California Community Bancshares Corp – ‘10KSB’ for 12/31/97

As of:  Thursday, 4/23/98   ·   For:  12/31/97   ·   Accession #:  1009325-98-5   ·   File #:  0-27856

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Annual Report — Small Business   —   Form 10-KSB
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Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                      136±   575K 
 2: EX-27       Financial Data Schedule (Pre-XBRL)                     2±     7K 

10KSB   —   Annual Report — Small Business
Document Table of Contents

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FORM 10-KSB                                                                     

SECURITIES AND EXCHANGE COMMISSION                                              
Washington, D.C. 20549                                                          

ANNUAL REPORT UNDER SECTION 13 OR 15(d)                                         
OF THE SECURITIES EXCHANGE ACT OF 1934                                          

For the Fiscal Year Ended     December 31, 1997                                 
Commission File No.               0-27856                                       

CALIFORNIA COMMUNITY BANCSHARES CORPORATION                                     
---------------------------------------------                                   
(Name of small business issuer in it charter)                                   

Delaware                              68-0366324                                
----------------------------          -------------------                       
(State or other jurisdiction          (IRS Employer                             
of incorporation)                     Identification No.)                       

555 Mason Street, Suite 280, Vacaville, CA     95688-4612                       
------------------------------------------     ------------                     
(Address of principal executive offices)       (ZIP Code)                       

Issuer's telephone number:  (707) 448-1200                                      

Securities registered under Section 12(g) of the Exchange Act:                  
$.10 Par Value Common Stock                                           
---------------------------                                           
(Title of Class)                                                      

Check whether the issuer (1) filed all reports required to be filed by Section  
13 or 15(d) of the Exchange Act during the past 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 [ ]        

Check if there is no disclosure of delinquent filers in response to Item 405 of 
Regulation S-B is not contained in this form, and no disclosure will be         
contained, to the best of the registrant's knowledge, in definitive proxy or    
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ X ]                                     

Total revenue for year ended December 31, 1997, was $16,175,000.                

The aggregate market value of the voting stock held by nonaffiliates based on   
the average bid and asked prices $30.125 of such stock, was $27,799,410 as of   
March 24, 1998.                                                                 

The number of shares outstanding of Common Stock as of March 24, 1998: 1,114,505

Transitional Small Business Disclosure Format (Check One) YES [ ] NO [ X ]      

CONTAINS 0108 SEQUENTIALLY NUMBERED PAGES                                       
EXHIBIT INDEX APPEARS ON SEQUENTIALLY NUMBERED PAGE 0060                        

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TABLE OF CONTENTS 
                                                                        Page
PART I                                                                          

ITEM 1 -  Description of Business                                           1   

ITEM 2 -  Description of Property                                          19   

ITEM 3 -  Legal Proceedings                                                20   

ITEM 4 -  Submission of Matters to a Vote of Security Holders              20   

PART II                                                                         

ITEM 5 -  Market for Common Equity and Related Stockholder Matters         20   

ITEM 6 -  Management's  Discussion and Analysis or Plan of Operation       21   

ITEM 7 -  Financial Statements                                             47   

ITEM 8 -  Changes In and Disagreements With Accountants on                      
              Accounting and Financial Disclosure                       47

PART III                                                                        

ITEM 9 -   Directors, Executive Officers, Promoters and Control Persons;        
              Compliance with Section 16(a) of the Exchange Act         48

ITEM 10 -  Executive Compensation                                          48   

ITEM 11 -  Security Ownership of Certain Beneficial Owners and Mgmt        53   

ITEM 12 -  Certain Relationships and Related Transactions                  55   

ITEM 13 -  Exhibits and Reports on Form 8-K                                56   

Financial Statements                                                     0064   

Signatures                                                               0091   

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CERTAIN STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-KSB               
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 INCREASES                          
SIGNIFICANTLY; CHANGES IN THE INTEREST RATE ENVIRONMENT REDUCE                  
MARGINS; 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; CHANGES IN BUSINESS CONDITIONS,                         
PARTICULARLY IN SOLANO AND CONTRA COSTA COUNTIES; 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.               
SEE ALSO "CERTAIN ADDITIONAL BUSINESS RISKS", HEREIN AND OTHER                  
RISK FACTORS DISCUSSED ELSEWHERE IN THIS REPORT.                                

MOREOVER, WHENEVER PHRASES SUCH AS, OR SIMILAR TO, "IN                
MANAGEMENT'S OPINION", "MANAGEMENT BELIEVES", OR "MANAGEMENT                    
CONSIDERS" ARE USED, SUCH STATEMENTS ARE AS OF, AND BASED UPON                  
THE KNOWLEDGE OF MANAGEMENT, AT THE TIME MADE AND ARE SUBJECT TO                
CHANGE BY THE PASSAGE OF TIME AND OR SUBSEQUENT EVENTS, AND                     
ACCORDINGLY SUCH STATEMENTS ARE SUBJECT TO THE SAME RISKS AND                   
UNCERTAINTIES NOTED ABOVE WITH RESPECT TO FORWARD LOOKING                       
STATEMENTS.                                                                     

THEREFORE, THE INFORMATION SET FORTH THEREIN SHOULD BE                
CAREFULLY CONSIDERED WHEN EVALUATING THE BUSINESS PROSPECTS OF                  
THE CORPORATION AND THE BANK.                                                   

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PART I                                                                          

ITEM 1 -  DESCRIPTION OF BUSINESS                                               

BUSINESS OF THE CORPORATION                                                     

Continental Pacific Bank (the "Bank") was organized as a              
California state banking corporation on May 27, 1983, and                       
commenced operations on November 14, 1983.                                      

In 1995, the Bank's Board of Directors approved a Bank                
holding company formation and corporate reorganization (the                     
"Reorganization") whereby the Bank would become a wholly-owned                  
subsidiary of California Community Bancshares Corporation (the                  
"Company").  The Company was incorporated as a Delaware                         
Corporation on October 5, 1995.  The Bank's shareholders approved               
the Reorganization on December 20, 1995.  The Reorganization was                
consummated as of the close of business on February 29, 1996.                   

On January 18, 1984, the Bank formed Conpac Development               
Corporation ("Conpac") as a wholly-owned subsidiary to take                     
advantage of the then recently enacted California Financial Code                
provision authorizing banks or their subsidiaries to engage in                  
real property investment and development.  The Bank is presently                
staffing the activities of Conpac with two regular Bank                         
employees.  As of December 31, 1997, in addition to the Pacific                 
Plaza project discussed below, Conpac projects and activities                   
have included investment in a limited partnership real estate                   
development project; improvement of 44 undeveloped residential                  
lots; development of an 8,000 square foot commercial office                     
building adjacent to the Bank's Benicia branch; and other                       
incidental activities.  As of December 31, 1997, all of Conpac's                
projects have been sold at a gross profit, except the current                   
Pacific Plaza project, which is held as Premises.  Recent                       
legislation limits the Bank's and Conpac's ability to engage in                 
most real estate development and investment activities and,                     
accordingly, the Bank has filed a divestiture plan with the FDIC,               
which has not been objected to, for its real estate developments.               
See "Real Estate Development Subsidiary," herein.                               

DEVELOPMENTS IN THE CORPORATION'S BUSINESS                                      

The principal business of the Company is to act as a holding          
company for the Bank.  Accordingly, various factors relating to                 
the Bank impact the business of the Company.  Several of these                  
factors are discussed below.  The Bank engages in the general                   
commercial banking business, in Solano and Contra Costa counties                
in the State of California. In addition to its head banking                     
office located at 141 Parker Street, Vacaville, California the                  
Bank has six full service branch offices at 1011 Helen Power Drive,             
Vacaville, California; 1300 Oliver Road, Fairfield,                             
California; 1001 First Street, Benicia, California; 303                         
Sacramento Street, Vallejo, California; 3355 Sonoma Boulevard,                  
Suite 20, Vallejo, California and the Bank's newest branch at                   
2151 Salvio Street, Suite H, Concord, California. In 1996 the                   
1100 Texas Street, branch was converted to an express branch for                
deposit services.  The Company's business is not seasonal.                      

The Bank conducts a commercial banking business including             
accepting demand, savings and time deposits, including                          
certificates of deposit, money market deposit accounts, NOW and                 
Super NOW accounts.  The Bank offers commercial, real estate,                   
personal, home improvement, automobile and other installment term               
loans.  It also offers installment note collection, issues                      
cashier's checks and money orders, sells travelers' checks and                  
provides safe deposit boxes and other customary banking services.               

The vast majority of loans are direct loans made to                   
individuals, professionals, and small  to medium sized                          
businesses.  On December 31, 1997, the total loans outstanding                  
were as follows:  commercial loans: $10,348,000; real estate                    
construction loans:  $6,042,000; real estate mortgage loans:                    
$90,778,000; consumer loans:  $13,894,000; and total loans:                     
$121,062,000.                                                                   

Deposits are attracted primarily from individuals,                    
professionals, and small to medium sized businesses.  The Bank                  
also attracts some deposits from municipalities and other                       
governmental agencies or entities.  The Bank is generally                       
required to pledge securities to secure such deposits (except the               
first $100,000 of such deposits, which is insured by the FDIC).                 

Except as described above, material portions of the deposits          
have not been obtained from a single person or a few persons                    
(including federal, state and local governments and agencies                    
thereunder) the loss of anyone or more of which would have a                    
materially adverse effect on the business of the Company;                       
however, at December 31, 1997, approximately four percent of                    
total deposits were obtained from a title company.  Such deposits               
have the potential to increase or decrease rapidly.                             
Approximately 80% of the loans are real estate loans.  The value                
of real estate collateral could be affected by adverse changes in               
the real estate markets in which the Company operates and this                  
could significantly adversely impact the value of such collateral               
or the Company's earnings.                                                      

As of December 31, 1997, the brokerage mortgage loan                  
department consisted of one loan originator who is paid on a                    
commission basis and one salaried full-time processor.  The                     
department's purpose is to originate and process single family                  
residential loan applications in Solano County and adjacent                     
areas.  The loans are underwritten and funded by one of the                     
twenty wholesale loan sources the Bank has established.  For the                
year ended December 31, 1997, the Company earned fees of $105,000               
on $7,200,000 in loan volume closed.  There were no loans held                  
for sale at December 31, 1997.                                                  

The Company does not offer trust services or international            
banking services and does not plan to do so in the near future,                 
but has arranged with its correspondent banks for such services                 
to be offered to its customers.  In December 1993, the Bank began               
offering financial investment services (mutual fund and annuity                 
sales) through a broker relationship with Financial Network                     
Investment Corporation ("FNIC").  For the year ending December                  
31, 1997, the Company earned fees of $83,000 on $2,200,000 in                   
sales.                                                                          

In 1995, the Bank began offering a new service called                 
Business Manager.  With Business Manager the Bank purchases a                   
business' accounts receivables and sets up a credit line custom                 
tailored to the business' needs.  The program includes the                      
administration of the billing and collection function. For the                  
year ending December 31, 1997, the Company earned fees of                       
$111,000 for this  service.                                                     

In 1994, the Small Business Administration established a Low          
Doc loan program.  This program is intended to reduce the                       
paperwork requirements and improve approval turnaround time on                  
certain SBA qualifying commercial loan requests of $100,000 or                  
less.  For the year ended September 30, 1997, the Bank was the                  
second highest SBA lender in Solano and Napa counties.                          

Other than as disclosed above, with respect to the Business           
Manager Accounts Receivable program and the SBA loan Program, the               
Company has not engaged in any material research activities                     
relating to the development of new services or the improvement of               
existing banking services during the last two fiscal years.                     
During that time, however, the Company's directors, officers and                
employees have continually engaged in marketing activities,                     
including the evaluation and development of new services, in                    
order to maintain and improve the Company's competitive position                
in its primary service area.  The cost of these activities cannot               
be calculated with any degree of certainty.                                     

The Company holds no patents, trademarks, licenses (other             
than licenses required to be obtained from the appropriate Bank                 
regulatory agencies), franchises or concessions which are of                    
material importance to its business.                                            

The Company is exploring, subject to the merger discussed             
below, the merits and costs of offering home banking, a bill                    
paying service through the customer's computer, and telephone                   
banking in 1998.  It is estimated these services could require an               
investment of $75,000 to $100,000.  The Company currently has no                
other plans to introduce a new product or line of business which                
would require the investment of a significant amount of the                     
Company's total assets.                                                         

As of December 31, 1997, the Company employed a total of 98           
employees representing 77 full-time-equivalent employees.                       

MERGER WITH SIERRAWEST BANCORP                                                  

On November 13, 1997, the Company entered into a Plan of              
Acquisition and Merger ("Plan") with SierraWest Bancorp                         
("SierraWest").  Under the terms of the Agreement, SierraWest                   
will acquire all the outstanding common stock of the Company in                 
exchange for shares of SierraWest common stock at an exchange                   
ratio defined by a formula in the Plan.  The merger, which is                   
expected to close early in the second quarter of 1998, is subject               
to the approval of each Company's shareholders and state and                    
federal banking regulatory agencies.  On the Effective Date,                    
each of the Company's outstanding Convertible Subordinated                      
Debentures Due April 30, 2003, shall by virtue of the merger, be                
assumed by SierraWest in accordance with the terms of the related               
Indenture Agreement,  provided, however, and as required by the                 
Indenture Agreement the conversion price of such debentures into                
SierraWest shares shall be adjusted by dividing the current                     
conversion price of $12.75 by the exchange ratio on the Effective               
Date.  The transaction will be accounted for as a pooling of                    
interest.                                                                       

On March 10, 1998, SierraWest Bancorp received a letter from          
the Federal Deposit Insurance Corporation ("FDIC"), dated March                 
3, 1998, which approved the application for merger.  On March 12,               
1998, the Department of Financial Institutions approved the                     
application for merger.  On February 12, 1998, SierraWest Bancorp               
received a letter from the Board of Governors of the Federal                    
Reserve System, dated February 6, 1998, which stated that the                   
Reserve Bank has reviewed the request within the context of the                 
policies and, based upon a review of the facts presented, would                 
not object to consummation of the proposed merger without the                   
filing of a formal application.  On March 16, 1998, the Company's               
shareholders approved the Merger.  The SierraWest shareholders                  
meeting is scheduled for March 26, 1998.                                        

REAL ESTATE DEVELOPMENT SUBSIDIARY                                              

The Bank's wholly-owned subsidiary, Conpac, engages in the            
real estate development business as authorized under California law.            
In July 1988, Conpac purchased and leased unimproved real                       
property in the vicinity of Mason and Davis streets in downtown                 
Vacaville.  This project is known as Pacific Plaza.  In mid-1990                
Conpac began to build a two-story building of approximately                     
32,000 square feet (27,133 rentable square feet) and 140 parking                
spaces.  This building is located on the lot east of Davis Street               
which Conpac currently owns and is referred to as Pacific Plaza                 
East.  In 1990, Conpac also exercised its option to purchase the                
lot immediately west of Davis Street for $225,000.  This lot and                
the adjacent lots previously purchased by Conpac are the proposed               
site of Pacific Plaza West.                                                     

Pacific Plaza East's occupancy rate was 93% and 100% in 1997          
and 1996, respectively, including the 3,796 square feet occupied                
by the Bank's Corporate office.  As of December 31, 1997, the                   
average leases were $1.40 per square foot on a triple net basis.                

Pacific Plaza East has ample parking, with 140 spaces,                
adjacent to the building.  Only 84 parking spaces are required by               
the City.  Prior to 1995, it was the intent of the Company to                   
sell the additional 56 spaces to the City of Vacaville.  In 1995,               
the Bank decided the building's long term value would be improved               
by retaining these extra spaces.  Therefore, the carrying amount                
of these spaces was added to the project and transferred to                     
premises. As of December 31, 1997, Conpac had a carrying amount                 
of $3,624,000 for Pacific Plaza East (net of $542,000 accumulated               
depreciation) and approximately $700,000 for Pacific Plaza West.                
At December 31, 1997, with Pacific Plaza East 84% leased, the                   
estimated return on investment was approximately 7.7%, before                   
depreciation.                                                                   

Beginning in December 1992, state banks and their                     
subsidiaries were prohibited from engaging, as principal, in                    
activities not permissible to national banks and their                          
subsidiaries.  Any Bank engaged in such activities must divest                  
itself of these investments by December 1996 and was required to                
file a divestiture plan with the FDIC by February 5, 1993,                      
detailing its plans.  Generally, national banks may not engage in               
real estate development, although they can own property used or                 
to be used, in part, as a banking facility.  During 1993, the                   
Bank moved its corporate offices to Pacific Plaza East.  The Bank               
occupies 3,796 square feet in Pacific Plaza East (14% of the                    
leaseable office space).  Since ownership of banking premises is                
permissible for a national Bank subsidiary, a divestiture plan                  
was not required for Pacific Plaza East.  Conpac currently plans                
to retain Pacific Plaza East.                                                   

On August 1, 1994, at the request of the FDIC, the Bank               
filed a new divestiture plan.  The new plan indicated the Bank                  
intended to build a two-story 12,000 square foot commercial                     
office building, upon 50% preleasing, on the 38,725 square foot                 
vacant parcel referred to as Pacific Plaza West.  The Bank also                 
indicated its intent to occupy between 15% and 19% of the space                 
in Pacific Plaza West.  The plan requested FDIC approval to                     
transfer Pacific Plaza West to premises, for regulatory reporting               
purposes, upon completion and occupancy of Pacific Plaza West by                
the Bank.  The plan also reaffirmed the Bank's intent to retain                 
Pacific Plaza East classifying the property as premises for                     
regulatory reporting purposes.  On August 12, 1994, the Bank                    
received notification from the FDIC that they raised no                         
objections to the  Bank's plan.  However, the FDIC requested to                 
be notified of the circumstances if the project was not completed               
by year end 1995. At December 31, 1997, the Bank had not begun                  
construction of Pacific Plaza West.  At December 31, 1997,                      
Pacific Plaza West is carried on the books as premises.                         

On October 15, 1997, Conpac Development Corporation entered           
into an agreement with the Vacaville Redevelopment Agency                       
("Agency") to sell half of Pacific Plaza West (approximately                    
20,810 square feet) for either $382,500, if parking improvements                
were completed by Conpac, or $300,000 if unimproved.  In                        
addition, Conpac will convey a portion of Pacific Plaza East                    
containing 28 existing parking spaces and existing easements to                 
the Agency.  On January 15, 1998, after receiving approval from                 
SierraWest as required by the Merger Plan, Conpac notified the                  
Agency of its election not to construct the parking improvement                 
and therefore sell the above mentioned property to the Agency for               
$300,000.  Close of Escrow shall occur on or before October 31,                 
1998.                                                                           

The Company is considering various options for the remaining          
18,000 square foot corner parcel, including, building a 6,200                   
square foot office building to relocate the Vacaville Main                      
office, leasing the building to a nonaffiliated entity or selling               
the property, as is.  The lease on the building currently                       
occupied by the Vacaville Main office expires December 31, 1998.                

On December 31, 1997, Conpac had total investments of                 
$4,324,000.  Except for Pacific Plaza, Conpac has no other                      
projects or investments.  During 1997, 1996 and 1995,                           
respectively, Conpac contributed $126,000, $242,000 and $213,000,               
respectively, to revenue net of related expenses.                               

ENVIRONMENTAL MATTERS                                                           

Compliance with federal, state and local regulations                  
regarding the discharge of materials into the environment may                   
have a substantial effect on the capital expenditure, earnings                  
and competitive position of the Company in the event of lender                  
liability or environmental lawsuits.  Under federal law,                        
liability for environmental damage and the cost of the cleanup                  
may be imposed upon any person or entity who is an "owner" or                   
"operator" of contaminated property.  State law provisions, which               
were modeled after federal law, are similar.  Congress                          
established an exemption under Federal law for lenders from                     
"owner" and/or "operator" liability, which provides that "owner"                
and/or "operator" do not include "a person, who, without                        
participating in the management of a vessel or facility, holds                  
indicia of ownership primarily to protect his security interests                
in the vessel or facility."  The wording of this exemption is                   
subject to conflicting interpretations between the Federal Courts               
and has therefore generated uncertainty within the financial and                
lending communities, particularly with regard to the extent to                  
which a secured creditor may undertake activities to oversee the                
affairs of the borrower without "participating in the management"               
of a facility.  Congress is currently addressing lender liability               
under environmental laws, and it is expected that the lender                    
exemption will be clarified.  There is no assurance, however,                   
that such clarification will be made, and, if made, that it will                
be favorable to lenders.  Thus, the scope of lender liability                   
under federal and state law remains an open question.                           

It is the policy of the Company to prohibit officers and              
employees from becoming directly involved in the operation or                   
management of borrowers' businesses.  To further minimize the                   
risk of liability, the Company requires that each borrower                      
proposing to finance nonresidential property complete an                        
environmental questionnaire and, in those instances where it is                 
warranted, requires appropriate independent environmental                       
assessment studies.                                                             

In the event the Bank or Conpac is held liable as owners or           
operators of a toxic property, they could be responsible for the                
entire cost of environmental damage and cleanup.  Such an outcome               
could have a serious effect on the Company's consolidated                       
financial condition depending upon the amount of liability                      
assessed and the amount of the cleanup required.  At March 24,                  
1998, the Company has no knowledge that any real estate securing                
loans in its portfolio are contaminated by hazardous substances.                

THE EFFECT OF GOVERNMENT POLICY ON BANKING                                      

The earnings and growth of the Company are affected not only          
by local market area factors and general economic conditions, but               
also by government  monetary and fiscal policies. For example,                  
the Board of Governors of the Federal Reserve System ("FRB")                    
influences the supply of money through its open market operations               
in U.S. Government securities and adjustments to the discount                   
rates applicable to borrowings by depository institutions and                   
others.  Such actions influence the growth of loans, investments                
and deposits and also affect interest rates charged on loans and                
paid on deposits.  The nature and impact of future changes in                   
such policies on the business and earnings of the Company cannot                
be predicted.                                                                   

As a consequence of the extensive regulation of commercial            
banking activities in the United States, the business of the                    
Company is particularly susceptible to being affected by the                    
enactment of federal and state legislation which may have the                   
effect of increasing or decreasing the cost of doing business,                  
modifying permissible activities or enhancing the competitive                   
position of other financial institutions.  Any change in                        
applicable laws or regulations may have a material adverse effect               
on the business and prospects of the Company.                                   

SUPERVISION AND REGULATION                                                      

The Company                                                                     

The Company, as a bank holding company, is subject to                 
regulation under the Bank Holding Company Act of 1956, as amended               
(the "BHC Act") and is registered with and subject to the                       
supervision of the Board of Governors of the Federal Reserve                    
System ("Federal Reserve").  It is the policy of the Federal                    
Reserve that each bank holding company serve as a source of                     
financial and managerial strength to its subsidiary banks.  The                 
Federal Reserve has the authority to examine the Company and the                
Bank.                                                                           

The BHC Act requires the Company to obtain the prior                  
approval of the Federal Reserve before acquisition of all or                    
substantially all of the assets of any bank or ownership or                     
control of the voting shares of any bank if, after giving effect                
to such acquisition, the Company would own or control, directly                 
or indirectly, more than 5% of the voting shares of such bank.                  
However, amendments to the BHC Act effected by the Riegle-Neal                  
Interstate Banking and Branching Efficiency Act of 1994                         
("Riegle-Neal"), which is discussed further below, expand the                   
circumstances under which a bank holding company may acquire                    
control of or all or substantially all of the assets of a bank                  
located outside the State of California.                                        

The Company may not engage in any business other than                 
managing or controlling banks or furnishing services to its                     
subsidiaries, with the exception of certain activities which, in                
the opinion of the Federal Reserve, are so closely related to                   
banking or to managing or controlling banks as to be incidental                 
to banking.  The Company is also generally prohibited from                      
acquiring direct or indirect ownership or control of more than 5%               
of the voting shares of any company unless that company is                      
engaged in such activities and unless the Federal Reserve                       
approves the acquisition.                                                       

The Company and its subsidiaries are prohibited from                  
engaging in certain tie-in arrangements in connection with any                  
extension of credit, sale or lease of property or provision of                  
services.  For example, with certain exceptions, the Bank may not               
condition an extension of credit on a customer obtaining other                  
services provided by it, the Company or any other subsidiary, or                
on a promise by the customer not to obtain other services from a                
competitor.  In addition, federal law imposes certain                           
restrictions on transactions between the Bank and its affiliates.               
As affiliates, the Bank and the Company are subject, with certain               
exceptions, to the provisions of federal law imposing limitations               
on and requiring collateral for loans by the Bank to any                        
affiliate.                                                                      

The Bank                                                                        

As a California state-licensed bank, the Bank is subject to           
regulation, supervision and periodic examination by the                         
California Department of Financial Institutions ("DFI") and the                 
Federal Deposit Insurance Corporation ("FDIC").  The Bank is not                
a member of the Federal Reserve System, but is nevertheless                     
subject to certain regulations of the Federal Reserve.  The                     
Bank's deposits are insured by the FDIC to the maximum amount                   
permitted by law, which is currently $100,000 per depositor in                  
most cases.                                                                     

The regulations of these state and federal bank regulatory            
agencies govern most aspects of the Bank's business and                         
operations, including but not limited to, the scope of its                      
business, its investments, its reserves against deposits, the                   
nature and amount of any collateral for loans, the timing of                    
availability of deposited funds, the issuance of securities, the                
payment of dividends, bank expansion and bank activities,                       
including real estate development and insurance activities, and                 
the maximum rates of interest allowed on certain deposits.  The                 
Bank is also subject to the requirements and restrictions of                    
various consumer laws and regulations.                                          

The following description of statutory and regulatory                 
provisions and proposals is not intended to be a complete                       
description of these provisions and is qualified in its entirety                
by reference to the particular statutory or regulatory provisions               
discussed.                                                                      

Change in Control                                                               

The BHC Act and the Change in Bank Control Act of 1978, as            
amended (the "Change in Control Act"), together with regulations                
of the Federal Reserve, require that, depending on the particular               
circumstances, either Federal Reserve approval must be obtained                 
or notice must be furnished to the Federal Reserve and not                      
disapproved prior to any person or company acquiring "control" of               
a bank holding company, such as the Company, subject to                         
exemptions for certain transactions.  Control is conclusively                   
presumed to exist if an individual or company acquires 25% or                   
more of any class of voting securities of the bank holding                      
company.  Control is rebuttably presumed to exist if a person                   
acquires 10% or more but less than 25% of any class of voting                   
securities and either the company has securities registered under               
Section 12 of the Exchange Act, or no other person will own a                   
greater percentage of that class of voting securities immediately               
after the transaction.  The Financial Code also contains approval               
requirements for the acquisition of 10% or more of the securities               
of a person or entity which controls a California licensed bank.                

Capital Adequacy Requirements                                                   

The Company is subject to the Federal Reserve's capital               
guidelines for bank holding companies and the Bank is subject to                
the FDIC's regulations governing capital adequacy for nonmember                 
banks.  Additional capital requirements may be imposed on banks                 
based on market risk.                                                           

The Federal Reserve and FDIC                                          

The Federal Reserve has established risk-based and leverage           
capital guidelines for bank holding companies which are similar                 
to the FDIC's capital adequacy regulations for nonmember banks.                 
The Federal Reserve guidelines apply on a consolidated basis to                 
bank holding companies with consolidated assets of $150 million                 
or more.                                                                        

The Federal Reserve capital guidelines for bank holding               
companies and the FDIC's regulations for nonmember banks set                    
total capital requirements and define capital in terms of "core                 
capital elements," or Tier 1 capital<F1>  and "supplemental                     
capital elements," or Tier 2 capital<F2>.  At least fifty percent               
(50%) of  the qualifying total capital base must consist of Tier                
1 capital.  The maximum amount of Tier 2 capital that may be                    
recognized for risk-based capital purposes is limited to                        
one-hundred percent (100%) of Tier 1 capital, net of goodwill.                  
---------                                                                       
F1   Tier 1 capital is generally defined as the sum of the core                 
capital elements less goodwill and certain intangibles.  The          
following items are defined as core capital elements:  (i) common     
stockholders' equity; (ii) qualifying noncumulative perpetual         
preferred stock and related surplus; and (iii) minority interests     
in the equity accounts of consolidated subsidiaries.                  

F2   Supplementary capital elements include:  (i) allowance for                 
loan and lease losses (which cannot exceed 1.25% of an                
institution's risk-weighted assets); (ii) perpetual preferred         
stock and related surplus not qualifying as core capital; (iii)       
hybrid capital instruments, perpetual debt and mandatory              
convertible debt securities; and (iv) term subordinated               
---------                                                                       

Both bank holding companies and nonmember banks are required          
to maintain a minimum ratio of qualifying total capital to risk-                
weighted assets of eight percent (8%), at least one-half of which               
must be in the form of Tier 1 capital.  Risk-based capital ratios               
are calculated with reference to risk-weighted assets, including                
both on and off-balance sheet exposures, which are multiplied by                
certain risk weights assigned by the Federal Reserve and the FDIC               
to those assets.                                                                

The Federal Reserve and the FDIC have established a minimum           
leverage ratio of three percent (3%) Tier 1 capital to total                    
assets for bank holding companies and nonmember banks that have                 
received the highest composite regulatory rating and are not                    
anticipating or experiencing any significant growth.  All other                 
institutions are required to maintain a leverage ratio of at                    
least 100 to 200 basis points above the 3% minimum for a minimum                
of four percent (4%) or five percent (5%).                                      

The following tables present the capital ratios for the               
Company and the Bank and respective regulatory capital adequacy                 
requirements.                                                                   

                                                                [Download Table]
Company:                                                                   
                                                             For Capital   
                                        Actual           Adequacy Purposes 
                               ---------------------   --------------------
                                                        Minimum     Minimum
                                  Amount      Ratio      Amount      Ratio 
                                  (000)                   (000)            
                               ---------------------   --------------------
                                                                           
As of December 31, 1997:                                                   
 Total capital                                                             
  (to risk weighted assets)    $19,084        13.64%     $11,195      8.0% 
 Tier I capital                                                            
  (to risk weighted assets)    $15,374        10.99%     $ 5,597      4.0% 
 Tier I capital                                                            
  (to average assets)          $15,374         7.91%     $ 7,772      4.0% 

As of December 31, 1996:                                                   
 Total capital                                                             
  (to risk weighted assets)    $17,895        13.55%     $10,564      8.0% 
 Tier I capital                                                            
  (to risk weighted assets)    $13,104         9.92%     $ 5,282      4.0% 
 Tier I capital                                                            
  (to average assets)          $13,104         7.04%     $ 7,444      4.0% 

                                                        [Enlarge/Download Table]
Bank:                                                                                        

                                                                       To Be Categorized as  
                                                                       Well Capitalized Under
                                                    For Capital        Prompt Corrective     
                                   Actual           Adequacy Purposes  Action Provisions     
                            ---------------------  ------------------- -------------------   
                                                    Minimum    Minimum  Minimum    Minimum   
                              Amount       Ratio     Amount     Ratio    Amount     Ratio    
                              (000)                  (000)               (000)               
                            ---------------------  ------------------- -------------------   
                                                                                             
As of December 31, 1997:                                                                     
Total capital                                                                                
 (to risk weighted assets)  $18,431        13.21%  $11,160       8.0%   $13,950      10.0%   
Tier I capital                                                                               
 (to risk weighted assets)  $13,521         9.69%  $ 5,580       4.0%   $ 8,370       6.0%   
Tier I capital                                                                               
 (to average assets)        $13,521         6.97%  $ 7,755       4.0%   $ 9,694       5.0%   

As of December 31, 1996:                                                                     
Total capital                                                                                
 (to risk weighted assets)  $17,416        13.22%  $10,540       8.0%   $13,174      10.0%   
Tier I capital                                                                               
 (to risk weighted assets)  $12,647         9.60%  $ 5,270       4.0%   $ 7,905       6.0%   
Tier I capital                                                                               
 (to average assets)        $12,647         6.81%  $ 7,407       4.0%   $ 9,286       5.0%   

The risk-based capital ratio discussed above focuses                  
principally on broad categories of credit risk, and may not take                
into account many other factors that can affect a bank's                        
financial condition.  These factors include overall interest rate               
risk exposure; liquidity, funding and market risks; the quality                 
and level of earnings; concentrations of credit risk; certain                   
risks arising from nontraditional activities; the quality of                    
loans and investments; the effectiveness of loan and investment                 
policies; and management's overall ability to monitor and control               
financial and operating risks, including the risk presented by                  
concentrations of credit and nontraditional activities.  The FDIC               
has addressed many of these areas in related rule-making                        
proposals and under FDICIA (as defined below), some of which are                
discussed herein.  In addition to evaluating capital ratios, an                 
overall assessment of capital adequacy must take account of each                
of these other factors including, in particular, the level and                  
severity of problem and adversely classified assets.  For this                  
reason, the final supervisory judgment on a bank's capital                      
adequacy may differ significantly from the conclusions that might               
be drawn solely from the absolute level of the bank's risk-based                
capital ratio.  In light of the foregoing, the FDIC has stated                  
that banks generally are expected to operate above the minimum                  
risk-based capital ratio.  Banks contemplating significant                      
expansion plans, as well as those institutions with high or                     
inordinate levels of risk, should hold capital commensurate with                
the level and nature of the risks to which they are exposed.                    

