Chief Financial Officer have concluded that the
Company's disclosure controls and procedures (as  defined in Exchange Act Rule 13a14(c))
are adequate and effective in timely alerting them to material  information relating to
the Company required to be included in the Company's filings with the SEC under the
Securities Exchange Act of 1934.


Changes
in Internal Controls

There
were  no  significant  changes  in the  Company's  internal  controls  or in  other
factors  that  could  significantly affect internal controls subsequent to the date of
their evaluation.



OTHER
MATTERS


Terrorist
Acts

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


Off-Balance
Sheet Items

The
Company has certain ongoing commitments under operating leases. These
commitments do not significantly impact operating results. As of March 31, 2003
and December 31, 2002, commitments to extend credit and letters of credit were
the only financial instruments with off-balance sheet risk (See footnote 2 in
the financial statements). The Company has not entered into any contracts for
financial derivative instruments such as futures, swaps, options or similar
instruments.

Certain
financial institutions have elected to use special purpose vehicles
(SPV) to dispose of problem assets. A SPV is typically a subsidiary
company with an asset and liability structure and legal status that makes it
obligations secure even if the parent corporation goes bankrupt. Under the
circumstances, these financial institutions may exclude the problem assets from
their reported impaired and non-performing assets. The Company does not use SPV
or other structures to dispose of problem assets.


Website
Access

Information
on the Company and its subsidiary Bank may be obtained from the Companys
website www.community-bnk.com. Copies of the Companys annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all
amendments thereto are available free of charge on the website as soon as they
are published by the SEC through a link to the Edgar reporting system maintained
by the SEC. Simply select the Central Coast Bancorp menu item, then
click on the Central Coast Bancorp SEC Filings link.








PART
II  OTHER INFORMATION
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|        |                                                     
|------- | ----------------------------------------------------
|Item 1. | Legal proceedings                                   
|        | None                                                
|Item 2. | Changes in securities.                              
|        | None                                                
|Item 3. | Defaults upon senior securities.                    
|        | None                                                
|Item 4. | Submission of matters to a vote of security holders.
|        | None                                                
|Item 5. | Other information.                                  
|        | None                                                
|Item 6. | Exhibits and reports on Form 8-K.                   

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

| | (2.1) | Agreement
and Plan of Reorganization and Merger by and between Central Coast  Bancorp, CCB Merger
Company and Cypress Coast Bank dated as of December 5,  1995, incorporated by
reference from Exhibit 99.1 to Form 8-K, filed with the  Commission on December 7, 1995.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3.1) | Articles
of Incorporation, as amended, incorporated by reference from Exhibit  10.18 to the
Registrants 2001 Annual Report on Form 10-K filed with the  Commission on March 26,
2002.
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3.2) | Bylaws,
as amended, incorporated by reference from Exhibit 3.2 to Form 10-Q,  filed with the
Commission on August 13, 2001.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------

