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        September 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 - 6,768,049 shares outstanding at November 6, 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)



                                                                                 September 30,        December 31,
(Dollars in thousands)                                                                2000                1999
                                                                                      ----                ----
<S>                                                                             <C>                  <C>

Assets
  Cash and due from banks                                                               $ 41,297           $ 39,959
  Federal funds sold                                                                      14,461                  -
                                                                                -----------------    ---------------
     Total cash and equivalents                                                           55,758             39,959

  Available-for-sale securities                                                          140,220            145,435

  Loans:
    Commercial                                                                           161,105            159,385
    Real estate-construction                                                              38,147             35,330
    Real estate-other                                                                    231,382            188,600
    Consumer                                                                               9,935             13,003
    Deferred loan fees, net                                                                 (731)              (721)
                                                                                -----------------    ---------------
        Total loans                                                                      439,838            395,597
    Allowance for loan losses                                                             (8,389)            (5,596)
                                                                                -----------------    ---------------
  Net Loans                                                                              431,449            390,001
                                                                                -----------------    ---------------

  Premises and equipment, net                                                              3,910              3,888
  Accrued interest receivable and other assets                                            11,591             14,162
                                                                                -----------------    ---------------
Total assets                                                                           $ 642,928          $ 593,445
                                                                                =================    ===============
Liabilities and Shareholders' Equity
  Deposits:
    Demand, noninterest bearing                                                        $ 148,089          $ 141,389
    Demand, interest bearing                                                              94,771            100,871
    Savings                                                                              105,707             97,833
    Time                                                                                 227,534            178,096
                                                                                -----------------    ---------------
        Total Deposits                                                                   576,101            518,189
  Accrued interest payable and other liabilities                                           9,887             21,951
                                                                                -----------------    ---------------
Total liabilities                                                                        585,988            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: 6,818,159 shares at September 30, 2000
    and 6,440,257 shares at December 31, 1999                                             46,182             40,223
  Shares held in deferred compensation trust (271,862 at September 30, 2000
    and 247,148 at December 31, 1999), net of deferred obligation                              -                  -
  Retained earnings                                                                       14,090             17,784
  Accumulated other comprehensive loss - net of taxes of $2,316
     at September 30, 2000 and $3,267 at December 31,1999                                 (3,332)            (4,702)
                                                                                -----------------    ---------------
Shareholders' equity                                                                      56,940             53,305
                                                                                -----------------    ---------------
Total liabilities and shareholders' equity                                             $ 642,928          $ 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 September 30,         Nine Months Ended September 30,
(In thousands, except per share data)         2000                 1999                 2000                1999
                                              ----                 ----                 ----                ----
<S>                                      <C>                <C>                   <C>                 <C>

Interest Income
   Loans (including fees)                       $ 10,830              $ 8,457             $ 30,193            $ 23,284
   Investment securities                           2,353                2,273                6,785               6,864
   Other                                             393                   25                  781                 100
                                         ----------------    -----------------    -----------------    ----------------
       Total interest income                      13,576               10,755               37,759              30,248
                                         ----------------    -----------------    -----------------    ----------------
Interest Expense
   Interest on deposits                            4,834                3,402               13,113               9,668
   Other                                              67                  123                  287                 299
                                         ----------------    -----------------    -----------------    ----------------
       Total interest expense                      4,901                3,525               13,400               9,967
                                         ----------------    -----------------    -----------------    ----------------

Net Interest Income                                8,675                7,230               24,359              20,281
Provision for Loan Losses                          1,530                  418                2,856                 955
                                         ----------------    -----------------    -----------------    ----------------
Net Interest Income after
   Provision for Loan Losses                       7,145                6,812               21,503              19,326
                                         ----------------    -----------------    -----------------    ----------------

Noninterest Income                                   672                  529                1,849               1,662
                                         ----------------    -----------------    -----------------    ----------------

Noninterest Expenses
   Salaries and benefits                           2,561                2,294                7,408               6,875
   Occupancy                                         385                  300                1,063                 877
   Furniture and equipment                           404                  320                1,204                 905
   Other                                             948                1,197                3,079               3,101
                                         ----------------    -----------------    -----------------    ----------------
       Total noninterest expenses                  4,298                4,111               12,754              11,758
                                         ----------------    -----------------    -----------------    ----------------
Income Before Income Taxes                         3,519                3,230               10,598               9,230
Provision for Income Taxes                         1,266                1,227                4,027               3,508
                                         ----------------    -----------------    -----------------    ----------------
       Net Income                                $ 2,253              $ 2,003              $ 6,571             $ 5,722
                                         ================    =================    =================    ================