Recently adopted regulations by the federal banking agencies          
have revised the risk-based capital standards to take adequate account of       
concentrations of credit and the risks of non-traditional activities.           
Concentrations of credit refers to                                              
situations where a lender has a relatively large proportion of                  
loans involving one borrower, industry, location, collateral or                 
loan type.  Non-traditional activities are considered those that                
have not customarily been part of the banking business but that                 
start to be conducted as a result of developments in, for                       
example, technology or financial markets.  The regulations                      
require institutions with high or inordinate levels of risk to                  
operate with higher minimum capital standards.  The federal                     
banking agencies also are authorized to review an institution's                 
management of concentrations of credit risk for adequacy and                    
consistency with safety and soundness standards regarding                       
internal controls, credit underwriting or other operational and                 
managerial areas.  In addition, the agencies have promulgated                   
guidelines for institutions to develop and implement programs for               
interest rate risk management, monitoring and oversight.                        

Further, the banking agencies recently have adopted                   
modifications to the risk-based capital regulations to include                  
standards for interest rate risk exposures.  Interest rate risk                 
is the exposure of a bank's current and future earnings and                     
equity capital arising from movements in interest rates.  While                 
interest rate risk is inherent in a bank's role as financial                    
intermediary, it introduces volatility to bank earnings and to                  
the economic value of the bank.  The banking agencies have                      
addressed this problem by implementing changes to the capital                   
standards to include a bank's exposure to declines in the                       
economic value of its capital due to changes in interest rates as               
a factor that the banking agencies will consider in evaluating an               
institution's capital adequacy.  Bank examiners will consider a                 
bank's historical financial performance and its earnings exposure               
to interest rate movements as well as qualitative factors such as               
the adequacy of a bank's internal interest rate risk management.                

Finally, institutions with significant trading activities             
must measure and hold capital for exposure to general market risk               
arising from fluctuations in interest rates, equity prices,                     
foreign exchange rates and commodity prices and exposure to                     
specific risk associated with debt and equity positions in the                  
trading portfolio.  General market risk refers to changes in the                
market value of on-balance-sheet assets and off-balance-sheet                   
items resulting from broad market movements.  Specific market                   
risk refers to changes in the market value of individual                        
positions due to factors other than broad market movements and                  
includes such risks as the credit risk of an instrument's issuer.               
The additional capital requirements apply effective January 1,                  
1998 to institutions with trading assets and liabilities equal to               
10% or more of total assets or trading activity of $1 billion or                
more.  The federal banking agencies may apply the market risk                   
regulations on a case by case basis to institutions not meeting                 
the eligibility criteria if necessary for safety and soundness                  
reasons.                                                                        

In connection with the recent regulatory attention to market          
risk and interest rate risk, the federal banking agencies will                  
evaluate an institution in its periodic examination on the degree               
to which changes in interest rates, foreign exchange rates,                     
commodity prices or equity prices can affect a financial                        
institution's earnings or capital.  In addition, the agencies                   
will focus in the examination on an institution's ability to                    
monitor and manage its market risk, and will provide management                 
with a clearer and more focused indication of supervisory                       
concerns in this area.                                                          

In certain circumstances, the FDIC or the Federal Reserve             
may determine that the capital ratios for an FDIC-insured bank or               
a bank holding company must be maintained at levels which are                   
higher than the minimum levels required by the guidelines or the                
regulations.  A bank or bank holding company which does not                     
achieve and maintain the required capital levels may be issued a                
capital directive by the FDIC or the Federal Reserve to ensure                  
the maintenance of required capital levels.                                     

Payment of Dividends                                                            

The shareholders of the Company are entitled to receive               
dividends when and as declared by its Board of Directors, out of                
funds legally available, subject to the dividends preference, if                
any, on preferred shares that may be outstanding and also subject               
to the restrictions of the California Corporations Code.  At                    
December 31, 1997 and 1996, the Company had no outstanding shares               
of preferred stock.                                                             

The principal sources of cash revenue to the Company have             
been dividends received from the Bank. The Bank's ability to make               
dividend payments to the Company is subject to state and federal                
regulatory restrictions.                                                        

Dividends payable by the Bank to the Company are restricted           
under California law to the lesser of the Bank's retained                       
earnings, or the Bank's net income for the latest three fiscal                  
years, less dividends previously declared during that period, or,               
with the approval of the DFI, to the greater of the retained                    
earnings of the Bank, the net income of the Bank for its last                   
fiscal year or the net income of the Bank for its current fiscal                
year.                                                                           

The FDIC has broad authority to prohibit a bank from                  
engaging in banking practices which it considers to be unsafe                   
or unsound.  It is possible, depending upon the financial condition             
of the bank in question and other factors, that the FDIC may                    
assert that the payment of dividends or other payments by the                   
bank is considered an unsafe or unsound banking practice and                    
therefore, implement corrective action to address such a                        
practice.                                                                       

In addition to the regulations concerning minimum uniform             
capital adequacy requirements discussed above, the FDIC has                     
established guidelines regarding the maintenance of an adequate                 
allowance for loan and lease losses.  Therefore, the future                     
payment of cash dividends by the Bank to the Company will                       
generally depend, in addition to regulatory constraints, upon the               
Bank's earnings during any fiscal period, the assessment of the                 
respective Boards of Directors of the capital requirements of                   
such institutions and other factors, including the maintenance of               
an adequate allowance for loan and lease losses.                                

Impact of Federal and California Tax Laws                                       

The following are the more significant federal and                    
California income tax provisions affecting commercial banks.                    

Corporate Tax Rates                                         

The federal corporate tax rate is 34% for up to $10 million           
of taxable income, and 35% for taxable income over $10 million.                 
The 1% differential is phased out between $15 million and                       
approximately $18.3 million so that corporations with over                      
approximately $18.3 million of taxable income are taxed at a flat               
rate of 35%.                                                                    

Corporate Alternative Minimum Tax                           

Generally, a corporation will be subject to an alternative            
minimum tax ("AMT") to the extent the tentative minimum tax                     
exceeds the corporation's regular tax liability.  The tentative                 
minimum tax is equal to (a) 20% of the excess of a corporation's                
"alternative minimum taxable income" ("AMTI") over an exemption                 
amount, less (b) the alternative minimum foreign tax credit.                    
AMTI is defined as taxable income computed with special                         
adjustments and increased by the amount of tax preference items                 
for a tax year.  An important adjustment is made for "adjusted                  
current earnings," which generally measures the difference                      
between corporate earnings and profits (as adjusted) and taxable                
income.  Finally, a corporation's net operating loss computed for               
AMT purposes (if any) only can be utilized to offset up to 90% of               
AMTI, with the result that a corporation with current year                      
taxable income will pay some tax.                                               

Bad debt deduction                                          

A bank with average adjusted bases of all assets exceeding            
$500 million (a "large bank") must compute its bad debt deduction               
using the specific charge-off method.  Under that method, a                     
deduction is taken at the time the debt becomes partially or                    
wholly worthless. A bank not meeting the definition of a large                  
bank may use either the specific charge-off method or the                       
"experience" reserve method, under which the addition to bad debt               
reserve is based on the bank's actual loss experience for the                   
current year and five preceding years.  The U.S. Treasury has                   
promulgated regulations which permit a bank to elect to establish               
a conclusive presumption that a debt is worthless, based on                     
applying a single set of standards for both regulatory and tax                  
accounting purposes.                                                            

Interest incurred for tax-exempt obligations                

Generally, taxpayers are not allowed to deduct interest on            
indebtedness incurred to purchase or carry tax-exempt                           
obligations.  This rule applies to a bank, to the extent of its                 
interest expense that is allocable to tax-exempt obligations                    
acquired after August 7, 1986.  The Taxpayer Relief Act of 1997                 
(the "1997 Act") made a technical change which expands the                      
interest potentially disallowed.  A special exception applies,                  
however, to a "qualified tax-exempt obligation," which includes                 
any tax-exempt obligation that (a) is not a private activity bond               
and (b) is issued after August 7, 1986 by an issuer that                        
reasonably anticipates it will issue not more than $10 million of               
tax-exempt obligations (other than certain private activity                     
bonds) during the calendar year.  Interest expense on qualified                 
tax-exempt obligations is deductible, although it is subject to a               
20% disallowance under special rules applicable to financial                    
institutions.                                                                   

Net operating losses                                        

The 1997 Act changed the tax treatment of net operating               
losses (an "NOL").  Effective for tax years beginning after                     
August 5, 1997, a bank generally is permitted to carry a NOL back               
to the prior two tax years and forward to the succeeding twenty                 
tax years.   For tax years beginning on or before August 5, 1997,               
the NOL may be carried back three years and forward fifteen                     
years.  However, if the NOL of a commercial bank is attributable                
to a bad debt deduction taken under the specific charge-off                     
method after December 31, 1986, and before January 1, 1994, such                
portion of the NOL may be carried back ten years and carried                    
forward five years.  A commercial bank's bad debt loss is treated               
as a separate NOL to be taken into account after the remaining                  
portion of the NOL for the year.                                                

Amortization of intangible assets including bank            
deposit base                                                

Certain intangible property acquired by a taxpayer must be            
amortized over a 15-year period.  For this purpose, acquired                    
assets required to be amortized include goodwill and the deposit                
base or any similar asset acquired by a financial institution                   
(such as checking and savings accounts, escrow accounts and                     
similar items).  The 15-year amortization rule generally applies                
to property acquired after August 10, 1993.                                     

Mark-to-market rules                                        

The Revenue Reconciliation Act of 1993 introduced certain             
"mark-to-market" tax accounting rules for "dealers in                           
securities." Under these rule, certain "securities" held at the                 
close of a taxable year must be marked to fair market value, and                
the unrealized gain or loss inherent in the security must be                    
recognized in that year for federal income tax purposes.  Under                 
the definition of a "dealer," a bank or financial institution                   
that regularly purchases or sells loans may be subject to the new               
rules.  The rules generally are effective for tax years ending on               
or after December 31, 1993.                                                     

Certain securities are excepted from the mark-to-market               
rules provided the taxpayer timely complies with specified                      
identification rules.  The principal exceptions affecting banks                 
are for (1) any security held for investment and (2) any note,                  
bond, or other evidence of indebtedness acquired or originated in               
the ordinary course of business and which is not held for sale.                 
If a taxpayer timely and properly identifies loans and securities               
as being excepted from the mark-to-market rules, these loans and                
securities will not be subject to these rules.  Generally, a                    
financial institution may make the identification of an excepted                
debt obligation in accordance with normal accounting practices,                 
but no later than 30 days after acquisition.                                    

California tax laws                                         

A commercial bank is subject to the California franchise tax          
at a special bank tax rate based on the general corporate (non                  
financial) rate plus 2%.  For calender income year 1997, the bank               
tax rate is 10.84% (which reflects a decrease in the general                    
corporate tax rate to 8.84%).  The applicable tax rate is higher                
than that applied to general corporations because it includes an                
amount "in lieu" of many other state and local taxes and license                
fees payable by such corporations but generally not payable by                  
banks and financial corporations.                                               

California has adopted substantially the federal AMT,                 
subject to certain modifications.  Generally, a bank is subject                 
to California AMT in an amount equal to the sum of (a) 7% of AMTI               
(computed for California purposes) over an exemption amount and                 
(b) the excess of the bank tax rate over the general corporation                
tax rate applied against net income for the taxable year, unless                
the bank's regular tax liability is greater.  The 7% rate is                    
lowered to 6.65% for any income year beginning after 1996.                      

California permits a bank to compute its deduction for bad            
debt losses under either the specific charge-off method or                      
according to the amount of a reasonable addition to a bad debt                  
reserve.                                                                        

California has incorporated the federal NOL provisions,               
subject to significant modifications for most corporations.                     
First, NOLs arising in income years beginning before 1987 are                   
disregarded.  Second, no carryback is permitted, and for most                   
corporations NOLs may be carried forward only five years.  Third,               
in most cases, only 50% of the NOL for any income year may be                   
carried forward.  Fourth, NOL carryover deductions are suspended                
for income years beginning in calendar years 1991 and 1992,                     
although the carryover period is extended by one year for losses                
sustained in income years beginning in 1991 and by two years for                
losses sustained in income years beginning before 1991.  Finally,               
the special federal NOL rules regarding bad debt losses of                      
commercial banks do not apply for California purposes.                          

Finally, in 1994, California enacted legislation conforming           
to the federal tax treatment of amortization of intangibles and                 
goodwill, with certain modifications.  No deduction is allowed                  
under this provision for any income year beginning prior to 1994.               

The various tax laws discussed herein contain other changes           
that could have a significant impact on the banking industry.                   
The effect of these changes is uncertain and varied, and it is                  
unclear to what extent any of these changes may influence the                   
Bank's operations or the banking industry generally.                            

In addition, there are several tax bills currently pending            
before Congress which could have a significant impact on the                    
banking industry.  It is uncertain whether these bills will be                  
enacted and what impact these bills will have on the Bank.                      

Impact of Monetary Policies                                                     

The earnings and growth of the Bank and the Company are               
subject to the influence of domestic and foreign economic                       
conditions, including inflation, recession and unemployment.  The               
earnings of the Bank and, therefore, the Company, are affected                  
not only by general economic conditions but also by the monetary                
and fiscal policies of the United States and federal agencies,                  
particularly the Federal Reserve.  The Federal Reserve can and                  
does implement national monetary policy, such as seeking to curb                
inflation and combat recession, by its open market operations in                
United States Government securities and by its control of the                   
discount rates applicable to borrowings by banks from the Federal               
Reserve System.  The actions of the Federal Reserve in these                    
areas influence the growth of bank loans, investments and                       
deposits and affect the interest rates charged on loans and paid                
on deposits.  As demonstrated recently by the Federal Reserve's                 
actions regarding interest rates, its policies have had a                       
significant effect on the operating results of commercial banks                 
and are expected to continue to do so in the future.  The nature                
and timing of any future changes in monetary policies are not                   
predictable.                                                                    

Recent and Proposed Legislation                                                 

Federal and state laws applicable to financial institutions           
have undergone significant changes in recent years.  The most                   
significant recent federal legislative enactments are the                       
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994             
("Riegle-Neal") and the Federal Deposit Insurance Corporation                   
Improvement Act of 1991 ("FDICIA").                                             

Riegle-Neal Interstate Banking and Branching                          
Efficiency Act of 1994                                                

In September 1994, President Clinton signed Riegle-Neal,              
which amends the BHC Act and the Federal Deposit Insurance Act                  
("FDIA") to provide for interstate banking, branching and                       
mergers.  Subject to the provisions of certain state laws and                   
other requirements, Riegle-Neal allows a bank holding company                   
that is adequately capitalized and adequately managed to acquire                
a bank located in a state other than the holding company's home                 
state regardless of whether or not the acquisition is expressly                 
authorized by state law.  Similarly, beginning on June 1, 1997,                 
the federal banking agencies were permitted to approve interstate               
merger transactions, subject to applicable restrictions and state               
laws.  Further, a state may elect to allow out of state banks to                
open de novo branches in that state.  However, recently adopted                 
regulations of the federal banking agencies prohibit interstate                 
branching primarily for the purpose of deposit production and                   
provide guidelines to ensure that banks operating interstate                    
branches are reasonably helping to meet the credit needs of the                 
communities served by the branches.                                             

Riegle-Neal includes several other provisions which may have          
an impact on the Company's and the Bank's business.  The                        
provisions include, among other things, a mandate for review of                 
regulations to equalize competitive opportunities between U.S. and              
foreign banks, evaluation on a bank-wide, state-wide and, if                    
applicable, metropolitan area basis of the Community Reinvestment               
Act compliance of banks with interstate branches, and, in the                   
event the FDIC is appointed as conservator or receiver of a                     
financial institution, the revival of otherwise expired causes of               
action for fraud and intentional misconduct resulting in unjust                 
enrichment or substantial loss to an institution.                               

California has adopted the Caldera, Weggeland, and Killea             
California Interstate Banking and Branching Act of 1995 ("IBBA"),               
which became effective on October 2, 1995.  The IBBA addresses                  
the supervision of state chartered banks which operate across                   
state lines, and covers such areas as branching, applications for               
new facilities and mergers, consolidations and conversions, among               
other things.  The IBBA allows a California state bank to have                  
agency relationships with affiliated and unaffiliated insured                   
depository institutions and allows a bank subsidiary of a bank                  
holding company to act as an agent to receive deposits, renew                   
time deposits, service loans and receive payments for a                         
depository institution affiliate.  In addition, pursuant to the                 
IBBA, California "opted in early" to the Riegle-Neal provisions                 
regarding interstate branching, allowing a state bank chartered                 
in a state other than California to acquire by merger or                        
purchase, at any time after effectiveness of the IBBA, a                        
California bank or industrial loan company which is at least five               
(5) years old and thereby establish one or more California branch               
offices.  However, the IBBA prohibits a state bank chartered in a               
state other than California from entering California by                         
purchasing a California branch office of a California bank or                   
industrial loan company without purchasing the entire entity or                 
establishing a de novo California branch office.                                

The changes effected by Riegle-Neal and the IBBA may                  
increase the competitive environment in which the Company and the               
Bank operate in the event that out of state financial                           
institutions directly or indirectly enter the Bank's market area.               
It is expected that Riegle-Neal will accelerate the consolidation               
of the banking industry as a number of the largest bank holding                 
companies expand into different parts of the country that were                  
previously restricted.  However, at this time, it is not possible               
to predict what specific impact, if any, Riegle-Neal and the IBBA               
will have on the Company and the Bank, the competitive                          
environment in which the Bank operates, or the impact on the                    
Company or the Bank of any regulations adopted or proposed under                
Riegle-Neal and the IBBA.                                                       

Federal Deposit Insurance Corporation                                 
Improvement Act of 1991 ("FDICIA")                                    

General                                                     

FDICIA primarily addresses the safety and soundness of the            
deposit insurance funds, supervision of and accounting by insured               
depository institutions and prompt corrective action by the                     
federal bank regulatory agencies with respect to troubled                       
institutions.  FDICIA gives the FDIC, in its capacity as federal                
insurer of deposits, broad authority to promulgate regulations to               
assure the viability of the deposit insurance funds, including                  
regulations concerning safety and soundness standards.  FDICIA                  
also places restrictions on the activities of state-chartered                   
institutions and on institutions failing to meet minimum capital                
standards and provides enhanced enforcement authority for the                   
federal banking agencies.  FDICIA also strengthened Federal                     
Reserve Act regulations regarding insider transactions.                         

Prompt Corrective Action                                    

FDICIA amended the FDIA to establish a format for closer              
monitoring of insured depository institutions and to enable                     
prompt corrective action by regulators when an institution begins               
to experience difficulty.  The general thrust of these provisions               
is to impose greater scrutiny and more restrictions on                          
institutions as they descend the capitalization ladder.                         

FDICIA establishes five capital categories for insured                
depository institutions: (a) Well Capitalized;<F1> (b) Adequately               
Capitalized;<F2> (c) Undercapitalized;<F3> (d) Significantly                    
Undercapitalized;<F4> and (e) Critically Undercapitalized.<F5>                  
All insured institutions (e.g., the Bank) are barred from making                
capital distributions or paying management fees to a controlling                
person (e.g., the Company) if to do so would cause the                          
institution to fall into any of the three undercapitalized                      
categories.                                                                     

---------                                                                       
<F1>  Well Capitalized means a financial institution with a total               
risk-based ratio of 10% or more, a Tier 1 risk-based ratio of       
6% or more and a leverage ratio of 5% or more, so long as           
the institution is not subject to any written agreement or          
order issued by the FDIC.                                           
<F2>  Adequately Capitalized means a total risk-based ratio of                  
8% or more, a Tier 1 risk-based ratio of 4% or more and a           
leverage ratio of 4% or more (3% or more if the institution has     
received the highest composite rating in its most recent report     
of examination) and does not meet the definition of a Well          
Capitalized institution.                                            
<F3>  Undercapitalized means a total risk-based capital ratio                   
of less than 8%, a Tier 1 risk-based capital ratio of less than     
4% or a leverage ratio of less than 4%.                             
<F4>  Significantly Undercapitalized means a financial                          
institution with a total risk-based ratio of less than 6%, a Tier   
1 risk-based ratio of less than 3% or a leverage ratio of less      
than 3%.                                                            
<F5>  Critically Undercapitalized means a financial                             
institution with a ratio of tangible equity to total assets that    
is equal to or less than 2%.                                        
---------                                                                       

An institution which is undercapitalized, significantly               
undercapitalized or critically undercapitalized becomes subject                 
to mandatory supervisory actions, including: (1) restrictions on                
payment of capital distributions, such as dividends; (2)                        
restrictions on payment of management fees to any person having                 
control of the institution; (3) close monitoring by the FDIC of                 
the condition of the institution, compliance with capital                       
restoration plans, restrictions, and requirements imposed under                 
Section 38 of the FDIA, and periodic review of the institution's                
efforts to restore its capital and comply with restrictions; (4)                
submission to the FDIC of a capital restoration plan; (5)                       
requirement that any company which controls an undercapitalized                 
institution must guarantee, in an amount equal to the lesser of                 
5% of the institution's total assets or the amount needed to                    
bring the institution into full capital compliance, that the                    
institution will comply with the capital restoration plan until                 
the institution has been adequately capitalized, on the average,                
for four consecutive quarters; (6) restrictions on the                          
institution's asset growth; and (7) limitations on the                          
institution's ability to make any acquisition, open any new                     
branch offices or engage in any new line of business.                           

Significantly undercapitalized and undercapitalized                   
institutions that fail to submit and implement adequate capital                 
restoration plans are subject to the mandatory provisions set                   
forth above and, in addition, to increasingly stringent operating               
restrictions, including an immediate requirement to raise                       
capital.                                                                        

Finally, a critically undercapitalized institution must be            
placed in conservatorship or receivership within 90 days of                     
becoming critically undercapitalized, unless the FDIC determines                
that other action would better achieve the purposes of the FDIA.                
Critically undercapitalized institutions which are not placed in                
conservatorship or receivership may be subject to additional                    
stringent operating restrictions.                                               

Safety and Soundness; Other Provisions of FDICIA            

FDICIA required the federal banking agencies to adopt                 
regulations or guidelines with respect to safety and soundness                  
standards.  The agencies have adopted uniform guidelines which                  
are used, primarily in connection with examinations, to identify                
and address problems at insured depository institutions before                  
capital becomes impaired.   The federal bank regulatory agencies                
have adopted asset quality and earnings standards as part of the                
safety and soundness guidelines.  The asset quality standards                   
require a depository institution to establish and maintain a                    
system appropriate to the institution's size and operations to                  
identify and prevent deterioration in problem assets.  With                     
respect to earnings, the institution should adopt and maintain a                
system to evaluate and monitor earnings and ensure that earnings                
are sufficient to maintain adequate capital and reserves.                       

The federal banking agencies recently published a "Policy             
Statement on the Internal Audit Function and its Outsourcing,"                  
which provides guidance on the elements of an effective internal                
audit function, including director and senior management                        
responsibilities, the structure of the internal audit department                
and procedures for resolving internal control weaknesses.  The                  
Policy Statement also provides guidance on how outsourcing                      
arrangements may affect an examiner's internal control                          
assessment, as well as the independence of an external auditor                  
who is also providing internal audit services to an institution.                

In response to the increasing number of financial                     
institutions using the Internet, the FDIC recently issued a paper               
identifying many of the risks to an institution's information                   
system security associated with Internet use, together with                     
several security and risk control measures.  The paper is                       
designed to complement the FDIC's safety and soundness                          
examination procedures for electronic banking activities. No                    
Internet Banking Services are offered.                                          

FDICIA restricts the acceptance of brokered deposits by               
insured depository institutions that are not well capitalized.                  
It also places restrictions on the interest rate payable on                     
brokered deposits and the solicitation of such deposits by such                 
institutions.  An undercapitalized institution will not be                      
allowed to solicit brokered deposits by offering rates of                       
interest that are significantly higher than the prevailing rates                
of interest on insured deposits in the particular institution's                 
normal market areas or in the market area in which such deposits                
would otherwise be accepted.  In addition to these restrictions                 
on acceptance of brokered deposits, FDICIA provides that no                     
pass-through deposit insurance will be provided to employee                     
benefit plan deposits accepted by an institution which is                       
ineligible to accept brokered deposits under applicable law and                 
regulations.                                                                    

Pursuant to FDICIA, the FDIC has established a risk-based             
assessment system for depository institutions.  This risk-based                 
system is used to calculate a depository institution's semiannual               
deposit insurance assessment based on the probability that the                  
deposit insurance fund will incur a loss with respect to the                    
institution.  To arrive at a risk-based assessment for each                     
depository institution, the FDIC has constructed a matrix of nine               
risk categories based on capital ratios and relevant supervisory                
information.  Each institution is assigned to one of three                      
capital categories: "well capitalized," "adequately capitalized"                
or "undercapitalized." Each institution also is assigned to one                 
of three supervisory groups based on levels of risk.  Risk                      
assessment premiums are based on an institution's assignment                    
within the matrix and for 1997 ranged from $0.0 to $0.27 per $100               
of deposits. The FDIC has stated that the foregoing risk                        
assessment premiums will be in effect indefinitely.                             

FDICIA also places restrictions on insured state bank                 
activities and equity investments, interbank liabilities and                    
extensions of credit to insiders and transactions with                          
affiliates.                                                                     

Other Recent Legislation                                              

On September 23, 1994, President Clinton signed into law the          
Riegle Community Development and Regulatory Improvement Act of                  
1994 (the "Regulatory Improvement Act").  The Regulatory                        
Improvement Act provides regulatory relief for both large and                   
small banks by, among other things, reducing the burden of                      
regulatory examinations, streamlining bank holding company                      
procedures and establishing a formal regulatory appeals process.                
The Regulatory Improvement Act also addresses a variety of other                
topics, including, but not limited to, mortgage loan settlement                 
procedures, call reports, insider lending, money laundering,                    
currency transaction reports, management interlocks, foreign                    
accounts, mortgage servicing and credit card receivables.                       
Although the Regulatory Improvement Act should reduce the                       
regulatory burden currently imposed on banks, it is not possible                
to ascertain the precise effect its various provisions will have                
on the Company or the Bank.                                                     

Year 2000 Compliance                                                            

The Federal Financial Institutions Examination Council                
("FFIEC") released interagency statements in May and December,                  
1997 addressing critical issues for Year 2000 readiness.  Year                  
2000 issues exist because most computer programs use only two                   
digits to identify a year in the date field (e.g., "98" for                     
"1998").  Bank information processing systems must be made year                 
2000 compliant well in advance of December 31, 1999.  In addition,              
banks face risks from vendors whose programs are not                            
Year 2000 compliant and must begin testing of programming changes               
no later than December 31, 1998.  The computer programs of banks'               
corporate customers also may pose Year 2000 risks.  Failure to                  
address Year 2000 issues could affect a borrower's                              
creditworthiness.  Accordingly, the FFIEC guidelines require                    
senior management to provide the board of directors with                        
quarterly or more frequent reports on efforts to reach Year 2000                
goals both internally and by the institution's major vendors.                   
Each institution must implement its own internal testing or                     
verification processes for vendor products and services to insure               
that its different computer systems function properly together                  
and should develop processes to periodically assess large                       
corporate borrower Year 2000 efforts.  Finally, institutions                    
should develop contingency plans for all vendors that service                   
"mission-critical" applications should the vendor not complete                  
its conversion efforts on time.                                                 

Year 2000 Computer Considerations.  Many existing computer            
programs use only two digits to identify a year in the date field               
(e.g., "98" for "1998").  As a result, the Company, like most                   
other companies, will face a potentially serious information                    
systems (computer) problem because many software applications and               
operational programs written in the past may not properly                       
recognize calendar dates beginning in the year 2000.  If not                    
corrected, many computer applications could fail or create                      
erroneous results by or at the year 2000.                                       

The Company began the process of identifying the changes              
required to its software and hardware in 1997, in consultation                  
with software and hardware providers, a consulting firm and bank                
regulators.  While the Company believes it is taking all                        
appropriate steps to assure that its information systems are                    
prepared for the year 2000, it is dependent on vendor compliance                
to some extent.  The Company is requiring its systems and                       
software vendors to represent that the services and products                    
provided are, or will be, year 2000 compliant, and contemplates a               
program of testing compliance to commence in 1998.  The Company                 
estimates that is costs related to year 2000 compliance will be                 
at least $100,000 and may be significantly more.  The "year 2000"               
problem is pervasive and complex as virtually every computer                    
operation will be affected in some way by the rollover of the two               
digit year value to 00.  Consequently, no assurance can be given                
that year 2000 compliance can be achieved without costs and                     
uncertainties that might affect future financial results or cause               
reported financial information not to be necessarily indicative                 
of future operating results or future financial condition.                      

The Company's customers, including its borrowers, are also            
faced with potential year 2000 problems.  The Company has adopted               
procedures to inquire of its borrowers whether they are taking                  
steps to address the problem.  The failure of its borrowers to                  
resolve the problem could adversely affect their operations  and                
impair their ability to repay their loans to the Company.                       
Therefore, even if the Company were to resolve its own direct                   
year 2000 problems, it could nevertheless be materially and                     
adversely affected if its borrowers do not also successfully                    
resolve their year 2000 problem.                                                

Consumer Protection Laws and Regulations                                        

The bank regulatory agencies are focusing greater attention           
on compliance with consumer protection laws and their                           
implementing regulations.  Examination and enforcement have                     
become more intense in nature, and insured institutions have been               
advised to monitor carefully compliance with such laws and                      
regulations.  The Bank is subject to many federal consumer                      
protection statutes and regulations, some of which are discussed                
below.                                                                          

The Community Reinvestment Act ("CRA") is intended to                 
encourage insured depository institutions, while operating safely               
and soundly, to help meet the credit needs of their communities.                
The CRA specifically directs the federal regulatory agencies, in                
examining insured depository institutions, to assess a bank's                   
record of helping meet the credit needs of its entire community,                
including low- and moderate-income neighborhoods, consistent with               
safe and sound banking practices.  The CRA further requires the                 
agencies to take a financial institution's record of meeting its                
community credit needs into account when evaluating applications                
for, among other things, domestic branches, mergers or                          
acquisitions, or holding company formations.  The agencies use                  
the CRA assessment factors in order to provide a rating to the                  
financial institution.  The ratings range from a high of                        
"outstanding" to a low of "substantial noncompliance."  The Bank                
was examined for CRA compliance by its primary regulator within                 
the past 12 months and received a "Satisfactory" CRA Assessment                 
Rating.  New evaluation criteria in the examination process for                 
small institutions (total assets of $250 million or less) were                  
implemented on January 1, 1996, while new criteria for large                    
institutions (assets of $250 million or more and, for multiple-                 
bank holding companies, total bank and thrift assets in excess of               
$1 billion) were implemented beginning July 1, 1997.                            

The Equal Credit Opportunity Act ("ECOA") generally                   
prohibits discrimination in any credit transaction, whether for                 
consumer or business purposes, on the basis of race, color,                     
religion, national origin, sex, marital status, age (except in                  
limited circumstances), receipt of income from public assistance                
programs, or good faith exercise of any rights under the Consumer               
Credit Protection Act.  The Truth in Lending Act ("TILA") is                    
designed to ensure that credit terms are disclosed in a                         
meaningful way so that consumers may compare credit terms more                  
readily and knowledgeably.  As a result of the TILA, all                        
creditors must use the same credit terminology to express rates                 
and payments, including the annual percentage rate, the finance                 
charge, the amount financed, the total of payments and the                      
payment schedule, among other things.                                           

The Fair Housing Act ("FH Act") regulates many practices,             
including making it unlawful for any lender to discriminate in                  
its housing-related lending activities against any person because               
of race, color, religion, national origin, sex, handicap, or                    
familial status.  A number of lending practices have been found                 
by the courts to be, or may be considered, illegal under the FH                 
Act, including some that are not specifically mentioned in the FH               
Act itself.  The Home Mortgage Disclosure Act ("HMDA") grew out                 
of public concern over credit shortages in certain urban                        
neighborhoods and provides public information that will help show               
whether financial institutions are serving the housing credit                   
needs of the neighborhoods and communities in which they are                    
located.  The HMDA also includes a "fair lending" aspect that                   
requires the collection and disclosure of data about applicant                  
and borrower characteristics as a way of identifying possible                   
discriminatory lending patterns and enforcing anti-discrimination               
statutes.                                                                       

Finally, the Real Estate Settlement Procedures Act ("RESPA")          
requires lenders to provide borrowers with disclosures regarding                
the nature and cost of real estate settlements.  Also, RESPA                    
prohibits certain abusive practices, such as kickbacks, and                     
places limitations on the amount of escrow accounts.                            

