12

                   SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C. 20549

                               FORM 10-Q

[x]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended        June 30, 2000        .

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

                     Commission File No. 0-25418 .

                         CENTRAL COAST BANCORP
------------------------------------------------------------------------
         (Exact name of registrant as specified in its charter)


             California                          77-0367061.
             ----------                          -----------
  (State or other jurisdiction of          (IRS Employer ID Number)
  incorporation or organization)


  301 Main Street, Salinas, California.             93901.
  -------------------------------------             ------
 (Address of principal executive offices)         (Zip code)


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

                                  not applicable
                                  --------------
        (Former name, former address and former fiscal year, if changed
                                since last report.)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or 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 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 - 6,903,379 shares outstanding at August 7, 2000.

                              Page 1 of 24
            The Index to the Exhibits is located at Page 22



                                       1
<PAGE>

<TABLE>
<CAPTION>

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

                                                                               June 30,          December 31,
(In thousands, except for share data)                                            2000                1999
                                                                                 ----                ----
<S>                                                                       <C>                   <C>
Assets
  Cash and due from banks                                                          $ 41,505           $ 39,959
  Federal funds sold                                                                 22,973                  -
                                                                           -----------------    ---------------
     Total cash and equivalents                                                      64,478             39,959

  Available-for-sale securities                                                     148,056            145,435

  Loans:
    Commercial                                                                      159,458            159,385
    Real estate-construction                                                         37,429             35,330
    Real estate-other                                                               219,315            188,600
    Consumer                                                                         10,600             13,003
    Deferred loan fees, net                                                            (729)              (721)
                                                                           -----------------    ---------------
        Total loans                                                                 426,073            395,597
    Allowance for loan losses                                                        (7,018)            (5,596)
                                                                           -----------------    ---------------
  Net Loans                                                                         419,055            390,001
                                                                           -----------------    ---------------

  Premises and equipment, net                                                         3,848              3,888
  Accrued interest receivable and other assets                                       13,380             14,162
                                                                           -----------------    ---------------
Total assets                                                                      $ 648,817          $ 593,445
                                                                           =================    ===============
Liabilities and Shareholders' Equity
  Deposits:
    Demand, noninterest bearing                                                   $ 153,070          $ 141,389
    Demand, interest bearing                                                         94,849            100,871
    Savings                                                                         106,628             97,833
    Time                                                                            229,404            178,096
                                                                           -----------------    ---------------
        Total Deposits                                                              583,951            518,189
  Accrued interest payable and other liabilities                                      9,679             21,951
                                                                           -----------------    ---------------
Total liabilities                                                                   593,630            540,140
                                                                           -----------------    ---------------
Commitments and contingencies (Note 2)
Shareholders Equity:
  Preferred stock-no par value; authorized
    1,000,000 shares; no shares issued
  Common stock - no par value; authorized 25,000,000 shares;
    issued and outstanding: 6,919,115 shares at June 30, 2000
    and 6,440,257 shares at December 31, 1999                                        47,892             40,223
  Shares held in deferred compensation trust (271,862 at June 30, 2000
    and 247,148 at December 31, 1999), net of deferred obligation                                 -                  -
  Retained earnings                                                                  11,837             17,784
  Accumulated other comprehensive loss - net of
    taxes of $3,157 at June 30, 2000 and $3,267 at December 31,1999                  (4,542)            (4,702)
                                                                           -----------------    ---------------
Shareholders' equity                                                                 55,187             53,305
                                                                           -----------------    ---------------
Total liabilities and shareholders' equity                                        $ 648,817          $ 593,445
                                                                           =================    ===============
See Notes to Consolidated Condensed Financial Statements

</TABLE>



                                       2
<PAGE>
<TABLE>
<CAPTION>



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

                                           Three Months Ended June 30,            Six Months Ended June 30,
(In thousands)                              2000              1999                2000                 1999
                                            ----              ----                ----                 ----
<S>                                    <C>               <C>                <C>                  <C>
Interest Income
   Loans (including fees)                    $ 10,150           $ 7,686             $ 19,363             $ 14,827
   Investment securities                        2,197             2,343                4,433                4,591
   Other                                          271                 2                  387                   75
                                       ---------------    --------------    -----------------    -----------------
       Total interest income                   12,618            10,031               24,183               19,493
                                       ---------------    --------------    -----------------    -----------------
Interest Expense
   Interest on deposits                         4,365             3,180                8,279                6,266
   Other                                           72               149                  220                  176
                                       ---------------    --------------    -----------------    -----------------
       Total interest expense                   4,437             3,329                8,499                6,442
                                       ---------------    --------------    -----------------    -----------------
Net Interest Income                             8,181             6,702               15,684               13,051
Provision for Loan Losses                         800               410                1,326                  537
                                       ---------------    --------------    -----------------    -----------------
Net Interest Income after
   Provision for Loan Losses                    7,381             6,292               14,358               12,514
                                       ---------------    --------------    -----------------    -----------------

Noninterest Income                                631               591                1,177                1,133
                                       ---------------    --------------    -----------------    -----------------

Noninterest Expenses
   Salaries and benefits                        2,467             2,250                4,847                4,581
   Occupancy                                      345               297                  678                  577
   Furniture and equipment                        412               294                  800                  585
   Other                                        1,112               983                2,131                1,904
                                       ---------------    --------------    -----------------    -----------------
       Total noninterest expenses               4,336             3,824                8,456                7,647
                                       ---------------    --------------    -----------------    -----------------
Income Before Income Taxes                      3,676             3,059                7,079                6,000
Provision for Income Taxes                      1,433             1,065                2,760                2,281
                                       ---------------    --------------    -----------------    -----------------
       Net Income                             $ 2,243           $ 1,994              $ 4,319              $ 3,719
                                       ===============    ==============    =================    =================

Basic Earnings per Share                       $ 0.32            $ 0.28               $ 0.62               $ 0.53
Diluted Earnings per Share                     $ 0.31            $ 0.27               $ 0.60               $ 0.51
See Notes to Consolidated Condensed Financial Statements

</TABLE>

















                                       3
<PAGE>

<TABLE>
<CAPTION>

                      CENTRAL COAST BANCORP AND SUBSIDIARY
          CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWES (Unaudited)


