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


                                  FORM 10-Q


(Mark One)
[X]       QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES 
          EXCHANGE ACT OF 1934

                For the quarterly period ended March 31, 1997

                                      OR

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

                       Commission file number:  0-19231

                            REDWOOD EMPIRE BANCORP
            (Exact name of Registrant as specified in its charter)

               California                                68-0166366
    (State or other jurisdiction of                    (IRS Employer
    Incorporated or organization)                    Identification No.)

    111 Santa Rosa Avenue, Santa Rosa, California            95404-4905
    (Address of principal executive offices)                 (Zip Code)

      Registrant's telephone number, including area code:  (707) 545-9611

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __X__   No _____


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.   May 1, 1997:  2,780,422

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                       This page is page 1 of 22 pages.

<PAGE>

                            REDWOOD EMPIRE BANCORP
                                     AND
                                 SUBSIDIARIES

                                    INDEX


                                                                            PAGE
                                                                            ----
PART I.        Financial Information

     ITEM 1.   Financial Statements

               Consolidated Statements of Operations
               Three Months ended March 31, 1997 and 1996. . . . . . . .      3

               Consolidated Balance Sheets
               March 31, 1997 and December 31, 1996. . . . . . . . . . .      4

               Consolidated Statements of Cash Flows
               Three Months Ended March 31, 1997 and 1996. . . . . . . .      5

               Notes to Consolidated Financial Statements. . . . . . . .      7


     ITEM 2.   Management's Discussion and Analysis
               of Financial Condition and Results of Operations  . . . .      9


PART II.       Other Information

     ITEM 1.   Legal Proceedings . . . . . . . . . . . . . . . . . . . .     19

     ITEM 2.   Changes in Securities . . . . . . . . . . . . . . . . . .     19

     ITEM 3.   Defaults Upon Senior Securities . . . . . . . . . . . . .     19

     ITEM 4.   Submission of Matters to a Vote of Securities Holders . .     19

     ITEM 5.   Other Information . . . . . . . . . . . . . . . . . . . .     19

     ITEM 6.   Exhibits and Reports on Item 8-K  . . . . . . . . . . . .     19


SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     21


                       This page is page 2 of 22 pages.

<PAGE>

PART I.  FINANCIAL INFORMATION
ITEM 1.   FINANCIAL STATEMENTS

                   REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                                 (UNAUDITED)

                                                           THREE MONTHS ENDED
                                                                 MARCH 31,
                                                             1997        1996
                                                          ---------   ---------
Interest income:
  Interest and fees on  loans                                $8,628     $10,398 
  Interest on investment securities                             829         718 
  Interest on federal funds sold                                278         324 
  Interest on time deposits due from 
    financial institutions                                        3          53 
                                                          ---------   ---------
Total interest income                                         9,738      11,493 

Interest expense:
  Interest on deposits                                        4,288       5,343 
  Interest on subordinated notes                                278         284 
  Interest on other borrowings                                   83         367 
                                                          ---------   ---------
Total interest expense                                        4,649       5,994 
                                                          ---------   ---------

Net interest income                                           5,089       5,499 
Provision for loan losses                                       585       1,515 
                                                          ---------   ---------
Net interest income after loan loss provision                 4,504       3,984 

Other operating income:
  Service charges on deposit accounts                           296         300 
  Merchant draft processing, net                                422         488 
  Loan servicing income                                         316         380 
  Net realized gains (losses) on sale of 
    investment securities available for sale                      1          17 
  Gain on sale of loans and loan servicing                    1,507       3,536 
  Other income                                                  467         864 
                                                          ---------   ---------
Total other operating income                                  3,009       5,585 

Other operating expense:
  Salaries and employee benefits                              3,654       4,487 
  Occupancy and equipment expense                               885       1,362 
  Restructuring charge                                           --          -- 
  Other                                                       1,974       2,242 
                                                          ---------   ---------
Total other operating expense                                 6,513       8,091 
                                                          ---------   ---------

  Income (loss) before income taxes                           1,000       1,478 
  Provision (benefit) for income taxes                          420         592 
                                                          ---------   ---------
Net income (loss)                                               580         886 
Dividends on preferred stock                                    112         112 
                                                          ---------   ---------
Net income (loss) available for common shareholders            $468        $774 
                                                          ---------   ---------
                                                          ---------   ---------
Earnings per common and common equivalent share:
   primary net income (loss) per share                         $.16        $.29 
   weighted average shares                                2,861,000   2,706,000
   fully diluted net income(loss) per share                    $.16        $.27 
   weighted average shares                                2,861,000   3,244,000

Dividends per common share                                   $   --     $    --


See Notes to Consolidated Financial Statements.

                       This page is page 3 of 22 pages.