Basic Earnings per Share                          $ 0.33               $ 0.28               $ 0.94              $ 0.81
Diluted Earnings per Share                        $ 0.32               $ 0.27               $ 0.92              $ 0.78
See Notes to Consolidated Condensed Financial Statements
</TABLE>

                                       3
<PAGE>


<TABLE>
<CAPTION>


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

(In thousands)
Nine months ended September 30,                                                               2000                    1999
                                                                                              ----                    ----
<S>                                                                                      <C>                     <C>

Cash Flows from Operations:
   Net income                                                                                   $ 6,571                 $ 5,722
   Reconciliation of net income to net cash provided
   by operating activities:
     Provision for loan losses                                                                    2,856                     955
     Net loss on sale of fixed assets                                                                21                     107
     Depreciation                                                                                   871                     607
     Amortization and accretion                                                                     (39)                     81
     (Increase) decrease in accrued interest receivable and other assets                          1,428                  (1,108)
     Increase in accrued interest payable and other liabilities                                     807                   2,347
     Increase in deferred loan fees                                                                  10                     139
                                                                                          --------------          --------------
       Net cash provided by operations                                                           12,525                   8,850
                                                                                          --------------          --------------
Cash Flows from Investing Activities:
   Purchases of investment securities                                                           (56,346)                (89,431)
   Proceeds from maturities of investment securities                                             64,114                  96,728
   Proceeds from sale of investment securities                                                        -                   5,988
   Proceeds from sale of premises and equipment                                                       -                      17
   Net increase in loans                                                                        (44,314)                (64,343)
   Purchases of premises and equipment                                                             (915)                 (1,593)
                                                                                          --------------          --------------
       Net cash used in investing activities                                                    (37,461)                (52,634)
                                                                                          --------------          --------------
Cash Flows from Financing Activities:
   Net increase in deposit accounts                                                              57,912                  26,915
   Net increase (decrease) in short-term borrowings                                             (12,662)                 14,233
   Net decrease in long-term borrowings                                                            (210)
   Proceeds from issuance of stock                                                                   89                   1,098
   Shares repurchased                                                                            (4,394)                 (2,680)
                                                                                          --------------          --------------
       Net cash provided by financing activities                                                 40,735                  39,566
                                                                                          --------------          --------------
   Net increase (decrease) in cash and equivalents                                               15,799                  (4,218)
Cash and equivalents, beginning of period                                                        39,959                  48,886
                                                                                          --------------          --------------
Cash and equivalents, end of period                                                            $ 55,758                $ 44,668
                                                                                          ==============          ==============

Other Cash Flow Information:
   Interest paid                                                                               $ 12,506                 $ 9,856
   Income taxes paid                                                                              4,660                   2,289
See Notes to Consolidated Condensed Financial Statements

</TABLE>

                                       4
<PAGE>










                  CENTRAL COAST BANCORP AND SUBSIDIARY
          NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                     September 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
September  30, 2000 and  December 31,  1999,  the results of  operations
for the three and nine month periods  ended  September 30, 2000 and 1999
and cash flows for the nine month periods  ended  September 30, 2000 and
1999.

Certain  disclosures  normally  presented in the notes to the  financial
statements   prepared   in   accordance   with   accounting   principles
generally  accepted in the Untied  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   1999  Annual  Report  to
Shareholders.  The  results of  operations  for the three and nine month
periods  ended  September  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  $135,537,000
and standby  letters of credit of  $4,475,000  at  September  30,  2000.
However,  all such commitments will not necessarily  culminate in actual
extensions of credit by the Company during 2000.

Outstanding loan  commitments of approximately  $24,988,000 at September
30, 2000 were 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.

                                       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  (6,887,000
and 6,974,000  for the three and nine month periods ended  September 30,
2000,  and  7,103,000 and 7,069,000 for the three and nine month periods
ended  September  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  (197,000  and  195,000  for the three and nine  month  periods
ended  September  30,  2000 and  194,000  and  254,000 for the three and
nine month periods ended September 30, 1999).