(In thousands)
Six months ended June 30,                                                      2000                    1999
                                                                               ----                    ----
<S>                                                                     <C>                       <C>
Cash Flows from Operations:
   Net income                                                                    $ 4,319                 $ 3,719
   Reconciliation of net income to net cash provided
   by operating activities:
     Provision for loan losses                                                     1,326                     537
     Net (loss) on sale of fixed assets                                               18                      61
     Depreciation                                                                    592                     403
     Amortization and accretion                                                      102                       3
     Decrease in accrued interest receivable and other assets                        544                      26
     Increase in accrued interest payable and other liabilities                      528                     965
     Increase in deferred loan fees                                                    8                     240
                                                                           --------------          --------------
       Net cash provided by operations                                             7,437                   5,954
                                                                           --------------          --------------
Cash Flows from Investing Activities:
   Purchases of investment securities                                            (10,209)                (88,912)
   Proceeds from maturities of investment securities                               7,884                  92,854
   Proceeds from sale of investment securities                                         -                   5,987
   Net decrease in loans held for sale                                                 -                     844
   Net increase in loans                                                         (30,388)                (43,165)
   Purchases of premises and equipment                                              (571)                   (821)
                                                                           --------------          --------------
       Net cash used in investing activities                                     (33,284)                (33,213)
                                                                           --------------          --------------
Cash Flows from Financing Activities:
   Net increase in deposit accounts                                               65,762                  14,979
   Net increase (decrease) in short-term borrowings                              (12,662)                 12,408
   Net decrease in long-term borrowings                                             (138)                      -
   Proceeds from issuance of stock                                                    58                   1,098
   Shares repurchased                                                             (2,654)                 (2,060)
                                                                           --------------          --------------
       Net cash provided by financing activities                                  50,366                  26,425
                                                                           --------------          --------------
  Net increase (decrease) in cash and equivalents                                 24,519                    (834)
Cash and equivalents, beginning of period                                         39,959                  48,886
                                                                           --------------          --------------
Cash and equivalents, end of period                                             $ 64,478                $ 48,052
                                                                           ==============          ==============

Other Cash Flow Information:
   Interest paid                                                                 $ 8,109                 $ 6,417
   Income taxes paid                                                               3,410                   1,589
See Notes to Consolidated Condensed Financial Statements
</TABLE>

                                       4
<PAGE>

                  CENTRAL COAST BANCORP AND SUBSIDIARY
          NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                       June 30, 2000 (Unaudited)

1. 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
June 30, 2000 and December 31, 1999,  the results of operations  for the
three  and six  month  periods  ended  June  30,  2000 and 1999 and cash
flows for the six month periods ended June 30, 2000 and 1999.

Certain  disclosures  normally  presented in the notes to the  financial
statements  prepared in accordance  with generally  accepted  accounting
principles  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   1999  Annual   Report  to   Shareholders.   The  results  of
operations  for the three and six month  periods ended June 30, 2000 and
1999 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 and the carrying  value
of other real estate  owned.  Management  uses  information  provided by
an   independent   loan   review   service   in   connection   with  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.


2. 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  $120,725,000
and  standby   letters  of  credit  of  $1,881,000  at  June  30,  2000.
However,  all such commitments will not necessarily  culminate in actual
extensions of credit by the Company during 2000.

Approximately  $21,809,000 of loan  commitments  outstanding at June 30,
2000 are for real  estate  construction  loans and are  expected to fund
within the next  twelve  months.  The  remaining  commitments  primarily
relate  to  revolving  lines of credit or other  commercial  loans,  and
many  of  these  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.



                                       5
<PAGE>

3. EARNINGS PER SHARE COMPUTATION

Basic  earnings  per share is  computed  by  dividing  net income by the
weighted  average common shares  outstanding  for the period  (6,967,000
and  7,018,000  for the three and six month periods ended June 30, 2000,
and  7,142,000  and  7,051,000 for the three and six month periods ended
June 30,  1999).  Diluted  earnings  per  share  reflect  the  potential
dilution  that  could  occur if  outstanding  stock  options  and  stock
purchase  warrants  were  exercised.   Diluted  earnings  per  share  is
computed by dividing net income by the weighted  average  common  shares
outstanding  for the period  plus the  dilutive  effect of  options  and
warrants  (192,000  and  195,000  for the three  and six  month  periods
ended  June 30,  2000 and  204,000  and  281,000  for the  three and six
month periods ended June 30, 1999).


4.  COMPREHENSIVE EARNINGS
<TABLE>
<CAPTION>

                                                            Three Months Ended June 30,            Six Months Ended June 30,
(In thousands)                                                  2000             1999                  2000             1999
                                                                ----             ----                  ----             ----
<S>                                                          <C>              <C>                <C>                <C>
Net Earnings                                                      $ 2,243          $ 1,994              $ 4,319           $ 3,719
Other comprehensive income (loss)- Net unrealized
      gain (loss) on available-for-sale securities                    216           (1,504)                 160            (2,296)

Reclassification adjustment for gains included in
      income, net of taxes of $4 and $(13)
      for the three and six month periods ended
      June 30, 1999                                                     -               (5)                   -                 8
                                                            --------------   --------------        -------------    --------------

Total comprehensive earnings                                      $ 2,459            $ 485              $ 4,479           $ 1,431
                                                            ==============   ==============        =============    ==============
</TABLE>




5.      STOCK DIVIDEND

On January  31,  2000,  the Board of  Directors  declared a ten  percent
stock  dividend,   which  was  distributed  on  February  28,  2000,  to
shareholders  of  record  as of  February  14,  2000.  All share and per
share  data  have  been  retroactively  adjusted  to  reflect  the stock
dividend.




                                       6
<PAGE>

            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.  The
reader of this report should  understand  that all such  forward-looking
statements  are  subject to various  uncertainties  and risks that could
affect  their  outcome.   The  Company's  actual  results  could  differ
materially  from those  suggested  by such  forward-looking  statements.
Factors  that could cause or  contribute  to such  differences  include,
but are  not  limited  to,  variances  in the  actual  versus  projected
growth in  assets,  return  on  assets,  loan  losses,  expenses,  rates
charged on loans and  earned on  securities  investments,  rates paid on
deposits,   competition   effects,  fee  and  other  noninterest  income
earned, general economic conditions,  nationally,  regionally and in the
operating  market  areas of the  Company  and the Bank,  changes  in the
regulatory  environment,  changes in business  conditions and inflation,
changes in securities  markets,  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, 1999.