<PAGE>

                   REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                            (DOLLARS IN THOUSANDS)
                                 (UNAUDITED)

<TABLE>
<CAPTION>
                                                             MARCH 31,    DECEMBER 31,
                                                               1997           1996
                                                             ---------    ------------
<S>                                                          <C>          <C>
Cash and due from banks                                       $ 22,780      $ 20,261 
Federal funds sold                                              15,320        25,212 
Due from broker                                                     --            --   
                                                             ---------    ------------
  Cash and cash equivalents                                     38,100        45,473 

Interest bearing deposits due from financial institutions          318           315 
Investment securities:
  Held to maturity (market value of $15,209 and $19,097)        14,986        18,781 
  Available for sale, at market                                 34,796        33,852 
                                                             ---------    ------------
    Total investment securities                                 49,782        52,633 
Mortgage loans held for sale                                    19,064        29,487 
Loans:
    Residential real estate mortgage                           111,094       111,563 
    Commercial real estate mortgage                             79,479        80,604 
    Commercial                                                  64,306        66,525 
    Real estate construction                                    75,880        84,407 
    Installment and other                                        6,900         7,112 
    Less deferred loan fees                                     (2,575)       (2,797)
                                                             ---------    ------------
        Total portfolio loans                                  335,083       347,414 
    Less allowance for loan losses                              (7,085)       (7,040)
                                                             ---------    ------------
        Net loans                                              327,998       340,374 

Premises and equipment, net                                      3,784         4,049 
Purchased mortgage servicing rights                                660           582 
Other real estate owned                                          2,893         2,132 
Cash surrender value of life insurance                           2,838         2,814 
Other assets and interest receivable                            15,552        21,607 
                                                             ---------    ------------
     Total assets                                             $460,990      $499,466 
                                                             ---------    ------------
                                                             ---------    ------------

Deposits:
  Noninterest bearing demand deposits                         $ 69,921      $ 71,814 
  Interest-bearing transaction accounts                        157,344       156,453 
  Time deposits $100,000 and over                               59,996        75,411 
  Other time deposits                                          117,546       132,772 
                                                             ---------    ------------
    Total deposits                                             404,807       436,450 

Other borrowings                                                 5,204        10,307 
Subordinated notes                                              12,000        12,000 
Other liabilities and interest payable                           8,860        10,977 
                                                             ---------    ------------
     Total liabilities                                         430,871       469,734 

Shareholders' equity:
  Preferred stock, no par value; authorized 2,000,000 shares;
     issued and outstanding 575,000 shares                       5,750         5,750 
  Common stock, no par value; authorized 10,000,000 shares;
      issued and outstanding 2,767,659 and 2,746,490 shares     19,471        19,281 
  Retained earnings                                              5,500         5,032 
  Unrealized gain (loss) on investment securities carried as,
    or transfered from available for sale, net of income taxes    (602)         (331)
                                                             ---------    ------------
     Total shareholders' equity                                 30,119        29,732 
                                                             ---------    ------------
                                                             ---------    ------------
         
     Total liabilities and shareholders' equity               $460,990      $499,466 
                                                             ---------    ------------
                                                             ---------    ------------
</TABLE>

See Notes to Consolidated Financial Statements.

                       This page is page 4 of 22 pages.

<PAGE>


                   REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)
                                 (UNAUDITED)

<TABLE>
<CAPTION>

                                                                         THREE MONTHS ENDED
                                                                              MARCH 31,
                                                                         1997           1996
                                                                      ---------      ----------
<S>                                                                   <C>            <C>
Cash flows from operating activities:
  Net income                                                          $     580      $      886 

Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization, net                                        788           1,086 
  Net realized losses (gains) on securities available for sale               (1)            (17)
  Loans originated for sale                                             (61,778)       (457,759)
  Proceeds from sale of loans held for sale                              79,980         457,258 
  Gain on sale of loans and loan servicing                               (1,507)         (3,536)
  Provision for loan losses                                                 585           1,515 
  Change in other assets and interest receivable                          6,525          (1,857)
  Change in other liabilities and interest payable                       (2,194)          2,857 
  Noncash restructuring charge                                               --              --   
  Other, net                                                               (151)           (187)
                                                                      ---------      ----------
  Total adjustments                                                      22,247            (640)
                                                                      ---------      ----------
    Net cash provided by operating activities                            22,827             246 
                                                                      ---------      ----------
Cash flows from investing activities:
  Net change in loans                                                     3,208         (39,362)
  Proceeds from sales of loans in portfolio                               1,311          27,076 
  Purchases of investment securities available for sale                  (5,000)        (12,763)
  Purchases of investment securities held to maturity                        --            (200)
  Sales of investment securities available for sale                       6,974              --   
  Maturities of investment securities available for sale                     --          10,500 
  Maturities of investment securities held to maturity                      500              --   
  Premises and equipment, net                                              (425)           (194)
  Purchase of mortgage servicing rights                                    (148)           (231)
  Noninterest bearing demand deposits                                        (3)             96 
  Proceeds from sale of other real estate owned                              98             309 
                                                                      ---------      ----------
    Net cash provided by (used in) investment activities                  6,515         (14,769)
                                                                      ---------      ----------
Cash flows from financing activities:
  Change in noninterest bearing transaction accounts                     (1,893)         (2,026)
  Change in interest bearing transaction accounts                           890          19,847 
  Change in time deposits                                               (30,640)         (1,522)
  Change in borrowings                                                   (5,103)        (16,742)
  Issuance of stock                                                         143              62 
  Dividends paid                                                           (112)           (112)
                                                                      ---------      ----------
    Net cash used in financing activities                               (36,715)           (493)
                                                                      ---------      ----------
Net change in cash and cash equivalents                                  (7,373)        (15,016)
Cash and cash equivalents at beginning of period                         45,473          55,140 
                                                                      ---------      ----------
Cash and cash equivalents at end of period                            $  38,100      $   40,124 
                                                                      ---------      ----------
                                                                      ---------      ----------
</TABLE>
                                 (Continued)

                       This page is page 5 of 22 pages.