| | (4.1) | Specimen
form of Central Coast Bancorp stock certificate, incorporated by  reference from the
Registrants 1994 Annual Report on Form 10-K filed with  the Commission on March 31,
1995.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (10.1) | Lease
agreement dated December 12, 1994, related to 301 Main Street, Salinas,  California
incorporated by reference from the Registrants 1994 Annual  Report on Form 10-K
filed with the Commission on March 31, 1995.
| | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (10.2) | King
City Branch Lease incorporated by reference from Exhibit 10.3 to  Registration Statement
on Form S-4, No. 33-76972, filed with the Commission on  March 28, 1994.
| | ------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (10.3) | Amendment
to King City Branch Lease, incorporated by reference from Exhibit 10.4  to Registration
Statement on Form S-4, No. 33-76972, filed with the Commission  on March 28, 1994.
| | ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | *(10.4) | 1994
Stock Option Plan, as amended and restated, incorporated by reference from  Exhibit 9.9
to Registration Statement on Form S-8, No. 33-89948, filed with the  Commission on
November 15, 1996.
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | *(10.5) | Form
of Nonstatutory Stock Option Agreement under the 1994 Stock Option Plan  incorporated by
reference from Exhibit 4.3 to Registration Statement on Form  S-8, No. 33-89948, filed
with Commission on November 15, 1996.
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | *(10.6) | Form
of Incentive Stock Option Agreement under the 1994 Stock Option Plan  incorporated by
reference from Exhibit 4.4 to Registration Statement on Form  S-8, No. 33-89948, filed
with the Commission on November 15, 1996.
| | ------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | *(10.7) | Form of
Director Nonstatutory Stock Option Agreement under the 1994 Stock Option Plan
incorporated by reference from Exhibit 4.5 to Registration Statement on Form  S-8, No.
33-89948, filed with the Commission on November 15, 1996.
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | *(10.8) | Form
of Bank of Salinas  Indemnification  Agreement for directors and executive officers
incorporated by reference from Exhibit 10.9 to Amendment No. 1 to Registration  Statement
on Form  S-4, No. 33-76972, filed with the Commission on April 15, 1994.
| | ------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | *(10.9) | 401(k) Pension
and Profit Sharing Plan Summary Plan Description incorporated by reference from Exhibit
10.8 to Registration Statement on Form S-4, No. 33-76972, filed with the Commission on
March 28, 1994.
| | ------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | *(10.10) | Form
of Executive Employment Agreement incorporated by reference from Exhibit  10.13 to the
Companys 1996 Annual Report on Form 10-K filed with the  Commission on March 31,
1997.
| | -------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | *(10.11) | Form
of Executive Salary Continuation Agreement incorporated by reference from  Exhibit 10.14
to the Companys 1996 Annual Report on Form 10-K filed with  the Commission on March
31, 1997.
| | -------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | *(10.12) | Form
of Indemnification Agreement incorporated by reference from Exhibit D to  the Proxy
Statement filed with the Commission on September 3, 1996, in  connection with Registrants
1996 Annual Shareholders Meeting held on  September 23, 1996.
| | -------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (10.13) | Purchase
and Assumption Agreement for the Acquisition of Wells Fargo Bank  Branches incorporated
by reference from Exhibit 10.17 to the Registrants  1996 Annual Report on Form 10-K
filed with the Commission on March 31, 1997.
| | ------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (10.14) | Lease
agreement dated November 27, 2001 related to 491 Tres Pinos Road,  Hollister, California
incorporated by reference from Exhibit 10.17 to the  Registrants 2001 Annual Report
on Form 10-K filed with the Commission on  March 26, 2002.
| | ------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (10.15) | Lease
agreement dated February 11, 2002, related to 761 First Street, Gilroy,  California
incorporated by reference from Exhibit 10.18 to the Registrants  2001 Annual Report
on Form 10-K filed with the Commission on March 26, 2002.
| | ------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (10.16) | Lease
agreement dated November 18, 2002, related to 439 Alvarado Street,  Monterey,  California
incorporated by reference from Exhibit 10.16 to the Registrants  2001 Annual Report
on Form 10-K filed with the Commission on March 21, 2003.
| | ------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (21.1) | The
Registrants only subsidiary is its wholly owned subsidiary, Community  Bank of
Central California.
| | ------ | -------------------------------------------------------------------------------------------------------

| | (99.1) | Certification
of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 the
Sarbanes-Oxley Act of 2002
| | ------ | ---------------------------------------------------------------------------------------------------------------------------

| | *Denotes management
contracts, compensatory plans or arrangements.
| | ------------------------------------------------------------------

(b)
Reports on Form 8-K.