4.    COMPREHENSIVE EARNINGS
<TABLE>
<CAPTION>

                                                           Three Months Ended              Nine Months Ended
                                                             September 30,                    September 30,
(In thousands)                                            2000             1999           2000              1999
                                                          ----             ----           ----              ----
<S>                                                     <C>             <C>             <C>             <C>

Net Earnings                                            $ 2,253          $ 2,003        $ 6,571          $ 5,722
Other comprehensive income (loss)- Net unrealized
      gain (loss) on available-for-sale securities        1,210           (1,751)         1,370           (4,047)
Reclassification adjustment for gains included in
      income, net of taxes of $5 for the
      nine month period ended
      September 30, 1999                                      -                -              -                8

                                                        -------          -------        -------          -------
Total comprehensive earnings                            $ 3,463            $ 252        $ 7,941          $ 1,683
                                                        =======          =======        =======          =======
</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,  net  interest  income  and net  interest  margin  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 the counties of
Monterey,  San Benito and Santa Cruz,  which are in the central  coastal
area of California.

Overview
--------

Central  Coast  Bancorp  recorded  net  income  of  $2,253,000  for  the
quarter ended  September 30, 2000,  which was a 12.5%  increase over the
$2,003,000  reported for the same period of 1999.  Diluted  earnings per
share for the third  quarter of 2000 was $0.32 versus $0.27  reported in
the year  earlier  period.  The return on equity (ROE) and the return on
assets  (ROA) for the  third  quarter  of 2000  were  15.8% and 1.36% as
compared to 15.4% and 1.38% for the same period in 1999.

Net income for the nine  months  ended  September  30, 2000 and 1999 was
$6,571,000  and $5,722,000  with diluted  earnings per share of $.92 and
$.78,  respectively.  For the first nine  months of 2000,  ROE was 15.9%
and ROA was 1.40% as  compared  to 14.7%  and 1.38% 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.

Year over year  balance  sheet  growth  reflects  a  $55,399,000  (9.4%)
increase in total assets,  a $57,312,000  (15.0%)  increase in loans and
a  $59,993,000  (11.6%)  increase in deposits at September 30, 2000 from
the ending balances at September 30, 1999.  Assets totaled  $642,928,000
at  September  30,  2000.  This  was down  $5,889,000  from the June 30,
2000  ending   balance  as  the  Bank   returned   $18,000,000   of  the
$20,000,000  of State of California  certificates  of deposit  placed in
the Bank in February 2000.

Central  Coast  Bancorp  ended the third  quarters of 2000 and 1999 with
Tier 1 capital  ratios of 11.8% and total  risk-based  capital ratios of
13.0%.

                                       7
<PAGE>

On October 16,  2000,  the Bank  continued to expand its service area by
opening its 10th full  service  branch in the city of  Hollister  in San
Benito  County.  The  economic  environment  in  San  Benito  County  is
similar to the  agricultural  communities  the Bank  serves in  Monterey
County.

As  previously  reported,  in the second  quarter of 2000,  the Board of
Directors  authorized  a  stock  repurchase  plan  for  5% of  the  then
outstanding  shares.  Under this plan,  the Company may repurchase up to
approximately  348,000  shares.  As of October 16, 2000, the Company had
repurchased  167,605  shares at an average  price of $16.07 with a total
value of $2,694,000.

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     Nine Months Ended     Change
                                         September 30,        Increase      September 30,       Increase
(In thousands, except percentages)     2000        1999      (Decrease)    2000       1999      (Decrease)
                                       ----        ----      ----------    ----       ----      ----------
<S>                                  <C>        <C>         <C>         <C>         <C>        <C>
Interest Income (1)                  $ 13,777    $ 10,951        26%     $ 38,352   $ 30,818        24%
Interest Expense                        4,901       3,525        39%       13,400      9,967        34%
                                     ---------   ---------  ---------    ---------  ---------   --------
  Net interest income                   8,876       7,426        20%       24,952     20,851        20%
Provision for Loan Losses               1,530         418       266%        2,856        955       199%
                                     ---------   ---------  ---------    ---------  ---------   --------
  Net interest income after
    provision for loan losses           7,346       7,008         5%       22,096     19,896        11%
Noninterest Income                        672         529        27%        1,849      1,662        11%
Noninterest Expense                     4,297       4,111         5%       12,754     11,758         8%
                                     ---------   ---------  ---------    ---------  ---------   --------
  Income before income taxes            3,721       3,426         9%       11,191      9,800        14%
Income Taxes                            1,267       1,227         3%        4,027      3,508        15%
Tax Equivalent Adjustment                 201         196         3%          593        570         4%
                                     ---------   ---------  ---------    ---------  ---------   --------

  Net income                          $ 2,253     $ 2,003        12%      $ 6,571    $ 5,722        15%
                                     =========   =========  =========    =========  =========   ========

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.