<PAGE>


                   REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (IN THOUSANDS)
                                 (CONTINUED)

<TABLE>
<CAPTION>

                                                                         THREE MONTHS ENDED
                                                                              MARCH 31,
                                                                         1997           1996
                                                                      ---------      ----------
<S>                                                                   <C>            <C>

Supplemental Disclosures:

Cash paid during the period for:
  Income taxes                                                        $      --      $      267
  Interest expense                                                        4,625           6,211

Noncash investing and financing activities:
  Transfers from loans to other real estate owned                         1,292             527
  Transfer from loans to mortgage loans held for sale                        --              --   
  Transfer from mortgage loans held for sale to loans                        --          50,000
  Transfer of investment securities from available for sale
     to held to maturity                                                     --              --

</TABLE>




                       This page is page 6 of 22 pages.

<PAGE>

                   REDWOOD EMPIRE BANCORP AND SUBSIDIARIES
                  Notes to Consolidated Financial Statements
                                 (Unaudited)

1.   Basis of Presentation

     The accompanying unaudited consolidated financial statements should be 
read in conjunction with the financial statements and related notes contained 
in Redwood Empire Bancorp's 1996 Annual Report to shareholders.  The 
statements include the accounts of Redwood Empire Bancorp and its wholly 
owned subsidiary, National Bank of the Redwoods ("NBR").  All significant 
intercompany balances and transactions have been eliminated.  The financial 
information contained in this report reflects all adjustments which, in the 
opinion of management, are necessary for a fair presentation of the results 
of the  interim periods.  All such adjustments are of a normal recurring 
nature.  The results of operations and cash flows for the three months ended 
March 31, 1997 are not necessarily indicative of the results that may be 
expected for the year ending December 31, 1997.

     Certain reclassifications were made to prior period financial statements 
to conform to current period presentations.

     For purposes of reporting cash flows, cash and cash equivalents include 
cash on hand, amounts due from banks and federal funds sold.  Federal funds 
sold are generally for one day periods.

2.   On March 24, 1997, Allied Bank, F.S.B. a wholly owned subsidiary of 
Redwood, was merged into NBR.  In connection with the merger, NBR assumed all 
of Allied's rights and obligations.  As a result of the merger Allied Bank, 
F.S.B. ceased to exist.

3.   Net Income per Share

     Net income per share is calculated based on the weighted average number 
of shares of common stock outstanding and common stock equivalents 
outstanding during the periods ended March 31, 1997 and 1996.

4.   New Accounting Pronouncements

     The Company has adopted SFAS No. 125 "Accounting for Transfers and 
Servicing of Financial Assets and Extinguishments of Liabilities" in 1997.  
The statement provides accounting and reporting standards for transfers and 
servicing of financial assets and extinguishments of liabilities.  These 
standards are based on consistent application of a financial-component 
approach that focuses on control. Under this approach, after a transfer of 
financial assets, an entity recognizes the financial and servicing assets it 
controls and liabilities it has incurred, derecognizes financial assets when 
control has been surrendered, and derecognizes liabilities when extinguished. 
Management believes that adoption of SFAS 125 does not have a material 
effect on the financial condition or results of operations of the Company.


                       This page is page 7 of 22 pages.

<PAGE>

     In February 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 128, "Earnings per Share" 
(SFAS 128).  The Company is required to adopt SFAS 128 in the fourth quarter 
of 1997 and will restate at that time earnings per share (EPS) data for prior 
periods to conform with SFAS 128.  Earlier application is not permitted.  

     SFAS 128 replaces current EPS reporting requirements and requires a dual 
presentation of basic and diluted EPS.  Basic EPS excludes dilution and is 
currently computed by dividing net income available to common shareholders by 
the weighted average of common shares outstanding for the period.  Diluted 
EPS reflects the potential dilution that could occur if securities or other 
contracts to issue common stock were exercised or converted into common 
stock. 

     If SFAS 128 had been in effect during the current and prior year 
periods, basic EPS would have been $.17 and $.29 for the quarters ended March 
31, 1997 and 1996 respectively.  Diluted EPS under SFAS 128 would not have 
been significantly different than fully diluted EPS reported for the periods.

                       This page is page 8 of 22 pages.

<PAGE>

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

     Redwood Empire Bancorp ("Redwood," and with its subsidiaries the 
"Company") is a financial institution holding company headquartered in Santa 
Rosa, California. Redwood has one subsidiary, National Bank of the Redwoods, 
a national bank ("NBR").