Interest  income  and  net  interest  income  are  presented  on a fully
taxable  equivalent basis (FTE) within the  Management's  Discussion and
Analysis.

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").  Other than its  investment  in the Bank,  the
Company  currently  conducts no other significant  business  activities,
although it is  authorized  to engage in a variety of  activities  which
are  deemed  closely  related  to the  business  of  banking  upon prior
approval of the Board of  Governors of the Federal  Reserve  System (the
"FRB"), the Company's principal federal regulator.

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  located in Salinas Valley,
Pajaro Valley and the Monterey Peninsula areas.

Overview
--------

Central  Coast  Bancorp  recorded  net  income  of  $2,243,000  for  the
quarter  ended  June  30,  2000,  which  was a 12.5%  increase  over the
$1,994,000  reported for the same period of 1999.  Diluted  earnings per
share for the second  quarter of 2000 was $0.31  versus  $0.27  reported
in the year  earlier  period.  The return on equity (ROE) and the return
on assets  (ROA) for the second  quarter of 2000 were 16.5% and 1.45% as
compared to 15.2% and 1.45% for the same period in 1999.

Net  income  for the six  months  ended  June  30,  2000  and  1999  was
$4,319,000  and $3,719,000  with diluted  earnings per share of $.60 and
$.51,  respectively.  For the  first six  months of 2000,  ROE was 16.0%
and ROA was 1.42% as  compared  to 14.4%  and 1.39% for the same  period
in  1999.  The  earnings  per  share  for the  1999  periods  have  been
adjusted for the 10% stock dividend distributed in February 2000.

The Company  continued  to achieve good year over year  internal  growth
as assets increased  $76,064,000  (13.3%) to total  $648,817,000 at June
30, 2000. Loans totaled  $426,073,000,  up $65,661,000  (18.2%) from the
ending  balances  on June 30,  1999.  Deposit  balances  at  quarter-end
totaled  $583,951,000  up  $79,779,000  (15.8%)  from the  year  earlier
balances.   The  deposit  growth   included   $20,000,000  of  State  of
California  certificates  of  deposit  placed  in the  Bank in  February
2000.

Central  Coast  Bancorp  ended the second  quarter of 2000 with a Tier 1
capital  ratio of 11.8% and a total  risk-based  capital  ratio of 13.1%
versus 13.0% and 14.2%,  respectively,  at the end of the second quarter
of 1999.

                                       7
<PAGE>

In October 1998, the Company  announced a 5% stock  repurchase  plan the
purpose  of  which  was  to  aid in  the  management  of  the  Company's
capital.  The last  purchase  of stock  under  this plan was made on May
22,  2000.  Under this plan,  the Company  purchased  337,150  shares at
an average  price of $14.98  and with a total  value of  $5,052,000.  In
the second quarter of 2000,  the Board of Directors  authorized a second
stock  repurchase  plan for an  additional  5% of the  then  outstanding
shares.   Under  this  plan,   the   Company   may   repurchase   up  to
approximately  348,000 shares,  and as of June 30, 2000, the Company had
repurchased 41,935 shares with a total value of $643,000.

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


<TABLE>
<CAPTION>

Condensed Comparative Income Statement
                                                                Percentage                         Percentage
                                        Three Months Ended        Change      Six Months Ended       Change
                                              June 30,           Increase         June 30,          Increase
(In thousands, except percentages)       2000        1999       (Decrease)     2000       1999     (Decrease)
                                         ----        ----       ----------     ----       ----     ----------
<S>                                    <C>         <C>         <C>          <C>        <C>         <C>
Interest Income (1)                     $ 12,815    $ 10,229         25%     $ 24,575   $ 19,867        24%
Interest Expense                           4,437       3,329         33%        8,499      6,442        32%
                                       ----------  ----------  ----------    ---------  ---------  ---------
  Net interest income                      8,378       6,900         21%       16,076     13,425        20%
Provision for Loan Losses                    800         410         95%        1,326        537       147%
                                       ----------  ----------  ----------    ---------  ---------  ---------
  Net interest income after
    provision for loan losses              7,578       6,490         17%       14,750     12,888        14%
Noninterest Income                           631         591          7%        1,177      1,133         4%
Noninterest Expense                        4,336       3,824         13%        8,456      7,647        11%
                                       ----------  ----------  ----------    ---------  ---------  ---------
  Income before income taxes               3,873       3,257         19%        7,471      6,374        17%
Income Taxes                               1,433       1,065         35%        2,760      2,281        21%
Tax Equivalent Adjustment                    197         198         -1%          392        374         5%
                                       ----------  ----------  ----------    ---------  ---------  ---------

  Net income                             $ 2,243     $ 1,994         12%      $ 4,319     $3,719        16%
                                       ==========  ==========  ==========    =========  =========  =========

1) Interest on tax-free securities is reported on tax equivalent basis.
</TABLE>



Net interest income / net interest margin
-----------------------------------------

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.  Net interest  margin
is net interest  income  expressed as a  percentage  of average  earning
assets.

Second  quarter  2000 net  interest  income  of  $8,378,000  was a 21.4%
increase  of  $1,478,000  over the same  period  in 1999.  The  interest
income  component  was up  $2,586,000  (25.3%).  Average  loan  balances
were  $73,341,000  (21.7%)  higher in the second  quarter of 2000 versus
the year earlier  period.  This volume  difference  added  $1,668,000 to
interest  income.  The  average  loan  yield for the  second  quarter of
2000 was 80 basis  points  higher  than  the  average  yield in the year
earlier  quarter.   The  higher  yield  increased   interest  income  by
$796,000.  There have been six rate  increases  implemented  by the Bank
in the past  twelve  months  as a result of the rate  tightening  by the
Federal  Reserve  Board.  For the past year,  as  investment  securities
have matured or been  reduced by principal  payments the funds have been
allocated  to loans and/or  overnight  Federal  funds sold.  The average
balance  of  investment  securities  in the  second  quarter of 2000 was
lower by  $14,310,000  (8.8%) over the second  quarter of 1999.  Average
balances  for  Federal  funds  sold  for  these  two  periods  increased
$16,451,000   to   $16,787,000.   Interest   income  for  the  investing
activities increased $122,000 on a period over period basis.