|A current
report on Form 8-K was filed with the Commission on April 11, 2003,  reporting a
subsequent event related to a loan transaction. On April 2, 2003 the  Bank was served
with an Application for a Writ of Mandate by the City of King  which seeks the return
from the Bank of an approximate $4.4 million certificate  of deposit assigned to the Bank
as collateral security for an approximate $4.4  million loan made by the Bank to a
private real estate developer. The loan was  made in conjunction with a redevelopment
project with the City of King and/or  its Community Development Agency. The certificate
of deposit matured on March  30, 2003 and the loan became due on April 3, 2003 and has
not been paid. The  Bank intends to vigorously defend its rights in respect to the
certificate of  deposit, however, as the payment on the loan has not been received, the
Bank  considers the loan impaired and, depending on the outcome of the matter, may
require a charge to the allowance for loan losses and potential additional  provision for
loan losses. A second loan for $4.6 million, made to the real  estate developer, is
secured by a first deed of trust. The second loan is in  default and a notice of default
was filed on April 21, 2003.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|A
second report on Form 8-K was filed with the Commission on April 22, 2003,
reporting a press release dated April 21, 2003 regarding the Companys
operating results for the quarter ended March 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

# SIGNATURES

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

|            |                            
|----------- | ---------------------------
|May 8, 2003 | CENTRAL COAST BANCORP      
|           
|            | By: /s/ NICK VENTIMIGLIA   
|            | Nick Ventimiglia           
|            | Chief Executive Officer    
|           
|            | By: /s/ ROBERT M. STANBERRY
|            | Robert M. Stanberry        
|            | (Chief Financial Officer,  
|            | Principal Financial and    
|            | AccountingOfficer)         

---

|CERTIFICATIONS
UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 Regarding the Quarterly Report on
Form 10-Q  For the Quarter Ended March 31, 2003

I, Nick
Ventimiglia, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Central Coast Bancorp.

2.
Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report.

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.

4.
The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a)
designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

(b)
evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

(c) presented in this
quarterly report our conclusions about the effectiveness of the disclosure
controls and procedures based on our evaluation as of the Evaluation Date.

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

(a)
all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

(b)
any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal controls.

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

|                  | 
|----------------- | 
|Date: May 8, 2003 | 
|                  | 

---

|CERTIFICATIONS
UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 Regarding the Quarterly
Report on Form 10-Q  For the Quarter Ended March 31, 2003 I, Robert M.
Stanberry, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Central Coast Bancorp.

2.
Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report.

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.

4.
The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a)
designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

(b)
evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

(c) presented in this
quarterly report our conclusions about the effectiveness of the disclosure
controls and procedures based on our evaluation as of the Evaluation Date.

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

(a)
all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

(b)
any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal controls.

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

|                  |  |                                           
|----------------- |  | ------------------------------------------
|Date: May 8, 2003 |  | /s/ ROBERT STANBERRY                      
|                  |  | Robert M. Stanberry, Senior Vice President
|                  |  | and Chief Financial Officer               

---

# EXHIBIT
INDEX

|               |  |                                                               
|-------------- |  | --------------------------------------------------------------
|               |  |                                                               
|Exhibit Number |  | Description                                                   
|              
|99.1           |  | Certification of Chief Executive Officer and Chief Financial  
|               |  | Officer pursuant to Section 906 the Sarbanes-Oxley Act of 2002
|              
|              

---

# EXHIBIT 99.1

# Certification
of Central Coast Bancorp 
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 regarding Quarterly Report on
Form 10-Q for the quarter ended March 31, 2003

Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of
section 1350, chapter 63 of title 18, United States Code), each of the
undersigned officers of Central Coast Bancorp, a California corporation (the
Company), does hereby certify that:

|1. | The
Companys Quarterly Report on Form 10-Q for the quarter ended March 31,  2003 (the
Form 10-Q) fully complies with the requirements of Section  13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended; and
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Information
contained in the Form 10-Q fairly presents, in all material respects, the financial
condition and results of operations of the Company.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|                   |  | 
|------------------ |  | 
|Dated: May 8, 2003 |  | 
|                   |  | 
|                   |  | 
|                  
|Dated: May 8, 2003 |  | 
|                   |  | 
|                   |  | 
|                   |  |