     Certain statement in this quarterly report on Form 10-Q include 
forward-looking information within the meaning of Section 27A of the 
Securities Act of 1933, as amended, and Section 21E of the Securities 
Exchange Act of 1934, as amended, and are subject to the "safe harbor" 
created by those sections.  These forward-looking statements involve certain 
risks and uncertainties that could cause actual results to differ materially 
from those in the forward-looking statements. Such risks and uncertainties 
include, but are not limited to, the following factors:  competitive pressure 
in the banking industry; changes in the interest rate environment; general 
economic conditions, either nationally or regionally, are less favorable than 
expected, resulting in, among other things, a deterioration in credit quality 
and an increase in the provision for possible loan losses; changes in the 
regulatory environment; and changes in business conditions, volatility of 
rate sensitive deposits, operational risks including data processing system 
failures or fraud; asset/liability matching risks and liquidity risks; and 
changes in the securities markets.  In addition, such risks and uncertainties 
include mortgage banking activities, merchant card processing and 
concentration of lending activities all of which have been described in 
"Certain Important Considerations for Investors".

     The following sections discuss significant changes and trends in 
financial condition, capital resources and liquidity of the Company from 
December 31, 1996 to March 31, 1997, and significant changes and trends in 
the Company's results of operations for the three months ended March 31, 
1997, compared to the same period in 1996.

SUMMARY OF FINANCIAL RESULTS

     The Company reported net income of $580,000 ($.16 per share, fully 
diluted) for the three months ended March 31, 1997, compared to $886,000 
($.29 per share, fully diluted) for the same period in 1996.  The decrease in 
net income in 1997 over 1996 is primarily due to a decline in first quarter 
net interest income of $410,000 or 7.5%, a decrease of $2,576,000 or 46.1% in 
first quarter other operating income, both being offset by a decline in first 
quarter other operating expense of $1,578,000 or 19.5%.

NET INTEREST INCOME

     Net interest income decreased $410,000 for the first quarter of 1997 
compared to the first quarter of 1996.  The decrease is primarily due to a 
decline in average earning assets from March 31, 1996 to March 31, 1997 of 
$75,031,000 or 14.7% partially offset by an increase in net interest margin.  
The net interest margin increased to 4.69% for the first quarter of 1997 
compared to 4.32% one year ago.

                       This page is page 9 of 22 pages.

<PAGE>

     The decline in earning assets of the Company is due principally to the 
decline in mortgage loans held for sale.  The average of such loans declined 
$39,011,000 from $59,408,000 as of March 31, 1996 to $20,397,000 as of March 
31, 1997.  This decline was a direct result of management's fourth quarter of 
1996 decision to significantly curtail its "A paper" wholesale mortgage 
banking operations.

     With respect to the net interest margin, the yield on earning assets 
declined slightly from 9.04% to 8.98%.  However, as a result of decreased 
funding needs, the Company significantly reduced its higher cost time 
certificates of deposits.  Total time certificates of deposits amounted to 
$177,542,000 as of March 31, 1997 as compared to $261,834,000 as of March 31, 
1996 which results in a decline of $84,292,000 or 32.2%.  This reduction in 
higher cost liabilities had a significant effect on overall yield paid for 
interest-bearing liabilities.  Such yield declined from 5.42% in the first 
quarter of 1996 to 5.02% for the same quarter in 1997.

     The following is an analysis of the net interest margin:

<TABLE>
<CAPTION>
                                            Three months ended            Three months ended
                                               March 31, 1997               March 31, 1996
                                        Average                %      Average                %
     (dollars in thousands)             Balance   Interest   Yield    Balance   Interest   Yield
                                       --------   --------   -----   --------   --------   -----
     <S>                               <C>        <C>        <C>     <C>        <C>        <C>
     Earning assets (1)                $433,622     $9,738    8.98   $508,653   $11,493     9.04
     Interest-bearing liabilities       370,501      4,649    5.02    442,690     5,994     5.42
                                                    ------                      -------
     Net interest income                            $5,089                       $5,499 
                                                    ------                      -------
                                                    ------                      -------
     Net interest income to 
       earning assets                                         4.69                          4.32

</TABLE>

     (1) Nonaccrual loans are included in the calculation of the average balance
         of earning assets, and interest not accrued is excluded.

                       This page is page 10 of 22 pages.

<PAGE>

     The following table sets forth changes in interest income and interest 
expense for each major category of interest-earning asset and 
interest-bearing liability, and the amount of change attributable to volume 
and rate changes for the three months ended March 31, 1997 and 1996.  Changes 
not solely attributable to rate or volume have been allocated to rate.

<TABLE>
<CAPTION>

                                                                       March 31, 1997 over
                                                                         March 31, 1996
                                                                   ----------------------------
                                                                    Volume     Rate     Total
                                                                   ----------------------------
                                                                          (in thousands)
     <S>                                                           <C>        <C>       <C>
     Increase (decrease) in interest income:
       Portfolio loans                                               ($891)   ($249)    ($1,140)
       Mortgage loans held for sale                                   (772)     142        (630)
       Investment securities                                           124      (13)        111 
       Interest-earning deposits with other institutions               (50)      --         (50)
       Federal funds sold                                              (85)      39         (46)
                                                                   ----------------------------
     Total increase (decrease)                                      (1,674)     (81)     (1,755)
                                                                   ----------------------------
     Increase (decrease) in interest expense:
       Interest-bearing transaction accounts                           155       15         170
       Time deposits                                                (1,066)    (159)     (1,225)
       Other borrowings                                               (281)      (9)       (290)
                                                                   ----------------------------
     Total increase (decrease)                                      (1,192)    (153)     (1,345)
                                                                   ----------------------------
     Increase in net interest income                                 ($482)     $72       ($410)
                                                                   ----------------------------
                                                                   ----------------------------
</TABLE>