Third  quarter  2000  net  interest  income  of  $8,876,000  was a 19.5%
increase  of  $1,450,000  over the same  period  in 1999.  The  interest
income  component  was up  $2,826,000  (25.8%).  Average  loan  balances
were  $60,684,000  (16.6%)  higher in the third  quarter of 2000  versus
the year earlier  period.  This volume  difference  added  $1,407,000 to
interest  income.  The average loan yield for the third  quarter of 2000
was 93 basis  points  higher than the average  yield in the year earlier
quarter.  The  higher  yield  increased  interest  income  by  $966,000.
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.  The  last  rate  increase  was on  May  16,  2000.  The
average  balance of  investment  securities in the third quarter of 2000
was  slightly  lower by  $1,227,000  (0.8%)  from the third  quarter  of
1999.   Since  yields  on   securities   were   somewhat   higher,   the
investments  contributed  an  additional  $85,000  in  interest  income.
Average   balances  for  Federal   funds  sold  for  these  two  periods
increased  $22,492,000  to  $24,459,000.  Interest  income  for  Federal
funds sold increased $368,000 on a period over period basis.

Interest  expense was up  $1,376,000  (39.0%) on a quarter  over quarter
basis.  The  average  balances  on  interest  bearing  liabilities  were
$54,493,000  (14.0%)  higher in the third  quarter  of 2000  versus  the
same  quarter in 1999.  The higher  balances  accounted  for $750,000 of
the  increase  in  interest  expense.  Rates  paid on  interest  bearing

                                       8
<PAGE>

liabilities  for the third  quarter  2000  averaged  4.39%.  This was an
increase  of 80  basis  points  from  the  like  quarter  last  year and
accounted  for $626,000 of the interest  expense  increase.  It was also
a 17 basis  point  increase  from the  average  rate paid in the  second
quarter of 2000.  As the longer  term  certificates  of deposit  mature,
it is expected  that there will be some  continuing  upward  pressure on
interest  expense.  This may  result  in a decline  in the net  interest
margin the Bank is able to generate  in future  quarters.  Net  interest
margin  for the third  quarters  of 2000 and 1999 were  5.82% and 5.62%,
respectively.

For the  nine-month  period  ending  September  30,  2000,  net interest
income  increased  $4,101,000  (19.7%)  over the  first  nine  months of
1999.   The  interest   income   component   increased   $7,534,000   to
$38,352,000.   Average  balances  of  earning  assets  were  $77,182,000
(15.4%)  higher in the first  nine  months of 2000 than the same  period
in 1999.  The average  balance of loans was  $71,110,000  higher,  which
accounted  for  $4,922,000  of the  increase  in  interest  income.  The
average  yield  received  on loans in the first nine  months of 2000 was
64 basis  points  higher  than the 9.22%  received  in the year  earlier
period.   The  higher  yield  on  loans  added  $1,987,000  to  interest
income.  The average balance of investment  securities in the first nine
months  of 2000 was lower by  $7,655,000  (4.8%)  over the year  earlier
period.   Average   balances  for  Federal  funds  sold  for  these  two
periods  increased  $13,727,000 to $16,556,000.  Interest income for the
investing   activities  increased  $625,000  on  a  period  over  period
basis.  As  mentioned  in the  quarterly  analysis  above,  the  Federal
Reserve  Board  increased  interest  rates  six times for a total of 150
basis  points  since June 30, 1999.  As a result,  the average  yield of
8.87%   received  on  all  earning  assets  in  the  nine  months  ended
September  30, 2000 was 64 basis points  higher than the yield  received
in the first nine months of 1999.

Interest  expense  for  the  nine-month   period  increased   $3,433,000
(34.4%)  from the expense in the same 1999 period.  Volume  increases in
deposits and borrowings  added $2,112,000 of interest  expense.  Overall
average  rates paid on  interest-bearing  liabilities  in the first nine
months of 2000  increased  63 basis points to 4.22% from the same period
in 1999.  The  interest  expense  increase  attributable  to the  higher
rates was  $1,321,000.  Net  interest  margin for the first nine  months
of 2000 was 5.77% versus 5.57% 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 September 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)                                  $ 425,424     $ 10,830     10.13%       $ 364,740      $ 8,457    9.20%
  Taxable investments                              119,876        1,952      6.48%         121,794        1,881    6.13%
  Tax-exempt securities (tax equiv. basis)          36,572          602      6.54%          35,881          588    6.50%
  Federal funds sold                                24,459          393      6.39%           1,967           25    5.04%
                                               ------------  -----------               ------------ ------------
Total Earning Assets                               606,331     $ 13,777      9.04%         524,382      $10,951    8.29%
                                                             -----------                            ------------
Cash & due from banks                               39,561                                  42,086
Other assets (4)                                     9,164                                   8,762
                                               ------------                            ------------
                                                 $ 655,056                               $ 575,230
                                               ============                            ============