Penalties under the above laws may include fines,                     
reimbursements and other penalties.  Due to heightened regulatory               
concern related to compliance with the CRA, TILA, FH Act, ECOA,                 
HMDA and RESPA generally, the Bank may incur additional                         
compliance costs or be required to expend additional funds for                  
investments in its local community.                                             

Recent Accounting Pronouncements                                                

In June 1997, the Financial Accounting Standards Board                
("FASB") issued Statement of Financial Accounting Standards No.                 
130, Reporting Comprehensive Income ("SFAS No. 130"), which                     
establishes standards for the reporting and display of                          
comprehensive income and its components in financial statements.                
Comprehensive income represents net income and certain amounts                  
reported directly in equity, such as the net unrealized gain or                 
loss on available-for-sale securities.  SFAS No. 130 requires an                
enterprise to display an amount representing total comprehensive                
income for the period.  SFAS No. 130 is effective for interim and               
annual periods beginning after December 15, 1997.                               

In June 1997, the FASB also issued Statement of Financial             
Accounting Standards No. 131, Disclosures about Segments of an                  
Enterprise and Related Information ("SFAS No. 131").  Among other               
things, SFAS No. 131 requires public companies to report (i)                    
certain financial and descriptive information about its                         
reportable operating segments, and (ii) certain enterprise-wide                 
financial information about products and services, geographic                   
areas and major customers.  The required segment financial                      
disclosures include a measure of profit or loss, certain specific               
revenue and expense items, and total assets.  SFAS No. 131 is                   
effective for fiscal year 1998.                                                 

Management of the Company does not anticipate that the                
adoption of SFAS Nos. 130 and 131 will have a material impact on                
the Company's Financial Statements.                                             

Other                                                                           

Other legislation which has been or may be proposed to the            
United States Congress and the California Legislature and                       
regulations which may be proposed by the Federal Reserve, the                   
FDIC and the DFI may affect the business of the Company or the                  
Bank.  It cannot be predicted whether any pending or proposed                   
legislation or regulations will be adopted or the effect such                   
legislation or regulations may have upon the business of the                    
Company or the Bank.                                                            

COMPETITION                                                                     

The Bank's primary market area presently consists of                  
portions of the Vacaville, Fairfield, Benicia and Vallejo areas                 
of Solano County and the Concord area of Contra Costa County.                   
The banking business in California generally, and specifically in               
the Bank's primary market area, is highly competitive with                      
respect to both loans and deposits.  A relatively small number of               
major banks dominate the business, most of which have many                      
offices operating over wide geographic areas.  Many major                       
commercial banks offer certain services (such as international,                 
trust and securities brokerage services) which the Bank does not                
offer directly.  By virtue of their greater total capitalization,               
such banks have much higher lending limits than the Bank and                    
substantial advertising and promotional budgets.                                

However, regional and smaller independent financial                   
institutions also represent a competitive force.  To illustrate                 
the Bank's relative market share, total deposits in banks and savings           
and loans in Solano County, California at June 30, 1997                         
(more recent data is not available) approximated $1,966,000,000.                
The Bank's deposits at June 30, 1997 represented approximately 8%               
of such figure.  As of June 30, 1997, the Bank was the fourth                   
largest Bank, behind Bank of America, Wells Fargo Bank and                      
Westamerica Bank, serving all the major cities in Solano County.                
In October 1996 the Bank purchased a branch in Concord California               
from Tracy Federal Savings Bank. The total deposits in banks and                
savings and loans in Contra Costa County, where Concord is                      
located, at June 30, 1997, were approximately $15,210,000,000.                  

To compete with major financial institutions in its service           
area, the Bank relies upon specialized services, responsive                     
handling of customer needs, local promotional activities, and                   
personal contacts by its officers, directors and staff.  For                    
customers whose loan demands exceed the Bank's lending limits,                  
the Bank seeks to arrange for such loans on a participation basis               
with its correspondent banks or other independent commercial                    
banks.  The Bank also assists customers requiring services not                  
offered by the Bank to obtain such services from its                            
correspondent banks.                                                            

In the past, an independent Bank's principal competitors for          
deposits and loans have been other banks (particularly major                    
banks), savings and loan associations and credit unions.  To a                  
lesser extent, competition was also provided by thrift and loans,               
mortgage brokerage companies and insurance companies.  Other                    
institutions, such as brokerage houses, credit card companies,                  
and even retail establishments have offered new investment                      
vehicles, such as money-market funds, which also compete with                   
banks for deposit business. The direction of federal legislation                
in recent years seems to favor competition between different                    
types of financial institutions and to foster new entrants into                 
the financial services market, and it is anticipated that this                  
trend will continue.                                                            

The enactment of the Riegle-Neal Act as well as the                   
California Interstate Banking and Branching Act of 1995 will                    
likely increase competition within California.  Regulatory                      
reform, as well as other changes in federal and California law                  
will also affect competition.  While the impact of these changes,               
and of other proposed changes, cannot be predicted with                         
certainty, it is clear that the business of banking in California               
will remain highly competitive.                                                 

SUMMARY                                                                         

It is impossible to predict with any degree of accuracy the           
competitive impact these laws will have on commercial banking                   
overall and the business of the Bank in particular or whether any of            
the proposed legislation and regulations will be adopted.  If                   
experience is any indication, there appears to be a continued                   
lessening of the historical distinction between the services                    
offered by financial institutions and other businesses offering                 
financial services.  As a result of these trends, it is                         
anticipated that banks will experience increased competition for                
deposits and loans and, possibly, further increases in their cost               
of doing business.                                                              

ITEM 2  -  DESCRIPTION OF PROPERTY                                              

The Vacaville main office is located in a modern, one-story           
building of 7,700 square feet at 141 Parker Street, Vacaville,                  
California. This office has liberal off-street parking                          
accommodations. The Branch's annual rental payment for 1997 was                 
$74,260. Its rent for 1998 will be $75,012.  The lease term                     
expires in December 1998, with two successive five-year renewal                 
options. The Bank also has a right of first refusal to purchase                 
the premises.  The Bank intends to relocate its main office to                  
Pacific Plaza West or Pacific Plaza East and therefore does not                 
intend to renew the existing lease.                                             

The second Vacaville branch is located in the factory stores          
area of Vacaville, California. This 3,600 square foot stand alone               
office has ample parking on the site. The Bank signed a 20-year                 
ground lease in May 1994 with rent increases scheduled every five               
years. The annual rent is $31,250 plus common area maintenance                  
(cam) expenses. In 1997, rent and cam expenses totaled $40,989.                 

The Fairfield branch office is located in freestanding                
building at 1100 Texas Street, Fairfield, California, and                       
comprises 5,760 square feet. This office has parking for                        
approximately 42 cars. The lease term expired in 1993, with a                   
single five-year renewal option. The Bank exercised  it's option                
to renew the lease for five years and in  January 1996 negotiated               
an extension of the lease to December 2002 in exchange for a                    
reduction in rent of approximately $2,000 a month. The annual                   
rental payments during 1997 totaled $58,402. In November 1996 the               
Bank began interior reconstruction of the office in an effort to                
provide larger office space for the Bank's Central/Data                         
Operations departments. At December 31, 1996, these departments                 
were in the rear of the Vacaville main office.  In January 1997,                
with the reconstruction completed, the departments were moved to                
the Fairfield Texas Street Office.  As a result, the space                      
occupied by the Branch was greatly reduced and the Branch became                
an express branch for deposit services only.                                    

A second Fairfield office, located at 1300 Oliver Road,               
Fairfield, California has been in operation since 1993. The                     
office occupies approximately 3,819 rental square feet in a                     
60,000 square foot commercial office building. The office has                   
ample parking. The lease began in August 1993 and has a term of                 
15 years. Rental and cam expenses in 1997 totalled $90,151. Rent                
is adjusted annually in August to reflect changes in the CPI.                   

The Bank has occupied its facility at 1001 First Street,              
Benicia, California, since June 1987. This two-story, 2,600                     
square foot building was constructed to the Bank's specifications               
at a cost of approximately $435,000. There is off-street parking                
for approximately 10 cars. The Bank purchased the property in                   
early 1986 from an unaffiliated party for approximately $125,000.               
On May 28, 1988, the Bank sold this property to an unaffiliated                 
party for $625,000. After deducting  $25,000 for real estate                    
commissions, the sale and lease back of the property resulted in                
a $40,000 profit which will be deferred over the life of the                    
lease. The lease, which was effective on May 1, 1988, has a                     
fifteen year term and has two successive five-year renewal                      
options. The annual rental in 1997 was $72,930.                                 

The Bank maintains two offices in the city of Vallejo,                
California. The first office opened in June 1987 and is located                 
at 303 Sacramento Street. The premises are leased for a monthly                 
base rental of  $5,900, adjusted to reflect changes in the CPI                  
(minimum of 4% to a maximum of 6%) on an annual basis. Those                    
terms are effective from January 1, 1988 to December 31, 1997.                  
From January 1, 1998 to December 31, 2007, there will be a new                  
base rental of $5,500 adjusted to reflect changes in the CPI on                 
an annual basis. The accumulated change in the CPI will be                      
adjusted back for the period beginning January 1, 1988 and ending               
January 1, 1998. The annual rental in 1997 was $103,122.                        

The second Vallejo office, which opened in March 1992, is             
located in the Park Place shopping center at 4300 Sonoma                        
Boulevard, Suite 300. The rent for the building, which is a                     
modern 3,900 square foot, one-story stand alone building, is                    
$70,056 per year plus common area maintenance. The lease term                   
expires in January 1997 with three five-year renewal options.  In               
December 1996, the Bank exercised the first five-year option and                
negotiated the base rent downward to $63,180 per year plus cam                  
expenses. This new rent is effective beginning with the February                
1, 1997 payment. Each subsequent year the rent will increase by                 
$2,340 per year. Total rental and cam payments during 1997                      
totaled $78,104.                                                                

The Bank opened it's first office in Contra Costa County on           
October 12, 1996 in the City of Concord, California at 2151                     
Salvio Street, Suite H. The office occupies approximately 2,866                 
square feet in an approximately 120,000 square foot commercial                  
office building. The lease has a term of 3 years and has a single               
five-year renewal option. The annual rent is $42,990 plus cam                   
expenses until October 1, 1997, at which time the rent increases                
to $44,710 per year through the remaining term of the lease. The                
rental payments in 1997 totaled $49,615.                                        

Conpac owns two parcels of land, one of approximately 84,500          
square feet which is located east of Davis Street in Vacaville,                 
California, and one of approximately 38,500 square feet located                 
west of Davis Street in Vacaville, California. Both lots are part               
of the Pacific Plaza project. The eastern lot, known as Pacific                 
Plaza East, was purchased in July 1988 at a cost of $612,500. The               
western lot, Pacific Plaza West, consisted of three parcels and                 
was purchased in stages. Two of the parcels were purchased for                  
approximately $225,000 in July 1988. The third lot was leased at                
$1,100 per month from July 1988 to June 1990, at which time it                  
was purchased by Conpac for $225,000. See, "Description of                      
Business - Real Estate Development Subsidiary",  herein.                        

In September 1993, the Bank moved its corporate offices to            
Pacific Plaza East, where it now occupies 3,796 square feet. Rent               
of $90,780 was paid to Conpac in 1997, which amount is eliminated               
upon consolidation with the Company. The Company does not occupy                
any space other than that shared with the Corporate offices on                  
the Bank.                                                                       

ITEM 3  -  LEGAL PROCEEDINGS                                                    

None of the Company, the Bank or Conpac is a party to or the          
subject of, or is any of their property the subject of, any                     
material pending legal proceedings, other than ordinary routine                 
litigation incidental to the business of the Company.                           

ITEM 4  -  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                  

No matter was submitted to a vote of security holders,                
through the solicitation of proxies or otherwise, during the                    
fourth quarter of the fiscal year covered by this report.                       

PART II                                                                         

ITEM 5  -  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER                     
MATTERS                                                                         

Prior to the Reorganization on February 29, 1996, the Bank's          
Common Stock was traded over-the-counter and privately and the                  
Bank was it's own transfer agent, handling all stock related                    
functions. As of the date of Reorganization, each outstanding                   
share of common stock was converted into one share of common                    
stock of the Company . As a result of the Reorganization, the                   
Bank's stock ceased trading on February 29, 1996. On March 14,                  
1996, the Company's stock was added to the Nasdaq National Market               
under the symbol "CCBC". This listing allows easy electronic                    
access to trading prices and volume through brokers and the                     
Internet alike.  On April 1, 1996, United States Trust Company of               
California became the Company's transfer agent.                                 

The following table indicates the historical range of high            
and low sales prices for the Company's common stock, excluding                  
brokers' commissions, for the periods shown based upon                          
information provided by Nasdaq.                                                 

                                                                [Download Table]


                          Bid Price of        Approximate            Cash     
                         Common Stock          Trading            Dividends   
Quarter Ended:          High        Low         Volume          Declared/Paid 
                      -------------------    -----------       ---------------
                                                                              
1996                                                                          
First Quarter         $16.000     $14.000       31,381               0.125    
Second Quarter        $14.500     $13.250       48,311               0.150    
Third Quarter         $15.750     $13.750       45,616               0.150    
Fourth Quarter        $16.500     $15.750       32,266               0.150    

1997                                                                          
First Quarter         $18.250     $16.000       42,271               0.150    
Second Quarter        $17.750     $16.000      125,532               0.150    
Third Quarter         $26.000     $17.000      125,385               0.150    
Fourth Quarter        $28.500     $24.000      207,754               0.150    

The last known trade in the Company's Common Stock occurred           
on March 20, 1998 for 2,000 shares at $29.875 per share.  As of                 
March 24, 1998, the approximate number of holders of record of                  
the Company's Common Stock was 620.  Management believes the                    
Company's Common Stock is held by approximately 917 beneficial                  
owners.                                                                         

AUTOMATIC DIVIDEND REINVESTMENT AND COMMON STOCK PURCHASE PLAN                  

In July 1996, the Company adopted its Automatic Dividend              
Reinvestment and Common Stock Purchase Plan (the "Dividend                      
Reinvestment Plan").  The Dividend Reinvestment Plan allows                     
eligible shareholders of the Company (those holding of record 100               
or more shares of the Company's Common Stock) to automatically                  
acquire additional shares of the Company's Common Stock through                 
the reinvestment of cash dividends or through the purchase of                   
additional shares of Common Stock with supplemental cash                        
investments without the payment of any brokerage commission or                  
service charge.  The Dividend Reinvestment Plan includes certain                
dollar limitations on additional cash payments and is                           
administered by U.S. Trust Company, N.A. pursuant to an agency                  
agreement with the Company.  Shares acquired through the Dividend               
Reinvestment Plan are purchased in the open market or in                        
negotiated transactions.  The Company will not issue new shares of              
Common Stock to participants under the Dividend Reinvestment                    
Plan.                                                                           

For information related to stockholder and dividend matters,          
including limitations on dividends, see Item 1, Description of                  
Business-Regulation and Supervision of Bank Holding Company and-                
Restrictions on Dividends and Other Distributions.                              

ITEM 6  -  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF                      
OPERATION                                                                       

Certain matters discussed or incorporated by reference in             
this Annual Report on Form 10-KSB are forward-looking statements                
that are subject to risks and uncertainties that could cause                    
actual results to differ materially from those projected in the                 
forward-looking statements.  Such risks and uncertainties                       
include, but are not limited to, those described in ITEM 6. -                   
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.                      
Therefore, the information set forth therein should be carefully                
considered when evaluating the business prospects of the Company                
and the Bank.                                                                   

FINANCIAL REVIEW                                                                

California Community Bancshares Corporation (the "Company")           
became the holding company for Continental Pacific Bank (the                    
"Bank"), a California state-chartered non-member Bank, as of                    
February 29, 1996. The following discussion of the Company's                    
financial condition and results of operations is designed to                    
provide a better understanding of the changes and trends related                
to the Company's financial condition, liquidity and capital                     
resources.  The discussion should be read in conjunction with all               
other information herein, including the Consolidated Financial                  
Statements of the Company and the Notes thereto.  The Company has               
not commenced any business operations independent of the Bank,                  
therefore the following discussion pertains primarily to the                    
Bank.  Average balances are generally comprised of daily                        
balances.                                                                       

OVERVIEW                                                                        

The Company's net income in 1997 was $1,439,000, an 8%                
decrease from the $1,559,000 reported in 1996.  Diluted earnings                
per share were $1.15 in 1997 as compared to $1.32 in 1996 and                   
$1.22 in 1995.  Assets ended the year at $197.0 million, an                     
increase of $5.2 million over the $191.8 million at December 31,                
1996.  Assets averaged $191.1 million during 1997 versus $169.0                 
million in 1996, for a $22.1 million (13.1%) increase.  The 8%                  
decrease in earnings and the 13.1% increase in average assets                   
resulted in a Return on Average Assets (ROA) of .75% for 1997.                  
This was 18.5% lower than 1996's ROA of .92%.  Return on Average                
Equity in 1997 was 9.93% compared to 12.25% in 1996.  The factors               
influencing income, as discussed more fully below, were merger                  
related expenses, declining interest margin, a slight decrease in               
noninterest income and an increase in noninterest expenses.                     

On November 13, 1997, the Company entered into a Plan of              
Acquisition and Merger ("Plan") with SierraWest Bancorp                         
("SierraWest").  Under the terms of the Agreement, SierraWest                   
will acquire all the outstanding common stock of the Company in                 
exchange for shares of SierraWest common stock at an exchange                   
ratio defined by a formula in the Plan.  The merger, which is                   
expected to close early in the second quarter of 1998, has been                 
approved by company's shareholders and state and federal banking                
regulatory agencies.  On the Effective Date,  each of the                       
Company's outstanding Convertible Subordinated Debentures Due                   
April 30, 2003, shall by virtue of the merger, be assumed by                    
SierraWest in accordance with the terms of the related Indenture                
Agreement,  provided, however, and as required by the Indenture                 
Agreement the conversion price of such debentures into SierraWest               
shares shall be adjusted by dividing the current conversion price               
of $12.75 by the exchange ratio on the Effective Date.  The                     
merger will be accounted for as a pooling of interest.  See                     
"Description of Business - Merger with SierraWest Bancorp".                     

Capital, a key measure of a Company's safety and soundness,           
increased in 1997 as Tier 1 Capital increased from $13,104,000 at               
December 31, 1996 to $15,374,000 at December 31, 1997 (17.3%).                  

The detailed changes in the nature and sources of income and          
expense for the years shown are highlighted in the following                    
table of consolidated statements of operations.                                 

                                                        [Enlarge/Download Table]

                                  -------------------------------------------------------- 
                                                     Year Ended December 31                
                                  -------------------------------------------------------- 
                                   1997 VS.1996        1996 VS. 1995       1995 VS.1994    
                                   Amount Percent      Amount Percent      Amount Percent  
                                   Incr. / (Decr)      Incr. / (Decr)      Incr. / (Decr)  
                                  -------------------------------------------------------- 
                                                     (Dollars in thousands)                
                                  -------------------------------------------------------- 
                                                                                           
Interest Income                    $1,153      9%        $ 792        6%     $1,357     12%
Interest Expense                      657     12         (  16)       0       1,385     34 
Net Interest Income                   496      6           808       12      (   28)     0 
Provision for Loan Losses          (   92)   (22)           87       27          68     27 
Net Interest Income                                                                        
 After Provision for Loan Losses      588      8           721       11      (   96) (   1)
Noninterest Income Excluding                                                               
 Securities Transactions           (   71)   ( 4)          252       15          44      3 
Noninterest Expense                   548      8           151        2         152      2 
Earnings Before Income Taxes and                                                           
 Securities Transactions           (   31)   ( 2)          822       52      (  204) (  11)
Securities Transactions            (   41)   (49)        ( 398)   (  83)        472   5,244
Provisions for Income Taxes            48      5           270       42          84      15
                                    -----    ---        ------    -----        ----   -----
Net Income                         (  120)   ( 8)          154       11         184      15
                                    =====    ===        ======    =====        ====   =====


NET INTEREST INCOME                                                             

Average interest earning assets increased $19.6 million to            
$171.0 million in 1997, from $151.4 million in 1996.  Average net               
loans, the highest yielding earning asset category contributed                  
$5.7 million of this growth, while significantly lower yielding                 
average investments increased $13.9 million.  This growth                       
distribution along with lower yields resulted in an overall                     
decline in the yield earned on average earning assets.  In 1997,                
the average yield earned on earning assets declined to 8.33% from               
an average yield of 8.65% in 1996.  The combined effect of                      
significantly increased volume offset by modestly lower yields                  
improved interest income by $1,153,000 to $14,255,000 in 1997                   
from $13,102,000 in 1996.                                                       

In 1997, average equity increased by $1.8 million and                 
average noninterest bearing deposits increased by $2.1 million.                 
Average interest-bearing liabilities increased $17.7 million in                 
1997 to $148.9 million from $131.2 million.  The growth in                      
deposits included a $9.4 million increase resulting from the                    
Concord Branch purchase completed in the fourth quarter of 1996.                
The remaining increase was derived from internal deposit growth                 
and borrowed funds.  Lower interest cost, average interest-bearing              
NOW accounts and average savings deposits contributed                           
$8.6 million of this growth, while higher interest cost, average                
time deposits and security repurchase agreements increased $9.1                 
million.                                                                        

This growth mix along with the varying degrees and                    
directions of rate changes paid on these liabilities resulted in                
a slight decline in the average rate paid on interest bearing                   
liabilities.  In 1997, the average rate paid on interest bearing                
liabilities declined to 4.11% from an average rate paid of 4.17%                
in 1996.  The net result of slightly lower average rates paid and               
the significantly increased volume was a $657,000 increase in                   
interest expense.                                                               

The result of the $1,153,000 increase in interest income and          
the $657,000 increase in interest expense increased net interest                
income by $496,000 to $8,133,000 in 1997 from $7,637,000 recorded               
in 1996.  Net interest income in 1996 was, in turn, $808,000                    
higher than the $6,829,000 reported in 1995.                                    

DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND STOCKHOLDERS'                   
EQUITY; INTEREST RATES AND DIFFERENTIALS                                        

The following table presents, for the periods indicated,              
condensed average balance sheet information for the Company,                    
together with average interest rates earned and paid on the                     
various sources and uses of its funds, the amount of interest                   
income or interest expense, the net interest margin, and net                    
interest spread.  The table is arranged to group the elements of                
interest-earning assets and interest-bearing liabilities, these                 
items being the major sources of income and expense.  Nonaccruing               
loans are included in the table for computational purposes, but                 
the nonaccrued interest thereon is excluded.  Tax exempt income                 
is not shown on a tax equivalent basis.                                         

                                                        [Enlarge/Download Table]

                                                                    Year Ending December 31,                                  
                                              1997                           1996                            1995             
                               ---------------------------------------------------------------------------------------------  
                                            Interest  Average               Interest  Average               Interest  Average 
                               Average      Earned/   Yield/   Average      Earned/   Yield/   Average      Earned/   Yield/  
                               Balance<F1>  Paid      Rate     Balance<F1>  Paid      Rate     Balance<F1>  Paid      Rate    
                               ---------------------------------------------------------------------------------------------  

                                                                                                                              
ASSETS:                                                                                                                       
INTEREST EARNING ASSETS                                                                                                       
Federal Funds Sold             $  3,182     $   165    5.19%    $  3,469     $   183    5.28%    $  2,040     $   116    5.69%
Investment Securities:                                                                                                        
 Taxable <F2>                    46,501       2,826    6.08       30,457       1,869    6.14       17,773       1,126    6.34 
 Exempt From Federal                                                                                                          
   Taxes<F3>                      4,622         238    5.15        6,477         346    5.34       12,121         698    5.76 

Loans, Net <F4>, <F5>           116,726      11,026    9.45      111,052      10,704    9.64      109,372      10,370    9.48 
                               --------     -------             --------     -------             --------     -------         
Total Interest Earning Assets  $171,031     $14,255    8.33     $151,455     $13,102    8.65     $141,306     $12,310    8.71 
Cash and Due From Banks           9,911                            8,692                            7,522                     
Premises and Equipment, NET       2,233                            2,185                            2,242                     
Invest. in Development Ventures   4,441                            4,545                            4,661                     
Accrued Interest Receivable                                                                                                   
 and Other Assets                 3,485                            2,101                            2,368                     
                               --------                         --------                         --------                     
TOTAL AVERAGE ASSETS           $191,101                         $168,978                         $158,099                     
                               ========                         ========                         ========                     

LIABILITIES AND SHAREHOLDERS' EQUITY:                                                                                         

INTEREST-BEARING LIABILITIES:                                                                                                 
Interest-Bearing NOW accounts  $ 23,603     $   294    1.25%    $ 18,470     $   257    1.39%    $ 18,111     $   229    1.26%
Savings Deposits and MMDA        59,129       2,224    3.76       55,679       2,105    3.78       56,193       2,333    4.15 
Time Deposits                    38,203       1,966    5.15       30,499       1,546    5.07       30,292       1,628    5.37 
Time Deposits over $100,000      21,679       1,154    5.32       19,647       1,049    5.34       15,853         873    5.51 
Federal Funds Purchased             182          11    5.77           80           4    5.00          439          28    6.38 
Security Repurchase Agreements      396          20    5.18        1,000          50    5.00          816          44    5.39 
Other Borrowed Funds              2,650         230    8.68        1,885         146    7.75                                  
Subordinated Debentures           3,017         223    7.39        3,910         308    7.88        4,025         346    8.60 
                               --------     -------             --------     -------             --------     -------         
Total Average Interest -                                                                                                      
  Bearing Liabilities          $148,859     $ 6,122    4.11%    $131,170     $ 5,465    4.17%    $125,729     $ 5,481    4.36%
                                            -------    ----                  -------    ----                  -------    ---- 
Noninterest-Bearing DDA's        26,918                           24,817                           20,794                     
Accrued Interest Payable                                                                                                      
 and Other Liabilities              828                              261                              162                     
                               --------                         --------                         --------                     
Total Average Liabilities      $176,605                         $156,248                         $146,685                     
Total Equity                     14,496                           12,730                           11,414                     
                               --------                         --------                         --------                     
Total Average Liabilities                                                                                                     
 and Shareholders' Equity      $191,101                         $168,978                         $158,099                     
                               ========                         ========                         ========                     
Net Interest Spread <F6>                               4.22%                            4.48%                           4.35% 
                                                       ====                             ====                            ====  
Net Interest Income                         $ 8,133                          $ 7,637                         $ 6,829          
                                            =======                          =======                         =======          
Net Interest Margin <F7>                       4.76%                            5.04%                           4.83%         
                                            =======                          =======                         =======          
-------------------------------------------------                                                                             
<FN>                                                                                                                          
<F1> Average balances are computed principally on the basis of                                                                
     daily balances.                                                                                                          
<F2> The taxable securities yield is computed by dividing                                                                     
     interest income (annualized on an actual day basis) by average                                                           
     historical cost.                                                                                                         
<F3> The tax equivalent yield on exempt from federal taxes                                                                    
     investment securities (tax exempt investments) was 7.48%, 7.78%                                                          
     and 8.39% in 1997, 1996 and 1995. The tax equivalent yield is                                                            
     calculated by dividing the adjusted yield by one minus the                                                               
     Federal Tax rate. The adjusted yield is determined by subtracting                                                        
     the Tefra penalty from the unadjusted tax exempt investment                                                              
     yield. The unadjusted tax exempt investment yield is computed by                                                         
     dividing tax exempt interest income by their average historical                                                          
     cost. The Tefra penalty is computed by dividing total interest                                                           
     expense (annualized) by average assets and multiplying the result                                                        
     by 20% (Tefra disallowance) and 34% (Federal Tax rate).                                                                  
<F4> Allowance for loan losses and deferred loans are netted                                                                  
     from loans receivable which includes nonaccrual loan balances.                                                           
<F5> Interest income on loans includes fees on loans of                                                                       
     $428,000, $441,000 and $486,000 in 1997, 1996 and 1995.                                                                  
<F6> Net interest spread represents the average yield earned on                                                               
     interest-earning assets less the average rate paid on                                                                    
     interest-bearing liabilities.                                                                                            
<F7> Net interest margin is computed by dividing net interest                                                                 
     income by total average interest earning assets.                                                                         
</FN>                                                                                                                         

RATE AND VOLUME VARIANCES                                                       

The following tables set forth, for the periods indicated, a          
summary of the changes in interest income and interest expense                  
resulting from changes in average asset and liability balances                  
(volume) and changes in average yield / interest rate (rate).                   
The change in interest due to both rate and volume has been                     
allocated to change due to rate and volume in proportion to the                 
relationship of absolute dollar amounts in each.  Nonaccrual                    
loans are included in total loans outstanding, while nonaccrued                 
interest thereon is excluded from the computation of rates                      
earned.  Tax exempt income is not shown on a tax equivalent                     
basis.                                                                          

The following tables below illustrate the effect that                 
declining interest rates and volume increases had on net interest               
income.                                                                         

                                                                [Download Table]

                                           1997 Compared to 1996        
                                      -------------------------------   
                                                     Net                
                                        Volume       Rate      Change   
                                      -------------------------------   
                                            (Dollars in thousands)      
                                                                        
Increase (Decrease) in Interest Income:                                 
Federal Funds Sold                       (   15)     (     3)    (   18)
Taxable Investment Securities            $  975      $(   18)    $  957 
Exempt from Federal Taxes                                               
  Investment Securities                  (   96)     (    12)    (  108)
Loans, Net <F1>                             536      (   214)       322 
                                          -----       ------     ------ 
Total Interest Income                    $1,400      $(  247)    $1,153 
                                          =====       ======     ====== 
Increase (Decrease) in Interest Expense:                                
Interest-bearing NOW Accounts            $   64      $(   27)    $   37 
Savings Deposits and MMDA                   130      (    11)       119 
Time Deposits                               396           24        420 
Time Deposits over $100,000                 108      (     3)       105 
                                          -----       ------     ------ 
Total Interest Expense on Deposits          698      (    17)       681 
Federal Funds Purchased                       6            1          7 
Security Repurchase Agreements           (   32)           2     (   30)
Other Borrowings                             66           18         84 
Subordinated Debentures                  (   66)     (    19)    (   85)
                                          -----       ------     ------ 
Total Interest Expense                      672      (    15)       657 
                                          -----       ------     ------ 
Net Interest Income                      $  728      ($  232)    $  496 
                                          =====       ======     ====== 
--------------------------------------                                  
<FN>                                                                    
<F1>  Loan fees have been included in the interest income               
      computation.  Loan fees for 1997 and 1996 were $428,000 and       
      $441,000, respectively.                                           
</FN>                                                                   

                                                                [Download Table]

                                            1996 Compared to 1995    
                                      -------------------------------
                                                     Net             
                                        Volume       Rate      Change
                                      -------------------------------
                                            (Dollars in thousands)   
                                                                     
Increase (Decrease) in Interest Income:                              
Federal Funds Sold                       $ 75        ($  8)     $ 67 
Taxable Investment Securities             778        (  35)      743 
Exempt from Federal Taxes                                            
  Investment Securities                 ( 302)       (  50)    ( 352)
Loans, Net <F1>                           162          172       334 
                                         ----         ----      ---- 
Total Interest Income                    $713         $ 79      $792 
                                         ====         ====      ==== 
Increase (Decrease) in Interest Expense:                             
Interest-bearing Now Accounts            $  5         $ 23      $ 28 
Savings Deposits and MMDA               (  19)       ( 209)    ( 228)
Time Deposits                              10        (  92)    (  82)
Time Deposits over $100,000               203        (  27)      176 
                                         ----         ----      ---- 
Total Interest Expense on Deposits        199        ( 305)    ( 106)
Federal Funds Purchased                 (  18)       (   6)    (  24)
Security Repurchase Agreements              9        (   3)        6 
Other Borrowings                          146            0       146 
Subordinated Debentures                 (   9)       (  29)    (  38)
                                         ----         ----      ---- 
Total Interest Expense                    327        ( 343)    (  16)
                                         ----         ----      ---- 
Net Interest Income                      $386         $422      $808 
                                         ====         ====      ==== 
--------------------------------------                               
<FN>                                                                 
<F1>  Loan fees have been included in the interest income            
      computation.  Loan fees for 1996 and 1995 were $441,000 and    
      $486,000, respectively.                                        
</FN>                                                                

INTEREST INCOME ON EARNING ASSETS                                               

Average assets and liabilities grew significantly in 1997.            
As mentioned above, average interest earning assets grew by $19.6               
million in 1997 or 12.9%, compared to a $10.1 million increase in               
1996.  Average interest-bearing liabilities increased by $17.7                  
million or 13.5% in 1997 versus growth of $5.4 million in 1996.                 

Although average net loans increased by $5.7 million in               
1997, the ratio of average net loans to average interest earning                
assets declined to 68.2% in 1997 from 73.3% in 1996.  The other                 
$13.9 million growth in interest earning assets consisted                       
entirely of taxable investment securities, which increased by                   
$16.1 million in 1997.  Decreases in average Federal Funds Sold                 
and average investments exempt from federal taxes offset this                   
increase by $.3 million and $1.9 million, respectively.  These                  
changes were a function of additional funds invested as well as a               
change in the portfolio mix from long term fixed investments to                 
short term fixed securities or variable rate securities.                        