PROVISION FOR LOAN LOSSES

     The provision for loan losses for the three months ended March 31, 1997 
amounted to $585,000 as compared to $1,515,000 in the same quarter in the 
previous year.  The decrease in the provision for loan losses for the 
comparable three month period is due principally to a first quarter of 1996 
loan loss provision relating to an acquired lease portfolio of $1,412,000, 
the Seller/Servicer of which filed for bankruptcy.  For further discussion 
see Allowance for Loan Losses.

                       This page is page 11 of 22 pages.

<PAGE>

OTHER OPERATING INCOME AND EXPENSE AND INCOME TAXES

     Other Operating Income

     The following table sets forth the components of the Company's other 
operating income for the three months ended March 31, 1997, as compared to 
the same period in 1996.

                                                     Three Months Ended
                                                          March 31
                                                     ------------------     %
     (dollars in thousands)                           1997       1996    Change
                                                     ------     ------   ------
     Service charges on deposit accounts                296        300     (1)
     Merchant draft processing, net                     422        488    (14)
     Loan servicing income                              316        380    (17)
     Gain (loss) on securities                            1         17    (94)
     Gain on sale of loans and servicing              1,507      3,536    (57)
     Other income                                       467        864    (46)
                                                     ------     ------
     Total other operating income                    $3,009     $5,585    (46)
                                                     ------     ------
                                                     ------     ------

     Other operating income decreased $2,576,000 or 46.1% to $3,009,000 for 
the first quarter of 1997 when compared to $5,585,000 for the same period in 
1996. Such decline is due primarily to a decline in gains on sales of loans 
and servicing of $2,029,000.  As previously mentioned, the Company 
significantly curtailed its mortgage "A paper" mortgage banking business the 
fourth quarter of 1996. Accordingly, gain on sale of loan revenue from 
mortgage banking operations has significantly declined.

     Due to the Company's sale of mortgage loan servicing rights associated 
with $839,945,000 mortgage loans in the third and fourth quarters 1996, loan 
servicing income declined $64,000 in the first quarter of 1997.  With a 
significant reduction in serviced loans, revenue from these operations will 
continue to be less than comparable historical performance.

     Other income declined $397,000 in the first quarter of 1997 when 
compared to the same quarter in 1996.  This decline is again attributable to 
the reduction in "A paper" mortgage banking operations. 

     Currently the Company's mortgage banking operation is comprised of 
sub-prime mortgage banking and residential mortgage loan brokerage.  For the 
remainder of the year revenue from these operations is expected to be 
significantly less than comparable historical performance of the Company's 
mortgage banking unit.
     
                       This page is page 12 of 22 pages.

<PAGE>

     Other Operating Expense

     Other operating expense decreased by $1,578,000 or 19.5% to $6,513,000 
during the first quarter of 1997 compared to $8,091,000 for the first quarter 
of 1996, primarily due to the Company's restructuring plan, initiated in the 
fourth quarter of 1996, which included the termination of employees, the 
closing of several mortgage loan production offices, write-off of duplicate 
or unnecessary fixed assets, and the merger of Allied Bank, F.S.B. into NBR.

     The following table sets forth the components of the Company's other 
operating expense during the three months ended March 31, 1997, as compared 
to the same period in 1996.

                                                     Three Months Ended
                                                          March 31
                                                     ------------------     %
     (dollars in thousands)                           1997       1996    Change
                                                     ------     ------   ------
     Salaries and employee benefits                  $3,654     $4,487    (19)
     Occupancy and equipment expense                    885      1,362    (35)
     Restructuring charge                                --         --     --   
     Other                                            1,974      2,242    (12)
                                                     ------     ------
     Total other operating expense                   $6,513     $8,091    (20)
                                                     ------     ------
                                                     ------     ------

     The Company expects other operating expense will continue to decline for 
the remainder of the year due to the virtual elimination of the "A paper" 
wholesale mortgage banking operations and the effect of consolidating Allied 
Bank, F.S.B. into NBR.

     Income Taxes

     The Company's effective tax rate varies with changes in the relative 
amounts of its non-taxable income and nondeductible expenses.  The effective 
rate was 42.0% for the three-months ended March 31, 1997, compared to 40.1% 
for the same period in 1996.

MORTGAGE LOANS HELD FOR SALE

     Mortgage loans held for sale decreased $10,423,000 or 35% to $19,064,000 
at March 31, 1997 compared to $29,487,000 at December 31, 1996.  The decrease 
was due to the Company's decision to significantly curtail its "A paper" 
mortgage banking operations in the fourth quarter of 1996.

LOANS

     Total loans decreased $12,331,000 or 6% to $335,083,000 at March 31, 
1997 compared to $347,414,000 at December 31, 1996.  The principal reason for 
this decline relates to construction loans whose balance declined $8,637,000 
due to loan payoffs.