Liabilities & Shareholders' Equity:
Interest bearing liabilities:
  Demand deposits                                 $ 97,569        $ 403      1.64%       $ 110,659        $ 503    1.80%
  Savings                                          112,054        1,026      3.64%         105,693          863    3.24%
  Time deposits                                    230,299        3,405      5.88%         163,833        2,036    4.93%
  Other borrowings                                   4,113           67      6.48%           9,357          123    5.22%
                                               ------------  -----------               ------------ ------------
Total interest bearing liabilities                 444,035        4,901      4.39%         389,542        3,525    3.59%
                                                             -----------                            ------------
Demand deposits                                    148,324                                 128,831
Other Liabilities                                    6,005                                   5,266
                                               ------------                            ------------
Total Liabilities                                  598,364                                 523,639
Shareholders' Equity                                56,692                                  51,591
                                               ------------                            ------------
                                                 $ 655,056                               $ 575,230
                                               ============                            ============
Net interest income & margin (3)                                $ 8,876      5.82%                      $ 7,426      5.62%
                                                             ===========  =========                 ============  =========

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

1  Loan interest income includes fee income of $271,000  and $268,000 for the three month periods
    ended September 30, 2000 and 1999, respectively.
2  Includes the average allowance for loan losses of $7,460,000  and $5,039,000 and average deferred
    loan fees of $717,000 and $845,000 for the three months ended September 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)
                                                                         Nine Months Ended September 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)                                      $408,885      $30,193    9.86%          $337,775     $23,284    9.22%
  Taxable investments                                 116,231        5,602    6.44%           125,241       5,726    6.11%
  Tax-exempt securities (tax equiv. basis)             36,067        1,776    6.58%            34,712       1,708    6.58%
  Federal funds sold                                   16,556          781    6.30%             2,829         100    4.73%
                                                   -----------  -----------                -----------  ----------
Total Earning Assets                                  577,739      $38,352    8.87%           500,557     $30,818    8.23%
                                                                -----------                             ----------
Cash & due from banks                                  38,327                                  41,835
Other assets (4)                                        8,279                                  10,287
                                                   -----------                             -----------
                                                     $624,345                                $552,679
                                                   ===========                             ===========

Liabilities & Shareholders' Equity:
Interest bearing liabilities:
  Demand deposits                                     $97,338       $1,200    1.65%          $102,249      $1,315    1.72%
  Savings                                             104,459        2,757    3.53%           105,168       2,569    3.27%
  Time deposits                                       216,447        9,156    5.65%           155,712       5,783    4.97%
  Other borrowings                                      6,015          287    6.37%             7,984         300    5.02%
                                                   -----------  -----------                -----------  ----------
Total interest bearing liabilities                    424,259       13,400    4.22%           371,113       9,967    3.59%
                                                                -----------                             ----------
Demand deposits                                       139,590                                 125,049
Other Liabilities                                       5,466                                   4,538
                                                   -----------                             -----------
Total Liabilities                                     569,315                                 500,700
Shareholders' Equity                                   55,030                                  51,979
                                                   -----------                             -----------
                                                     $624,345                                $552,679
                                                   ===========                             ===========
Net interest income & margin (3)                                   $24,952    5.77%                       $20,851    5.57%
                                                                =========== ========                    ========== =========

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

1  Loan interest income includes fee income of $745,000  and $816,000 for the nine month
     periods ended September 30, 2000 and 1999, respectively
2  Includes the average allowance for loan losses of $6,563,000  and $4,650,000 and average deferred
     loan fees of $714,000 and $806,000 for the nine months ended September 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 September 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)                                  $ 1,407           $ 966         $ 2,373
   Taxable investment securities                         (30)            101              71
   Tax exempt investment securities (4)                   11               3              14
   Federal funds sold                                    286              82             368
                                                  -----------     -----------     -----------
     Total                                             1,674           1,152           2,826
                                                  -----------     -----------     -----------