Interest  expense was up  $1,108,000  (33.3%) on a quarter  over quarter
basis.  The  average  balances  on  interest  bearing  liabilities  were
$50,768,000  (13.6%)  higher in the second  quarter  of 2000  versus the
same  quarter in 1999.  The higher  balances  accounted  for $669,000 of
the  increase  in  interest  expense.  Rates  paid on  interest  bearing
liabilities  increased 63 basis  points on a quarter over quarter  basis
and accounted for $439,000 of the interest expense increase.

                                       8
<PAGE>


Net  interest  margin  for the  second  quarters  of 2000 and 1999  were
5.85% and 5.52%, respectively.

For the  six-month  period  ending June 30, 2000,  net  interest  income
increased  $2,651,000  (19.7%)  over the first six  months of 1999.  The
interest   income   component   increased   $4,708,000  to  $24,575,000.
Average  balances of earning assets were  $74,841,000  (15.3%) higher in
the  first  six  months  of 2000  than the  same  period  in  1999.  The
average  balance of loans was  $76,457,000  higher,  which accounted for
$3,519,000  of the  increase  in  interest  income.  The  average  yield
received  on loans in the first six  months of 2000 was 49 basis  points
higher than the 9.23%  received in the year earlier  period.  The higher
yield  on  loans  added  $1,017,000  to  interest  income.  The  average
balance  of  investment  securities  in the first six months of 2000 was
lower  by  $10,910,000  (6.8%)  over the year  earlier  period.  Average
balances  for  Federal  funds  sold  for  these  two  periods  increased
$9,294,000   to   $12,561,000.   Interest   income  for  the   investing
activities  increased  $172,000  on  a  period  over  period  basis.  As
mentioned  in the  quarterly  analysis  above,  Federal  funds  interest
rates were  increased  six times for a total of 150 basis  points  since
June 30,  1999.  As a result,  the  average  yield of 8.77%  received on
all  earning  assets in the six months  ended June 30, 2000 was 57 basis
points higher than the yield received in the first six months of 1999.

Interest expense for the six-month period increased  $2,057,000  (31.9%)
from  the  expense  in  the  same  1999  period.   Volume  increases  in
deposits and borrowings  added $1,358,000 of interest  expense.  Overall
average  rates  paid on  interest-bearing  liabilities  in the first six
months of 2000  increased  54 basis points to 4.13% from the same period
in 1999.  The  interest  expense  increase  attributable  to the  higher
rates was $699,000.

Net  interest  margin for the first six months of 2000 was 5.74%  versus
5.54% in the year earlier period.

The first two following  tables  provide a summary of the  components of
net  interest  income  and the  changes  within the  components  for the
periods  indicated.  The  second  two  tables set 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.

                                       9
<PAGE>


<TABLE>
<CAPTION>
                                                                              (Unaudited)
                                                                       Three months ended June 30,
(Taxable Equivalent Basis)                                      2000                                   1999
                                               ------------------------------------    ------------------------------------
                                                  Avg.                      Avg.          Avg.                      Avg.
(In thousands, except percentages)               Balance      Interest     Yield         Balance     Interest      Yield
                                                 -------      --------     -----         -------     --------      -----
<S>                                              <C>          <C>           <C>         <C>          <C>             <C>
Assets:
Earning Assets
  Loans (1) (2)                                  $ 411,435     $ 10,150      9.92%       $ 338,094      $ 7,686      9.12%
  Taxable investments                              112,353        1,805      6.46%         126,560        1,951      6.18%
  Tax-exempt securities (tax equiv. basis)          35,800          588      6.61%          35,903          590      6.59%
  Federal funds sold                                16,787          272      6.52%             336            2      2.39%
                                               ------------  -----------               ------------ ------------
Total Earning Assets                               576,375     $ 12,815      8.94%         500,893      $10,229      8.19%
                                                             -----------                            ------------
Cash & due from banks                               38,201                                  41,023
Other assets                                         7,615                                  11,186
                                               ------------                              ------------
                                                  $ 622,191                               $ 553,102
                                               ============                              ============

Liabilities & Shareholders' Equity:
Interest bearing liabilities:
  Demand deposits                                 $ 97,755        $ 392      1.61%       $ 102,864        $ 457      1.78%
  Savings                                           99,037          856      3.48%         101,001          816      3.24%
  Time deposits                                    221,695        3,117      5.65%         156,071        1,907      4.90%
  Other borrowings                                   4,481           72      6.46%          12,264          149      4.87%
                                               ------------  -----------               ------------ ------------
Total interest bearing liabilities                 422,968        4,437      4.22%         372,200        3,329      3.59%
                                                             -----------                            ------------
Demand deposits                                    139,707                                 123,985
Other Liabilities                                    5,028                                   4,311
                                               ------------                            ------------
Total Liabilities                                  567,703                                 500,496
Shareholders' Equity                                54,488                                  52,606
                                               ------------                            ------------
                                                 $ 622,191                               $ 553,102
                                               ============                            ============
Net interest income & margin (3)                                $ 8,378      5.85%                      $ 6,900      5.52%
                                                             ===========  =========                 ============  =========

---------------------------------------------------------------------------------------------------------------------------

1  Loan interest income includes fee income of $238,000 and $307,000 for the three month periods
   ended June 30, 2000 and 1999, respectively.
2  Includes the average allowance for loan losses of $6,422,000 and $4,536,000 and average deferred
   loan fees of $738,000 and $853,000 for the three months ended June 30, 2000 and 1999, respectively.
3  Net interest margin is computed by dividing net interest income by the total average earning assets.
4  Includes the unrealized loss on available-for-sale securities.
</TABLE>