                       This page is page 13 of 22 pages.

<PAGE>

     The following table summarizes the composition of the loan portfolio at 
March 31, 1997 and December 31, 1996.

                                     March 31, 1997    December 31, 1996
                                    ----------------   -----------------
(dollars in thousands)               Amount       %     Amount       %
                                    ----------------   -----------------
Residential real estate mortgage    $111,094     33%   $111,563     33% 
Commercial real estate mortgage       79,479     24      80,604     23 
Commercial                            64,306     19      66,525     19 
Real estate construction              75,880     23      84,407     24 
Installment and other                  6,900      2       7,112      2 
Less deferred fees                    (2,575)    (1)     (2,797)    (1)
                                    ----------------   ----------------
    Total loans                      335,083    100%    347,414    100%
                                                ----               ----
                                                ----               ----
Less allowance for loan losses        (7,085)            (7,040)
                                    --------           --------
    Net loans                       $327,998           $340,374 
                                    --------           --------
                                    --------           --------

ALLOWANCE FOR LOAN LOSSES

     The allowance for loan losses is established through charges to earnings 
in the form of the provision for loan losses.  Loan losses are charged to, 
and recoveries are credited to, the allowance for loan losses.  The provision 
for loan losses is determined after considering various factors such as loan 
loss experience, current economic conditions, maturity of the portfolio, size 
of the portfolio, industry concentrations, borrower credit history, the 
existing allowance for loan losses, independent loan reviews, current charges 
and recoveries to the allowance for loan losses, and the overall quality of 
the portfolio, as determined by management, regulatory agencies, and 
independent credit review consultants retained by the Company.

     The adequacy of the Company's allowance for loan losses is based on 
specific and formula allocations to the Company's loan portfolio.  Specific 
allocations of the allowance for loan losses are made to identified problem 
or potential problem loans.  The specific allocations are increased or 
decreased through management's reevaluation of the status of the particular 
problem loans.  Loans which do not receive a specific allocation receive an 
allowance allocation based on a formula, represented by a percentage factor 
based on underlying collateral, type of loan, historical charge-offs and 
general economic conditions and other qualitative factors.

                       This page is page 14 of 22 pages.

<PAGE>

The following table summarizes the Company's allowance for loan losses:

                                                       Three months ended
                                                             March 31
                                                       ------------------
     (dollars in thousands)                             1997       1996
                                                       ------     ------
     Beginning allowance for loan losses               $7,040     $5,037
     Provision for loan losses                            585      1,515 
     Charge-offs                                         (575)      (199)
     Recoveries                                            35         27 
                                                       ------     ------
     Ending allowance for loan losses                  $7,085     $6,380 
                                                       ------     ------
                                                       ------     ------

     Net charge-offs to average 
        loans (annualized)                                .64%       .17%
     
     The allowance for loan losses as a percentage of portfolio loans 
increased from 2.03%  at December 31, 1996 to 2.11% at March 31, 1997.  The 
increase in this percentage is due to a $12,331,000 decline in the Company's 
total loan portfolio. The decrease in the provision of $930,000 over the same 
period in 1996 is primarily due to a lease portfolio of $1,412,000 purchased 
from a company currently in bankruptcy proceedings who retained the servicing 
of such portfolio.

     Although the Company's provision for loan losses declined significantly 
in the first quarter of 1997 when compared to the same quarter of 1996, no 
assurances can be given that future quarterly provisions for loan losses will 
be maintained at the 1997 first quarter level.

NONPERFORMING ASSETS

     The following table summarizes the Company's  nonperforming assets.
     
     
                                                       March 31,    December 31,
     (dollars in thousands)                              1997           1996
                                                       ---------    ------------
     Nonaccrual loans                                   $ 9,670        $ 8,246
     Accruing loans past due 90 days or more                746          1,536 
     Restructured loans                                   1,622            599 
                                                       ---------    ------------
     Total nonperforming loans                           12,037         10,381 
     Other real estate owned                              2,893          2,132 
     Other assets owned                                     640            668 
                                                       ---------    ------------
     Total nonperforming assets                         $15,570        $13,181 
                                                       ---------    ------------
                                                       ---------    ------------

     Nonperforming assets to total assets                  3.38%         2.64%

                       This page is page 15 of 22 pages.

<PAGE>

     Nonperforming assets have increased from $13,181,000 as of December 31, 
1996 to $15,570,000 as of March 31, 1997.  The principal reasons for this 
increase relate to an increase in restructured loans of $1,023,000, an 
increase in nonaccrual loans of $1,424,000, an increase in other real estate 
owned of $761,000, all being offset by a decline in accruing loans past due 
90 days or more of $790,000.  In the first quarter of 1997 the Company was 
required to repurchase three nonperforming residential mortgage loans 
totaling $721,000 which had been previously sold to investors.

     Nonperforming loans consist of loans to 83 borrowers, 34 of which have 
balances in excess of $100,000. The two largest have recorded balances of 
$742,000 secured by general business assets and $684,000 secured by 
residential real estate. Based on information currently available, management 
believes that adequate reserves are included in the allowance for loan losses 
to cover any loss exposure that may result from these loans.