Interest-bearing liabilities:
   Demand deposits                                       (59)            (41)           (100)
   Savings deposits                                       52             111             163
   Time deposits                                         826             543           1,369
   Other borrowings                                      (69)             13             (56)
                                                  -----------     -----------     -----------
     Total                                               750             626           1,376
                                                  -----------     -----------     -----------
Interest differential                                  $ 924           $ 526         $ 1,450
                                                  ===========     ===========     ===========
</TABLE>

<TABLE>
<CAPTION>

Nine Months Ended September 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)                             $ 4,922        $ 1,987     $ 6,909
   Taxable investment securities                   (413)           289        (124)
   Tax exempt investment securities (4)              67              1          68
   Federal funds sold                               487            194         681
                                              ----------     ----------    --------
     Total                                        5,063          2,471       7,534
                                              ----------     ----------    --------

Interest-bearing liabilities:
   Demand deposits                                  (63)           (52)       (115)
   Savings deposits                                 (17)           205         188
   Time deposits                                  2,266          1,107       3,373
   Other borrowings                                 (74)            61         (13)
                                              ----------     ----------    --------
     Total                                        2,112          1,321       3,433
                                              ----------     ----------    --------
Interest differential                           $ 2,951        $ 1,150     $ 4,101
                                              ==========     ==========    ========

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 $271,000 and $268,000 for the quarters ended September 30, 2000 and 1999, respectively, have
    been included in the interest income computation.
3. Loan fees of $745,000  and $816,000 for the nine months ended September 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  $1,530,000  for the third quarter of
2000 as compared to $418,000 in the third  quarter of 1999 and  $800,000
in  the  second  quarter  of  2000.  For  the  nine-month  period  ended
September 30, 2000,  the Bank  provided  $2,856,000  versus  $955,000 in
the year earlier  period.  Loan balances  increased  $13,765,000  in the
third  quarter of 2000 and are up  $57,312,000  on year over year basis.
Industry experience indicates that higher provisions may be required in
circumstances when there has been significant loan growth and/or there are
credit concentrations in loan categories, industries or geographical area.
The loan portfolio of the Bank is reflective of all of these factors and
the provision for loan losses has been adjusted accordingly. In particular,
the agricultural sector in the Bank's service area has been under pricing
pressures for the last few years.  Continuing weaknesses in these markets
could have a negative impact on the local economy and consequently on the
economic viability of some of the Bank's borrowers.  Besides providing an
allowance for loan losses for the preceding factors during the year, an
additional loan loss provision of approximately $1.4 million was needed
for some specific loan classifications made in the third quarter.  At
September 30, 2000 non-performing  assets were $591,000  as  compared  to
$2,219,000  at the same  date in  1999.  The ratios  of the  allowance for
loan  losses to  nonperforming  assets on those two dates were 1419% and
238%,  respectively.  The  allowance  for loan  losses to total  loans was
1.91% and 1.38% at  September  30, 2000 and 1999, respectively.

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

Noninterest  income  consists  primarily  of service  charges on deposit
accounts  and  fees  for  miscellaneous  services.   Noninterest  income
totaled  $672,000  in the third  quarter of 2000,  which was up $143,000
(27.0%)  over the same period in 1999.  Income from  service  charges on
deposit  accounts was $156,000  higher mostly due to higher  volumes and
new  business  account  fees.  The  higher  interest  rates in 2000 have
resulted  in   significantly   lower  fees   generated   from   mortgage
originations.  These  fees  were  down  $28,000  (53.3%)  in  the  third
quarter of 2000 versus the same period last year.

For the first  nine-months  of 2000,  noninterest  income was $1,849,000
versus  $1,662,000  in the same  period  last year.  Service  charges on
deposits  were  up  $295,000  (30.2%)  due to  higher  volumes  and  new
business  account fees. As discussed in the previous  paragraph,  due to
the higher interest rates the activity in residential  mortgage  lending
slowed  significantly  in 2000.  Consequently,  the fees  generated from
mortgage  originations  decreased  $101,000  (49.3%)  in the first  nine
months of 2000 as compared to the same period in 1999.