In late 1995 and early 1996 the Federal Reserve lowered the           
key short term rate known as Federal Funds.  In early 1997 they                 
increased this rate by .25%.  Other interest rates follow this                  
rate with varying degrees of magnitude (multiplier) and timing                  
(lag).  For example, the Prime rate usually changes immediately                 
and by the same degree (multiplier of 1.0) as the Federal Funds                 
rate, while the Cost of Funds Index (COFI) may change by a                      
smaller amount, and this change may occur over a period of six to               
twelve months.  This delay in rate change is known as lag.                      

The Federal Funds rate and the Prime rate began 1995 at               
5.50% and 8.50%, respectively.  On February 1, 1995, the Federal                
Reserve raised the Federal Funds rate by .50% to 6.0%.  Prime                   
immediately increased to 9.0% and remained at that level until                  
early July, when the Federal Reserve began to lower rates.  This                
was the first rate reduction by the Federal Reserve since July                  
1992 and it was only a .25% reduction.  The next and final rate                 
reduction of 1995 occurred on December 20, 1995.  At this time,                 
the Federal Funds rate was reduced by another .25% to 5.5%.                     
Prime rate also fell by .25% to 8.5% at this time.  In 1996, the                
Federal Reserve again lowered rates by .25% on February 1, 1996,                
where they remained until March 26, 1997, when the Federal                      
Reserve increased rates by .25% to 5.50%.  Prime rate followed                  
these rate changes and ending 1996 and 1997 Prime rate was 8.25%                
and 8.50%, respectively.  The timing and the degree of the rate                 
decreases in late 1995 and early 1996 and the subsequent minor                  
increase in early 1997 resulted in lower average interest rates                 
in 1997 versus 1996 for financial products tied to lagging or                   
slow moving indexes whereas the average interest rate on                        
financial products tied to more responsive indexes increased                    
slightly.  The degree and timing of these changes for each                      
interest rate index utilized by the Company and the Bank and the                
amount and timing of volume changes for each type of interest                   
earning asset and interest-bearing liability determined the                     
change in interest income and expense in 1997 and 1996.                         

At December 31, 1997, approximately 23.2% of the loans were           
tied to non-lagging, high multiplier indexes such as Prime rate                 
($18.2 million) and 1 year treasury indexes ($9.9 million), while               
24.8% ($30.1 million) were tied to the lagging certificate of                   
deposit (CD) index and 25.2% ($30.5 million) were tied to the                   
longer lagging COFI index.  The remaining 26.8% ($32.4 million)                 
of the loans had either fixed rates or rate adjustments every                   
five years and therefore were not subject to rate changes.                      

In 1997, Prime rate and the one year treasury index averaged          
.17% and .09% higher than they averaged in 1996, while the CD                 
index, the COFI index, and fixed rate loans averaged .19%, .28%                 
and .26% lower than they averaged in 1996.  The yield on COFI and               
CD indexed loans were lower in 1997, due to the repricing timing,               
which occurs every six months based on the index available two                  
months prior to adjustment date. Another reason the yield on the                
loan portfolio is lower than expected, given the higher federal                 
funds rates in 1997, is the fact that in 1997 the Bank's average                
impaired loans which include nonaccrual loans and restructured                  
loans increased to $2.64 million from $1.22 million in 1996.  In                
1997, if interest on nonaccrual loans had been accrued, such                    
income would have been approximately $74,000 verses $7,000 in                   
1996. Loan fees, which are included in loan interest income and                 
effect the loan yield, totalled $428,000 in 1997, compared to                   
$441,000 in 1996.                                                               

The aggregate effect of these influences was a 19 basis               
point decrease in net loan yield to 9.45% in 1997 from 9.64% in                 
1996. The result of the $5.7 million increase in average loan                   
volume and the 19 basis point decrease in yield resulted in the                 
$322,000 increase in interest and fee income from loans.                        

As mentioned earlier, total average investments increased by          
$13.9 million in 1997.  Although the yield earned on each                       
investment category declined the combined yield increased due to                
the significant shift to the higher yielding taxable securities.                
The overall yield on investments increased by 1 basis points to                 
5.95% in 1997 from 5.94% in 1996.  Consequently, in 1997 the                    
increase in interest income from investments of $831,000 was a                  
function of increased volume offset slightly by the decrease in                 
yields.  The increased volume accounted for $864,000, while the                 
decrease in yields reduced income by $33,000.  The $322,000                     
increase in interest and fee income from loans and the $831,000                 
increase in interest from investments resulted in the $1,153,000                
increase in total interest income from 1996 to 1997.                            

INTEREST EXPENSE ON INTEREST-BEARING LIABILITIES                                

Interest expense also increased in 1997 as higher average             
volumes more than offset slightly lower rates paid. As mentioned                
above, average interest-bearing liabilities increased $17.7                     
million in 1997 over the average balance in 1996.  In 1997,                     
average time deposits under $100,000 showed the most growth,                    
increasing by $7.7 million to $38.2 million in 1997 from $30.5                  
million in 1996. The rate paid on these deposits increased to                   
5.15% in 1997 from 5.07% in 1996. The increased volume increased                
interest expense by $396,000 while the higher rate paid increased               
expense by $24,000 for a total increase of $420,000.  Interest                  
expense in 1997 on savings and money market demand accounts                     
increased by $119,000 from the previous year. In 1997 the average               
balance in this category increased by $3.4 million while the                    
average rate paid decreased by 2 basis points (.02%) to 3.76% in                
1997 from 3.78% in 1996.  Interest expense in 1997 on time                      
deposits over $100,000 increased $105,000 from 1996 totals.  In 1997,           
the average balance in time deposits over $100,000 was $2.0                     
million higher than the average balance in 1996, while the                      
average rate paid was 2 basis points (.02%) lower than the 5.34%                
average rate paid in 1996.  Average interest-bearing NOW accounts               
increased $5.1 million in 1997 over 1996 average balances, while                
the average rate paid declined by 14 basis points (.14%) for a                  
net increase in interest expense of $37,000.  Average security                  
repurchase agreements decreased by $.6 million reducing interest                
expense by $30,000.  Increased average balances and average rates               
paid on Federal funds purchased and other borrowed money were                   
offset by decreased average balances and lower rates paid on                    
subordinated debentures.                                                        

The net effect of the above mentioned volume changes and              
average rates paid was a $657,000 increase in interest expense,                 
to $6,122,000 in 1997 from $5,465,000 in 1996. The combined                     
effect of the $657,000 increase in interest expense and the $17.7               
million increase in volume was a 6 basis points (.06%) decline in               
the average rate paid on average interest bearing liabilities to                
4.11% in 1997 from 4.17% in 1996.                                               

In summary, from 1996 to 1997, interest income decreased by           
$247,000 as a result of decreases in interest rates while                       
interest expense decreased by $15,000, resulting in a $232,000                  
decrease in net interest income due to changes in interest rates.               
Interest income attributed to an increase in volume improved by                 
$1,400,000, while interest expense attributed to increased volume               
rose by $672,000, for a increase in net interest income                         
attributed to volume of $728,000.  This increase and the $232,000               
decrease in net interest income due to interest rate changes                    
resulted in the $496,000 increase in net interest income.  Net                  
interest income was $8,133,000 in 1997 versus $7,637,000 in 1996                
and $6,829,000 in 1995.                                                         

NONINTEREST INCOME AND EXPENSE                                                  

Noninterest income was $1,920,000 (1.00% of average assets)           
in 1997 compared to $2,032,000 in 1996, a $112,000 (5.5%)                       
decrease.  Service charges on deposit accounts increased by                     
$65,000 in 1997 over 1996 and $24,000 in 1996 over 1995.  Other                 
fees and charges decreased by $97,000 in 1997 after increasing by               
$167,000 in 1996.  In 1997, the Company recognized $4,000 in fee                
income from the sale of  SBA guaranteed loans compared to                       
$157,000 in 1996 from the sale of $1.8 million in SBA guaranteed                
loans.  This accounted for 158% of the decrease in other fees and               
charges or, in other words, other fees and charges excluding SBA                
fee income increased by $56,000 in 1997.  In 1995 the Bank did                  
not recognize any fee income from the sale of SBA guaranteed                    
loans.                                                                          

Income from real estate development ventures decreased by             
$39,000 to $503,000 in 1997 from $542,000 in 1996 and $481,000 in               
1995.  The sole real estate development venture in 1997, 1996 and               
1995 was Pacific Plaza East, a 32,000 square foot commercial                    
office building in Vacaville, California.  Income from this                     
property declined in 1997 due to a reduction in the occupancy                   
rate from 100% in 1996 to 93% in 1997.  At December 31, 1997, the               
building was 84% occupied.  Management is negotiating with a                    
potential tenant, which if successful,  would increase occupancy                
to 90%.  The Company is also considering utilizing the remaining                
2,625 square feet for the relocation of its Main Vacaville                      
Branch.  Gains from the sale of securities decreased by $41,000                 
to $42,000 in 1997 from $83,000 in 1996.                                        

The table below depicts the changes in noninterest income             
from period to period.                                                          

                                                        [Enlarge/Download Table]


                                                  Year Ended December 31,               
                               ---------------------------------------------------------
                                 1997      1996   Incr. /       1996      1995  Incr./  
                                                  (Decr.)                        (Decr.)
                               ---------------------------------------------------------
                                                  (Dollars in thousands)                
                                                                                        
Noninterest Income:                                                                     
Service Charges on Deposit     $  908    $  843    $ 65       $  843    $  819    $ 24  
Other Fees and Charges            467       564    ( 97)         564       397     167  
                               ------    ------    ----       ------    ------    ----  
Subtotal                        1,375     1,407    ( 32)       1,407     1,216     191  
Income From Real Estate                                                                 
 Development                      503       542    ( 39)         542       481      61  
                               ------    ------    ----       ------    ------    ----  
Subtotal                        1,878     1,949    ( 71)       1,949     1,697     252  
Net Gain on the                                                                         
 Sale of Securities                42        83    ( 41)          83       481   ( 398) 
                               ------    ------    ----       ------    ------    ----  

Total                          $1,920    $2,032   ($112)      $2,032    $2,178   ($146) 
                               ======    ======    ====       ======    ======    ====  
----------------------------------                                                      

In 1997, noninterest expense totalled $7,329,000, an                  
increase of $548,000 over 1996's total of $6,781,000, which was                 
$151,000 more than the $6,630,000 reported in 1995.  One measure                
of efficiency is the ratio of noninterest expense to average                    
assets. This ratio has improved the last three years, from 4.19%                
in 1995 to 4.01% in 1996 and finally to 3.83% in 1997.                          

In 1997, salaries and benefits increased by $134,000 to               
$3,476,000 in 1997 from $3,342,000 in 1996.  In 1996 salaries and               
benefits increased by $205,000 from 1995's figure.  Salary                      
expense in the new Concord branch along with increased bonuses                  
accounted for 110% of the increase. Other salary and benefits                   
categories actually declined by $13,000.                                        

Occupancy expense increased by $107,000 (7.8%) in 1997 from           
1996's total, which was $8,000 lower than the 1995 figure.  In                  
January 1997, the Bank completed tenant improvements in its                     
Fairfield Branch to accommodate the relocation of the Bank's Data               
Processing department.  The depreciation of this improvement in                 
1997 along with the increased occupancy expense associated with                 
the new Concord Branch accounted for 105% of this increase.                     

Other noninterest expense increased by 13.0% or $230,000 in           
1997 over  the figure reported in 1996, after declining by                      
$78,000 (4.2%) in 1996 from the 1995 figure. In 1997,                           
nonrecurring expense related to the proposed merger with                        
SierraWest totalled $247,000, while other expenses related to the               
new Concord Branch increased $42,000.  All other expenses as a                  
group decreased by $59,000.  In total, other noninterest expense                
declined by $230,000 to $2,003,000 in 1997 from $1,773,000 in                   
1996.  In 1997, expense from Real Estate Development increased                  
$77,000 to $377,000 from $300,000 in 1996.  During 1997, the                    
Company wrote down the Pacific Plaza West property by $59,000 to                
more accurately reflect the market value.  In addition, the                     
Company paid $17,000 in lease commissions in 1997 verses no                     
commissions paid in 1996.                                                       

The major components of noninterest expense are as follows:                     

                                                                [Download Table]

                                              Year Ended December 31,               
                            --------------------------------------------------------
                                    Net Income                    Net Income        
                              1997     1996   Incr. /      1996     1995     Incr. /
                                              (Decr.)                        (Decr.)
                            --------------------------------------------------------
                                   (Dollars in thousands)                           
                                                                                    
Noninterest Expenses:                                                               
Salary and Benefits          $3,476    $3,342   $134      $3,342    $3,137   $ 205  
Occupancy, Furniture,                                                               
   Fixtures and Equipment     1,473     1,366    107       1,366     1,374  (    8) 
Other Noninterest Exp.        2,003     1,773    230       1,773     1,851  (   78) 
Expenses from                                                                       
  Real Estate Development       377       300     77         300       268      32  
                             ------    ------   ----      ------    ------    ----  
Total                                                                               
  Noninterest Expenses       $7,329    $6,781   $548      $6,781    $6,630   $ 151  
                             ======    ======   ====      ======    ======    ====  
-------------------------------------------                                         

PROVISION FOR LOAN LOSSES                                                       

The provision for loan losses was $319,000 in 1997 compared           
to $411,000 in 1996 and $324,000 in 1995. The Bank experienced                  
net charge-offs of $178,000 in 1997, or .15% of average loans,                  
compared to $468,000, or .42% of average loans, in 1996 and                     
$274,000, or .25% of average loans, in 1995.                                    

The $319,000 provision, when deducted from the net interest           
income figure of $8,133,000, resulted in net interest income                    
after provision for loan losses of $7,814,000 for 1997.  This                   
amount, which is $588,000 higher  than the $7,226,000 reported in               
1996, represents a return on average assets of 4.09% in 1997.  In               
1996 and 1995, this ratio was 4.27% and 4.11%, respectively.                    

INCOME BEFORE PROVISION FOR INCOME TAXES                                        

The result of a 4.09% ratio of adjusted net interest income           
to average assets, a 1.00% noninterest income ratio and a 3.83%                 
noninterest expense ratio, resulted in a ratio of Income before                 
Provision for Income Taxes to average assets of 1.26%.  This is a               
decline of .20% from 1.46% in 1996 which in turn was a .16%                     
improvement over the 1.30% reported in 1995.                                    

The $588,000 increase in net interest income after provision          
for loan losses, the $112,000 decrease in noninterest income and                
the $548,000 increase in noninterest expenses reduced income                    
before provision for income taxes by $72,000 to $2,405,000 in                   
1997 from $2,477,000 in 1996.  This 1996 figure was $424,000                    
higher than the $2,053,000 reported in 1995.                                    

PROVISION FOR INCOME TAXES / NET INCOME                                         

The Company recorded $966,000 in provision for income taxes           
in 1997 versus $918,000 in 1996 and $648,000 in 1995.  The tax                  
provisions reduced income to $1,439,000, $1,559,000 and                         
$1,405,000 for 1997, 1996 and 1995, respectively.  Provision for                
income taxes and the related effective tax rate in 1997 was                     
higher than the 1996 amount and effective tax rate even though                  
pre-tax in 1997 was $72,000 less than the 1996 figure.  This                    
anomaly resulted from approximately $200,000 of the merger                      
related expenses being non-tax deductible.                                      

The before tax Return on Average Assets (ROA) was 1.26% in            
1997.  After deducting the provision for income taxes, .51% of                  
average assets, ROA in 1997 was .75%, down from an ROA of .92% in               
1996 and .89% in 1995.                                                          

Management is not aware of any trends, events or                      
uncertainties that have had or that are reasonably expected to                  
have a material impact on liquidity, capital resources, or                      
revenues or income from continuing operations. The company is                   
also not aware of any current recommendations by any regulatory                 
authority which, if they were implemented, would have such an                   
effect.                                                                         

LOAN PORTFOLIO                                                                  

The Association of Bay Area Governments (ABAG) projects               
Solano County to have the largest percentage increase in                        
population growth between 1995 and 2015 of all the Bay Area                     
counties. They further estimate that Solano's population will be                
531,700 by the year 2015, which is an increase of 40%. Job growth               
in Solano County is projected to increase by 68% during this same               
time period.                                                                    

Contra Costa County is also slated for substantial growth             
over the next 15 years. Contra Costa's population  is projected                 
to grow from 882,700 in 1995 to 1,169,400 by 2015, representing a               
32% increase. A 50% increase in jobs and a 3% increase in the                   
mean household income, bringing it to $95,800, is projected by                  
the year 2015.                                                                  

The economic climate of Solano and Contra Costa counties              
remains strong due to its prime locale between San Francisco and                
Sacramento, a plentiful supply of natural resources, an extensive               
transportation network, and the enviable quality of life which                  
exist due to the availability of affordable homes, clean and safe               
communities, a comfortable climate all within easy reach of many                
recreational and cultural activities.                                           

The following table shows the composition of the loan                 
portfolio by major category of loan as of the dates indicated:                  

                                                                [Download Table]


                                              Year Ended December 31,             
                              ----------------------------------------------------
                                1997       1996       1995       1994       1993  
                              ----------------------------------------------------
Loan Categories:                              (Dollars in thousands)              
                                                                                  
Real Estate Mortgage:                                                             
   Commercial                 $ 72,672   $ 64,634   $ 61,942   $ 60,206   $ 56,401
   Residential                  18,106     17,612     15,456     19,272     18,063
                              --------   --------   --------   --------   --------

Total Real Estate Mortgage      90,778     82,246     77,398     79,478     74,464
Commercial                      10,348      8,926      9,908      9,348     10,269
Real Estate Construction         6,042      6,408      9,553      9,433      9,723
Consumer                        13,894     16,045     14,265     12,937     13,252
                              --------   --------   --------   --------   --------
Total Loans                    121,062    113,625    111,124    111,196    107,708
   Less                                                                           
     Allowance for Loan Losses   1,242      1,101      1,158      1,108      1,090
     Deferred Loan Fees            498        599        732        940        892
                              --------   --------   --------   --------   --------
Net Loans                     $119,322   $111,925   $109,234   $109,148   $105,726
                              ========   ========   ========   ========   ========
---------------------------------------                                           

The loan portfolio consists of:  (1) commercial loans; (2)            
real estate construction loans; (3) consumer loans (loans to                    
individuals for household, family and other personal                            
expenditures, including revolving equity loans); and (4) real                   
estate mortgage loans. These categories accounted for                           
approximately 9%, 5%, 11% and 75%, respectively, of the total                   
loan portfolio at December 31, 1997.  Loans are generally made to               
persons or businesses with whom it has an existing relationship                 
or anticipates developing such a relationship.                                  

Because loans are the highest yielding assets, maximizing             
the loan-to-deposit ratio increases interest income, however, in                
order to prudently manage its liquidity, the loan policy calls                  
for it to maintain a loan-to-deposit ratio target is between 70%                
and 85%.  The loan-to-deposit ratio was 69% and 67% at December                 
31, 1997 and 1996, respectively. The ratio is below target at                   
year end 1997 and 1996 due to the addition of approximately $15.5               
million in deposits purchased from Tracy Federal Savings Bank                   
(Concord Branch) without corresponding loan balances in the                     
fourth quarter of 1996.                                                         

With certain exceptions, the Bank is permitted under                  
applicable law to make loans which are unsecured to single                      
borrowers in aggregate amounts of up to 15% of the sum of the                   
Bank's total capital, including subordinated debt, and allowance                
for possible loan losses for unsecured loans (as defined for                    
regulatory purposes), and up to 25% of such sum in the aggregate                
for unsecured and secured loans (as defined for regulatory                      
purposes).  As of December 31, 1997, these lending limits were                  
approximately $2,933,000 for unsecured loans and $4,889,000 for                 
unsecured and secured loans.  The Bank sells participations in                  
its loans where necessary to stay within its lending limits.                    
However, the unsecured limit is used as a guideline for the                     
maximum amount it will lend to any one borrower on a secured                    
basis.                                                                          

REAL ESTATE MORTGAGE LOANS                                                      

Real estate mortgage loans consist primarily of loans                 
secured by commercial real property and by first liens on single-               
family residential properties.                                                  

As of December 31, 1997, outstanding commercial mortgage              
loans totalled $72,672,000, or 60% of total loans.  This                        
represents an increase in outstanding balances of $8,038,000                    
since year end 1996. Of these loans, $62.1 million were                         
adjustable rate loans while $10.6 million had fixed rates. These                
loans are secured by first or second deeds of trust on both owner               
occupied and nonowner occupied commercial properties, and                       
generally have 5 to 15 year maturities with 15 to 25 year                       
amortizations (miniperms). The Bank generally conducts market                   
rent surveys and requires all borrowers to meet minimum debt                    
service ratios. The Bank also makes loans in conjunction with                   
Small Business Administration ("SBA") sponsored programs.  With                 
the SBA 504 program, the Bank takes a first deed of trust on the                
property generally at a loan to value ratio of 50%.  The SBA then               
makes an additional loan in second position of up to 40% of                     
value.  With the SBA 7A program, the Bank makes commercial loans                
for the purchase of inventory, equipment, or real estate or to                  
fund working capital, and the SBA provides a guaranty up to 80%                 
of the loan amount.                                                             

As of December 31, 1997, residential mortgage loans totalled          
$18,106,000, or 15% of total loans.  This loan category increased               
$494,000 over the $17,612,000 outstanding at December 31, 1996.                 
These loans were secured by first or second deeds of trust                      
predominately by property in Solano County.  Of these loans, $2.0               
million or 11% were fixed rate mortgage loans having original                   
terms ranging from one to 30 years, with the majority having                    
remaining terms of less than 5 years.  The other $16.1 million or               
89% were held as adjustable rate mortgages which are adjusted                   
either semiannually or annually based on either the COFI Index or               
the CD Index (the secondary market monthly average interest rate                
or yield for large negotiable certificates of deposit ($100,000                 
or more with maturity of one month)).  The above loans consist of               
1-4 family residential loans, multi-family loans, second mortgage               
loans, and loans on improved single family lots.  The majority of               
the residential mortgage loans have been underwritten for the                   
portfolio, and such loans do not necessarily meet standard                      
underwriting criteria for sale in the secondary market.  The Bank               
uses certain of the credit underwriting criteria applicable to                  
loans for sale in the secondary market, but chooses not to use                  
certain other underwriting criteria which in the opinion of                     
management do not materially affect credit quality.  The loan to                
appraised value ratio is generally 80% or less when originated.                 
The Bank does not generally make residential real estate loans on               
a negative amortization basis.                                                  

COMMERCIAL LOANS                                                                

Commercial loans consist primarily of financing for                   
businesses and professionals in Solano County.  At December 31,                 
1997, these loans totalled $10,348,000, or 9% of total loans.                   
This figure is $1,422,000 higher than the figure reported                       
December 31, 1996. The commercial loans are diversified as to                   
industries and type of businesses with no material industry                     
concentration.  Commercial borrowers generally have deposit                     
relationships with the Bank.  Commercial loans are made for the                 
purposes of providing working capital, financing the purchase of                
equipment or inventory and for other business purposes.  Such                   
loans include loans with maturities ranging from thirty days to                 
twelve months and "term loans" which are loans with maturities                  
normally ranging from one to seven years.  Short-term business                  
loans are generally used to finance current transactions and                    
typically provide for periodic interest payments, with principal                
being payable monthly, quarterly or at maturity.  Term loans                    
normally provide for floating interest rates, with monthly                      
payments of both principal and interest. In 1996, the Bank began                
offering an additional service to its commercial customers called               
Business Manager. Under this program account receivables are                    
purchased from its customer for a discount fee. At December 31,                 
1997, Business Manager loans totalled $1,198,000.                               

In commercial lending, the amount of losses as a percentage           
of outstanding loans can vary widely from period to period and is               
particularly sensitive to the fluctuations caused by changing                   
economic conditions.  Charged off commercial loans totalled                     
$88,000 and $217,000 in 1997 and 1996, respectively.                            

REAL ESTATE CONSTRUCTION LOANS                                                  

Real estate construction loans are made to finance the                
construction of commercial and single-family residential property               
and, typically, have short maturities.  Construction lending                    
involves certain risks not inherent in other forms of real estate               
financing.  The Bank does not require construction loan borrowers               
to obtain commitments for permanent takeout financing from other                
lenders.  As a result, the Bank may be required to grant                        
permanent financing or extend its construction loans beyond                     
anticipated maturity periods in times of rising interest rates                  
or reduced availability of permanent financing from other lenders.              
At December 31, 1997 there were ten such permanent financing                    
loans totaling approximately $1,146,000.  Management does not                   
believe that the extension of these loans results in substantial                
additional credit risk to the Bank.                                             

Currently there are 47 construction loans with an average             
balance of approximately $129,000.  As of December 31, 1997,                    
these loans totalled $6,042,000, or 5% of the loan portfolio.                   
This is $366,000 lower than the figure reported as of December                  
31, 1996.                                                                       

Construction loans are funded on a line-item, percentage of           
completion basis.  As the builder completes various line items                  
(foundation, framing, electrical, etc.) of the project, or                      
portions of those line items, the work is reviewed by an officer                
of the Bank.  Upon approval from the officer, the Bank funds the                
draw request according to the percentage completion of the line                 
items that have been approved.  Actual funding checks must be                   
signed by an officer of the Bank.  Charged off real estate                      
construction loans totalled $10,000 and $181,000 in 1997 and                    
1996, respectively.                                                             

CONSUMER LOANS                                                                  

Consumer loans are made for the purpose of financing the              
purchase of various types of consumer goods, home improvement                   
loans, and other personal loans.  Consumer installment loans                    
generally provide for the monthly payment of principal and                      
interest.  Most of the consumer installment loans are secured by                
the personal property being purchased or a second deed of trust                 
on the borrower's residence.  As of December 31, 1997, consumer                 
loans totalled $13,894,000, or 11% of the portfolio, a decrease                 
of $2,151,000 from the figure reported December 31, 1996.                       

LOAN COMMITMENTS                                                                

In the normal course of business, there are various                   
commitments outstanding to extend credit that are not reflected                 
in the financial statements.  As of December 31, 1997,                          
outstanding undisbursed loan commitments totalled approximately                 
$18.2 million.  In the opinion of management, annual review of                  
the commercial credit lines and ongoing monitoring of outstanding               
balances reduces the risk of loss associated with these                         
commitments.  The undisbursed loan commitments include $3.9                     
million (38% of the outstanding balance) of commercial loans,                   
$3.8 million (63% of the outstanding balance) of real estate                    
construction loans, and $10.5 million (76% of outstanding                       
balance) of consumer loans.  Undisbursed commercial loan                        
commitments represent primarily business lines of credit.                       
Undisbursed construction commitments represent undisbursed                      
funding on construction projects in process.  The consumer loan                 
commitments represent approved, secured (equity) lines of credit,               
and unsecured personal lines of credit.                                         

The Company had standby letters of credit outstanding                 
aggregating $504,000 and $649,000 at December 31, 1997 and 1996,                
respectively.                                                                   

ASSET QUALITY                                                                   

The risk of nonpayment of loans is inherent in commercial             
banking.  To a large extent, the degree of perceived risk is                    
taken into account in establishing the loan structure, the                      
interest rate and security for specific loans and various types                 
of loans.  The Bank also attempts to minimize its credit risk                   
exposure by use of thorough loan application, approval and review               
procedures.                                                                     

The primary risk elements considered by management with               
respect to each installment and conventional real estate loan are               
the lack of timely payments and the value of the collateral.                    
Management has a reporting system that monitors past due loans                  
and has adopted policies to pursue its creditor's rights in order               
to preserve the Bank's position.  As the majority of the loan                   
portfolio is held in real estate related loans, particular                      
attention is given to factors affecting the real estate markets.                
The primary risk elements considered by management with respect                 
to real estate construction loans are fluctuations in real estate               
values in the Company's market areas, fluctuations in interest                  
rates, the availability of conventional financing, the demand for               
housing in the Company's market areas, and general economic                     
conditions.  The primary risk elements with respect to commercial               
loans are the financial condition of the borrower, general                      
economic conditions in the Company's market area, the sufficiency               
of collateral, the timeliness of payment, and, with respect to                  
adjustable rate loans, interest rate fluctuations.                              

Because the Bank lends primarily within its market area, the          
real property collateral for its loans is similarly concentrated,               
rather than diversified over a broader geographic area.  The                    
Company could, therefore, be adversely affected by a decline in                 
real estate values in Solano County, even if real estate values                 
elsewhere in Northern California or California generally remained               
stable or increased.  Management has a policy of requesting and                 
reviewing annual financial statements from its commercial loan                  
customers and periodically reviews the existence of collateral                  
and its value.                                                                  

The Bank places an asset on nonaccrual status when one of             
the following events occur:  any installment of principal or                    
interest is 90 days or more past due (unless in management's                    
opinion the loan is well secured and in the process of                          
collection), management determines the ultimate collection of                   
principal or interest on a loan to be unlikely, it takes                        
possession of the collateral (in the case of real estate                        
collateral, referred to as "OREO"), or the terms of a loan have                 
been renegotiated to less than market rates due to a serious                    
weakening of the borrower's financial condition.                                

With respect to the policy of placing loans 90 days or more           
past due on nonaccrual status unless the loan is well secured and               
in the process of collection, a loan is considered to be in the                 
process of collection if, based on a probable specific event, it                
is expected that the loan will be repaid or brought current.                    
Generally, this collection period would not exceed 30 days.  When               
a loan is placed on nonaccrual status, the general policy is to                 
reverse and charge against current income previously accrued but                
unpaid interest.  Interest income on such loans is subsequently                 
recognized only to the extent that cash is received and future                  
collection of principal is deemed by management to be probable.                 
Where the collectibility of the principal or interest on a loan                 
is  considered to be doubtful by management, it is placed on                    
nonaccrual status prior to becoming 90 days delinquent.  For                    
loans where the collateral has been repossessed, the property is                
classified as OREO or, if the collateral is personal property,                  
the loan is classified as other assets on the Company's financial               
statements.                                                                     

The following table sets forth the amount of the                      
nonperforming assets as of the dates indicated.                                 

                                                                [Download Table]


                                           Year Ended December 31,               
                               --------------------------------------------------
                                1997      1996      1995       1994      1993    
                               --------------------------------------------------
                                            (Dollars in thousands)               
Nonperforming Assets:                                                            
                                                                                 
   Nonaccrual Loans             $966     $   70     $1,049     $1,258     $179   
   Accruing Loans Past                                                           
    Due 90 Days or More          194         67         78        496      127   
                                ----     ------     ------     ------    -----   
Total Nonperforming Loans      1,160        137      1,127      1,754      306   
   Other Real Estate Owned        96        150        182        374      389   
                                ----     ------     ------     ------    -----   
Total Nonperforming Assets     1,256       $287     $1,309     $2,128     $695   
                                ----     ------     ------     ------    -----   
Performing Restructured Loans  1,262     $  974     $  470     $    0     $946   
Allowance for Loan Losses                                                        
     to Nonperforming Loans      107%       804%       103%        63%     356%  
Allowance for Loan Losses                                                        
     to Nonperforming Assets      99%       384%        88%        52%     157%  
Allowance for Loan Losses                                                        
     to Nonperforming Assets                                                     
     and Performing                                                              
     Restructured Loans           49%        87%        65%       52%       66%  
Nonperforming Loans                                                              
     to Total Assets             .59%       .07%       .70%     1.12%      .21%  
Nonperforming Assets                                                             
     to Total Assets             .64%       .15%       .82%     1.36%      .47%  
Nonperforming Assets and                                                         
     Performing Restructured                                                     
     Loans to Total Assets      1.28%       .66%      1.11%     1.36%     1.10%  
-----------------------------                                                    

At December 31, 1997 and 1996, the recorded investment in             
loans for which impairment has been recognized in accordance with               
SFAS No. 114 was approximately $2,454,000 and $2,648,000.  The                  
total allowance for loan losses related to these loans was                      
$443,000 and $278,000 at December 31, 1997 and 1996.  For the                   
years ended December 31, 1997 and 1996, the average recorded                    
investment in loans for which impairment has been recognized was                
approximately $2,642,000 and $1,218,000.  During the portion of                 
the year that the loans were impaired, the Company recognized                   
interest income of approximately $104,000 and $28,000 for cash                  
payments received in 1997 and 1996.                                             

Interest income on nonaccrual loans which would have been             
recognized if all such loans had been current in accordance with                
their terms totalled $74,000, $7,000 and $203,000 in 1997, 1996                 
and 1995, respectively.  Nonperforming assets increased to                      
$1,256,000 or .64% of total assets, at December 31, 1997, from                  
$287,000 or .15% of total assets, at December 31, 1996.                         