     Other real estate owned consists of 21 properties.  17 properties are 
residential and four construction lots.  Other assets owned included contract 
receivable rights and repossessed personal property valued at $640,000.

     Although the volume of nonperforming assets will depend in part on the 
future economic environment, there are also five loan relationships which 
total approximately $2,585,000 about which management has serious doubts as 
to the ability of the borrowers to comply with the present repayment terms 
and which may become nonperforming assets based on the information presently 
known about possible credit problems of the borrower.

     Construction lending generally bears a greater degree of risk than other 
forms of real estate lending.  Accordingly, due to the Company's current 
level of outstanding construction loans, the Company may experience an 
increase in non performing loans from this loan category.

     In the first quarter of 1997 the Company was required to repurchase 
three non performing residential mortgage loans from investors.  From time to 
time the Company may be required to repurchase mortgage loans from investors 
depending upon the terms of the purchase agreement between the investor and 
the Company.  Such repurchase terms include first payment default or fraud.  
Primarily these repurchases involve loans which are in default.  The Company 
expects that it may be required to repurchase loans in the future.  The 
Company maintains a reserve for its estimate of potential losses associated 
with recourse provisions of certain loan sale agreements.

     At March 31, 1997 the Company's total recorded investment in impaired 
loans (as defined by SFAS 114 and 118) was $12,037,000 of which $7,550,000 
relates to the recorded investment for which there is a related allowance for 
credit losses of $929,000 determined in accordance with these statements and 
$4,487,000 relates to the amount of that recorded investment for which there 
is no related allowance for credit losses determined in accordance with these 
standards.

                       This page is page 16 of 22 pages.

<PAGE>

     The average recorded investment in the impaired loans during the three 
months ended March 31, 1997 and March 31, 1996 was $16,928,000 and 
$7,690,000; the related amount of interest income recognized during the 
periods that such loans were impaired was $14,000 for 1997 and $54,000 for 
1996.   No interest income was recognized using a cash-basis method of 
accounting during the period that the loans were impaired.

LIQUIDITY

     Redwood's primary source of liquidity is dividends from its financial 
institution subsidiary.  Redwood's primary uses of liquidity are associated 
with cash payments made to the subordinated debt holders, dividend payments 
made to the preferred stock holders, and operating expenses of the parent.  
It is Redwood's general policy to retain liquidity at Redwood at a level 
which management believes to be consistent with the safety and soundness of 
the Company as a whole.  As of March 31, 1997, Redwood held $3,644,000 in 
deposits at its subsidiary and a $3,000,000 subordinated note issued by NBR.  
     
     Beginning with the fourth quarter of 1992, Redwood has paid a quarterly 
dividend of $.03 per share of Common Stock.  In the fourth quarter of 1993, 
this dividend was increased to $0.035 per share.  This dividend was suspended 
in the fourth quarter of 1994.  In addition, Redwood pays quarterly dividends 
of 7.8% on its preferred stock of $5,750,000 and interest at 8.5% on 
$12,000,000 of subordinated debentures issued in 1993.  Payment of these 
obligations is dependent on dividends from NBR.  Federal regulatory agencies 
have the authority to prohibit the payment of dividends by NBR to Redwood if 
a finding is made that such payment would constitute an unsafe or unsound 
practice, or if NBR became undercapitalized. If NBR is restricted from paying 
dividends, Redwood could be unable to pay the above obligations.  No 
assurance can be given as to the ability of NBR to pay dividends to Redwood.
     
     In the fourth quarter of 1994, Redwood received a dividend of $200,000 
from NBR and $400,000 from Allied.  During 1995, NBR and Allied declared 
dividends of $860,000 and $227,000 respectively, compared to 1996, NBR and 
Allied declared dividends of $215,000 and $2,227,000 respectively.  During 
the first quarter of 1997, NBR declared dividends of $215,000.  Management 
believes that at March 31, 1997, the Company's liquidity position was 
adequate for the operations of Redwood and its subsidiary for the foreseeable 
future.
     
     Although each entity within the consolidated group manages its own 
liquidity, the Company's consolidated cash flow can be divided into three 
distinct areas; operating, investing and financing.  For the three months 
ended March 31, 1997 the Company received $22,827,000 and $6,515,000 in cash 
flows from operating and investing activities while using $36,715,000 in 
financing activities.
     
                       This page is page 17 of 22 pages.

<PAGE>

CAPITAL RESOURCES
     
     A strong capital base is essential to the Company's continued ability to 
service the needs of its customers.  Capital protects depositors and the 
deposit insurance fund from potential losses and is a source of funds for the 
substantial investments necessary for the Company to remain competitive.  In 
addition, adequate capital and earnings enable the Company to gain access to 
the capital markets to supplement its internal growth of capital.  Capital is 
generated internally primarily through earnings retention.

     The Company and each of its subsidiaries are required to maintain 
minimum capital ratios defined by various federal government regulatory 
agencies. The FRB and the OCC have each established capital guidelines, which 
include minimum capital requirements. The regulations impose three sets of 
standards: a "risk-based", "leverage" and "tangible" capital standard.