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

Noninterest   expenses   increased   $186,000   (4.5%)  to  a  total  of
$4,297,000  in the third  quarter of 2000  versus  the third  quarter of
1999.  Salary and employee benefits  increased  $267,000 (11.6%) 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  $169,000   (27.3%).   Ongoing  costs
associated  with two branch  relocations  and remodel of office space in
the second half of 1999 plus the addition of the  Watsonville  branch in
June of 2000  were  the  major  factors  contributing  to the  increased
premises  and  fixed  asset  expenses.  Other  expenses  for  the  third
quarter  of  2000  were  down  $249,000  (20.8%)  from  the  prior  year
quarter.  In the third quarter of 1999 the Bank  incurred  approximately
$190,000 in one time costs  associated  with merging Bank of Salinas and
Cypress Bank  together.  The efficiency  ratios (fully taxable
equivalent)  for the 2000 and 1999 third  quarters were 45.0% and 51.7%,
respectively.

Noninterest  expenses for the  nine-month  period  ending  September 30,
2000 were  $12,754,000  versus  $11,758,000 for the same period in 1999.
Salaries  and  benefits  increased  $533,000  (7.8%)  due  to  increased
staffing  levels,  higher benefit costs and normal salary  progressions.
Premises and fixed asset  expenses  were up $485,000  (27.2%) due to the
items as detailed in the previous  paragraph.  Other  expenses were down
$22,000  (0.7%).  In  the  first  nine  months  of  1999,  approximately
$284,000 of one-time  costs were  incurred  for the merger  discussed in
the  above  paragraph.   By  eliminating  the  effect  of  the  one-time
expenses  the other  expenses  were up  $262,000  (9.3%) in 2000.  These
higher  expenses  are  attributable  to higher  volumes  due to  growth,
opening  the  Watsonville  office  and  price  increases.  The
efficiency  ratio (fully taxable  equivalent) for the first  nine-months
of 2000 was 47.6% as compared to 52.2% in the same period of 1999.

                                       13
<PAGE>



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

The effective tax rates for the third quarter and first  nine-months  of
2000 were 36.0% and 38.0%,  respectively,  versus  38.0% in the same two
periods of 1999.

Securities
----------

At  September  30,  2000,  available-for-sale  securities  had a  market
value of  $140,220,000  with an  amortized  cost basis of  $145,868,000.
The pretax  unrealized  loss of  $5,648,000  at September 30, 2000 was a
decrease of $2,051,000  from the  unrealized  loss at June 30, 2000. The
lower  unrealized  loss resulted  from a decrease in the interest  rates
in  the  securities  markets  in  the  third  quarter.  For  other  than
short-term   commercial   paper,   the  Bank's  purchase  of  investment
securities during the third quarter of 2000 was minimal.

Loans
-----

Ending loan  balances at  September  30, 2000 were  $439,838,000,  which
was an increase of  $44,241,000  (11.1%)  from  year-end  1999  balances
and   $57,312,000   (15.0%)  from  September  30,  1999  balances.   All
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 fourth 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.

                                       14
<PAGE>



The following is a summary of nonperforming assets:
<TABLE>
<CAPTION>

(In thousands, except percentages)                                                 September 30,            December 31,
                                                                                       2000                     1999
                                                                                 ------------------       ------------------
<S>                                                                              <C>                     <C>
Past due 90 days or more and still accruing :
   Real estate                                                                                 $ -                    $ 303
   Commercial                                                                                   70                       51
   Consumer and other                                                                            -                        -
                                                                                 ------------------       ------------------
                                                                                                70                      354
                                                                                 ------------------       ------------------
Nonaccrual:
   Real estate                                                                                  10                    1,565
   Commercial                                                                                  411                       11
   Consumer and other                                                                            -                        -
                                                                                 ------------------       ------------------
                                                                                               421                    1,576
                                                                                 ------------------       ------------------
Total nonperforming loans                                                                      491                    1,930
                                                                                 ------------------       ------------------
Other real estate owned                                                                        100                      180
                                                                                 ------------------       ------------------
Total nonperforming assets                                                                   $ 591                  $ 2,110
                                                                                 ==================       ==================

Allowance for loan losses as a percentage of nonperforming loans                             1709%                     290%
Nonperforming loans to total loans                                                           0.11%                    0.49%
</TABLE>


Nonperforming  loans decreased  $1,439,000  during the first nine months
of 2000  with  $207,000  of that in the  third  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 1,709%.

At  September  30,  2000,  the  recorded  investment  in loans  that are
considered   impaired  under  SFAS  No.  114  was  $1,930,000  of  which
$387,000 is included in nonaccrual  loans above.  At December 31, 1999,
the recorded investment in loans that were considered impaired under
SFAS No. 114 was $2,165,000 of which $1,586,000 is included in nonaccrual
loans above.  Such impaired loans had valuation allowances totaling
$617,000 and $821,000 at the two dates, respectively.  The amount of
impaired  loans  includes  all restructured loans.