                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                                                  (Unaudited)
                                                                            Six months ended June 30,
(Taxable Equivalent Basis)                                         2000                                    1999
                                                     -------------------------------        -------------------------------
                                                     Avg.                    Avg.            Avg.                   Avg.
(In thousands, except percentages)                   Balance     Interest    Yield           Balance     Interest   Yield
                                                     -------     --------    -----           -------     --------   -----
<S>                                                <C>           <C>         <C>           <C>          <C>          <C>
Assets:
Earning Assets
  Loans (1) (2)                                       $400,526     $19,363     9.72%          $324,069     $14,827    9.23%
  Taxable investments                                  114,387       3,650     6.42%           126,992       3,844    6.10%
  Tax-exempt securities (tax equiv. basis)              35,813       1,175     6.60%            34,118       1,121    6.62%
  Federal funds sold                                    12,561         387     6.20%             3,267          75    4.63%
                                                   ------------  ----------                ------------ -----------
Total Earning Assets                                   563,287     $24,575     8.77%           488,446     $19,867    8.20%
                                                                 ----------                             -----------
Cash & due from banks                                   37,704                                  41,708
Other assets (4)                                         7,829                                  11,062
                                                   ------------                            ------------
                                                      $608,820                                $541,216
                                                   ============                            ============

Liabilities & Shareholders' Equity:
Interest bearing liabilities:
  Demand deposits                                      $97,221       $ 797     1.65%           $97,974       $ 812    1.67%
  Savings                                              100,620       1,731     3.46%           104,901       1,706    3.28%
  Time deposits                                        209,445       5,751     5.52%           151,585       3,748    4.99%
  Other borrowings                                       6,976         220     6.34%             7,222         176    4.91%
                                                   ------------  ----------                ------------ -----------
Total interest bearing liabilities                     414,262       8,499     4.13%           361,682       6,442    3.59%
                                                                 ----------                             -----------
Demand deposits                                        135,172                                 123,125
Other Liabilities                                        5,192                                   4,232
                                                   ------------                            ------------
Total Liabilities                                      554,626                                 489,039
Shareholders' Equity                                    54,194                                  52,177
                                                   ------------                            ------------
                                                      $608,820                                $541,216
                                                   ============                            ============
Net interest income & margin (3)                                   $16,076     5.74%                       $13,425    5.54%
                                                                 ==========  ========                   =========== ========

----------------------------------------------------------------------------------------------------------------------------

1  Loan interest income includes fee income of $474,000 and $548,000 for the six month
   periods ended June 30, 2000 and 1999, respectively
2  Includes the average allowance for loan losses of $6,110,000 and $4,452,000 and average deferred
   loan fees of $712,000 and $786,000 for the six months ended June 30, 2000 and 1999, respectively.
3  Net interest margin is computed by dividing net interest income by the total average earning assets.
4  Includes the unrealized loss on available-for-sale securities.
</TABLE>


                                       11
<PAGE>

<TABLE>
<CAPTION>
 Volume/Rate Analysis
(in thousands) Three Months Ended June 30, 2000 over 1999
Increase (decrease) due to change in:
                                                                                                 Net
                                                            Volume           Rate (5)          Change
                                                            -------          ---------         -------
<S>                                                     <C>               <C>               <C>
Interest-earning assets:
Net Loans (1)(2)                                             $ 1,668              $ 796          $2,464
   Taxable investment securities                                (219)                73            (146)
   Tax exempt investment securities (4)                           (2)                 -              (2)
   Federal funds sold                                             98                172             270
                                                          -----------       ------------      ----------
     Total                                                     1,545              1,041           2,586
                                                          -----------       ------------      ----------

Interest-bearing liabilities:
   Demand deposits                                               (23)               (42)            (65)
   Savings deposits                                              (16)                56              40
   Time deposits                                                 802                408           1,210
   Other borrowings                                              (94)                17             (77)
                                                          -----------       ------------      ----------
     Total                                                       669                439           1,108
                                                          -----------       ------------      ----------
Interest differential                                          $ 876              $ 602          $1,478
                                                          ===========       ============      ==========

</TABLE>

<TABLE>
<CAPTION>
 Volume/Rate Analysis
(in thousands) Six Months Ended June 30, 2000 over 1999
Increase (decrease) due to change in:
                                                                                                    Net
                                                               Volume           Rate (5)           Change
                                                               ------           --------           ------
<S>                                                        <C>                <C>              <C>
Interest-earning assets:
Net Loans (1)(3)                                                $ 3,519            $1,017            $4,536
   Taxable investment securities                                   (383)              189              (194)
   Tax exempt investment securities (4)                              56                (2)               54
   Federal funds sold                                               215                97               312
                                                           -------------      ------------      ------------
     Total                                                        3,407             1,301             4,708
                                                           -------------      ------------      ------------

Interest-bearing liabilities:
   Demand deposits                                                   (6)               (9)              (15)
   Savings deposits                                                 (70)               95                25
   Time deposits                                                  1,440               563             2,003
   Other borrowings                                                  (6)               50                44
                                                           -------------      ------------      ------------
     Total                                                        1,358               699             2,057
                                                           -------------      ------------      ------------
Interest differential                                           $ 2,049             $ 602            $2,651
                                                           =============      ============      ============

1. The average balance of non-accruing loans is immaterial as a percentage of total loans and, as such,
   has been included in net loans.
2. Loan fees of $238,000 and $307,000 for the quarters ended June 30, 2000 and 1999, respectively, have
   been included in the interest income computation.
3. Loan fees of $474,000 and $548,000 for the six months ended June 30, 2000 and 1999, respectively, have
   been included in the interest income computation.
4. 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 34% for 2000 and 1999.
5. The rate / volume variance has been included in the rate variance.
</TABLE>

                                       12
<PAGE>


Provision for Loan Losses
-------------------------

The  provision  for loan losses was  $800,000  in the second  quarter of
2000  as  compared  to  $410,000  in the  second  quarter  of  1999  and
$526,000 in the first quarter of 2000.  For the  six-month  period ended
June 30,  2000,  the Bank  provided  $1,326,000  versus  $537,000 in the
year earlier period.  Loan balances increased  $30,144,000 in the second
quarter  of 2000 and are up  $65,661,000  on year  over year  basis.  In
addition  to these  new,  unseasoned  loans,  several  ongoing  economic
forces  have  caused  management  to  increase  its  provision  for loan
losses.  Among  these  are  continued  pressure  on the  Salinas  Valley
agricultural  industry due to poor market  prices.  In addition,  as the
Federal  Reserve  Board's  program to slow down consumer  spending takes
effect,  the tourism industry will be impacted.  Together,  customers in
the  agriculture  and  tourism  industries  represent  36% of the Bank's
total loans and loan  commitments  outstanding  as of June 30, 2000.  At
June  30,  2000  and  1999,  non-performing  assets  were  $796,000  and
$3,490,000,  respectively.  The ratios of the  allowance for loan losses
to total loans on those two dates were 1.65% and 1.35%, respectively.