Included in the impaired loans above were three nonaccrual            
loans to two borrowers totalling $70,000 at December 31, 1996. In               
1997, the Bank charged off these three loans totalling $70,000.                 
At December 31, 1997 there were three nonaccrual loans to three                 
borrowers totalling $966,000.  Two loans totalling $1,198,000 are               
secured by a commercial office/warehouse building in Suisun,                    
California.  In early 1997, management became aware that this                   
29,000 square foot building was 44% vacant.  At that time both                  
loans were restructured.  One loan with an outstanding balance of               
$917,000 at December 31, 1997 was placed on nonaccrual status and               
the other loan with an outstanding balance of $280,000 at                       
December 31, 1997, was categorized as a performing restructured                 
loan.  Although no interest was realized on the nonaccrual loan                 
in 1997, the borrower/building was able to generate sufficient                  
cash flow to reduce the principal by $18,000.  The other loan has               
performed under the terms of the restructure agreement.  The                    
building currently has a 70% occupancy rate.  Under the terms of                
the restructure agreement, the reduction in interest is deferred                
and remains an obligation of the borrower.  The Bank believes the               
borrower will be able to fully service the loan under the                       
original terms at the time the building becomes approximately 90%               
occupied.  The Bank has an allowance for loan loss allocation of                
$180,000 on these two loans.  Two other loans to two other                      
borrowers with outstanding balances of $26,000 and $23,000 were                 
also placed on nonaccrual status in 1997.  In January 1998, the                 
$26,000 nonaccrual loan was paid off by the SBA.                                

At December 31, 1996, OREO consisted of one foreclosed real           
estate property with a carrying value of $150,000. This                         
commercial property in Vallejo, California was sold in 1997 for                 
$135,000, resulting in a $15,000 loss from the sale of OREO.  In                
1997, the Bank acquired, four residential properties totalling                  
$437,000 through foreclosure and subsequently sold three of these               
properties resulting in a net loss of $10,000.  At December 31,                 
1997, OREO consisted of the remaining residential property in                   
Fairfield, California with a carrying value of $96,000.                         

At December 31, 1996, there was two performing restructured           
loans for $974,000.  One loan with an outstanding balance of                    
$412,000 at December 31, 1996 was removed from performing                       
restructured status in 1997 as the borrower became able and                     
willing to perform under the original terms of the loan.  The                   
other loan with an outstanding balance of $562,000 at December                  
31, 1996 is secured by a 7,500 square foot commercial office                    
building.  This loan, which was restructured on a month to month                
basis to receive principal based on the original amortization                   
schedule, while the interest rate was reduced to approximately                  
6.80%, continues to perform under the restructured terms.  In                   
1997, the Bank realized $37,000 in interest income on this loan,                
while the outstanding principal was reduced to $548,000.                        

In February 1997, two loans totalling $444,000 secured by             
the two remaining suites in an eight unit medical condominium                   
office building in Vacaville, California were restructured.  The                
borrower has leased one of the units and the Bank has financed                  
the tenant improvement costs.  These loans were restructured for                
six months at approximately 2% to allow the borrower time to                    
lease or sell the final unit.  The borrower reported in November                
1997 that they had two potential purchasers but as of the date of               
this report, no transaction has occurred.  At December 31, 1997,                
the outstanding balance on these two loans was $434,000.                        

At December 31, 1997, performing restructured loans                   
consisted of the above mentioned four loans to three borrowers                  
for a total of $1,262,000 ($280,000, $548,000 and $434,000).                    

Potential increase in the volume of nonperforming assets              
will depend, upon other events and upon the economic environment.               
The Bank has identified loans, totalling $577,000, where known                  
information about the possible credit problems of the borrowers                 
cause management to have serious doubts as to the ability of such               
borrowers to comply with the present loan repayment terms and                   
which may become nonperforming in the future.  This total                       
consists of eight loans to seven borrowers. Four loans totalling                
$249,000 to four borrowers are secured by either a First or a                   
Second Deed of Trust on single family residences. Notices of                    
default were filed on these properties in February 1998 and March               
1998. Due to loan to value and marketability of these properties                
minimal loss is expected.  The Bank has an unsecured loan for                   
$15,000 and a real estate secured loan for $78,000 to one                       
borrower. Based on the borrower's financial condition the                       
unsecured loan may result in a loss and the secured loan may                    
result in a minimal loss. The other two loans to two borrowers                  
totalling $247,000 are commercial loans.  One loan for $92,000                  
with a 80% SBA guarantee was placed on nonaccrual in early 1998                 
due to the borrowing filing Chapter 13 bankruptcy.  Upon                        
liquidation of collateral, a small loss is anticipated.  The                    
other loan for $155,000 is an unsecured line of credit to a Real                
Estate Developer.  Due to the soft real estate market, which has                
delayed development projects, this Developer has been unable to                 
pay off this line.  Payments are being made as agreed, but this                 
loan may become nonperforming or a loss in the future.                          

Changes in general or local economic conditions or specific           
industry segments, rising interest rates, declines in real estate               
values and acts of nature could have an adverse effect on the                   
ability of borrowers to repay outstanding loans and the value of                
real estate and other collateral securing such loans.                           

Other than the loans discussed above, management is not               
aware of any loans that represent or result from trends or                      
uncertainties which management reasonably expects will materially               
impact future operating results, liquidity or capital resources;                
or represent material credits about which management is aware of                
information which causes management to have serious doubts as to                
the ability of such borrowers to comply with the loan repayment                 
terms.                                                                          

LOAN CONCENTRATIONS                                                             

As of December 31, 1997, the only concentration of loans to           
any individual, business, or industry exceeding 10% of total                    
loans was Real Estate loans secured by commercial office                        
properties, which represented 29.0% of total loans.                             

SUMMARY OF THE ALLOWANCE FOR LOAN LOSSES                                        

The Bank maintains an allowance for estimated losses                  
inherent in existing loans and commitments.  Additions to the                   
allowance are made by charges to operating expense in the form of               
a provision for possible loan losses.  Where a loss is considered               
probable, loans are charged against the allowance while any                     
recoveries are credited to the allowance.  The allowance for loan               
losses is maintained at a level determined by management to be                  
adequate, based on the performance of loans in the portfolio,                   
with particular attention to credit risks associated with any                   
loans past due thirty days or more, evaluation of collateral for                
such loans, historical loan loss experience, examination reports                
prepared by regulatory agencies, the prospects or net worth of                  
the borrowers or guarantors, anticipated growth in the portfolio,               
prevailing economic conditions and such other factors which, in                 
the Bank's judgment, deserve consideration in the estimation of                 
possible loan losses.                                                           

The following table provides certain information with                 
respect to the allowance for loan losses as well as charge-offs,                
recoveries and certain related ratios:                                          

                                                        [Enlarge/Download Table]

                                                   Year ended December 31,              
                                   ---------------------------------------------------- 
                                     1997       1996       1995        1994       1993  
                                   ---------------------------------------------------- 
                                                   (Dollars in thousands)               
Allowance for loan Losses:                                                              
                                                                                        
Balance at Beginning of Period     $  1,101   $  1,158   $ 1,108    $  1,090   $    933 
Charge Offs:                                                                            
 Commercial                              88        217        104         44        142 
 Real Estate Construction                10        181         72        146          0 
 Real Estate Mortgage                    20         83         31          0         41 
 Consumer Loans                         106         15         75         49          4 
                                   ---------------------------------------------------- 
Total Charge Offs                       224        496        282        239        187 
Recoveries:                                                                             
 Commercial                              24          1          2          1         75 
 Real Estate Construction                 0         25          0          0          0 
 Real Estate Mortgage                    13          1          0          0          0 
 Consumer Loans                           9          1          6          0          0 
                                   ---------------------------------------------------- 
Total Recoveries                         46         28          8          1         75 
Net Charge Offs                         178        468        274        238        112 
Provision for Loan Losses               319        411        324        256        269 
                                   ---------------------------------------------------- 
Balance at End of Period           $  1,242   $  1,101   $  1,158   $  1,108   $  1,090 
                                   ==================================================== 
Loans:                                                                                  
Average Loans Outstanding                                                               
 During Period (Net)               $116,726   $111,052   $109,372   $106,408   $105,868 

Total Loans at End of Period       $121,062   $113,625   $111,124   $111,196   $107,708 

Ratios:                                                                                 
Net Loans Charged Off to                                                                
 Average Loans                          .15%       .42%       .25%       .22%       .11%
Net Loans Charged Off to                                                                
 Total Loans at End of Period           .15%       .41%       .25%       .21%       .10%
Net Loans Charged Off to                                                                
 Allowance for Loan Losses             14.3%      42.5%      23.7%      21.5%      10.3%
Net Loans Charged Off to                                                                
 Provision for Loan Losses             55.8%     113.8%      84.6%      93.0%      41.6%
Allowance for Loan Losses to                                                            
 Average Loans                         1.06%       .99%      1.06%      1.04%      1.03%
Allowance for Loan Losses to                                                            
 Total Loans at End of Period          1.03%       .97%      1.04%      1.00%      1.01%
Allowance for Loan Losses to                                                            
 Nonperforming Loans                    107%       804%       103%        63%       356%
Allowance for Loan Losses to                                                            
 Nonperforming Assets                    99%       384%        88%        52%       157%
Allowance for Loan Losses to                                                            
 Nonperforming Assets and                                                               
 Performing Restructured Loans           49%        87%        65%        52%        66%
------------------------------------                                                    

The provision for loan losses represents management's                 
determination of the amount necessary to be added to the                        
allowance for loan losses to bring it to a level which is                       
considered adequate in relation to the risk of future losses                    
inherent in the loan portfolio.  While it is the policy to charge               
off in the current period those loans where a loss is considered                
probable, there also exists the risk of future losses which                     
cannot be precisely quantified or attributed to particular loans                
or classes of loans.  Because this risk is continually changing in              
response to factors beyond the control of the Company, such as                  
the state of the economy, management's judgment as to the                       
adequacy of the allowance for loan losses is necessarily an                     
approximate one.  Management believes that the allowance for loan               
losses of $1,242,000 at December 31, 1997, which constituted                    
1.03% of total loans, is adequate as an allowance against                       
foreseeable loan losses as of December 31, 1997.                                

The following table shows the allocation of the allowance             
for loan losses and the percent of loans in each category to                    
total loans as of the periods indicated.                                        

                                                        [Enlarge/Download Table]

                                  December 31, 1997                December 31, 1996           
                              -----------------------------------------------------------------
                              Allowance for    % of Loans      Allowance for   % of Loans      
                              Loan Losses      in each         Loan Losses     in each         
                                               Category                        Category        
                                               to Total Loans                  to Total Loans  
                              -----------------------------------------------------------------
Loan Categories:                              (Dollars in thousands)                           
                                                                                               
Real Estate Mortgage:                                                                          
   Residential                 $     46             4%          $    192            15%        
   Commercial                       617            50                469            57         
                              -----------------------------------------------------------------
Total Real Estate Mortgage          663            54                661            72         
Commercial                          233            19                214             8         
Real Estate Construction            152            12                 91             6         
Consumer (Inc. ELOC)                180            14                 52            14         
Unallocated                          14             1                 83           ---         
                              -----------------------------------------------------------------
     Total                     $  1,242           100%          $  1,101           100%        
-------------------------------------                                                          

The adequacy of the allowance for loan losses is based upon           
the potential for loss related to specific loans and formula                    
allocations based upon the potential for loss in various                        
categories.  Specific allocations are increased or decreased                    
through management's reevaluation of the status of particular                   
problem loans.  Provisions for losses which have not been made on               
a specific basis are based on a formula.  Management applies a                  
percentage factor based on loss ratios of the Bank's peers,                     
history of loss, underlying collateral, type of loan and general                
economic conditions, to the loan categories.                                    

INVESTMENT SECURITIES                                                           

In order to provide investment income and collateral to               
secure borrowings to meet liquidity and loan requirements, from                 
time to time the Bank purchases United States Treasury securities               
and obligations of federal agencies as well as obligations of                   
states and their political subdivisions and other securities.                   
Purchases of such securities, as well as sales of Federal funds                 
(short-term loans to other banks) and placement of funds in                     
certificates of deposit with other financial institutions, are                  
also made as alternative investments pending utilization of funds               
for loans or other purposes.                                                    

Under the investment policy, investment securities may be             
placed in two categories:  "available for sale" and "held to                    
maturity."  Securities available for sale provide flexibility to                
the asset/liability management strategy and may be sold in                      
response to changes in interest rates and to meet liquidity                     
needs.                                                                          

The Company accounts for securities investments in                    
accordance with Statement of Financial Accounting Standards                     
(SFAS) No. 115, Accounting for Certain Investments in Debt and                  
Equity Securities.  In November 1995, as permitted by additional                
implementation guidance regarding the previously issued SFAS No.                
115, the entire held to maturity portfolio was transferred to                   
available for sale.                                                             

At December 31, 1997, the net unrealized loss on securities           
available for sale was $215,000, resulting in a reduction in                    
stockholders' equity of $125,000 and a $90,000 increase in                      
deferred tax assets. At December 31, 1997, the amortized cost of                
available for sale securities totalled $48,680,000, consisting of               
$8,083,000 variable rate (COFI) U. S. Government Agency Bonds,                  
$17,112,000 in fixed rate short term (less than 5 years) U.S.                   
Treasury and U.S. Government Agency Securities, $17,303,000 in                  
variable rate (Prime rate and 1 year CMT) U. S. Government Agency               
Bonds, $4,590,000 in fixed rate municipal bonds, $1,000,000 in                  
fixed rate long term (greater than 5 years) U.S. Government                     
Agency Bonds and $592,000 in Federal Home Loan Bank (FHLB) stock.               
The $4,364,000 decrease in investments which was used to fund                   
loan growth was distributed as follows, a $1,062,000 decline in                 
lagging COFI Indexed U.S. Agency Bonds, an $851,000 reduction in                
fixed rate short term U.S. Treasury and Agency Bonds, a                         
$1,970,000 reduction in variable rate U.S. Agency Bonds and a                   
$506,000 reduction in fixed rate long term U.S. Agency bonds.                   

At December 31, 1996 the total reduction in the carrying              
value of investment securities available for sale was $475,000,                 
along with a reduction to stockholders' equity of $276,000 and a                
$199,000 increase in deferred tax assets. At December 31, 1996,                 
the amortized cost of available for sale securities totalled                    
$53,044,000, consisting of $9,145,000 in variable rate (COFI) U.                
S. Government Agency Bonds, $17,963,000 in fixed rate short term                
(less than 5 years) U.S. Treasury and U.S. Government Agency                    
Securities, $19,273,000 in variable rate (Prime rate and 1-year                 
CMT) U. S. Government Agency Bonds, $4,667,000 in fixed rate                    
municipal bonds, $1,506,000 in fixed rate long term (greater than               
5 years) U.S. Government Agency Bonds and $490,000 in Federal                   
Home Loan Bank (FHLB) stock. As detailed above, holdings in both                
fixed rate short term U.S. agency bonds and variable rate U.S.                  
agency bonds tied to prime and the 1-year CMT index were                        
significantly increased.  It also reduced holdings in U.S.                      
Government Agency bonds tied to the lagging COFI index and long                 
term fixed rate municipal bonds.                                                

At December 31, 1997 and 1996, the Company did not have any           
investment securities designated as held to maturity or                         
considered to be held for trading under the provisions of SFAS                  
No. 115.                                                                        

In 1997, $6,015,000 available for sale securities were sold           
for liquidity purposes, to reduce interest rate risk or in                      
response to changes in interest rates.  The Bank also had pay                   
downs on its U.S. Agency bonds (SBA or mortgage backed                          
securities) of $6,434,000.  The above-mentioned transactions                    
resulted in a pretax profit of $42,000. In addition, $4,060,000                 
in municipal and U. S. Agency bonds either matured or were                      
called.                                                                         

The Company has entered into interest rate swap agreements            
with the Federal Home Loan Bank as described below.  The effect                 
of the $10,000,000 notional amount agreement was to shorten the                 
lag time in interest rate fluctuations from the 11th District                   
Cost of Funds Index (COFI) to the treasury bill to enable the                   
Company to better match the timing of the repricing of certain                  
liabilities.  The effect of the $900,000 notional amount                        
agreement was to lock in an interest rate spread on a fixed                     
interest rate loan of a similar amount and term.                                

                                                                [Download Table]


---------------------------------------------------------------------------- 
                                                       1997          1996    
                                                      Net          Net       
          Original                                  Interest     Interest    
  Notional   Issue    Original  Company   Company     Expense      Expense   
   Amount    Date       Term      Pays    Receives    Recognized   Recognized
---------------------------------------------------------------------------- 
                                                                             
$10,000,000  5-24-96   5-years  COFI        3-mo       $40,000      $19,000  
                                plus .65%   treasury                         
                                (floating   bill                             
                                 rate)      (floating                        
                                             rate)                           

$   900,000  1-24-97   7-years  6.74%       1-yr       $10,000               
                                (fixed      constant                         
                                  rate)     maturity                         
                                            treasury                         
                                            index                            
                                            (floating                        
                                            rate)                            


Interest-rate swap agreements involve not only the risk of            
dealing with counter parties and their ability to meet the terms                
of the contracts but also the interest-rate risk associated with                
unmatched positions.  Notional principal amounts are often used                 
to express the volume of these transactions, but the amounts                    
potentially subject to credit risk are much smaller.                            

At December 31,1997, the Company did not have any investment          
securities issued by a single issuer, which the aggregate book                  
value of such securities exceeded ten percent of stockholders'                  
equity other than those issued by the U.S. Government and U. S.                 
Government agencies and corporations.                                           

The following table shows the carrying amounts and                    
approximate fair values of investment securities available for                  
sale at December 31, 1997 and 1996:                                             

                                                        [Enlarge/Download Table]

                                            1997                        1996           
                                 ----------------------------------------------------- 
                                  Amortized     Carrying     Amortized     Carrying    
                                  Cost          Amount       Cost          Amount      
                                                (Fair Value)               (Fair Value)
                                 ----------------------------------------------------- 
                                                  (Dollars in thousands)               
                                                                                       
U.S. Treasury Securities and                                                           
  Securities of other U.S.                                                             
  Government Agencies                                                                  
  and Corporations                 $43,498        $43,190     $47,887        $47,395   
Obligations of States of the                                                           
  U.S. and Political Subdivisions    4,590          4,683       4,667          4,684   
Other Securities                       592            592         490            490   
                                 ----------------------------------------------------- 
Total                              $48,680        $48,465     $53,044        $52,569   
                                 ===================================================== 
-------------------------------------------                                            

At December 31, 1997 and 1996, investment securities having           
carrying amounts of approximately $11,155,000 and $10,171,000,                  
respectively, were pledged to secure public deposits and short-term             
borrowings and for other purposes required or permitted by                      
law.                                                                            

The following table sets forth the maturity distribution and          
weighted average yield of available for sale securities (other                  
than FHLB stock with a carrying value of approximately $592,000),               
categorized by type of security, including securities issued by                 
U.S. Government agencies, states and political subdivisions as of               
December 31, 1997:                                                              

                                                        [Enlarge/Download Table]

                                                          Available for Sale           
---------------------------------------------------------------------------------------
                                                         Fair           Weighted       
December 31, 1997                                        Value        Average Yield<F1>
---------------------------------------------------------------------------------------
                                                        (Dollars in thousands)         
                                                                                       
U.S. Treasury Securities and                                                           
Securities of Government Agencies and Corporations                                     

Due within one year                                     $ 6,032           5.70%        
Due after one year but within five years                 11,568           6.17         
Due after five years but within ten years                   839           7.06         
Due after ten years                                      24,751           6.11         
                                                        -------           ----         
                                                        $43,190           6.09%        
                                                        =======           ====         
Obligations of States of the                                                           
   U.S. and Political Subdivisions(F1)                                                 
Due within one year                                     $   259           5.96%        
Due after one year but within five years                  1,289           4.33         
Due after five years but within ten years                 2,703           5.06         
Due after ten years                                         432           5.58         
                                                        -------           ----         
                                                        $ 4,683           4.95%        
                                                        -------           ----         
                                                        $47,873           5.98%        
                                                        =======           ====         
------------------------------                                                         
<FN>                                                                                   
<F1>  The yields shown above for Obligations of States of the                          
      U.S. and Political Subdivisions are not shown on a tax                           
      equivalent basis.                                                                
</FN>                                                                                  

DEPOSITS                                                                        

Deposits are the primary source of funds.  The Bank                   
presently prices its deposit rates to be slightly higher than                   
those offered by the major banks in its market area but                         
competitive with those rates offered by other independent                       
financial institutions with offices in the Company's service                    
areas, based upon a weekly survey of such rates.                                

The deposit distribution, in terms of maturity and                    
applicable interest rates, is a primary determinant of the                      
Company's cost of funds and the relative stability of its supply                
of funds.  Deposits are, for the most part, no longer subject to                
interest rate limitations, and interest rates on such deposits                  
tend to reflect current market rates of interest available to                   
depositors on alternative investments at the time of deposit.  At               
December 31, 1997, the aggregate amount of time, savings and                    
interest-bearing demand deposits was 82% of total deposits.  As                 
of December 31, 1997, the Company did not have any foreign                      
deposits, nor, except as noted below, did it have any material                  
concentrations of deposits in any one industry or business.                     
However, the Bank's escrow deposits from a local title company,                 
which are demand deposits, are volatile and occasionally exceeded               
5% of total deposits.  Such escrow deposits averaged $3,681,000                 
and $2,876,000 in 1997 and 1996, respectively, and accounted for                
about 14% and 12% of average demand deposits and 2% of average                  
total deposits during 1997 and 1996.  The loss of these escrow                  
deposits would likely require the Bank to replace some or all of                
such funds with more costly interest-bearing deposits which would               
likely increase the Company's cost of funds and decrease                        
earnings.  At year end 1997, the Bank has had an ongoing deposit                
relationship with the title company for almost eight years.  The                
Bank does not experience substantial seasonal fluctuations in                   
deposit levels.                                                                 

The average rate paid on total deposits for 1997, 1996 and            
1995, was 3.33%, 3.32% and 3.58%, respectively.                                 

The following table, sets forth by time remaining to                  
maturity, domestic time deposits in amounts of $100,000 or more                 
at December 31, 1997:                                                           

                                                                [Download Table]

                                                 (Dollars      
          Remaining Maturity:                     in thousands)
          ---------------------------            --------------
                                                               
          Three Months or Less                      $ 12,803   
          Over Three Months through Six Months         4,099   
          Over Six Months through Twelve Months        4,186   
          Over One Year                                1,142   
                                                    --------   
               Total                                $ 21,088   
                                                    ========   
-------------------------                                      

LIQUIDITY AND INTEREST RATE SENSITIVITY                                         

Management regularly reviews general economic and financial           
conditions, both external and internal, and determines its                      
position with respect to liquidity and interest rate sensitivity.               

Liquidity is defined as the ability to provide funds on an            
ongoing basis to meet fluctuations in deposit levels as well as                 
the credit needs of its customers without affecting net income.                 
Both assets and liabilities contribute to the liquidity ratio.                  
Assets such as unpledged investment securities, cash and due from               
banks, time deposits in other banks, Federal Funds sold, loan                   
sales, and loan repayments contribute to liquidity.  Cash flows                 
generated are mainly used to fund loans, while investment                       
securities are both a use and a source of funds.                                

Of equal significance are the diverse sources comprising the          
funding base.  These include demand deposits, interest-bearing                  
transaction accounts, savings and time deposits, Federal Funds                  
purchased and security repurchase agreements, and borrowings from               
the Federal Home Loan Bank (FHLB).  Additionally, equity and debt               
provide sources of funds.  Capital markets can be utilized by                   
management as a potential funding source.                                       

Liquidity is measured by various ratios, the most common              
being the liquidity ratio of cash, time deposits in other banks,                
Federal Funds sold, and investment securities as compared to                    
total assets.  At December 31, 1995 this ratio was 26%.  In 1996 and            
1997, as loan growth was nominal and securities increased,                      
this ratio increased to 36% and 34%, respectively.  Another                     
relevant measure of liquidity is the ratio of total loans to                    
total deposits.  This ratio also changed in 1996 and 1997, due to               
the slow loan growth, dropping from 78% at year end 1995 to 67%                 
and 69% at December 31, 1996 and 1997, respectively. This large                 
drop in the loan to deposit ratio in 1996 was also a function of                
the Concord branch purchase which added about $15.5 million in                  
deposits and only $.14 million in loans at year end 1996. As of                 
December 31, 1997, the Company through the Bank could borrow up                 
to $8,500,000 from its correspondent banks under informal                       
arrangements should its liquidity needs so mandate.  The Bank has               
made arrangements with the Federal Reserve to borrow funds at the               
discount window.  In addition, the Bank is a member of the FHLB                 
where it can borrow approximately $6,500,000.  Outstanding                      
borrowings from the FHLB were $2,650,000 at December 31, 1997.                  

In the area  of interest rate sensitivity management focuses          
on reducing the impact movements in interest rates would have on                
interest income and the economic value of the Company. The                      
Company believes that keeping overall risks at a low level                      
achieves optimal performance. The objective is to control risks                 
and produce consistent, high quality earnings independent of                    
fluctuating interest rates. The Board of Directors and the Board                
Asset / Liability Committee ("ALCO") oversees the establishment                 
of appropriate internal controls which are designed to ensure                   
that implementation of the Asset / Liability strategies remain                  
consistent with Asset / Liability Management Policy objectives.                 
The ALCO consists of all Senior Management and is charged with                  
implementing these strategies.                                                  

A major tool used by this Committee and the Board ALCO is             
the ALX Asset / Liability computer model (ALX). This model, which               
is run quarterly, measures a number of risks, including liquidity               
risk, capital adequacy risk, interest rate risk and market risk.                
The model analyzes the mix and repricing characteristics of                     
interest rate sensitive assets and liabilities using multipliers                
(the degree interest rates change when federal funds change) and                
lags (the time it takes rates to change after federal funds rate                
change).  The model simulates the effects of net interest income                
and market risk when federal funds change. The ALCO committee                   
then uses this information, in conjunction with, current and                    
projected economic conditions and the outlook for interest rates                
to set loan strategies, investment strategies and funding                       
strategies, which include loan and deposit pricing, volume and                  
mix of each asset and liability category and proposed changes to                
the maturity distribution of assets and liabilities. The Asset /                
Liability policy states that the Bank will monitor and limit                    
interest rate risk as follows:                                                  

For a 1% change in the federal funds rate, net interest               
income (NII) should not change by more than 5% and for a 2%                     
change in the federal funds rate, NII should not change by more                 
than 10%. The policy further states that the Bank will monitor                  
and limit market risk (in a market where interest rates have                    
risen 3%) to 25% of equity capital while maintaining "well                      
capitalized" leverage and risk based capital ratios.                            

At December 31, 1997, the ALX model showed the Bank was               
liability sensitive with a decrease in NII of $66,000 or 0.8% for               
a 1% increase in the federal funds rate and a $462,000 or 5.7%                  
decrease in NII for a 2% increase in the federal funds rate.  In                
contrast, for a 1% and 2% decrease in the federal funds rate, the               
model showed the Bank's NII would increase $31,000 or .4% and                   
$343,000 or 4.2%, respectively.  All of these figures are within                
policy.                                                                         

At December 31, 1997 market risk, as measured by the model,           
for a 3% increase in market rates, was 9.7% of equity capital,                  
well within policy, and the market risk adjusted leverage and                   
risk based capital ratios were 6.3% and 12.3%, respectively, also               
well within policy.                                                             

When the Bank is liability sensitive, as it was at December           
31, 1997, management will discontinue or limit the use of longer                
lagging indexes such as the 11th District Cost of Funds (COFI)                  
for loan pricing and switch to more market sensitive indexes. In                
the security portfolio, the Bank will switch from fixed rate                    
investments, as well as investments tied to lagging indexes, to                 
short term securities and/or to securities tied to more market                  
sensitive indexes. The Bank will also use interest rate swaps,                  
when appropriate, to reposition the Bank's interest rate risk.                  

The following table shows the interest sensitive assets and           
liabilities gap, which is the measure of interest sensitive                     
assets over interest bearing liabilities, for each individual                   
repricing period on a cumulative basis:                                         

                                                        [Enlarge/Download Table]

INTEREST RATE SENSITIVITY GAP                                                                

                                                         1997                                
                            ---------------------------------------------------------------- 
                                                       After                                 
                                                       Three     After                       
                                            Next Day   Months     One                        
Assets and Liabilities                      Through     But     Through     After            
Which Mature or Reprice:                     Three     Within     Five       Five            
                            Immediately<F1>  Months   One Year   Years      Years     Total  
                            ---------------------------------------------------------------- 
                                                  Dollars in Thousands                       
                            ---------------------------------------------------------------- 
                                                                                             
Federal Funds Sold            $ 8,775       $     --  $     --  $     --  $     --  $  8,775 
Investment Securities              --         29,637     2,250    12,447     4,131    48,465 
Total Loans                    27,357         11,697    50,942    20,363    10,703   121,062 
Total Interest                                                                               
 Earning Assets                36,132         41,334    53,192    32,810    14,834   178,302 
                              =======       ========  ========  ========  ========  ======== 
Cumulative Interest                                                                          
 Earning Assets                36,132         77,466   130,658   163,468   178,302   178,302 
Interest Bearing                                                                             
 Transaction Accounts          23,907             --        --        --        --    23,907 
Savings Accounts               59,163             --        --        --        --    59,163 
Time Deposits                       0         28,221    26,805     4,516         0    59,542 
Repurchase Agreements              --            359       229        --        --       588 
Other Borrowed Funds                                                         2,650     2,650 
Subordinated Debentures            --             --     2,468        --        --     2,468 
Total Interest                                                                               
 Bearing Liabilities           83,070         28,580    29,502     4,516     2,650   148,318 
                              =======       ========  ========  ========  ========  ======== 
Cumulative Interest                                                                          
 Bearing Liabilities           83,070        111,650   141,152   145,668   148,318   148,318 

Interest Rate                                                                                
 Sensitivity Gap              (46,938)        12,754    23,690    28,294    12,184    29,984 
Cumulative Interest                                                                          
 Rate Sensitivity Gap         (46,938)       (34,184)  (10,494)   17,800    29,984    29,984 
Interest Rate                                                                                
 Sensitivity Gap Ratio <F2>        44%           145%      180%      727%      100%      120%
Cumulative Interest Rate                                                                     
 Sensitivity Gap Ratio <F3>        44%            69%       93%      112%      120%      120%
-----------------------------------------                                                    
<FN>                                                                                         
<F1>  Includes $10,524,000 in regular savings accounts which are                             
      subject to interest rate changes.                                                      
<F2>  The interest rate sensitivity Gap Ratio for each time                                  
      period presented is calculated by dividing the respective total                        
      interest earning assets by total interest bearing liabilities.                         
<F3>  The cumulative interest rate sensitivity Gap ratio, for                                
      each time period presented, is calculated by dividing the                              
      respective cumulative interest earning assets by cumulative                            
      interest bearing liabilities.                                                          
</FN>                                                                                        

Both the traditional GAP analysis and the asset liability             
simulation model indicated, in the twelve-month period ending                   
December 31, 1997, the Company and the Bank were liability                      
sensitive.  In 1996, average interest rates, as measured by the                 
average Federal Funds rate, were .50% lower than they were in                   
1995, 5.80% in 1995 verses 5.30% in 1996.  In 1997, average                     
Federal Funds interest rates rose slightly to 5.44%.  The                       
Company's liability sensitive posture had a negative impact on                  
net interest margins as predicted by the asset liability                        
simulation model.  Although net interest income increased by                    
$496,000 in 1997 over 1996 results,  a $728,000 improvement in                  
net interest income due to higher volumes was offset by a                       
$232,000 decline in interest income due to changes in interest                  
rates.  Changes in interest income on loans attributed to                       
interest rates accounted for $214,000 of this decline.  Lower                   
loan fees, higher unrealized interest on nonaccrual loans and                   
lower loan rates on loans tied to slow and lagging loan indexes                 
such as the 11th District Cost of Funds, were the factors causing               
this reduction.  Interest rate sensitivity measured by the gap                  
method does not consider the impact of different multipliers and                
lags.  Neither method of measuring interest rate sensitivity takes              
into account actions that management could take to modify                       
the effect to net interest income if interest rates were to rise                
or fall, or the behavior of consumers in response to changes in                 
interest rates.                                                                 

At year end 1997, the Company had $130,658,000 in assets and          
$141,152,000 in liabilities repricing within one year, resulting                
in a cumulative gap ratio of 93%.  Stated differently, 7% of                    
interest-rate sensitive liabilities are unmatched through one                   
year.  The Company could experience a decrease in its net                       
interest margin if the general level of interest rates were to                  
rise.  At year end 1997, the Company had $30,004,000 more in                    
interest rate sensitive assets than it did in interest rate                     
sensitive liabilities.  The principal funding source of these                   
assets is $32,120,000 in noninterest bearing deposits which are                 
by definition not sensitive to interest rate changes since they                 
do not earn interest.                                                           

MATURITY DISTRIBUTION AND INTEREST RATE SENSITIVITY OF LOANS                    

The following table shows the maturity of commercial loan             
and real estate construction loans outstanding as of December 31,               
1997.  Also provided are the amounts due after one year                         
classified according to the sensitivity to changes in interest                  
rates.  Nonperforming loans are included in this table based on                 
nominal maturities, even though the Company may be unable to                    
collect such loans or compel repricing of such loans at the                     
maturity date.  Included in the totals are unearned income on                   
such loans, such as deferred loan fees.                                         

                                                        [Enlarge/Download Table]


                                                           Maturing                     
                                         -----------------------------------------------
                                                    After One                           
                                         Within     through      After                  
                                         One Year   Five Years   Five Years   Total     
                                         -----------------------------------------------
                                                     (Dollars in Thousands)             
                                                                                        
Commercial,                              $ 4,333    $ 4,244      $ 1,771      $10,348   
Real Estate - Construction                 4,342      1,189          511        6,042   
                                         -------    -------      -------      -------   
                                         $ 8,675    $ 5,433      $ 2,282      $16,390   
                                         =======    =======      =======      =======   
Loans maturing after one year with:                                                     
Fixed interest rates                     $ 5,200    $ 1,738      $   575      $ 7,513   
Variable interest rates                    3,475      3,695        1,707        8,877   
                                         -------    -------      -------      -------   
                                         $ 8,675    $ 5,433      $ 2,282      $16,390   
                                         =======    =======      =======      =======   
-------------------------------------------------------                                 

CAPITAL RESOURCES                                                               

Capital planning by the Company and the Bank considers                
current capital needs as well as anticipated future growth and                  
dividend payouts.  A determination of whether a Bank is "well                   
capitalized," "adequately capitalized" or "under capitalized" is                
used by Bank regulators to determine which aspects of federal                   
regulations are applicable to the Bank.  For example, FDIC                      
premium rates are now based upon capital levels as well as the                  
Bank's safety and soundness rating.                                             

The Company raised capital of $1,426,000 and $321,000 in              
1997 and 1996, respectively, through  issuance of common stock                  
pursuant to the exercise of employee stock options and the                      
conversion of debentures.                                                       

The Company and the Bank are subject to minimum capital               
guidelines issued by the Federal Reserve and the FDIC,                          
respectively, which require a minimum leverage ratio of Tier 1                  
capital to quarterly average total assets less goodwill of 3% to                
5% (the "leverage ratio").  The Company and the Bank are also                   
required to meet a minimum risk based capital ratio of qualifying               
total capital to risk weighted assets of 8%, of which at least 4%               
must be in the form of core (Tier 1) capital-common stock less                  
goodwill.  The unrealized loss in Available for Sale Securities                 
is excluded when calculating capital ratios.  For the Company and               
the Bank, supplementary (Tier 2) capital consists only of the                   
allowance for loan losses and the debentures (Company) and                      
subordinated notes (Bank).  As of December 31, 1997, the                        
Company's and the Bank's leverage ratios were 7.91% and 6.97%,                  
both higher than the respective 7.04% and 6.81% reported at                     
December 31, 1996.  The Company's and the Bank's total risk-based               
capital ratios were 13.64% and 13.21% at December 31, 1997                      
compared to 13.56% and 13.22% at December 31, 1996.                             

