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

California

33-0937517

(State of Incorporation)

(IRS Employer Identification No)

86 North Main Street, Porterville, California  93257

(Address of principal executive offices)          (Zip Code)

(559) 782-4900

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Yes

x

No

o

Page

Part I - Financial Information

3

Item 1. Financial Statements (Unaudited)

3

Consolidated Balance Sheets

3

Consolidated Statements of Income & Comprehensive Income

4

Consolidated Statements of Cash Flows

5

Notes to Unaudited Consolidated Financial Statements

6

Item 2. Management’s Discussion & Analysis of Financial Condition & Results of Operations

10

Forward-Looking Statements

10

Overview of the Results of Operation and Financial Condition

10

Earnings Performance

12

Net Interest Income

13

Provision for Loan Losses

17

Non-interest Income/Expense

17

Provision for Income Taxes

20

Balance Sheet Analysis

21

Earning Assets

21

Investment Portfolio

21

Loan Portfolio

22

Non-accrual and Restructured Loans

24

Allowance for Loan Losses

26

Other Assets

27

Deposits and Interest Bearing Liabilities

28

Deposits

28

Fed Funds Purchased & Securities Sold Under Agreements to Repurchase

28

Non-Interest Bearing Liabilities

29

Liquidity and Market Risk Management

29

Capital Resources

31

Item 3.   Qualitative & Quantitative Disclosures about Market Risk

32

Item 4.   Controls and Procedures

32

Part II - Other Information

33

Item 1. - Legal Proceedings

33

Item 2. - Changes in Securities

33

Item 3. - Defaults upon Senior Securities

33

Item 4. - Submission of Matters to a vote of Security Holders

33

Item 5. - Other Information

33

Item 6. - Exhibits and Reports on Form 8-K

33

Signatures

34

CEO’s & CFO’s Certifications on Disclosure Controls and Procedures

35

Exhibit 99.1, Certification of Periodic Financial Report

37

September 30, 2002

December 31, 2001

ASSETS

Cash and due from banks

$

51,822

$

40,025

Federal funds sold

$

—  

$

—  

Total Cash & Cash Equivalents

$

51,822

$

40,025

Investment securities available for sale

$

82,738

$

92,689

Loans:

Gross loans

$

502,876

$

486,601

Allowance for loan losses

$

(5,316

)

$

(5,675

)

Deferred loan fees, net

$

(935

)

$

(533

)

Net Loans

$

496,625

$

480,393

Other equity securities

$

1,828

$

2,422

Premises and equipment, net

$

16,681

$

14,304

Other real estate owned

$

1,319

$

769

Accrued interest receivable

$

3,617

$

3,766

Other assets

$

27,778

$

16,042

TOTAL ASSETS

$

682,408

$

650,410

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES

Deposits:

Demand

$

145,424

$

142,884

Interest bearing demand

$

50,591

$

49,455

Savings

$

36,591

$

31,128

MMDA’s

$

111,742

$

93,928

TDOA’s, IRA’s & KEOGH’S

$

18,900

$

21,185

Time deposits < $100,000

$

91,376

$

106,188

Time deposits > $100,000

$

114,730

$

76,549

Total Deposits

$

569,354

$

521,317

Repurchase agreements

$

30,757

$

22,253

Other borrowed funds

$

6,836

$

38,530

Accrued interest payable

$

847

$

442

Other liabilities

$

7,175

$

6,727

Company obligated manditorily redeemable cumulative trust preferred security of subsidiary trust holding solely junior subordinated debentures

$

15,000

$

15,000

TOTAL LIABILITIES

$

629,969

$

604,269

SHAREHOLDERS’ EQUITY

Common stock, no par value; 24,000,000 shares authorized; 9,274,500 and 9,212,280 shares issued and outstanding at 9/30/02 and 12/31/01, respectively.

$

2,771

$

2,285

Retained earnings

$

47,423

$

42,651

Accumulated other comprehensive income

$

2,245

$

1,205

Total shareholders’ equity

$

52,439

$

46,141

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

682,408

$

650,410

For the Three-Month Period
Ended September 30,

For the Nine-Month Period
Ended September 30,

2002

2001

2002

2001

INTEREST INCOME:

Federal funds sold and interest bearing deposits

$

69

$

128

$

182

$

392

US Treasury securities

$

6

$

15

$

34

$

253

US Government agencies

$

275

$

523

$

818

$

1,928

State and political subdivision bonds

$

457

$

493

$

1,427

$

1,522

Mortgage-backed securities

$

240

$

370

$

767

$

712

Corporate bonds

$

79

$

—  

$

246

$

—  

Equities

$

99

$

13

$

156

$

76

Loans, including fee income

$

9,410

$

8,978

$

27,894

$

28,071

Total interest income

$

10,635

$

10,520

$

31,524

$

32,954

INTEREST EXPENSE:

Interest on deposits

$

1,914

$

3,512

$

5,933

$

12,790

Interest on borrowed funds

$

312

$

111

$

1,028

$

419

Total interest expense

$

2,226

$

3,623

$

6,961

$

13,209

Net Interest Income

$

8,409

$

6,897

$

24,563

$

19,745

Provision for loan losses

$

900

$

100

$

2,450

$

700

Net Interest Income after Provision for Loan Losses

$

7,509

$

6,797

$

22,113

$

19,045

OTHER OPERATING INCOME:

Service charges on deposit accounts

$

1,366

$

1,230

$

3,921

$

3,532

Gains on sales of loans

$

78

$

316

$

598

$

755

Gain on sale of investments

$

1

$

420

$

146

$

748

Other

$

531

$

548

$

1,608

$

2,416

Total other operating income

$

1,976

$

2,514

$

6,273

$

7,451

OTHER OPERATING EXPENSES:

Salaries and employee benefits

$

3,062

$

2,522

$

8,482

$

8,504

Occupancy expense

$

1,124

$

1,035

$

3,135

$

3,113

Other

$

2,743

$

2,590

$

7,604

$

7,488

Total other operating expenses

$

6,929

$

6,147

$

19,221

$

19,105

INCOME BEFORE PROVISION FOR INCOME TAXES

$

2,556

$

3,164

$

9,165