Management  is not aware of any  potential  problem  loans,  which  were
accruing and current at September  30, 2000,  where serious doubt exists
as to the ability of the  borrower to comply with the present  repayment
terms.

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.

                                       15
<PAGE>

Management  believes  that the  allowance  for loan losses at  September
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                    Nine months ended
                                                 September 30,                         September 30,
(In thousands, except percentages)         2000              1999                 2000              1999
                                           ----              ----                 ----              ----
<S>                                    <C>              <C>                  <C>                <C>

 Beginning balance                           $ 7,018          $ 4,882               $ 5,596           $ 4,352
   Provision charged to expense                1,530              418                 2,856               955
   Loans charged off                            (181)             (23)                 (200)             (150)
   Recoveries                                     22               14                   137               134
                                       --------------    -------------        --------------    --------------
Ending balance                               $ 8,389          $ 5,291               $ 8,389           $ 5,291
                                       ==============    =============        ==============    ==============

Ending loan portfolio                                                             $ 439,838         $ 382,526
                                                                              ==============    ==============

Allowance for loan losses as percentage of ending loan protfolio                      1.91%             1.38%
</TABLE>


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 September 30, 2000
were  approximately  $135,537,000  and  $4,475,000,  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
September 30, 2000,  consolidated  liquid assets  totaled $101.5 million
or  15.8% 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 $56,940,000 at September
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.

                                       16
<PAGE>

The  following  table shows the  Company's  actual  capital  amounts and
ratios  at  September  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:
(In thousands, except percentages)                         Amount          Ratio            Amount          Ratio
                                                           ------          -----            ------          -----
<S>                                                       <C>             <C>              <C>             <C>
As of September 30, 2000
------------------------
Total Capital (to Risk Weighted Assets):                   $ 65,706        13.0%            $ 40,370         8.0%
Tier 1 Capital (to Risk Weighted Assets):                    59,396        11.8%              20,185         4.0%
Tier 1 Capital (to Average Assets):                          59,396         9.1%              26,202         4.0%

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




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  fourth  was  October  10,  the first  date to  require an
8-digit  field  (10/10/2000)  (This  date has  passed  as of the date of
this report.) The Company did not  experience  any  processing  problems
on those dates.  The one  remaining  date is December 31, the end of the
year.  The  December  31 date  was  tested  as part of the Y2K  project.
The Company does not anticipate  having any processing  problems at year
end,  however  failure by third  parties  to  adequately  remediate  Y2K
issues could have an impact upon the  Company,  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.

                                       17
<PAGE>

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 August 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  $2,374,000  in net
interest  income.  Conversely,  a 200 basis point  decrease would result
in a decrease of $3,010,000 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.

Accounting Pronouncements
-------------------------

The Financial  Accounting  Standards Board issued an exposure draft of a
proposed   statement,   "Business   Combinations  and  Intangibles,"  in
September 1999 which  included the  elimination of "pooling of interest"
accounting.  The  result  of this  accounting  change  would be that all
mergers  consummated  after a designated  date would be accounted for as
"purchase"  transactions,  resulting in the  recognition  of goodwill in
any merger  where the  purchase  price  exceeds  the asset  value of the
acquired  company.  The  Board  is in the  process  of  researching  and
discussing  the  accounting  for  goodwill  and its impact on the future
reported  income of merged  companies.  Additionally,  in bank  mergers,
the  goodwill  in  a  purchase  accounting   transaction  would  not  be
included in the  calculation  of regulatory  capital  requirements.  The
Board  will  redeliberate  the  related  issue of  whether to retain the
pooling  method,  but  not  until  it has  reached  a set  of  tentative
decisions  with respect to the  accounting  for goodwill  that will best
meet  the  concerns  of  investors,   creditors,   and  other  users  of
financial  statements-as  well as companies  that prepare those reports.
The Board expects to issue a final  statement  near the end of the first
quarter of 2001.


                                       18
<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.

                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,    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.

                                       19
<PAGE>

           *(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.

           *(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.

                                       20
<PAGE>

           *(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 -  None


                                       21
<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.


November 10, 2000                       CENTRAL COAST BANCORP


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



                                       22
<PAGE>





                             EXHIBIT INDEX



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

27.1                 Financial Data Schedule                      23