The Company and the Bank must also maintain a 4% ratio of             
Tier 1 capital to risk weighted assets.  As of December 31, 1997,               
this ratio was 10.99% and 9.69%, respectively, compared to 9.92%                
and 9.60% in the prior year, both well above the minimum.  In                   
October 1992, the FDIC adopted the final rules for implementing                 
the risk-related premium system, where a Bank's safety and                      
soundness rating by a Bank supervisory body and the Bank's                      
capitalization determines which of nine risk classifications is                 
appropriate for an institution.  Although the Bank meets all the                
minimum requirements of each capital ratio, these standards are                 
now the minimum ratios to be considered "adequately capitalized."               

The following tables present the capital ratios for the               
Company and the Bank and respective regulatory  capital  adequacy               
requirements, at December 31, 1997:                                             

                                                                [Download Table]


Company:                                                   For Capital     
                                        Actual           Adequacy Purposes 
                               ---------------------   --------------------
                                                        Minimum     Minimum
                                  Amount      Ratio      Amount      Ratio 
                                  (000)                   (000)            
                               ---------------------   --------------------
                                                                           
As of December 31, 1997:                                                   
 Total capital                                                             
  (to risk weighted assets)    $19,084        13.64%     $11,195      8.0% 
 Tier I capital                                                            
  (to risk weighted assets)    $15,374        10.99%     $ 5,597      4.0% 
 Tier I capital                                                            
  (to average assets)          $15,374         7.91%     $ 7,772      4.0% 

                                                        [Enlarge/Download Table]

Bank:                                                                                          
                                                                         To Be Categorized as  
                                                                         Well Capitalized Under
                                  For Capital                            Prompt Corrective     
                                     Actual           Adequacy Purposes  Action Provisions     
                              ---------------------  ------------------- -------------------   
                                                      Minimum    Minimum  Minimum    Minimum   
                                Amount       Ratio     Amount     Ratio    Amount     Ratio    
                                (000)                  (000)               (000)               
                              ---------------------  ------------------- -------------------   
                                                                                               
As of December 31, 1997:                                                                       
Total capital                                                                                  
 (to risk weighted assets)    $18,431        13.21%  $11,160       8.0%  $13,950       10.0%   
Tier I capital                                                                                 
 (to risk weighted assets)    $13,521         9.69%  $ 5,580       4.0%  $ 8,370        6.0%   
Tier I capital                                                                                 
 (to average assets)          $13,521         6.97%  $ 7,755       4.0%  $ 9,694        5.0%   

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

SELECTED FINANCIAL RATIOS                                                       

The following table sets forth certain financial ratios for           
the periods indicated (averages are computed using daily                        
figures):                                                                       

                                                                [Download Table]

                                                      Year Ended December 31, 
                                                    --------------------------
                                                      1997           1996     
                                                    --------------------------
                                                                              
Net earnings to:                                                              
     Average interest earning assets                    .84  %        1.03  % 
     Average total assets                               .75            .92    
     Average stockholders' equity                      9.93          12.25    
Cash dividend payment to:                                                     
     Net earnings                                     43.92          36.05    
     Average stockholders' equity                      4.36           4.41    
Tier 1 capital to:                                                            
     Quarterly average total assets (less goodwill)    7.91           7.04    
Average earning assets to:                                                    
     Average total assets                             89.50          89.63    
     Average total deposits                          100.88         101.57    
Percent of total deposits:                                                    
     Net loans                                        68.29          65.71    
     Noninterest-bearing deposits                     18.38          15.78    
     Interest-bearing deposits                        81.62          84.22    
Total interest expense to:                                                    
     Total gross interest income                      42.95          41.71    
Total risk-based capital to:                                                  
     Risk-based assets                                13.64          13.55    
Tier 1 capital to:                                                            
     Risk based assets                                10.99           9.92    
Average stockholders' equity to:                                              
     Average total assets                              7.59           7.53    
------------------------------------------------                              

SHORT-TERM BORROWINGS                                                           

The Company had no short term borrowings at December 31,              
1997 or 1996.                                                                   

IMPACT OF INFLATION                                                             

The impact of inflation on a financial institution differs            
significantly from that exerted on an industrial concern,                       
primarily because a financial institution's assets and                          
liabilities consist largely of monetary items.  The relatively                  
low proportion of the Company's net fixed assets (less than 4% at               
December 31, 1997) reduces both the potential of inflated                       
earnings resulting from understated depreciation and the                        
potential understatement of absolute asset values.                              

ITEM 7 - FINANCIAL STATEMENTS                                                   

The Financial Statements Required by this Item are set                
forth following Item 13 hereof, and are incorporated herein by                  
reference.                                                                      

ITEM  8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON                      
ACCOUNTING AND FINANCIAL DISCLOSURE                                             

Not applicable.                                                       

PART III                                                                        

ITEM  9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL                  
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT                      

Section 16(a) of the Securities Exchange Act of 1934, as              
amended, (the "Act"), as administered by the Securities and                     
Exchange Commission (the "SEC"), requires the Bank's directors                  
and executive officers and persons who own more than ten percent                
of a registered class of the Bank's equity securities to file                   
with the SEC initial reports of ownership and reports of changes                
in ownership of Common Stock of the Company.  Officers, directors               
and greater than ten percent stockholders are required by the SEC               
to furnish the Bank with copies of all Section 16(a) forms they                 
file.                                                                           

To the Company's knowledge, based upon a review of the                
copies of such reports furnished to the Company and written                     
representations that no other reports were required, during the                 
fiscal year ended December 31, 1997, all such filing requirements               
applicable to its officers, directors and ten percent                           
shareholders were complied with pursuant to Section 16(a) of the                
Act.                                                                            

ITEM  10 - EXECUTIVE COMPENSATION                                               

The following table sets forth all compensation awarded to,           
earned by or paid for services rendered in all capacities to the                
Company and its subsidiaries by its Chief Executive Officer and                 
the other officers of the Company and its subsidiaries whose                    
salary and bonus for 1997 exceeded $100,000 (the "Named                         
Executive Officers").                                                           

                                                                [Download Table]

                                   Annual Compensation                 
                          --------------------------------------       
Name and                                    Other    All Other         
Principal Position   Year  Salary   Bonus  Annual<F1>  Comp.           
---------------------------------------------------------------        
                                                                       
Walter O. Sunderman  1997 $155,288 $34,320 $      0  $338,667(F2)      
President, CEO       1996 $147,888 $30,130 $      0  $322,917(F2)      
and Director         1995 $140,838 $28,003 $      0  $308,664(F2)      
---------------------------------------------------------------        
Andrew S. Popovich   1997 $101,270 $22,382 $174,795  $219,651(F3)      
EVP and CAO          1996 $ 96,446 $19,649 $ 15,798  $209,438(F3)      
                     1995 $ 91,854 $18,264 $      0  $198,071(F3)      
---------------------------------------------------------------        
Ronald A. Alfstad    1997 $ 98,400 $21,747 $      0  $215,164(F4)      
EVP and CCO          1996 $ 92,856 $19,092 $      0  $204,238(F4)      
                     1995 $ 87,576 $17,413 $      0  $190,557(F4)      
----------------------                                                 
<FN>                                                                   
<F1>  Consisted of the value realized upon the exercise of             
      stock options.                                                   
<F2>  Reflects (for 1995, 1996 and 1997, respectively) $288,546,       
      $303,000 and 318,150 Mr. Sunderman would be entitled to receive  
      (2x then current annual base salary) in the event of a merger or 
      change in control of the Company, resulting in his terminated.   
      This payment hereunder includes the change of control payment    
      described below.  In the event of change of control but neither  
      Mr. Sunderman nor his agreement is terminated, Mr. Sunderman     
      would be entitled to receive a lump sum payment equal to one time
      his then current annual base salary ("change of control          
      payment").  Mr.  Sunderman may be entitled to other payments as a
      result of a  merger or change of control of the Company under    
      certain  other circumstances.  See "Employment Agreements and    
      Supplemental Retirement Plan" herein. Also includes (for  1995,  
      1996 and 1997, respectively) $10,917 in Medical and Life         
      insurance payments and $9,000, $9,000 and $9,600 in Profit       
      Sharing Contributions made by the Bank on behalf of Mr.          
      Sunderman.                                                       
<F3>  Reflects (for 1995, 1996 and 1997, respectively)                 
      $188,196, $197,600 and 207,480  Mr. Popovich would be entitled to
      receive (2x then current annual base salary) in the event of  a  
      merger or change in control of the Company, resulting  in his    
      terminated.  This payment hereunder includes the change  of      
      control payment described below.  In the event of change  of     
      control but neither Mr. Popovich nor his agreement is terminated,
      Mr. Popovich would be entitled to receive a lump sum payment     
      equal to six months his then current annual base salary ("change 
      of control payment").  Mr. Popovich may be  entitled to other    
      payments as a result of a merger or change  of control of the    
      Company under certain other circumstances.  See "Employment      
      Agreements and Supplemental  Retirement Plan" herein. Also       
      includes (for 1995, 1996 and 1997, respectively) $3,814, $4,347  
      and $4,347 in  Life insurance payments and $6,061, $7,491 and    
      $7,824 in Profit Sharing Contributions made by the Bank on behalf
      of Mr. Popovich.                                                 
<F4>  Reflects (for 1995, 1996 and 1997, respectively) $179,426,       
      $192,000 and $201,600 Mr. Alfstad would be entitled to receive   
      (2x then current annual base salary) in the event of a merger or 
      change in control of the Company, resulting in his terminated.   
      This payment hereunder includes the change of control payment    
      described below.  In the event of change of control but neither  
      Mr. Alfstad nor his agreement is terminated, Mr. Alfstad would be
      entitled to receive a lump sum payment equal to six months his   
      then current annual base salary ("change of control payment").   
      Mr. Alfstad may be entitled to other payments as a result of a   
      merger or change of control of the Company under certain other   
      circumstances.  See "Employment Agreements and Supplemental      
      Retirement Plan" herein. Also includes (for 1995, 1996 and 1997, 
      respectively) $5,642, $5,868 and $5,868 in Life insurance        
      payments and $5,489, $6,368 and 7,695 in Profit Sharing          
      Contributions made by the Bank on behalf of Mr. Alfstad.         
-------------------                                                    
</FN>                                                                  

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF                
CONTROL ARRANGEMENTS                                                            

On November 1, 1989, Continental Pacific Bank (the "Bank")            
entered into two-year employment agreements ("Agreements") with                 
Messrs. Alfstad, Popovich and Sunderman in recognition of their                 
past contributions to the Bank and in order to provide an                       
incentive to retain and motivate them in connection with their                  
continued employment with the Bank.  The Agreements are                         
automatically extended for successive additional one-year terms                 
unless certain events occur or the Bank gives notice that an                    
agreement will not be extended.                                                 

Under the Agreements, commencing with the 1990 fiscal year,           
the Bank agreed to allocate to a bonus pool an amount equal to a                
specified percentage of Bank profits which exceed a specified                   
return on the Banks average equity.  The bonus pool is then                     
distributed to the above-named individuals in proportion to the                 
ratio of that individual's current base salary to the sum of the                
three base salaries.                                                            

In the event of the termination of any of the Agreements or           
any Executive Officer, without cause, within either six (6)                     
months prior to or twelve (12) months after a merger,                           
acquisition, or other change of control of the Company, as                      
defined in the Agreements (a "Change of Control"), each Executive               
Officer so terminated would be entitled to receive a lump sum                   
payment equal to two times his then current current base salary;                
provided, however, that the change of control payment and the                   
termination payment, defined below, shall first be deducted from                
the lump sum payment hereunder.                                                 

In the event a Change of Control occurs but neither the               
Executive Officer nor his Agreement is terminated, Mr. Sunderman                
would be entitled to receive a lump sum payment equal to one time               
his then current annual base salary, and Messrs. Alfstad and                    
Popovich would each be entitled to receive a lump sum payment                   
equal to one half of his then current annual base salary ("change               
of control payment").                                                           

If a Change of Control is consummated for a total purchase            
or investment price or value of more than 1.75 times the book                   
value of the Company's stock as of the month prior to the                       
announcement of the Change of Control, calculated in accordance                 
with the FDIC's regulatory capital requirements, but on a fully                 
diluted basis, then Messrs. Sunderman and Popovich each will be                 
entitled to receive an additional incentive payment calculated                  
based upon a percentage of the purchase price over the 1.75                     
threshold dependent upon the ratio of the purchase price to fully               
diluted book value of the Company's stock.  However, in no event                
shall the incentive payment exceed twice the Company's Executive                
Officer's annual base salary.  Based on the market value of                     
SierraWest Bancorp common stock at January 29, 1998, which was                  
$31.00, the amounts payable under these provisions to Messrs.                   
Sunderman and Popovich would be $318,150 and $207,480,                          
respectively.                                                                   

The Agreements further provide for severance payments for             
Mr. Sunderman in the amount of one times his then current annual                
base salary and for Messrs. Alfstad and Popovich in the amount of               
one-half times their respective then current annual base                        
salaries, plus  certain other expenses if the named individuals                 
are otherwise terminated without cause ("termination payment").                 

Pursuant to the certain performance targets specified in the          
Agreement, Mr. Sunderman received, options to purchase 1,000                    
shares in 1990 and 1,000 shares in 1992 (currently he has options               
to purchase 1,331 shares and 1,210 shares, respectively, due to                 
subsequent stock dividends) of the Bank's Common Stock at its                   
then current market value and Messrs. Alfstad and Popovich each                 
received options to purchase 650 shares in 1990 and 650 shares in               
1992, (currently, Mr. Alfstad has options to purchase 865 shares                
and 787 shares, respectively, due to subsequent stock dividends,                
Mr. Popovich exercised these options in 1997) shares of the                     
Bank's Common Stock.  These options are subject to adjustment for               
subsequent stock dividends.                                                     

COMPENSATION OF DIRECTORS                                                       

During 1997, Directors of the Company and the Bank were paid          
$650 per Board Meeting attended and $250 per Committee meeting                  
attended, except that if the Director was a member of the Board                 
of Directors of both the Company and the Bank, and both Boards                  
met on the same day, the Director only received a single $650 fee               
for attending both meetings.  Directors of Conpac Development                   
Corporation were paid $300 per Board Meeting attended and $150                  
per Committee meeting attended.  Mr. Sunderman does not receive                 
Director's fees.  The aggregate Directors fees paid in 1997 was                 
$62,400.  Directors electing coverage under the group health                    
insurance plan available to employees of the Company have been                  
required to pay 100% of their premiums.                                         

The Company's 1993 Stock Option Plan provides for annual              
automatic Stock Option grants to non-employee Directors.                        

STOCK OPTION PLANS                                                              

The Bank adopted a Stock Option Plan in 1983 which                    
terminated on November 8, 1993 ("the "1990 Plan").  The Bank                    
adopted a new stock option plan in 1993 (the "1993 Plan"), which                
was approved by stockholders in 1993 and amended in 1994 and                    
1996.  Both the 1990 Plan and the 1993 Plan became stock option                 
plans of the Company following the reorganization.  As a result                 
of the reorganization, options to purchase the Banks Common Stock               
were converted into options to purchase the same number of shares               
of the Company's Common Stock.                                                  

Pursuant to the 1990 Plan, both nonqualified and incentive            
stock options were issued.  As of the date the 1990 Plan                        
terminated, nonemployee directors had been granted options to                   
purchase 44,722 shares of the Company's Common Stock.                           

Pursuant to the 1993 Plan, both nonqualified and incentive            
stock options may be issued.  The 1993 Plan allows for the                      
issuance of options to purchase up to 200,000 shares of the                     
Company's Common Stock.  As of March 24, 1998, 22,846 shares have               
been issued pursuant to the exercise of options under the 1993                  
Plan.  68,089 shares were subject to outstanding options and                    
109,065 shares were available for future grant.                                 

The 1993 Plan provides that all options be granted at an              
exercise price of not less than 100% of fair market value on the                
date of grant to key, full-time salaried employees and officers                 
of the Company and the Bank.  Options are exercisable in                        
installments as provided in individual stock option agreements.                 
The selection of individual participants is determined by the                   
Stock Option Committee, or in the absence of such committee, by                 
the full Board of Directors; however, vesting provisions for non-               
employee directors may not be modified from those set forth in                  
the 1993 Plan.  The 1993 Plan provides that each nonemployee                    
Director, who first joins the Board after May 13, 1993, shall                   
receive a nonstatutory stock option ("NSO") covering 1,000 shares               
of the Company's Common Stock on the first business day after his               
or her initial election or appointment to the Board.                            
Additionally, on the first business day following the conclusion                
of each regular annual meeting of the Company's stockholders after              
the year 1993, each nonemployee Director who continues                          
serving as a member of the Board thereafter is entitled to                      
receive an NSO covering 250 shares of Company's Common Stock.                   

Each option granted under the 1993 Plan is transferable only          
by will or the laws of descent and distribution and is                          
exercisable during each optionee's lifetime only by the optionee.               
The Board of Directors has the complete power and authority to                  
terminate or amend the 1993 Plan; provided, however, that the                   
Board of Directors may not amend the 1993 Plan without, where                   
required by law, the approval of stockholders; provided further,                
that the Board may not amend the 1993 Plan provisions relating to               
the amount, price and timing of option grants to nonemployee                    
directors more than once in any six-month period without                        
stockholder approval.                                                           

There were no options granted to Messrs.  Alfstad, Popovich           
and Sunderman in 1997.                                                          

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year                 
End Option Values                                                               

                                                        [Enlarge/Download Table]

                                      Number of                                        
                                Securities Underlying           Value of               
           Shares                Unexercised Options       In-the-Money Options        
          Acquired                at Fiscal Year End        at Fiscal Year End         
             on      Value    -------------------------  ------------------------------
Name      Exercise  Realized  Exercisable Unexercisable  Exercisable(F1)  Unexercisable
--------- --------  --------  ----------- -------------  ---------------  -------------
                                                                                       
Walter O.                                                                              
Sunderman   n/a        n/a       18,541         0          $332,425.41         0       

Andrew S.                                                                              
Popovich  10,961   174,794.75     1,126         0          $ 19,986.50         0       

Ronald A.                                                                              
Alfstad     n/a        n/a       11,601         0          $208,077.90         0       
---------------------------                                                            
<FN>                                                                                   
<F1>  Based upon fair market value of 28.500 at December 31, 1997.                     
</FN>                                                                                  

SUPPLEMENTAL RETIREMENT PLAN                                                    

Additionally, Messrs. Sunderman, Popovich, Alfstad and                
Fletcher are each party to a Supplemental Retirement Plan each                  
dated as of August 1, 1993 (the "Supplemental Plans").  Under the               
supplemental Plans, vested retirement benefits shall be paid over               
a 15 year term beginning on the later of the participant's 62nd                 
birthday or his termination of employment.  The benefits of each                
Executive Officer vest 100% after 15 years of service.                          
Additionally, with respect to Messrs. Popovich and Fletcher, in                 
the case of a Change in Control, each such Executive Officer is                 
entitled to receive fully vested retirement benefits on the                     
January 1st next following termination of employment following                  
the Change in control, determined on the date of termination as                 
though the Executive Officer were age 62, and may elect to be                   
paid in a single lump sum cash payment or that payments commence                
following a certain term, e.g., 10 years after the Change in                    
Control.  No interest shall be credited on any deferred payments.               
The annual retirement benefit to be received shall be equal to 2%               
of the participant's average annual compensation for the 36                     
months preceding his retirement multiplied by the participant's                 
years of employment with the Bank (rounded up or down to the                    
nearest complete year and not to exceed 25 years), minus the                    
annual amount that could be provided by the participant's Profit                
Sharing Plan vested account balance upon the participant's                      
retirement (converted to an annual benefit of 15 installments                   
commencing on the date benefits begin).                                         

The Supplemental Plan also provides for death benefits.  If           
a participant dies after benefits commence or following                         
termination of employment, any installment payments that would                  
have been made to the participant had he lived will be made to                  
his beneficiary.  If a participant dies while still employed by                 
the Company, the participant's beneficiary shall receive the                    
following lump sum death benefit in lieu of any retirement                      
benefits:  Mr. Alfstad, $400,000; Mr. Fletcher, $475,000; Mr.                   
Popovich, $600,000; Mr. Sunderman, $700,000.  The pre-retirement                
death benefits provided under the Supplemental Plan are funded                  
with life insurance policies.                                                   

The Supplemental Plan is not currently funded.  The Company           
must contribute to the trust to fund the retirement benefits                    
under the Supplemental Plan in the event of a change of control.                
The following table is furnished in connection with the                         
Supplemental Plan.  The table sets forth the estimated annual                   
payment which would be made each year for 15 years to                           
participants in the specified compensation and years of service                 
classifications (although there may be no participants in these                 
classifications).  However, the annual payment actually received                
by any participant is reduced by the actuarial equivalent of his                
benefit under the profit sharing plan.                                          

During 1997, the cash compensation of Messrs.  Sunderman,             
Popovich, Alfstad and Fletcher (including bonuses) were $189,608,               
$123,652, $120,147 and $98,935, respectively.  Years of service                 
credit for the Bank's Executive Officers as of the March 24, 1998               
were as follows:  Alfstad, 15 years;  Fletcher, 13 years;                       
Popovich, 15 years;  Sunderman, 15 years.                                       

                                                                [Download Table]


PENSION TABLE                                    
Estimated Annual Retirement Income               

                       YEARS OF SERVICE          
              -----------------------------------
Remuneration   10 yrs   15 yrs   20 yrs   25+ yrs
                                                 
 $  75,000    $15,000  $22,500  $30,000  $ 37,500
  $100,000    $20,000  $30,500  $40,000  $ 50,000
  $125,000    $25,000  $37,500  $50,000  $ 62,500
  $150,000    $30,000  $45,000  $60,000  $ 75,000
  $175,000    $35,000  $52,500  $70,000  $ 87,500
  $200,000    $40,000  $60,000  $80,000  $100,000

PROFIT SHARING PLAN                                                             

On January 29, 1989, the Board of Directors of the Bank               
adopted a profit sharing plan (the "Plan").  The Profit Sharing                 
Plan is intended to provide the Company's employees with                        
additional financial security at retirement.  With the exception                
of employees who are paid by the hour and employees who have not                
attained age 21, all employees of the Company who have completed                
one year of service are eligible to participate in the Plan.                    

For each year in which the Plan is in effect, the Board of            
Directors may, in its sole discretion, decide whether to make a                 
contribution to the Plan and the amount of that contribution, if                
any.  Employees may not make contributions to the Plan. Employees               
who participate in the Plan and who are still employed on                       
December 31 of that year receive a pro rata share (based on the                 
participant's compensation) of any contribution made by the Board               
of Directors.  In the event the Plan becomes "top heavy", i.e.,                 
more than sixty percent (60%) of the Plan benefits are held for                 
"key-employees," a special minimum contribution may be made for                 
non-key employees.                                                              

Contributions to an individual employee's account become one          
hundred percent (100%) vested after five or more years of                       
service, although vesting may occur on an expedited basis in the                
event the Plan becomes top heavy.  In 1997, contributions for                   
Messrs. Sunderman, Popovich and Alfstad were $9,600, $7,824 and                 
$7,695, respectively.                                                           

ITEM  11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND                  
MANAGEMENT                                                                      

As of March 24, 1998, no individual or group was known by             
the Company to own beneficially more than five percent (5%) of                  
the outstanding shares of the Company's Common Stock, except as                 
follows:                                                                        

                                                                [Download Table]


Name and Address of              Amount and Nature of        Percent    
Beneficial Owner<F1>             Beneficial Ownership<F2>    of Class   
                                                                        
John Hancock Advisers, Inc.          60,000                    5.4%     
----------------                                                        
<FN>                                                                    
<F1>  The principal business office is located at 101 Huntington        
      Avenue, Boston MA 02199.                                          
<F2>  John Hancock Advisers, Inc. has direct beneficial                 
      ownership of 60,000 shares of common stock through their          
      parent-subsidiary relationship to John Hancock Advisers, Inc, John
      Hancock Mutual Life Insurance Company, John Hancock Subsidiaries, 
      Inc., and The Berkeley Financial Group have indirect beneficial   
      ownership of these same shares. 60,000 shares are held by the     
      John Hancock Regional Bank Fund an open-end diversified           
      management company, registered under 8 of the Investment Company  
      Act.  John Hancock Advisers, Inc.  has sole power to vote or      
      direct the vote of the 60,000 shares of Common Stock under the    
      Advisory Agreement with John Hancock Regional Bank Fund.          
</FN>                                                                   

The following table sets forth information as of March 24,            
1998, with respect to each Director and each executive officer                  
named in the Summary Compensation Table in Item 10 above, as well               
as for all Directors and executive officers as a group.                         

The table should be read with the understanding that more             
than one person may be the beneficial owner or possess certain                  
attributes of beneficial ownership with respect to the same                     
securities.  Therefore, careful attention should be given to the                
footnote references set forth in the column "Amount and Nature of               
Beneficial Ownership."  In addition, shares issuable pursuant to                
options to purchase Common Stock which may be exercised within 60               
days of the Record Date are deemed to be issued and outstanding                 
and have been utilized in calculating the percentage ownership of               
those individuals possessing such interest, but not for any other               
individuals.  Thus, the total number of shares considered to be                 
outstanding for the purposes of this table may vary depending                   
upon the individual's particular circumstance.                                  

                                                                [Download Table]


Name and Address of   Amount and Nature of        Percent        
Beneficial Owner<F1>  Beneficial Ownership<F2>    of Class<F2>   
                                                                 
Ronald A. Alfstad             26,137<F3>             2.3 %       
Dorce L. Daniel               18,710<F4>             1.7 %       
William J. Hennig             33,788<F4><F5>         3.0 %       
Bernard E. Moore               9,238<F4>             0.8 %       
Melvin M. Norman              31,774<F4><F6>         2.8 %       
Andrew S. Popovich            11,513<F7>             1.0 %       
Stephen R. Schwimer           37,450<F4>             3.3 %       
Donald E. Sheahan             31,308<F8>             2.8 %       
Dr. Gary E. Stein             23,748<F4>(F9>         2.1 %       
Walter O. Sunderman           40,073<F10>            3.5 %       
John C. Usnick                28,429<F4><F11>        2.5 %       
All directors and officers                                       
  as a group (11 in number)  292,169<F12><F13>      24.1 %       
------------------------                                         
<FN>                                                             
<F1> The address for all persons is c/o California Community     
     Bancshares Company, 555 Mason Street, Suite 280,            
     Vacaville, California 95688-4612.                           
<F2> Includes shares beneficially owned, directly and indirectly,
     together with associates.  Subject to applicable community  
     property laws and shared voting and investment power with a 
     spouse, the persons listed have sole voting and investment  
     power with respect to such shares unless otherwise noted.   
<F3> Includes options to acquire 11,601 shares which are         
     exercisable within 60 days of the Record Date.  Also,       
     includes 2,077 held in an individual retirement account.    
     Also includes conversion rights, pursuant to the            
     Company's Convertible Subordinated Debentures due 2003,     
     to acquire 2,353 shares.                                    
<F4> Includes options to acquire 8,653 shares which are          
     exercisable within 60 days of the Record Date.              
<F5> Includes 25,135 shares held by the Bill and Joan Hennig     
     Family Trust, of which Mr. Hennig and his wife, Joan, are   
     trustees.                                                   
<F6> Includes 23,121 shares held by Melvin M. Norman             
     Construction, Inc.  Profit Sharing Plan, over which Mr.     
     Norman has sole voting and investment power.                
<F7> Includes options to acquire 1,126 shares which are          
     exercisable within 60 days of the Record Date.  Also,       
     includes 1,940 shares held by Mr. Popovich as custodian for 
     his daughter, Sara Kate; and 958 shares held by Mr. Popovich
     as custodian for his daughter, Amy Beth.  Also, includes    
     2,028 held in an individual retirement account and 150 held 
     in an individual retirement account for his wife.  Also     
     includes conversion rights, pursuant to the Company's       
     Convertible Subordinated Debentures due 2003,  to acquire   
     549 shares.                                                 
<F8> Includes 20,430 shares held by the Donald and Patricia      
     Sheahan Family Trust, of which Mr. Sheahan and his wife,    
     Patricia, are trustees.  Includes options to acquire 5,725  
     shares which are exercisable within 60 days of the          
     Record Date. Also, includes 5,145 shares held in            
     an individual retirement account.                           
<F9> Includes 2,059 shares owned by Dr. Stein's wife, Dr. Jana   
     Boyce-Stein, as to which shares Dr. Stein disclaims         
     beneficial ownership.  Also, includes 2,072 held in an      
     individual retirement account.                              
<F10> Includes options to acquire 18,541 shares which are        
     exercisable within 60 days of the Record Date.  Also,       
     includes 2,016 shares held in an individual retirement      
     account for Mr. Sunderman and includes 880 shares held in   
     an individual retirement account for his wife Mary I.       
     Sunderman.  Also, includes 261 shares held by Mr. Sunderman 
     as custodian for his son, Paul David.                       
<F11> Includes 1,398 shares held by Mr. Usnick as custodian for  
     his daughter, Adrian; and 2,183 shares held by Mr. Usnick as
     custodian for his daughter, Alexis.  Also, includes 355     
     shares held in an individual retirement account.            
<F12> Includes options with respect to 31,268 shares held by Mr. 
     Sunderman and the executive officers of the Company as a    
     group and options with respect to 66,296 shares held by     
     nonemployee directors subject to options exercisable within 
     60 days which are deemed outstanding, and these options have
     been added to the shares which are outstanding for the      
     purpose of determining the percent of the class held by the 
     group.                                                      
<F13> Includes conversion rights, pursuant to the Company's      
     Convertible Subordinated Debentures due 2003, to acquire    
     2,902 shares as a group.                                    
-------------------------                                        
</FN>                                                            

The principal occupations of the Directors and executive              
officers of the Company, for the previous five years are as                     
follows:                                                                        

Ronald A. Alfstad (age 60), has been Executive Vice                   
President of the Company since July 1, 1996 and Senior Vice                     
President of the Company from October 1995 thru July 1, 1996  and               
has been Executive Vice President of the Bank since July 1, 1996                
and Senior Vice President and Chief Credit Officer from January                 
1986 thru July 1996.                                                            

Dorce L. Daniel (age 61), a Director of the Company since             
1995 and a Director of the Bank since 1988, is the owner of                     
Daniel Properties, a real estate development company; and                       
President of Danjon, Inc., a land development company.                          

William J. Hennig (age 66), a Director of the Company since           
1995 and a Director of the Bank since 1983, is the President of                 
the Hennig Company, Ltd., a property management company.                        

Bernard E. Moore (age 68), the Chairman of the Board of               
Directors of the Company since 1995 and the Chairman of the Board               
of Directors of the Bank since 1986 and Director of the Bank                    
since 1983, is President of Bernard Moore, Inc., d.b.a. Moore                   
Tractor, Inc., which sells farm implements.                                     