     Under the risk-based capital standard, assets reported on an 
institution's balance sheet and certain off-balance sheet items are assigned 
to risk categories, each of which is assigned a risk weight.  This standard 
characterizes an institution's capital as being "Tier 1" capital (defined as 
principally comprising shareholders' equity and noncumulative preferred 
stock) and "Tier 2" capital (defined as principally comprising the allowance 
for loan losses and subordinated debt).

     Under the leverage capital standard, an institution must maintain a 
specified minimum ratio of Tier 1 capital to total assets, with the minimum 
ratio ranging from 4% to 6%.  The leverage ratio for the Company and NBR is 
based on average assets for the quarter.
     
     The following table summarizes the consolidated capital ratios and the 
capital ratios of the principal subsidiaries at December 31, 1996 and March 
31, 1997.

                                                      Company     NBR
                                                      ------------------
March 31, 1997
  Total capital to risk based assets                    13.15    12.32
  Tier 1 capital to risk based assets                    8.41    10.19
  Leverage ratio                                         5.58     7.56

December 31, 996
  Total capital to risk based assets                    12.12    12.28
  Tier 1 capital to risk based assets                    7.63     9.40
  Leverage ratio                                         5.46     6.87


                       This page is page 18 of 22 pages.

<PAGE>

CERTAIN IMPORTANT CONSIDERATIONS FOR INVESTORS
     
     MORTGAGE BANKING ACTIVITY.  The Company's historic results of operations 
has been significantly influenced by mortgage banking activity, which can 
fluctuate significantly, in both volume and profitability, with changes in 
interest rate movements.  In the fourth quarter of 1996, the Company 
significantly curtailed its "A paper" wholesale mortgage loan production.  As 
a result of this action, the Company's future mortgage loan production 
revenue and expenses will be significantly reduced from pre 1997 levels.

     MERCHANT CREDIT CARD PROCESSING.  The Company's profitability can be 
negatively impacted should one of the Company's merchant credit card 
customers be unable to pay on charge-backs from cardholders.  Due to a 
contractual obligation between the Company and Visa and Mastercard, NBR 
stands in the place of the merchant in the event that a merchant is unable to 
pay on charge-backs from cardholders.  Management has taken certain actions 
to decrease the risk of merchant bankruptcy with its merchant bankcard 
business.  These steps include elimination of all merchants in the travel 
business and the discontinuance of other high-risk accounts.

     CONCENTRATION OF LENDING ACTIVITIES.  Concentration of the Company's 
lending activities in the real estate sector, including construction loans 
could have the effect of intensifying the impact on the Company of adverse 
changes in real estate market in the Company's lending areas.  At March 31, 
1997, approximately 85% of the Company's loans were secured by real estate, 
of which 22% were secured by commercial real estate, including small office 
buildings, owner-user office/warehouses, mixed use residential and commercial 
properties and retail properties.  Substantially all of the properties that 
secure the Company's present loans are located within Northern and Central 
California.  The ability of the Company to continue to originate mortgage 
loans may be impaired by adverse changes in local or regional economic 
conditions, adverse changes in the real estate market, increasing interest 
rates, or acts of nature (including earthquakes, which may cause uninsured 
damage and other loss of value to real estate that secures the Company's 
loans).  Due to the concentration of the Company's real estate collateral, 
such events could have a significant adverse impact on the value of such 
collateral or the Company's earnings.

                       This page is page 19 of 22 pages.

<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) EXHIBIT 11

              Weighted average shares, used in the computation of per share
              earnings, include the common stock equivalents impact of common 
              stock options outstanding.  Primary earnings per share includes 
              the reduction of net income by the declared Preferred Stock 
              dividend.  The impact on earnings per share assuming conversion 
              of the Preferred Stock was reflected in the fully-dilutive 
              computation.  The computation of per share earnings is 
              incorporated by reference in the Consolidated Statement of 
              Operations on page 3 herein.

                       This page is page 20 of 22 pages.

<PAGE>

          (b)  REPORTS ON FORM 8-K

               Form 8-K dated January 27, 1997 declaring first quarterly 
               dividend on its Redwood Empire Bancorp's preferred stock payable 
               on February 14, 1997.

               Form 8-K dated January 30, 1997 announcing fourth quarter and 
               full year 1996 financial results.

               Form 8-K dated February 2, 1997 announcing completion of 
               combination of Allied Bank and National Bank of the Redwoods 
               subsidiaries.

               Form 8-K dated February 6, 1997 reporting receipt of approval to
               combine Allied Bank and National Bank of the Redwoods 
               subsidiaries.

               Form 8-K dated February 19, 1997 announcing management change at 
               its Allied Bank subsidiary.

                       This page is page 21 of 22 pages.

<PAGE>

                                  SIGNATURES



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




                            REDWOOD EMPIRE BANCORP
                                 (Registrant)




DATE:       5-01-97          BY:      /s/ James E. Beckwith
           ---------                  -------------------------------------
                                      James E. Beckwith
                                      Executive Vice President, 
                                      Chief Financial Officer,
                                      Principal Financial Officer, and 
                                      Principal Accounting Officer





                       This page is page 22 of 22 pages.