Noninterest Income
------------------

Noninterest  income  consists  primarily  of service  charges on deposit
accounts  and  fees  for  miscellaneous  services.   Noninterest  income
totaled  $631,000  in the second  quarter of 2000,  which was up $40,000
(6.8%) over the same  period in 1999.  Income  from  service  charges on
deposit  accounts was $99,000  higher  mostly due to higher  volumes and
new business  account fees.  This  increase was partially  offset by the
fact that in the second  quarter of 1999,  the  Company  realized a gain
of $45,000  from the sale of  investment  securities  versus no gains in
2000.

For the first  six-months  of 2000,  noninterest  income was  $1,177,000
versus  $1,133,000  in the same  period  last year.  Service  charges on
deposits  were  up  $139,000  (21.2%)  due to  higher  volumes  and  new
business  account  fees.  As the  interest  rates rose,  the activity in
residential  mortgage lending slowed  significantly in the first half of
2000.  Consequently,  the  fees  generated  from  mortgage  originations
decreased  $80,000  (46.2%) in the first six months of 2000 as  compared
to the same period in 1999.  As reported  in the  quarterly  analysis in
the preceding  paragraph,  a gain of $45,000 was  recognized on the sale
of investment  securities in the second  quarter of 1999 versus no gains
in 2000.

Noninterest Expense
-------------------

Noninterest   expenses   increased   $512,000  (13.4%)  to  a  total  of
$4,336,000  in the second  quarter of 2000 versus the second  quarter of
1999.  Salary and employee  benefits  increased  $217,000 (9.6%) because
of additional  staff due to growth,  higher  benefit  costs,  and normal
salary  increases.  On a quarter over quarter basis,  premises and fixed
asset   expenses  were  higher  by  $166,000   (28.1%).   Ongoing  costs
associated  with two branch  relocations  and remodel of office space in
the  second  half of 1999 were the  major  factors  contributing  to the
increased  premises  and fixed asset  expenses.  Other  expenses for the
second  quarter of 2000 were  $1,112,000  for an  increase  of  $129,000
over the prior year quarter.  Various  items related to higher  business
volume  and  some  price  increases  contributed  to the  increase.  The
overhead  efficiency  ratios  (fully  tax  equivalent)  for the 2000 and
1999 second quarters were 48.1% and 51.0%, respectively.

Noninterest  expenses  for the  six-month  period  ending  June 30, 2000
were  $8,456,000   versus  $7,647,000  for  the  same  period  in  1999.
Salaries  and  benefits  increased  $266,000  (5.8%)  due  to  increased
staffing  levels,  higher benefit costs and normal salary  progressions.
Premises and fixed asset  expenses  were up $316,000  (27.2%) due to the
items as detailed in the previous  paragraph.  Other expenses  increased
$227,000  (11.9%).   Factors   contributing  to  the  increase  were  as
discussed  above.  The overhead  efficiency ratio (fully tax equivalent)
for the first  six-months  of 2000 was 49.0% as compared to 52.5% in the
same period of 1999.

Provision for Income Taxes
--------------------------

The  effective tax rate for the second  quarter and first  six-months of
2000 was 39.0% for both  periods  versus 34.8% and 38.0% in the same two
periods of 1999.

                                       13
<PAGE>

Securities
----------

At June 30, 2000,  available-for-sale  securities  had a market value of
$148,056,000   with  an  amortized  cost  basis  of  $155,755,000.   The
unrealized  loss of  $7,699,000  at June  30,  2000  was a  decrease  of
$366,000  from the  unrealized  loss at March  31,  2000.  The  slightly
lower  unrealized  loss was the result of a leveling of  interest  rates
in the securities  markets in the second  quarter.  Other than for short
term funds management,  the Bank did not purchase  securities during the
second quarter of 2000.

Loans
-----

Ending loan  balances at June 30, 2000 were  $426,073,000,  which was an
increase  of   $30,476,000   (7.7%)  from  year-end  1999  balances  and
$65,661,000  (18.2%) from June 30, 1999 balances.  With the exception of
consumer  loans,  all other  categories  of loans were  higher on a year
over  year  basis.  Loan  demand  has  remained  brisk  and the  current
pipeline  would  indicate that the demand is  continuing  into the third
quarter.

Nonperforming Assets
--------------------

Nonperforming  assets are comprised of loans  delinquent 90 days or more
with  respect to interest or  principal,  loans for which the accrual of
interest  has been  discontinued,  and other real estate  which has been
acquired through foreclosure and is awaiting disposition.

Unless well secured and in the process of  collection,  loans are placed
on  nonaccrual  status  when a  loan  becomes  90  days  past  due as to
interest or  principal,  when the payment of  interest or  principal  in
accordance with the contractual  terms of the loan becomes  uncertain or
when a portion of the  principal  balance has been charged  off.  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 process of collection.

Real estate and other assets  acquired in  satisfaction  of indebtedness
are  recorded  at the  lower  of  estimated  fair  market  value  net of
anticipated   selling  costs  or  the  recorded  loan  amount,  and  any
difference  between  this and the amount is treated as a loan loss.  The
costs of  maintaining  other  real  estate  owned and gains or losses on
the subsequent sale are reflected in current earnings.

The following is a summary of nonperforming assets:

<TABLE>
<CAPTION>

(In thousands, except percentages)                                                June 30,              December 31,
                                                                                    2000                    1999
                                                                                --------------        ---------------
<S>                                                                             <C>                   <C>
Past due 90 days or more and still accruing :
   Real estate                                                                          $ 102                  $ 303
   Commercial                                                                              59                     51
   Consumer and other                                                                      50                      -
                                                                                --------------       ----------------
                                                                                          211                    354
                                                                                --------------       ----------------
Nonaccrual:
   Real estate                                                                              -                  1,565
   Commercial                                                                             443                     11
   Consumer and other                                                                      44                      -
                                                                                --------------       ----------------
                                                                                          487                  1,576
                                                                                --------------       ----------------
Total nonperforming loans                                                                 698                  1,930
                                                                                --------------       ----------------
Other real estate owned                                                                   100                    180
                                                                                --------------       ----------------
Total nonperforming assets                                                              $ 798                $ 2,110
                                                                                ==============       ================

Allowance for loan losses as a percentage of nonperforming loans                        1005%                   290%
Nonperforming loans to total loans                                                      0.16%                  0.49%
</TABLE>

                                       14
<PAGE>

Nonperforming  loans  decreased  $1,234,000  during the first six months
of 2000 with  $326,000  of that in the  second  quarter.  This  decrease
coupled  with  the  year-to-date  increase  of  the  provision  for  the
allowance  for loan  losses  resulted  in  improvement  in the  coverage
ratio of the  allowance  for loan  losses to  nonperforming  loans  from
290% at year-end to 1005%.