Melvin M. Norman (age 59), a Director of the Company since            
1995 and a Director of the Bank since 1983, is the President of                 
Melvin M. Norman Construction, Inc., a construction company and he              
is the owner of Dry Clean USA, a dry-cleaning company.                          

Andrew S. Popovich (age 47), has been Executive Vice                  
President of the Company since 1995 and has been Executive Vice                 
President of the Bank since 1991 and Chief Administrative Officer               
since 1990.                                                                     

Stephen R. Schwimer (age 56), a Director of the Company               
since 1995 and a Director of the Bank since 1983, is the                        
President of Cavalier Services Inc., a master franchiser of                     
Coverall of North America Inc., a commercial cleaning business,                 
since 1991.                                                                     

Donald E. Sheahan (age 69), the Vice Chairman of the Board            
of Directors of the Company since 1995 and the Vice Chairman of                 
the Board of Directors of the Bank since 1986 and Director of the               
Bank since 1983, is the President of California-Hawaii                          
Corporation, a property management company.                                     

Dr. Gary E. Stein (age 52), a Director of the Company since           
1995 and a Director of the Bank since 1983, is a Physician in                   
Vacaville, the Associate Medical Director of the University of                  
California, Davis Medical Group, Vacaville.                                     

Walter O. Sunderman (age 57),  has been Director, President           
and Chief Executive Officer of the Company since 1995 and has                   
been Director, President and Chief Executive Officer of the Bank                
and its subsidiaries since 1983.                                                

John C. Usnick (age 51), a Director and the Secretary of the          
Board of Directors of the Company since 1995 and the Secretary                  
and Director of the Board of Directors of the Bank since 1983, is               
an Attorney at Debevec, Usnick & Long, Inc., a law firm in                      
Vacaville.                                                                      

Each of the above Directors have been a Director of the               
Bank's subsidiary Conpac Development Corporation (Conpac) since                 
1984, except Dan Daniel who became a Director of Conpac in 1988.                
None of the Company's Directors is a director of any other                      
reporting company.  There are no family relationships between any               
of the Directors and executive officers of the Company.  There                  
are no arrangements or understandings pursuant to which any of                  
the Directors was or is to be selected as a Director or nominee.                

ITEM  12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                       

Through its banking subsidiary, the Company has had and               
expects in the future to have banking transactions in the                       
ordinary course of its business with many of the Company's                      
Directors, executive officers, holders of five percent of the                   
Company's Common Stock and members of the immediate family of the               
foregoing persons, including transactions with Companies of which               
such persons are directors, officers or controlling stockholders,               
on substantially the same terms (including interest rates and                   
collateral) as those prevailing at the time for comparable                      
transactions with others, except that all employees (other than                 
executive officers or Directors of the Company or its                           
subsidiaries) are granted rate concessions on installment loans                 
and are not charged origination fees on residential real estate                 
loans.  Management believes that in 1997 such loan transactions                 
did not involve more than the normal risk of collectability or                  
present other unfavorable features.                                             

John C. Usnick, Secretary of the Board and Director, is an            
attorney and stockholder of the law firm of Debevec, Usnick and                 
Long, Inc. which provided legal services to the Company and the                 
Bank during 1997, and expects to provide professional legal                     
services to them in the future.  The fees during 1997 did not                   
exceed $60,000.                                                                 

ITEM  13 - EXHIBITS AND REPORTS ON FORM 8-K                                     

A)   Exhibits                                                         

See Index to Exhibits at page 60 of this Annual Report on             
Form 10-KSB, which is incorporated herein by reference.                         

B)   Reports on Form 8-K                                              

No reports on Form 8-K were filed by the Company during the           
last quarter of 1997, except a Form 8K filed with the SEC on                    
November 19, 1997, reporting under Item 5, the execution of a                   
Plan and Acquisition of Merger by and between the Company and                   
SierraWest Bancorp as of November 13, 1997.                                     

C)   The following is a list of all exhibits filed as part            
of the Annual Report on Form 10-KSB.                                            

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                                                                [Download Table]

                                                               Sequentially 
                                                                   Numbered 
Exhibit          Exhibit                                               Page 
No.                                                                         
                                                                            
2.1       Plan of Reorganization and Merger Agreement,                      
          dated  February 22, 1996 is incorporated by reference             
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

2.2       Plan of Acquisition and Merger By and Between                     
          SierraWest Bancorp, SierraWest Bank, CCBC and Continental         
          Pacific Bank dated as of November 13, 1997, is                    
          incorporated by reference from the Current Report on              
          Form 8-K filed on November 19, 1997.                           *  

3.1       Certificate of Incorporation of Registrant, dated                 
          October 5, 1995 is incorporated by reference                      
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

3.2       By-laws of Registrant is incorporated by reference                
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

4.1       Indenture, dated as of April 16, 1993, between Continental        
          Pacific Bank and U.S. Trust Company of California,                
          N.A. is incorporated by reference from the Company's              
          1995 Annual Report on Form 10-KSB filed on March 29, 1996.     *  

4.2       First Supplemental Indenture, dated as of October 20, 1995,       
          Amending Indenture dated as of April 16, 1993, between            
          Continental Pacific Bank and U.S. Trust Company                   
          of California, N.A. is incorporated by reference                  
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

4.3       Second Supplemental Indenture, dated as of February 29, 1996,     
          Amending Indenture dated as of April 16, 1993, between            
          Continental Pacific Bank, California Community Bancshares         
          Corporation and U.S. Trust Company of California, N.A. is         
          incorporated by reference from the Company's 1995 Annual          
          Report on Form 10-KSB filed on March 29, 1996.                 *  

10.1      Deferred Compensation Arrangement, as amended is                  
          incorporated by reference from the Company's 1995 Annual          
          Report on Form 10-KSB filed on March 29, 1996.                 *  

10.2      Amended and Restated Employment Agreement between                 
          Walter O. Sunderman and Continental Pacific Bank, dated           
          August 1, 1993 is incorporated by reference                       
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

10.3      Amended and Restated Employment Agreement between                 
          Andrew S. Popovich and Continental Pacific Bank, dated            
          August 1, 1993 is incorporated by reference                       
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

10.4      Amended and Restated Agreement Employment Agreement               
          between Ronald A. Alfstad and Continental Pacific Bank,           
          dated August 1, 1994 is incorporated by reference                 
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

10.5      Employment Agreement between Larry Q. Fletcher and                
          Continental Pacific Bank, dated August 1, 1993 is                 
          incorporated by reference from the Company's 1995                 
          Annual Report on Form 10-KSB filed on March 29, 1996.          *  

10.6      Continental Pacific Bank Supplemental Retirement Plan,            
          effective August 1, 1993 is incorporated by reference             
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

10.7      1990 Amended Stock Option Plan is incorporated by reference       
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

10.8      1993 Stock Option Plan is incorporated by reference               
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

10.9      Lease Agreement, dated July 15, 1993, between                     
          Conpac Development Corporation and Continental Pacific            
          Bank for the Administrative Offices is incorporated by            
          reference from the Company's 1995 Annual Report on Form           
          10-KSB filed on March 29, 1996.                                *  

10.10     Lease Agreement and Addendum, dated May 31, 1983,                 
          between Ibrahim Dib and Continental Pacific Bank for the          
          Vacaville Branch is incorporated by reference                     
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

10.11     Lease Agreement and Amendment, dated August 11, 1983,             
          between Leon Schiller, Joseph Friend, Ida Friend, Beulah          
          Schiller and Bruch J.  Friend and Continental Pacific Bank        
          for the Fairfield Branch is incorporated by reference             
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

10.12     Modification of Lease Agreement, dated December 31, 1987,         
          between Dante A.  Madnani, Ernest N.  Kettenhofen and Maxine      
          M. Campbell and Continental Pacific Bank for the Vallejo          
          Branch is incorporated by reference from the Company's 1995       
          Annual Report on Form 10-KSB filed on March 29, 1996.          *  

10.13     Lease Agreement, dated May 3, 1988, between Albert Morgan         
          Family Trust and Continental Pacific Bank for the Benicia         
          Branch is incorporated by reference                               
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

10.14     Ground Lease Agreement and Amendment, dated April 4, 1993,        
          between Jepson Parkway Associates L.P.  and Continental           
          Pacific Bank for the Power Plaza Branch is incorporated           
          by reference from the Company's 1995 Annual Report on Form        
          10-KSB filed on March 29, 1996.                                *  

10.15     Lease Agreement and First Amendment to Lease, dated January       
          15, 1993, between BTV Crown Equities, Inc. and Continental        
          Pacific Bank for the Oliver Road Branch is incorporated by        
          reference from the Company's 1995 Annual Report on                
          Form 10-KSB filed on March 29, 1996.                           *  

10.16     Lease Agreement, dated July 8, 1991, between Vallejo C & R        
          Associates and Continental Pacific Bank for the Park Place        
          Branch is incorporated by reference                               
          from the Company's 1995 Annual Report on Form                     
          10-KSB filed on March 29, 1996.                                *  

10.17     Purchase and Assumption Agreement between Tracy                   
          Federal Bank, F.S.B., and Continental Pacific Bank,               
          dated as of May 14, 1996 is incorporated by reference             
          from the Company's Current Report on Form                         
          8-K filed on May 24, 1996.                                     *  

10.18     Terms and Conditions of Authorization for Automatic               
          Dividend Reinvestment and Common Stock Purchase                   
          Plan for Shareholders of California Community                     
          Bancshares Corporation is incorporated by reference               
          from the Company's Current Report on Form                         
          8-K filed on July 15, 1996.                                    *  

10.19     Form of Automatic Dividend Reinvestment and                       
          Common Stock Purchase Plan Agency Agreement                       
          is incorporated by reference from the Company's                   
          Current Report on Form 8-K filed on July 15, 1996.             *  

10.20     Amendment to Purchase and Assumption Agreement                    
          between Tracy Federal Bank, F.S.B., and Continental               
          Pacific Bank, dated as of October 8, 1996                         
          is incorporated by reference from the Company's                   
          Current Report on Form 8-K filed on May 24, 1996.              *  

10.21     Lease Agreement, dated August 22, 1996, between                   
          Salvio Pacheco Square Investors / IRM                             
          Corporation and Continental Pacific Bank for the                  
          Concord Branch                                                 *  

10.22     First Amendment to the Sunderman Employment                       
          Agreement amended May 20, 1997                                0094

10.23     First Amendment to the Popovich Employment                        
          Agreement amended May 20, 1997                                0096

10.24     First Amendment to the Alfstad Employment                         
          Agreement amended May 20, 1997                                0098

10.25     Form of Directors Indemnification Agreement                       
          with Amendment dated as of November 11, 1997                  0100

10.26     Form of Officers Indemnification Agreement                        
          with Amendment dated as of November 11, 1997                  0104

21.1      The Company's only subsidiary is Continental Pacific Bank,        
          a California banking Corporation                                  

21.2      The Bank's only subsidiary is Conpac Development Corporation,     
          a real estate development business as authorized under            
          California law.                                                   

23        Independent Auditors' Consent by Deloitte & Touche LLP        0108

27        Financial Date Schedule under Article 9                       0109

--------------                                                              
*     Asterisk denotes documents which have been incorporated by reference. 

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CALIFORNIA COMMUNITY BANCSHARES CORPORATION AND SUBSIDIARY                      

Consolidated Financial Statements as of December 31, 1997 and                   
1996 and for each of the Three Years in the Period Ended December               
31, 1997 and Independent Auditors' Report                                       

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INDEPENDENT AUDITORS' REPORT                                                    

Board of Directors and Shareholders                                             
California Community Bancshares Corporation                                     
Vacaville, California                                                           

We have audited the accompanying consolidated balance sheets of                 
California Community Bancshares Corporation and subsidiary                      
(Company) as of December 31, 1997 and 1996, and the related                     
consolidated statements of income, shareholders' equity, and cash               
flows for each of the three years in the period ended December                  
31, 1997.  These financial statements are the responsibility of                 
the Company's management.  Our responsibility is to express an                  
opinion on these financial statements based on our audits.                      

We conducted our audits in accordance with generally accepted                   
auditing standards.  Those standards require that we plan and                   
perform the audit to obtain reasonable assurance about whether                  
the financial statements are free of material misstatement.  An                 
audit includes examining, on a test basis, evidence supporting                  
the amounts and disclosures in the financial statements.  An                    
audit also includes assessing the accounting principles used and                
significant estimates made by management, as well as evaluating                 
the overall financial statement presentation.  We believe that                  
our audits provide a reasonable basis for our opinion.                          

In our opinion, such consolidated financial statements present                  
fairly, in all material respects, the financial position of the                 
Company at December 31, 1997 and 1996, and the results of its                   
operations and its cash flows for each of the three years in the                
period ended December 31, 1997 in conformity with generally                     
accepted accounting principles.                                                 

As discussed in Note 2 to the financial statements, on November                 
13, 1997 the Company entered into a Plan of Acquisition and                     
Merger with SierraWest Bancorp.                                                 

/S/ DELOITTE & TOUCHE LLP                                                       
--------------------------                                                      
February 20, 1998                                                               
Sacramento, California                                                          

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                                                                [Download Table]


CALIFORNIA COMMUNITY BANCSHARES CORPORATION AND SUBSIDIARY      

CONSOLIDATED BALANCE SHEETS                                     
DECEMBER 31, 1997 AND 1996                                      
----------------------------------------------------------------

ASSETS                                  1997           1996     
                                                                
Cash and due from banks            $ 10,289,000    $ 10,825,000 
Federal funds sold                    8,775,000       6,115,000 
                                   ------------    ------------ 
 Total cash and cash equivalents     19,064,000      16,940,000 

Securities available for sale,                                  
  at fair value                      48,465,000      52,569,000 

Loans receivable                    121,062,000     113,625,000 
Less: Allowance for loan losses       1,242,000       1,101,000 
    Deferred loan fees                  498,000         599,000 
                                   ------------    ------------ 
 Net loans receivable               119,322,000     111,925,000 
                                   ------------    ------------ 
Premises and equipment,                                         
  net of accumulated depreciation     2,049,000       2,284,000 
Investment in real estate                                       
  development                         4,324,000       4,483,000 
Other real estate owned                  96,000         150,000 
Goodwill                                504,000         540,000 
Accrued interest receivable                                     
  and other assets                    3,167,000       2,938,000 
                                   ------------    ------------ 
TOTAL ASSETS                       $196,991,000    $191,829,000 
                                   ============    ============ 

LIABILITIES AND SHAREHOLDERS' EQUITY                            

LIABILITIES:                                                    
Deposits:                                                       
 Noninterest-bearing               $ 32,120,000    $ 26,882,000 
 Interest-bearing                   142,612,000     143,461,000 
                                   ------------    ------------ 
 Total deposits                     174,732,000     170,343,000 

Securities sold under                                           
  repurchase agreements                 588,000         992,000 
Accrued interest payable                                        
  and other liabilities                 800,000         785,000 
Other borrowed funds                  2,650,000       2,650,000 
Convertible subordinated debentures   2,468,000       3,690,000 
                                   ------------    ------------ 
 Total liabilities                  181,238,000     178,460,000 

SHAREHOLDERS' EQUITY:                                           
 Preferred stock, no par value,                                 
  Series A, authorized 1,000,000                                
  shares; none outstanding                                      

 Common stock, $.10 par value;                                  
  authorized 2,000,000 shares;                                  
  outstanding, 1,110,036 and                                    
  994,519 in 1997 and 1996           12,561,000      11,135,000 
 Retained earnings                    3,317,000       2,510,000 
 Net unrealized loss on                                         
   securities available for sale,                               
   net of tax effect                   (125,000)       (276,000)
                                   ------------    ------------ 
 Total shareholders' equity          15,753,000      13,369,000 
                                   ------------    ------------ 

TOTAL LIABILITIES AND                                           
 SHAREHOLDERS' EQUITY              $196,991,000    $191,829,000 
                                   ============    ============ 

See notes to consolidated financial statements                  
--------------------------------------------------------------- 

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CALIFORNIA COMMUNITY BANCSHARES CORPORATION AND SUBSIDIARY                  

CONSOLIDATED STATEMENTS OF INCOME                                           
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995                                
---------------------------------------------------------------             

                                         1997         1996          1995    
INTEREST INCOME:                                                            
                                                                            
 Loans and loan fees                 $11,026,000   $10,704,000   $10,370,000
 Securities:                                                                
   Taxable                             2,826,000     1,869,000     1,126,000
   Exempt from federal taxes             238,000       346,000       698,000
 Federal funds sold and securities                                          
   purchased under                                                          
   repurchase agreements                 165,000       183,000       116,000
                                     -----------   -----------   -----------
 Total interest income                14,255,000    13,102,000    12,310,000

INTEREST EXPENSE:                                                           
 Deposits                              5,638,000     4,957,000     5,063,000
 Federal funds and repurchase                                               
   agreements purchased                   31,000        54,000        72,000
 Convertible subordinated debentures     223,000       308,000       346,000
 Other borrowed funds                    230,000       146,000              
                                     -----------   -----------   -----------
 Total interest expense                6,122,000     5,465,000     5,481,000
                                     -----------   -----------   -----------
NET INTEREST INCOME                    8,133,000     7,637,000     6,829,000

PROVISION FOR LOAN LOSSES                319,000       411,000       324,000
                                     -----------   -----------   -----------
NET INTEREST INCOME AFTER PROVISION                                         
 FOR LOAN LOSSES                       7,814,000     7,226,000     6,505,000
                                     -----------   -----------   -----------
NONINTEREST INCOME:                                                         
 Service charges on deposit accounts     908,000       843,000       819,000
 Net gain on sale of securities                                             
   available for sale                     42,000        83,000       481,000
 Other fees and charges                  467,000       564,000       397,000
 Income from real estate development     503,000       542,000       481,000
                                     -----------   -----------   -----------
 Total noninterest income              1,920,000     2,032,000     2,178,000
                                     -----------   -----------   -----------
NONINTEREST EXPENSES:                                                       
 Salaries and employee benefits        3,476,000     3,342,000     3,137,000
 Occupancy                             1,473,000     1,366,000     1,374,000
 Business development                    139,000       176,000       137,000
 Data processing                         131,000       118,000       106,000
 Expenses from real estate development   377,000       300,000       268,000
 Other                                 1,733,000     1,479,000     1,608,000
                                     -----------   -----------   -----------
 Total noninterest expenses            7,329,000     6,781,000     6,630,000
                                     -----------   -----------   -----------
INCOME BEFORE PROVISION                                                     
 FOR INCOME TAXES                      2,405,000     2,477,000     2,053,000

PROVISION FOR INCOME TAXES               966,000       918,000       648,000
                                     -----------   -----------   -----------
NET INCOME                            $1,439,000    $1,559,000    $1,405,000
                                     ===========   ===========   ===========
EARNINGS PER SHARE:                                                         
 Basic                                     $1.36         $1.59         $1.46
                                     ===========   ===========   ===========
Diluted                                    $1.15         $1.32         $1.22
                                     ===========   ===========   ===========
See notes to consolidated financial statements.                             
---------------------------------------------------------------             

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CALIFORNIA COMMUNITY BANCSHARES CORPORATION AND SUBSIDIARY                                      

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY                                                 
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995                                                    
---------------------------------------------------------------                                 

                                                                        Net                     
                                                                     Unrealized                 
                                  Common Stock                         Loss on                  
                             ------------------------                Securities                 
                               Number                                 Available                 
                              of Shares                  Retained     for Sale,    Shareholders'
                             Outstanding     Amount      Earnings    Net of Taxes     Equity    
                              ---------   -----------  -----------    ----------    ----------- 
                                                                                                
Balance at January 1, 1995      955,467   $10,700,000  $   588,000    $(562,000)    $10,726,000 

Stock options exercised          10,686       114,000                                   114,000 
Cash dividend on common stock                             (480,000)                    (480,000)
Net change in net unrealized                                                                    
 loss on securities                                                                             
 available for sale,                                                                            
 net of taxes                                                           497,000         497,000 
Net income                                               1,405,000                    1,405,000 
                              ---------   -----------  -----------    ----------    ----------- 
Balance at December 31, 1995    966,153    10,814,000    1,513,000      (65,000)     12,262,000 

Stock options exercised           2,094        14,000                                    14,000 
Common stock issued on                                                                          
 conversion of debentures        26,272       307,000                                   307,000 
Cash dividend on common stock                             (562,000)                    (562,000)
Net change in net unrealized                                                                    
 loss on securities                                                                             
 available for sale, net of taxes                                      (211,000)       (211,000)
Net income                                               1,559,000                    1,559,000 
                              ---------   -----------  -----------    ----------    ----------- 
Balance at December 31, 1996    994,519    11,135,000    2,510,000     (276,000)     13,369,000 

Stock options exercised          19,678       294,000                                   294,000 
Common stock issued on                                                                          
 conversion of debentures        95,839     1,132,000                                 1,132,000 
Cash dividend on common stock                             (632,000)                    (632,000)
Net change in net unrealized                                                                    
 loss on securities                                                                             
 available for sale, net of taxes                                       151,000         151,000 
Net income                                               1,439,000                    1,439,000 
                              ---------   -----------  -----------    ----------    ----------- 
Balance at December 31, 1997  1,110,036   $12,561,000  $ 3,317,000    $(125,000)    $15,753,000 
                              =========   ===========  ===========    ==========    =========== 

See notes to consolidated financial statements.                                                 
---------------------------------------------------------------                                 

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CALIFORNIA COMMUNITY BANCSHARES CORPORATION AND SUBSIDIARY                   

CONSOLIDATED STATEMENTS OF CASH FLOWS                                        
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995                                 
---------------------------------------------------------------              

                                         1997          1996          1995    
                                     -----------   -----------   ----------- 
                                                                             
CASH FLOWS FROM OPERATING ACTIVITIES:                                        
 Net income                           $1,439,000    $1,559,000    $1,405,000 
 Adjustments to reconcile net income                                         
  to net cash provided by operating                                          
  activities:                                                                
   Depreciation and amortization         689,000       523,000       516,000 
   Provision for loan losses             319,000       411,000       324,000 
   Provision for deferred income taxes   (68,000)      132,000      (268,000)
    Net gain on sale of available                                            
    for sale securities                  (42,000)      (83,000)     (481,000)
    Net loss (gain) on sale of                                               
     other real estate owned              24,000        17,000        (8,000)
    Gain on sale of premises and                                             
     equipment                            (6,000)                            

    Effect of changes in:                                                    
     Interest receivable and                                                 
      other assets                      (234,000)     (541,000)     (294,000)
     Interest payable and                                                    
      other liabilities                   15,000      (112,000)      390,000 
                                     -----------   -----------   ----------- 
Net cash provided by operating                                               
 activities                            2,136,000     1,906,000     1,584,000 
                                     -----------   -----------   ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                        
 Purchases of available for                                                  
  sale securities                    (12,328,000)  (34,275,000)  (23,721,000)
 Proceeds from sales of available                                            
  for sale securities                  6,015,000     6,635,000    18,468,000 
 Proceeds from maturities, calls                                             
  or repayments of available                                                 
  for sale securities                 10,494,000     4,416,000     6,558,000 
 Purchases of held to maturity                                               
  securities                                                      (1,493,000)
 Proceeds from maturities or                                                 
  calls of held to maturity securities                             1,735,000 
 Net change in loans receivable       (7,716,000)   (3,192,000)     (710,000)
 Proceeds from sales of other real                                           
  estate owned                            30,000       105,000       500,000 
 Purchases of premises and equipment    (244,000)     (592,000)     (194,000)
 Proceeds from sales of premises                                             
  and equipment                           21,000        14,000        17,000 
 Change in investment in real                                                
  estate development                     159,000       124,000       111,000 
                                     -----------   -----------   ----------- 
Net cash (used by) provided by                                               
 investing activities                 (3,569,000)  (26,765,000)    1,271,000 
                                     -----------   -----------   ----------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                        
 Net change in deposits:                                                     
  Noninterest bearing                  5,238,000     4,982,000       475,000 
  Interest bearing                      (849,000)   23,127,000     1,032,000 
 Net change in securities sold                                               
  under repurchase agreements           (404,000)      327,000       (82,000)
 Net change in other borrowed funds                  2,650,000               
 Cash dividends paid                    (632,000)     (562,000)     (480,000)
 Cash proceeds from stock options                                            
  exercised                              204,000        14,000       114,000 
                                     -----------   -----------   ----------- 
Net cash provided by financing                                               
 activities                            3,557,000    30,538,000     1,059,000 
                                     -----------   -----------   ----------- 
INCREASE IN CASH AND CASH EQUIVALENTS  2,124,000     5,679,000     3,914,000 

CASH AND CASH EQUIVALENTS:                                                   
 Beginning of year                    16,940,000    11,261,000     7,347,000 
                                     -----------   -----------   ----------- 
 End of year                         $19,064,000   $16,940,000   $11,261,000 
                                     -----------   -----------   ----------- 

See notes to consolidated financial statements.                              
(Continued)                                                                  
---------------------------------------------------------------              

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CALIFORNIA COMMUNITY BANCSHARES CORPORATION AND SUBSIDIARY                   

CONSOLIDATED STATEMENTS OF CASH FLOWS                                        
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Concluded)                     
---------------------------------------------------------------              

                                           1997         1996         1995    
                                        ----------   ----------   -----------
                                                                             
ADDITIONAL INFORMATION:                                                      
 Common stock issued on conversion                                           
  of debentures net of debenture                                             
  offering costs of $90,000 and $28,000                                      
  in 1997 and 1996, respectively        $1,132,000   $  307,000              
                                        ==========   ==========              
 Transfer of securities from held                                            
  to maturity to available for sale                               $12,087,000
                                                                  ===========
 Transfer of foreclosed loans                                                
  from loans receivable                                                      
  to other real estate owned            $  437,000   $  100,000   $   341,000
                                        ==========   ==========   ===========
 Cash Payments:                                                              
  Income tax payments                   $1,228,000   $  738,000   $   896,000
                                        ==========   ==========   ===========
  Interest payments                     $6,121,000   $5,443,000   $ 5,465,000
                                        ==========   ==========   ===========

See notes to consolidated financial statements.                              
---------------------------------------------------------------              

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CALIFORNIA COMMUNITY BANCSHARES CORPORATION AND SUBSIDIARY                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995                                   
---------------------------------------------------------------                 

1.   SIGNIFICANT ACCOUNTING POLICIES                                            

Nature of Operations - California Community Bancshares                
Corporation (Company) was incorporated in Delaware on October 5,                
1995 for the purpose of becoming a bank holding company                         
registered under the Bank Holding Company Act of 1956.  On                      
February 29, 1996, pursuant to a plan of reorganization and                     
agreement of merger, resulting in Continental Pacific Bank (Bank)               
becoming the wholly-owned subsidiary of the Company, the Company                
issued 967,902 shares of its common stock for all of the                        
outstanding common stock of the Bank.  The Bank commenced banking               
operations on November 14, 1983.  The merger has been accounted                 
for as a reorganization of entities under common control (similar               
to a pooling-of-interests).  Additionally, during 1996, the Bank                
purchased from another bank approximately $15,500,000 in                        
deposits and certain leasehold improvements and equipment and                   
assumed the building lease of a branch located in Concord,                      
California, for approximately $820,000.  The leasehold                          
improvements and equipment were recorded at fair value and the                  
excess of the amounts paid over the fair value was recorded as                  
goodwill.  The Company operates eight branches in Solano and                    
Contra Costa  Counties in Northern California.  The Company's                   
primary source of revenue is through providing loans to                         
customers, who are predominately small and middle market                        
businesses and middle income individuals.                                       

General - The accounting and reporting policies of the                
Company conform to generally accepted accounting principles and                 
to prevailing practices within the banking industry.                            

Use of Estimates in the Preparation of Financial Statements           
- The preparation of financial statements in conformity with                    
generally accepted accounting principles requires management to                 
make estimates and assumptions that affect the reported amounts                 
of assets and liabilities and disclosure of contingent assets and               
liabilities at the date of the financial statements and the                     
reported amounts of revenues and expenses during the reporting                  
period.  Actual results could differ from those estimates.                      

The more significant accounting and reporting policies are            
discussed below.                                                                

Consolidation - The consolidated financial statements                 
include California Community Bancshares Corporation and its                     
wholly-owned subsidiary, Continental Pacific Bank and its                       
wholly-owned subsidiary, Conpac Development Corporation.  All                   
material intercompany accounts and transactions have been                       
eliminated in consolidation.                                                    

Cash and Cash Equivalents - For purposes of the statements            
of cash flows, cash and cash equivalents have been defined as                   
cash, demand deposits with correspondent banks, cash items in                   
transit and federal funds sold.  Generally, federal funds are                   
sold for one-day periods.  Cash equivalents have remaining terms                
to maturity of three months or less from the date of acquisition.               

Securities - The Company accounts for securities in                   
accordance with Statement of Financial Accounting Standards                     
(SFAS) No. 115, Accounting for Certain Investments in Debt and                  
Equity Securities.  The Company's policy with regard to                         
investments is as follows:                                                      

Securities Available for Sale are carried at fair value.        
Unrealized gains and losses resulting from changes in fair value                
are recorded, net of tax, as a separate component of                            
shareholders' equity.  Gains or losses on disposition are                       
recorded in other operating income based on the net proceeds                    
received and the carrying amount of the securities sold, using                  
the specific identification method.                                             

The Company does not have any investment securities                   
considered to be held to maturity or held for trading under the                 
provisions of SFAS 115.                                                         

Interest Rate Swap Agreements - The Company enters into               
interest rate swap agreements with the Federal Home Loan Bank                   
(FHLB) as part of its asset/liability management activities to                  
reduce its exposure to certain lags and fluctuations in interest                
rates.  The Company accounts for these activities as matched                    
swaps in accordance with settlement accounting.  An interest rate               
swap is considered to be a matched swap if it is linked through                 
designation with an asset or liability, or both, that is on the                 
balance sheet, provided that it is has the opposite interest                    
characteristics of such balance sheet items. Under settlement                   
accounting, periodic net cash settlements under the swap                        
agreements are recognized as interest income or expense of the                  
related asset or liability over the lives of the agreements.                    

Loans Receivable - Loans are reported at the principal                
amount outstanding adjusted for any specific charge-offs.                       
Interest on loans is calculated by using the simple interest                    
method on the daily balance of the principal amount outstanding.                

Loan fees and certain related direct costs to originate loans         
are deferred and amortized to income by a method that                           
approximates a level yield over the contractual life of the                     
underlying loans.                                                               

The accrual of interest on loans is discontinued when                 
reasonable doubt exists as to the full and timely collection of                 
interest and principal, or when a loan becomes contractually past               
due by 90 days or more with respect to interest or principal                    
(unless the loan is well secured and in the process of                          
collection) and such loans are designated as nonaccrual loans.                  
When a loan is placed on nonaccrual status, all accrued but                     
unpaid interest revenue is reversed by a charge to earnings.                    
Income on such loans is then recognized only to the extent that                 
cash is received and where the future collection of principal is                
determined by management to be probable.  Interest accruals are                 
resumed on such loans when, in the judgment of management, the                  
loans are estimated to be fully collectible as to both principal                
and interest.                                                                   

Allowance for Loan Losses - The allowance for loan losses is          
established through a provision for loan losses charged to                      
operations.  Loans are charged against the allowance for loan                   
losses when management believes that the collectibility of the                  
principal is unlikely.  The allowance is an amount that                         
management believes will be adequate to absorb losses inherent in               
existing loans and commitments to extend credit based on                        
evaluations of the collectibility and prior loss experience of                  
loans and commitments to extend credit.  In evaluating the                      
probability of collection, management is required to make                       
estimates and assumptions that affect the reported amounts of                   
loans, allowance for loan losses and the provision for loan                     
losses charged to operations.  Actual results could differ                      
significantly from those estimates.  The evaluations take into                  
consideration such factors as changes in the nature and volume of               
the portfolio, overall portfolio quality, loan concentrations,                  
specific problem loans, commitments, and current and anticipated                
economic conditions that may affect the borrowers' ability to                   
pay.                                                                            

A loan is considered impaired if, based on current                    
information and events, it is probable that the Company will be                 
unable to collect the scheduled payments of principal or interest               
when due according to the contractual terms of the loan                         
agreement.  The measurement of impaired loans is generally based                
on the fair value of the collateral, for all collateral dependent               
loans, or the present value of expected future cash flows                       
discounted at the historical effective interest rate.                           