At June 30, 2000,  the recorded  investment in loans that are considered
impaired  under  SFAS  No.  114 was  $2,073,000  of which  $487,000  are
included in nonaccrual  loans above.  Such impaired  loans had valuation
allowances  totaling  $617,000  based on the estimated fair value of the
collateral.

Allowance for Loan Losses
-------------------------

The  allowance  for loan losses  reflects  management's  judgement as to
the level  considered  adequate to absorb  probable  losses  inherent in
the loan  portfolio.  The allowance is increased by  provisions  charged
to  expense  and  reduced  by  loan   charge-offs   net  of  recoveries.
Management  determines an appropriate  provision based upon  information
currently  available to analyze loan loss  potential,  including (1) the
loan portfolio  balance in the period;  (2) a comprehensive  grading and
review  of new and  existing  loans  outstanding;  (3)  actual  previous
charge-offs; and, (4) changes in economic conditions.

In  determining  the provision for estimated  losses related to specific
major loans,  management  evaluates its allowance on an individual  loan
basis,  including  an analysis of the  creditworthiness,  cash flows and
financial  status of the  borrower,  and the condition and the estimated
value of the  collateral.  Specific  valuation  allowances  for  secured
loans are  determined  by the excess of recorded  investment in the loan
over the fair market value or net  realizable  value where  appropriate,
of  the   collateral.   In   determining   overall   general   valuation
allowances  to  be  maintained  and  the  loan  loss  allowance   ratio,
management  evaluates many factors  including  prevailing and forecasted
economic conditions,  regular reviews of the quality of loans,  industry
experience,  historical  loss  experience,  composition  and  geographic
concentrations  of the loan portfolio,  the borrowers'  ability to repay
and repayment performance and estimated collateral values.

Management  believes  that the  allowance  for loan  losses  at June 30,
2000 is adequate,  based on information  currently  available.  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:
<TABLE>
<CAPTION>
                                            Three months ended June 30,              Six months ended June 30,
(In thousands, except percentages)            2000               1999                 2000               1999
                                              ----               ----                 ----               ----
<S>                                       <C>               <C>                   <C>               <C>
 Beginning balance                              $ 6,136           $ 4,398              $ 5,596            $ 4,352
   Provision charged to expense                     800               410                1,326                537
   Loans charged off                                 (3)              (37)                 (19)              (127)
   Recoveries                                        85               111                  115                120
                                          --------------     -------------        -------------      -------------
Ending balance                                  $ 7,018           $ 4,882              $ 7,018            $ 4,882
                                          ==============     =============        =============      =============

Ending loan portfolio                                                                 $426,073           $360,412
                                                                                  =============      =============

Allowance for loan losses as percentage of
   ending loan portfolio                                                                 1.65%              1.35%
</TABLE>


                                       15
<PAGE>

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 June 30, 2000 were
approximately  $120,725,000  and  $1,881,000,  respectively.  Such  loan
commitments  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 its deposits with other
banks,   overnight  funds  sold  to   correspondent   banks,   unpledged
short-term,  marketable  investments  and loans  available  for sale. On
June 30, 2000,  consolidated  liquid  assets  totaled  $90.0  million or
13.9% of total  assets as  compared  to $91.1  million or 15.4% of total
consolidated  assets  on  December  31,  1999.  In  addition  to  liquid
assets,  the Bank  maintains  lines of credit with  correspondent  banks
for  up  to  $80,000,000  available  on  a  short-term  basis.  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  $55,187,000 at June 30,
2000 compared to $53,305,000 at December 31, 1999.

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.  A banking  organization's  total  qualifying  capital
includes   two   components,   core   capital   (Tier  1  capital)   and
supplementary  capital  (Tier  2  capital).  Core  capital,  which  must
comprise at least half of total capital,  includes common  shareholders'
equity,   qualifying   perpetual   preferred   stock,   trust  preferred
securities  and  minority   interests,   less  goodwill.   Supplementary
capital  includes  the  allowance  for loan  losses  (subject to certain
limitations),   other  perpetual   preferred   stock,   trust  preferred
securities,  certain other  capital  instruments  and term  subordinated
debt. The Company's major capital  components are  shareholders'  equity
in core  capital,  and the  allowance  for loan losses in  supplementary
capital.

The  following  table shows the  Company's  actual  capital  amounts and
ratios at June 30,  2000 and  December  31,  1999 as well as the minimum
capital ratios for capital adequacy under the regulatory framework:

<TABLE>
<CAPTION>
                                                                                                         For Capital
                                                                           Actual                     Adequacy Purposes:
                                                                   Amount          Ratio             Amount         Ratio
                                                                   ------          -----             ------         -----
<S>                                                             <C>               <C>             <C>               <C>
As of June 30, 2000
Total Capital (to Risk Weighted Assets):                       $ 64,975,000        13.1%         $ 39,811,000        8.0%
Tier 1 Capital (to Risk Weighted Assets):                        58,788,000        11.8%           19,905,000        4.0%
Tier 1 Capital (to Average Assets):                              58,788,000         9.5%           24,888,000        4.0%

As of December 31, 1999
Total Capital (to Risk Weighted Assets):                       $ 62,489,000        13.8%         $ 36,125,000        8.0%
Tier 1 Capital (to Risk Weighted Assets):                        56,938,000        12.6%           18,062,000        4.0%
Tier 1 Capital (to Average Assets):                              56,938,000         9.7%           23,593,000        4.0%
</TABLE>


                                       16
<PAGE>

Year 2000
---------

During  1998  and  1999,   management   of  the   Company   focused  the
appropriate  resources  to address  the  potential  problems  that could
arise   regarding  the  Year  2000  (Y2K)   century  date  change.   The
Company's mission critical systems were evaluated,  modified as required
and  contingency  plans were put into  place  should  the  systems  have
experienced  any  failures.  The Y2K  readiness of vendors and customers
was also  evaluated  and  monitored.  The  century  date  change  passed
without any  operational  difficulties  for the Company,  its vendors or
its  customers.  There are certain  dates within the year 2000 that have
been  identified  as critical  processing  dates.  The first was January
31, the end of the first  month of the year.  The  second  was  February
29,  leap  year  day.  The  third  was  March  31,  the end of the first
quarter.  The  Company did not  experience  any  processing  problems on
those  dates.  Upcoming  dates during the year are October 10, the first
date to require an 8-digit field  (10/10/2000)  and December 31, the end
of the year.  Those  dates were tested as part of the Y2K  project.  The
Company  does not  anticipate  having any  processing  problems on those
dates,  however  failure by third  parties to  adequately  remediate Y2K
issues  could  have an  impact  upon  Central  Coast  Bancorp,  which is
impossible  to quantify.  Nevertheless,  the Company  currently  expects
that its Y2K  compliance  efforts will be  successful  without  material
adverse effects on its business.


                     Item 3. MARKET RISK MANAGEMENT

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.  Based  on a
forecast  using May 31, 2000 balances and measuring  against a flat rate
environment,  in a one-year  horizon an increase  in  interest  rates of
200 basis  points  would  result in an  increase  of  $1,980,000  in net
interest  income.  Conversely,  a 200 basis point  decrease would result
in a decrease of $2,470,000 in net interest income.

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.

                                       17
<PAGE>

                      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.

            THE FOLLOWING ARE THE VOTING RESULTS OF THE REGISTRANTS'S ANNUAL
            MEETING OF THE SHAREHOLDERS HELD ON MAY 25, 2000:


           PROPOSAL NO. 1: ELECTION OF DIRECTORS
                               Number of Affirmative Votes
                               ---------------------------

            C. EDWARD BOUTONNET             5,491,981
            BRADFORD G. CRANDALL            5,491,932
            ALFRED P. GLOVER                5,494,221
            MICHAEL T. LAPSYS               5,494,101
            DUNCAN L. McCARTER              5,493,765
            ROBERT M. MRAULE, D.D.S., M.D.  5,494,150
            LOUIS M. SOUZA                  5,494,101
            MOSE E. THOMAS, JR.             5,494,101
            NICK VENTIMIGLIA                5,494,150

           PROPOSAL NO. 2:  APPROVAL OF DELOITTE & TOUCHE LLP
                AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
                2000 FISCAL YEAR.

                                                          Number of Shares
                    Number of            Number of          Indicated As
                 Votes Cast For      Votes Cast Against      Abstentions
                 --------------      ------------------      -----------

                   5,421,052                6,180             72,451

                   TOTAL NUMBER OF SHARES VOTED: 5,499,683.

Item 5.     Other information.

                None.


                                       18
<PAGE>

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,    incorporated   by
                     reference   from   Exhibit   4.8  to   Registration
                     Statement  on Form S-8,  No.  33-89948,  filed with
                     the Commission on March 3, 1995.

             (3.2)   Bylaws,  as  amended,   incorporated  by  reference
                     from the  Registrant's  1998 Annual  Report on Form
                     10-K filed with the Commission on March 29,1999.

             (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)   1982 Stock Option Plan, as amended, incorporated
                     by reference from Exhibit 4.2 to Registration
                     Statement on Form S-8, No. 33-89948, filed with
                     the Commission on March 3, 1995.

           *(10.5)   Form of Nonstatutory  Stock Option  Agreement under
                     the  1982  Stock   Option  Plan   incorporated   by
                     reference   from   Exhibit   4.6  to   Registration
                     Statement  on Form S-8,  No.  33-89948,  filed with
                     the Commission on March 3, 1995.

           *(10.6)   Form of  Incentive  Stock  Option  Agreement  under
                     the  1982  Stock   Option  Plan   incorporated   by
                     reference   from   Exhibit   4.7  to   Registration
                     Statement  on Form S-8,  No.  33-89948,  filed with
                     the Commission on March 3, 1995.

           *(10.7)   1994 Stock  Option Plan  incorporated  by reference
                     from  Exhibit  4.1  to  Registration  Statement  on
                     Form S-8, No.  33-89948,  filed with the Commission
                     on March 3, 1995.

           *(10.8)   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 March 3, 1995.

           *(10.9)   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 March 3, 1995.

                                       19
<PAGE>

          *(10.10)   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 March 3, 1995.

          *(10.11)   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.

          *(10.12)   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.

          *(10.13)   Form  of  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.

          *(10.14)   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.

          *(10.15)   1994 Stock Option Plan, as amended, incorporated
                     by reference from Exhibit A 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.

          *(10.16)   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.

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

          *(10.18)   Employee  Stock  Ownership Plan and Trust
                     Agreement  incorporated  by reference  from Exhibit
                     10.18 to  Registrant's  1996 Annual  Report on Form
                     10-K filed with the Commission on March 31, 1997.

           (10.19)   Lease agreement dated March 7, 1997, related to 484
                     Lighthouse Avenue, Monterey, California
                     incorporated by reference from Exhibit 10.19 to
                     Registrant's 1997 Annual Report on Form 10-K
                     filed with the Commission on March 27, 1998.

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

            (27.1)   Financial Data Schedule
           *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 May 17, 2000 to report the Board of
      Directors' authorization of a stock repurchase program of up to
      five percent of the Registrant's outstanding shares.  This followed
      the completion of the previous five percent repurchase plan
      authorized in October, 1998.

                                       20
<PAGE>


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.


July 28, 2000                             CENTRAL COAST BANCORP


                                    By: /S/ ROBERT M. STANBERRY
                                        --------------------------
                                          Robert M. Stanberry
                                          (Chief Financial Officer,
                                           Principal Financial and
                                           Accounting Officer)




                                       21
<PAGE>



                             EXHIBIT INDEX


Exhibit
Number               Description                                   Page
------               -----------                                   ----

27.1                 Financial Data Schedule                        23



                                       22