Premises and Equipment - Premises and equipment are carried           
at cost less accumulated depreciation and amortization.                         
Depreciation is computed using the straight-line method over the                
estimated useful lives of the respective assets, generally 5 to                 
10 years for furniture and fixtures and 3 to 7 years for                        
equipment.  Leasehold improvements are amortized on the                         
straight-line method over the shorter of the estimated useful                   
lives of the improvements or the terms of the respective leases.                
Expenditures for major renewals and betterments of premises and                 
equipment are capitalized and those for maintenance and repairs                 
are charged to operations as incurred.                                          

Investments in Real Estate Development - The investment in            
real estate development represents the investment in the Pacific                
Plaza project by the Bank's wholly-owned consolidated subsidiary,               
Conpac Development Corporation.  The investment in the land and                 
building is carried at cost, net of accumulated depreciation                    
which is computed on the straight-line basis over 31.5 years.                   
(see Note 6).                                                                   

Other Real Estate Owned - Real estate properties acquired             
through, or in lieu of, foreclosure are expected to be sold and                 
are recorded at the date of foreclosure at the lower of the                     
recorded investment in the property or its fair value less                      
estimated selling costs (fair value) establishing a new cost                    
basis through a charge to allowance for loan losses, if                         
necessary.  After foreclosure, valuations are periodically                      
performed by management with any subsequent write-downs recorded                
as a valuation allowance and charged against operating expenses.                
Operating expenses of such properties, net of related income, are               
included in other expenses and gains and losses on their                        
disposition are included in other income and other expenses.                    

Goodwill - Goodwill consists of the unamortized excess of             
the purchase price over the fair value of the assets acquired in                
the 1996 purchase of a branch located in Concord, California.                   
Goodwill recorded was $550,000 and is being amortized on a                      
straight-line basis over 15 years.                                              

Income Taxes - The Company applies an asset and liability             
method in accounting for deferred income taxes.  Deferred tax                   
assets and liabilities are calculated by applying applicable tax                
laws to the differences between the financial statement basis and               
the tax basis of assets and liabilities.  The effect on deferred                
taxes of a change in tax rates is recognized in income in the                   
period that includes the enactment date.                                        

Stock-Based Compensation - The Company accounts for                   
stock-based awards to employees using the intrinsic value method                
in accordance with Accounting Principles Board (APB) No. 25,                    
Accounting for Stock Issued to Employees.  Under the intrinsic                  
value method, no compensation cost has been recognized for its                  
stock option grants.  SFAS No. 123, Accounting for Stock-Based                  
Compensation requires disclosure of pro forma net income and                    
earnings per share had the Company adopted the fair value method                
as of the beginning of 1995.                                                    

Earnings per Share - The Company has adopted the provisions           
of SFAS No. 128, Earnings per Share.  This statement replaces                   
previous standards for reporting earnings per share with basic                  
and diluted earnings per share.  All earnings per share                         
information has been restated to give effect to the new                         
standards.  Basic earnings per share excludes dilution and is                   
computed by dividing income available to common shareholders by                 
the weighted-average number of common shares outstanding for the                
period.  Diluted earnings per share reflects the potential                      
dilution that could occur if securities or other contracts to                   
issue common stock were exercised or converted into common stock                
or resulted in the issuance of common stock that then shared in                 
the earnings of the entity.                                                     

The following table reconciles the numerator and denominator          
used in computing both basic earnings per share and diluted                     
earnings per share for the periods indicated:                                   

                                                                [Download Table]


                                                Year Ended December 31      
                                               1997      1996     1995      
                                                    (in thousands)          
                                                                            
Calculation of Basic Earnings Per Share                                     
Numerator - net income                  $1,439,000   $1,559,000   $1,405,000
Denominator - weighted average                                              
 common shares outstanding               1,054,457      981,528      962,016

Basic Earnings Per Share                     $1.36        $1.59        $1.46
                                        ==========   ==========   ==========

Calculation of Diluted Earnings Per Share                                   
Numerator:                                                                  
 Net income                             $1,439,000   $1,559,000   $1,405,000
 Interest expense on convertible                                            
  subordinated debentures, net of tax      129,000      178,000      200,000
                                        ----------   ----------   ----------
                                         1,568,000    1,737,000    1,605,000
                                        ----------   ----------   ----------
Denominator:                                                                
 Weighted average common shares                                             
  outstanding                            1,054,457      981,528      962,016
 Effect of outstanding stock options        93,161       37,207       37,382
 Effect of Convertible Subordinated                                         
  Debentures                               211,170      302,255      315,686
                                        ----------   ----------   ----------
                                         1,358,788    1,320,990    1,315,084
                                        ----------   ----------   ----------
Diluted Earnings Per Share                   $1.15        $1.32        $1.22
                                        ==========   ==========   ==========
------------------------------------------                                  

New Accounting Pronouncements - In June 1997, the Financial           
Accounting Standards Board adopted Statements of Financial                      
Accounting Standards No. 130, Reporting Comprehensive Income,                   
which requires that an enterprise report, by major components and               
as a single total, the change in its net assets during the period               
from nonowner sources, and No. 131, Disclosures about Segments of               
an Enterprise and Related Information, which establishes annual                 
and interim reporting standards for an enterprise's business                    
segments and related disclosures about its products, services,                  
geographic areas, and major customers.  Adoption of these                       
statements will not impact the Company's consolidated financial                 
position, results of operations or cash flows.  Both statements                 
are effective for fiscal years beginning after December 15, 1997,               
with earlier application permitted.                                             

2.   PLAN OF ACQUISITION AND MERGER                                             

On November 13, 1997, the Company entered into a Plan of              
Acquisition and Merger (Plan) with SierraWest Bancorp                           
(SierraWest).  Under the terms of the agreement SierraWest will                 
acquire all the outstanding common stock of the Company in                      
exchange for shares of SierraWest's common stock at an exchange                 
ratio defined by a formula in the Plan.  The merger, which is                   
expected to close early in the second quarter of 1998, is subject               
to the approval of each company's shareholders and various                      
regulatory agencies.  The transaction is expected to be accounted               
for as a pooling of interest.                                                   

3.   RESTRICTED CASH BALANCES                                                   

Aggregate reserves of $616,000 and $750,000 in the form of            
deposits with the Federal Reserve Bank were maintained to satisfy               
Federal Reserve requirements at December 31, 1997 and 1996.                     

4.   SECURITIES                                                                 

At December 31, the amortized cost of securities available            
for sale and their approximate fair value were as follows:                      

                                                                [Download Table]


                                                            Carrying        
                                            Gross      Gross      Amount    
                               Amortized  Unrealized Unrealized (Approximate
                                  Cost       Gains    Losses    Fair Value) 
December 31, 1997:                                                          
                                                                            
Securities of U.S. government                                               
 agencies and corporations    $43,498,000  $ 67,000  $375,000  $43,190,000  
FHLB stock                        592,000                          592,000  
Obligations of states and                                                   
 political subdivisions         4,590,000   126,000    33,000    4,683,000  
                              -----------  --------  --------  -----------  
                              $48,680,000  $193,000  $408,000  $48,465,000  
                              ===========  ========  ========  ===========  
                                                                [Download Table]

                                                                 Carrying   
                                            Gross      Gross      Amount    
                               Amortized  Unrealized Unrealized (Approximate
                                  Cost       Gains    Losses    Fair Value) 
December 31, 1996:                                                          
                                                                            
Securities of U.S. government                                               
 agencies and corporations    $47,887,000  $ 27,000  $519,000  $47,395,000  
FHLB stock                        490,000                          490,000  
Obligations of states and                                                   
 political Subdivisions         4,667,000    65,000    48,000    4,684,000  
                              -----------  --------  --------  -----------  
                              $53,044,000  $ 92,000  $567,000  $52,569,000  
                              ===========  ========  ========  ===========  

Gross realized gains on sales of securities available for             
sale were approximately $42,000 in 1997 and $88,000 in 1996.                    
Gross realized losses on sales of available for sale securities                 
were approximately $5,000 in 1996.  There were no gross realized                
losses on sales of available for sale securities in 1997.                       

In November 1995, the FASB issued additional implementation           
guidance regarding the previously issued SFAS No. 115.  In                      
accordance with this guidance and prior to December 31, 1995,                   
companies were allowed a one-time reassessment of their                         
classification of securities and were required to account for any               
resulting transfers at fair value.  Transfers from the held to                  
maturity category that result from this one-time reassessment                   
will not call into question the intent to hold other securities                 
to maturity in the future.  The Company transferred approximately               
$12,087,000 of securities from held to maturity to available for                
sale to allow the Company greater flexibility in managing its                   
interest rate risk and liquidity.  Available for sale securities                
were adjusted to fair value and stockholders' equity was                        
increased by $274,000 net of income taxes of $198,000.                          

Scheduled maturities of securities available for sale (other          
than FHLB stock with a carrying value of approximately $592,000)                
at December 31, 1997, are shown below.  Expected maturities may                 
differ from contractual maturities because borrowers may have the               
right to prepay with or without penalty.                                        

                                                                [Download Table]

                                         Available for sale securities 
                                        -------------------------------
                                                         Approximate   
                                                          Fair Value   
                                          Amortized       (Carrying    
                                            Cost            Amount)    
                                                                       
Due in one year or less                 $ 6,286,000       $ 6,291,000  
Due after one year through five years    12,793,000        12,857,000  
Due after five years through 10 years     3,495,000         3,542,000  
Due after 10 years                       25,514,000        25,183,000  
                                        -----------       -----------  
                                        $48,088,000       $47,873,000  
                                        ===========       ===========  

At December 31, 1997 and 1996, securities having carrying             
amounts of approximately $11,155,000 and $10,171,000 were pledged               
to secure public deposits and short-term borrowings and for other               
purposes required by law or contract.                                           

5.   LOANS RECEIVABLE, IMPAIRED LOANS AND ALLOWANCE FOR LOAN                    
LOSSES                                                                          

The Company's loan customers are located primarily in Solano          
County and neighboring communities.  At December 31, 1997, 75% of               
the Company's loan portfolio was for real estate, of which 80%                  
was for commercial projects and 20% was for residential                         
properties.  Real estate construction loans comprise 5% of the                  
loan portfolio with consumer and other, and commercial loans                    
accounting for the remaining 11% and 9%, respectively.  The real                
estate portfolio consists of approximately 86% variable rate                    
loans and approximately 14% fixed rate loans. Substantially all                 
loans are collateralized.  Generally, real estate loans are                     
secured by real property.  Commercial and other loans are secured               
by bank deposits or business or personal assets.  The Company's                 
policy for requiring collateral reflects the Company's analysis                 
of the borrower, the borrower's industry and the economic                       
environment in which the loan would be granted.  The loans are                  
expected to be repaid from cash flows or proceeds from the sale                 
of selected assets of the borrower.                                             

The major classifications of loans at December 31 are                 
summarized as follows:                                                          

                                                                [Download Table]


                               1997           1996    
                                                      
Commercial                 $ 10,348,000   $  8,926,000
Real estate construction      6,042,000      6,408,000
Real estate                  90,778,000     82,246,000
Consumer and other           13,894,000     16,045,000
                           ------------   ------------
                            121,062,000    113,625,000
Less:                                                 
 Allowance for loan losses    1,242,000      1,101,000
 Deferred loan fees             498,000        599,000
                           ------------   ------------
Net loans receivable       $119,322,000   $111,925,000
                           ============   ============

Changes in the allowance for loan losses for the years ended          
December 31 are summarized below:                                               

                                                                [Download Table]

                                 1997        1996       1995    
                                                                
Balance at beginning of year  $1,101,000  $1,158,000 $1,108,000 
Provision for loan losses        319,000     411,000    324,000 
Loans charged off               (224,000)   (496,000)  (282,000)
Recoveries                        46,000      28,000      8,000 
                              ----------  ---------- ---------- 
Balance at end of year        $1,242,000  $1,101,000 $1,158,000 
                              ==========  ========== ========== 

At December 31, 1997 and 1996, the recorded investment in             
loans for which impairment has been recognized was $2,454,000 and               
$2,648,000.  The total allowance for loan losses related to these               
loans was $443,000 and $278,000 at December 31, 1997 and 1996.                  
For the years ended December 31, 1997 and 1996, the average                     
recorded investment in loans for which impairment has been                      
recognized was approximately $2,642,000 and $1,218,000.  During                 
the portion of the year that the loans were impaired, the Company               
recognized interest income of approximately $104,000 and $28,000                
for cash payments received in 1997 and 1996.                                    

Included in the impaired loans are nonperforming loans at             
December 31 as follows:                                                         

                                                                [Download Table]

                                   1997         1996  
                                                      
Nonaccrual loans               $  966,000     $ 70,000
Loans 90 days past due but                            
 still accruing interest          194,000       67,000
                               ----------     --------
Total nonaccrual and 90 days                          
 past due loans                $1,160,000     $137,000
                               ==========     ========

If interest on nonaccrual loans had been accrued, such                
income would have been approximately $74,000, $7,000, and                       
$203,000 in 1997, 1996 and 1995.  At December 31, 1997, there                   
were no commitments to lend additional funds to borrowers whose                 
loans were classified as nonaccrual or whose loans have been                    
modified.                                                                       

6.   PREMISES AND EQUIPMENT                                                     

The major classifications of premises and equipment at                
December 31 are summarized as follows:                                          

                                                                [Download Table]


                                          1997         1996   
                                                              
Bank premises                          $  132,000   $  132,000
Furniture, fixtures and equipment       2,318,000    2,222,000
Leasehold improvements                  2,872,000    2,752,000
                                       ----------   ----------
                                        5,322,000    5,106,000

Less accumulated depreciation                                 
 and amortization                       3,273,000    2,822,000
                                       ----------   ----------
                                       $2,049,000   $2,284,000
                                       ==========   ==========

Depreciation expense for the years ended December 31, 1997,           
1996 and 1995 amounted to $464,000, $431,000 and $422,000,                      
respectively.                                                                   

7.   INVESTMENT IN REAL ESTATE DEVELOPMENT                                      

In 1984, the Bank formed a wholly-owned subsidiary, Conpac            
Development Corporation (Conpac), to engage in real estate                      
development activities.                                                         

Conpac's current project consists of one commercial property          
development, Pacific Plaza, located in Vacaville, California.                   
The Pacific Plaza East portion of the project, consisting of a                  
32,000 square-foot office building, was completed and commenced                 
operations in 1992.  The Pacific Plaza West portion is being                    
considered for development.  At December 31, 1997, the Company                  
occupied approximately 14% of the Pacific Plaza East project for                
use as its corporate offices.  All significant intercompany                     
transactions, including rental income for the Company's corporate               
offices, are eliminated in consolidation and excluded from the                  
schedule of future minimum rentals.                                             

A summary of certain financial information for Conpac, after          
consolidation, is as follows:                                                   

                                                        [Enlarge/Download Table]


                                1997       1996         1997        1996           1995          
                                                                                                 
Investment in Pacific Plaza:                                                                     
 Land                       $1,314,000 $1,366,000  Rental income - net $503,000 $542,000 $481,000
 Building and improvements   3,459,000  3,459,000                                                
 Less accumulated                                  Operating expenses   262,000  185,000  168,000
  depreciation                (542,000)  (426,000) Depreciation                                  
                            ---------- ----------   expense             115,000  115,000  100,000
 Total investment in Pacific                                           -------- -------- --------
  Plaza                      4,231,000  4,399,000                                                
Other                           93,000     84,000  Total expenses       377,000  300,000  268,000
                            ---------- ----------                      -------- -------- --------
Total investment in real estate                    Income from real                              
 development                $4,324,000 $4,483,000   estate development $126,000 $242,000 $213,000
                            ========== ==========                      ======== ======== ========

The future minimum rental income under long-term                      
noncancelable leases for the Pacific Plaza East project are as                  
follows:                                                                        

                                                                [Download Table]

                                                     
1998                                $         241,000
1999                                          117,000
2000                                           88,000
2001                                           88,000
2002                                           67,000
                                    -----------------
Total                               $         601,000
                                    =================

No interest costs were capitalized in 1997 or 1996 in                 
connection with the Bank's development activities.                              

A provision of the Federal Deposit Insurance Corporation              
Improvement Act (FDICIA) has impacted the Bank's ability to                     
continue to engage in certain real estate development activities.               
Beginning in December 1992, state banks and their subsidiaries                  
may not engage, as principal, in activities not permissible to                  
national banks and their subsidiaries.  Any bank engaged in such                
activities must divest itself of these investments by December                  
1996, and was required to file a divestiture plan with the FDIC                 
by February 5, 1993.  Generally national banks may not engage in                
real estate development, although they can own property used or                 
to be used, in part, as a banking facility.  During 1993, the                   
Bank moved its corporate offices to Pacific Plaza East which is                 
owned by Conpac.  The Bank occupies approximately 14% of the                    
leasable office space.  Since ownership of banking premises is                  
permissible for a national bank subsidiary, a divestiture plan is               
not required for Pacific Plaza East.  The Bank, through Conpac,                 
currently plans to retain its ownership of Pacific Plaza East.                  

The Bank's divestiture plan, which was not objected to by             
the FDIC, states that the Bank and Conpac plan to develop and                   
retain ownership of Pacific Plaza West.                                         

8.   OTHER REAL ESTATE OWNED                                                    

Other real estate owned at December 31, consisted of the              
following:                                                                      

                                                                [Download Table]

                                       1997        1996    
                                                           
Real estate acquired through                               
 foreclosure and held for sale        $96,000     $219,000 
Less - allowance for other                                 
 real estate owned losses                          (69,000)
                                      -------     -------- 
Other real estate owned - net         $96,000     $150,000 
                                      =======     ======== 

A summary of the activity in the allowance for other real             
estate owned losses is as follows:                                              

                                                                [Download Table]

                                        1997        1996   
                                                           
Balance at beginning of year          $69,000     $161,000 
Charge-offs                           (69,000)     (92,000)
                                      -------     -------- 
Balance at end of year                $           $ 69,000 
                                      =======     ======== 

9.   DEPOSITS                                                                   

The aggregate amount of time certificates of deposit in               
denominations of $100,000 or more was $22,230,000 and $20,881,000               
at December 31, 1997 and 1996.  Interest expense incurred on                    
certificates of deposit of $100,000 or more was approximately                   
$1,154,000, $1,049,000, and $873,000, for the years ended                       
December 31, 1997, 1996 and 1995.                                               

At December 31, 1997, the scheduled maturities of                     
certificates of deposit are as follows:                                         

                                                                [Download Table]
                                           
1998                           $ 55,320,000
1999                              1,685,000
2000                                 89,000
2001                                851,000
2002 and thereafter               1,894,000
                               ------------
Total                          $ 59,839,000
                               ============

10.  OTHER BORROWED FUNDS                                                       

Other borrowed funds at December 31, 1997 and 1996 represent          
amounts borrowed from the FHLB.  Borrowings require monthly                     
interest payments with the principal payable at maturity.                       
Amounts consist of the following:                                               

                                                                [Download Table]
                                                           
Borrowing from the FHLB, matures March 26, 2001,           
 interest at 6.44%                               $  750,000
Borrowing from the FHLB, matures April 23, 2003,           
 interest at 6.92%                                1,900,000
                                                 ----------
Total                                            $2,650,000
                                                 ==========

11.  CONVERTIBLE SUBORDINATED DEBENTURES                                        

During 1993, the Bank sold $4,025,000 of convertible                  
subordinated variable rate debentures due April 30, 2003, with an               
initial and minimum interest rate of 8%.  During 1996, as part of               
the plan of reorganization and merger of the Company and the Bank,              
the convertible subordinated debentures were assumed by the                     
Company under the same terms and provisions as previously entered               
into by the Bank.  Interest is payable, as to the six months                    
beginning on any interest rate payment date, on each April 1 and                
October 1 based on a variable rate of 1.5% over the average yield               
on the 10-year U.S. Treasury bond (rounded down to the nearest                  
1/8%) for the month ending two months prior to the month of the                 
interest payment, subject to a ceiling of 10%.  The debentures                  
are convertible, at any time prior to maturity, into shares of                  
the $.10 par value common stock of the Company at a conversion                  
prices of $12.75 per share (subject to adjustment).  During 1997,               
$1,132,000 (net of $90,000 in debt issuance costs) of the debt                  
was converted to 95,839 shares of common stock at $12.75 per                    
share.  The debentures are currently redeemable at the Company's                
option, in whole or from time to time in part, at a rate of 104%                
of principal value until March 31, 1998 and at a rate of 100% of                
principal value thereafter.  The payment of principal and                       
interest on the debentures is subordinated in right of payment in               
full to senior indebtedness of the Company which includes                       
obligations of the Company to its depositors and general                        
creditors.                                                                      

12.  INCOME TAXES                                                               

The provision for income taxes for the years ended December           
31 are summarized as follows:                                                   

                                                                [Download Table]


                               1997    1996           1995    
                                                              
Currently payable:                                            
 Federal                     $  730,000   $529,000   $667,000 
 State                          304,000    257,000    249,000 
                             ----------   --------   -------- 
 Total                        1,034,000    786,000    916,000 
                             ----------   --------   -------- 
Deferred:                                                     
 Federal                        (49,000)    98,000   (259,000)
 State                          (19,000)    34,000     (9,000)
                             ----------   --------   -------- 
 Total                          (68,000)   132,000   (268,000)
                             ----------   --------   -------- 
Provision for income taxes   $  966,000   $918,000   $648,000 
                             ==========   ========   ======== 

A reconciliation of the federal statutory tax rate to the             
effective tax rate on income is as follows:                                     

                                                                [Download Table]

                                            1997    1996   1995 
                                                                
Federal statutory tax rate                  35.0%   35.0%  35.0%
State income taxes, net of federal benefit   7.8     7.7    7.4 
Effect of tax exempt income                 (2.9)   (4.2) (10.5)
Merger-related costs                         1.5                
Other                                       (1.2)   (1.4)  (0.3)
                                            -----   -----  -----
                                            40.2%   37.1%  31.6%
                                            =====   =====  =====

Deferred income taxes reflect the net tax effects of                  
temporary differences between the carrying amounts of assets and                
liabilities for financial reporting purposes and the amounts used               
for income tax reporting purposes.  The significant components of               
the Bank's net deferred tax asset (included in other assets) at                 
December 31, were as follows:                                                   

                                                                [Download Table]

                                    1997        1996   
                                                       
Unrealized loss on securities                          
 available for sale              $ 91,000     $199,000 
Allowance for loan losses         393,000      349,000 
State taxes                        55,000       59,000 
Depreciation                      (12,000)      70,000 
Deferred compensation              67,000       42,000 
Securities and loans marked                            
 to market for tax purposes       (83,000)    (179,000)
Other                               4,000       15,000 
                                 --------     -------- 
                                 $515,000     $555,000 
                                 ========     ======== 

13.  STOCK BASED COMPENSATION                                                   

During 1996, as part of the plan of reorganization and                
merger of the Company and the Bank, the two stock option plans of               
the Bank were assumed by the Company under the same terms and                   
provisions as previously adopted by the Bank.  Under the plans,                 
options are exercisable at prices equal to the fair market value                
as determined in good faith by the Company's board of directors                 
at the date of the grant.  The Company has reserved 200,000                     
shares of common stock for the 1993 stock option plan.  No                      
additional grants may be made under the 1990 plan, however,                     
options for 47,486 shares remain outstanding.  Options become                   
exercisable in approximately one-third increments during each                   
year subsequent to the date of grant.  Options held by executives               
and directors must be fully exercised by the end of the tenth                   
year, while all remaining options must be exercised by the end of               
the fifth year.  A summary of stock options follows:                            

                                                                [Download Table]


                                                        Weighted      
                                                        Average       
                                           Options      Exercise Price
                                                                      
Outstanding, January 1, 1995               140,367        10.17       
 Granted                                     3,500        14.50       
 Exercised                                 (10,686)       10.65       
 Expired or canceled                          (333)       10.45       
                                           -------                    
Outstanding, December 31, 1995             132,848        10.49       
 Granted                                     4,000        14.81       
 Exercised                                  (2,094)        6.53       
 Expired or canceled                          (500)       16.00       
                                           -------                    
Outstanding December 31, 1996              134,254        10.67       
 Granted                                     4,500        16.71       
 Exercised                                 (19,679)       10.40       
 Expired or canceled                        (1,000)       16.00       
                                           -------                    
Outstanding, December 31, 1997             118,075        10.90       
                                           =======                    

Information about stock options outstanding at December 31,           
1997 is summarized as follows:                                                  

                                                                [Download Table]

                                           Weighted                 Weighted   
                                           Average                  Average    
                               Average     Exercise                 Exercise   
  Range of                    Remaining    Price of                 Price of   
  Exercise       Options     Contractual    Options     Options      Options   
   Prices      Outstanding  Life (Years)  Outstanding  Exercisable  Exercisable
                                                                               
 $8.88-$9.50     24,691         2.20          $8.98       24,691        $8.98  
$10.45-$11.50    81,219         4.70         $10.84       81,219       $10.84  
$13.75-$14.50     6,665         7.05         $14.02        4,667       $13.99  
$16.00-$17.13     5,500         5.89         $16.58        1,500       $16.13  

As discussed in Note 1, the Company continues to            
account for its stock-based awards using the intrinsic value                    
method in accordance with APB No. 25, Accounting for Stock Issued               
to Employees and its related interpretations.  Accordingly, no                  
compensation expense has been recognized in the financial                       
statements for employee stock arrangements.  The required pro                   
forma disclosures of the effect of stock-based compensation on                  
net income and earnings per share using the fair value method in                
accordance with SFAS No. 123, Accounting for Stock-Based                        
Compensation, are not presented as the differences are not                      
material.                                                                       

14.  PROFIT SHARING PLAN                                                        

The Company has a profit sharing plan (Plan) for the                  
employees of the Company under which annual contributions are at                
the discretion of the Board of Directors.  Substantially all of                 
the Company's employees are participants in the Plan.  The total                
contribution made to the Plan by the Company in 1997, 1996 and                  
1995 was approximately $143,000, $132,000, and $117,000.                        

15.  SALARY CONTINUATION PLAN                                                   

The Company has a Salary Continuation Plan covering certain           
of its senior officers.  Under this plan, the officers or their                 
beneficiaries will receive monthly payments after retirement or                 
if earlier, death.  The Company has accrued $55,000, $41,000 and                
$32,000 as compensation expense in 1997, 1996 and 1995,                         
respectively, under this plan.  To protect the Company in the                   
event of death prior to retirement, the Company has secured life                
insurance on the lives of the covered officers.                                 

16.  FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK                          

The Company is a party to financial instruments with                  
off-balance-sheet risk in the normal course of business to meet                 
the financing needs of its customers and to reduce its own                      
exposure to fluctuations in interest rates.  These financial                    
instruments include commitments to extend credit, standby letters               
of credit, and interest rate swaps.  Those instruments involve,                 
to varying degrees, elements of credit and interest rate risk in                
excess of the amount recognized in the statement of financial                   
position.  The contract or notional amounts of those instruments                
reflect the extent of involvement the Company has in particular                 
classes of financial instruments.                                               

The Company's exposure to credit loss in the event of                 
nonperformance by the other party to the financial instrument for               
commitments to extend credit and standby letters of credit is                   
represented by the contractual notional amount of those                         
instruments.  The Company uses the same credit policies in making               
commitments and conditional obligations as it does for                          
on-balance-sheet instruments.  For swap transactions, notional                  
principal amounts often are used to express the volume of these                 
transactions, but the amounts subject to credit risk are much                   
smaller because the Company enters into matched swap agreements                 
that are settled periodically on a net cash basis.  The Company                 
controls the credit risk of its interest rate swap agreements                   
through credit approvals, limits, and monitoring procedures.                    

The following table discloses the contract or notional                
amount of off-balance sheet financial instruments at December 31,               
1997 and 1996.                                                                  

                                                                [Download Table]

                                             1997       1996    
                                                                
Financial instruments whose                                     
 contract amounts represent credit risk:                        
  Commitments to extend credit           $18,191,000 $14,370,000
 Standby letters of credit                   532,000     649,000
Financial instruments whose notional                            
 or contract amounts exceed the amount                          
 of credit risk:                                                
  Interest rate swap agreements           10,900,000  10,000,000

Commitments to extend credit are agreements to lend to a              
customer as long as there is no violation of any condition                      
established in the contract.  Commitments generally have fixed                  
expiration dates or other termination clauses and may require                   
payment of a fee.  Since many of the commitments are expected to                
expire without being drawn upon, the total commitment amounts do                
not necessarily represent future cash requirements.  The Company                
evaluates each customer's creditworthiness on a case-by-case                    
basis.  The amount of collateral obtained if deemed necessary by                
the Company upon extension of credit is based on management's                   
credit evaluation of each customer.  Collateral held varies but                 
may include real property, bank deposits, debt securities, equity               
securities, or business assets.                                                 

Standby letters of credit are conditional commitments issued          
by the Company to guarantee the performance of a customer to a                  
third party.  Those guarantees are primarily issued to support                  
inventory purchases by the Company's commercial and technology                  
division customers, and such guarantees are typically short-term.               
The credit risk involved in issuing letters of credit is                        
essentially the same as that involved in extending loan                         
facilities to customers and the Company accordingly uses                        
evaluation and collateral requirements similar to those for loan                
commitments.                                                                    

The Company has entered into interest rate swap agreements            
with the FHLB as described below.  The effect of the $10,000,000                
notional amount agreement was to shorten the lag time in interest               
rate fluctuations from the 11th District Cost of Funds Index                    
(COFI) to the treasury bill to enable the Company to better match               
the timing of the repricing of certain liabilities.  The effect                 
of the $900,000 notional amount agreement was to lock in an                     
interest rate spread on a fixed interest rate loan of a similar                 
amount and term.                                                                

                                                                [Download Table]


              Original                                                    
  Notional      Issue    Original        Company           Company        
  Amount        Date       Term           Pays             Receives       
                                                                          
$10,000,000  5-24-1996  Five years    COFI plus .65%     Three month      
                                      (variable rate)    treasury bill    
                                                         (variable rate)  

   $900,000  1-24-1997  Seven years   6.74% (fixed       One year constant
                                      rate)              maturity treasury
                                                         index (variable  
                                                         rate)            

Cash requirements under the swap agreements have not been             
material to the Company's financial position or results of                      
operations.  The credit risk on the swap agreements is estimated                
to be the replacement cost for those agreements in a gain                       
position in the event of nonperformance by the FHLB.  At December               
31, 1997 and 1996, there was no credit risk associated with these               
agreements.                                                                     

17.  COMMITMENTS AND CONTINGENCIES                                              

Branch facilities and certain equipment are rented under              
long-term operating leases which provide for future minimum                     
rental payments as follows:                                                     

                                                                [Download Table]

Year Ended December 31                           Amount 
                                                        
     1998                                  $     572,000
     1999                                        498,000
     2000                                        473,000
     2001                                        482,000
     2002                                        412,000
     Thereafter                                1,889,000
                                           -------------
                                           $   4,326,000
                                           =============

Renewal privileges exist on certain leases.  Total rent               
expense amounted to $576,000, $536,000, and $534,000, for the                   
years ended December 31, 1997, 1996, and 1995.                                  

The Company is involved in a number of legal actions arising          
from normal business activities.  Management, upon the advice of                
legal counsel, believes that the ultimate resolution of these                   
actions will not have a material adverse effect on the financial                
statements.                                                                     

18.  RELATED PARTY TRANSACTIONS                                                 

The Bank has made loans to directors and executive officers           
and companies with which they are affiliated.  These loans were                 
made on substantially the same terms, including interest rates                  
and collateral, as those prevailing at the time for comparable                  
transactions with unrelated parties.  A summary of the activity                 
for the years ended December 31, 1997 and 1996 is as follows                    
(renewals are not reflected as either new loans or repayments):                 

                                                                [Download Table]

                                             1997       1996    
                                                                
Balance at beginning of year             $3,410,000  $3,376,000 
Borrowings                                  246,000     433,000 
Principal repayments                       (322,000)   (399,000)
                                         ----------  ---------- 
Balance at end of year                   $3,334,000  $3,410,000 
                                         ==========  ========== 

19.  REGULATORY MATTERS AND DIVIDENDS                                           

The Company and the Bank are subject to various regulatory            
capital requirements administered by federal banking agencies.                  
Failure to meet minimum capital requirements can initiate certain               
mandatory - and, possibly, additional discretionary - actions by                
regulators that, if undertaken, could have a direct material                    
effect on the Company's consolidated financial statements.  Under               
capital adequacy guidelines, the Company and the Bank must meet                 
specific capital guidelines that involve quantitative measures of               
the Company's and the Bank's assets, liabilities and certain off-               
balance sheet items as calculated under regulatory accounting                   
practices.  The Company's and the Bank's capital amounts and the                
Bank's prompt corrective action classification are also subject                 
to qualitative judgments by the regulators about components, risk               
weightings and other factors.                                                   

Quantitative measures established by regulation to ensure             
capital adequacy require the Company and the Bank to maintain                   
minimum amounts and ratios (set forth in the table below) of                    
total and Tier I capital (as defined in the regulations) to                     
risk-weighted assets (as defined) and of Tier I capital (as                     
defined) to average assets (as defined).  Management believes, as               
of December 31, 1997, that the Company and the Bank meet all                    
capital adequacy requirements to which they are subject.                        

The most recent notifications from the Federal Deposit                
Insurance Corporation for the Bank as of December 31, 1997 and                  
1996, categorized the Bank as well capitalized under the                        
regulatory framework for prompt corrective action.  To be                       
categorized as well capitalized the Bank must maintain minimum                  
Total risk-based, Tier I risk-based and Tier I leverage ratios as               
set forth in the table.  There are no conditions or events since                
that notification that management believes have changed the                     
Bank's category.                                                                

The Company and the Bank's actual capital amounts and ratios          
are also presented, respectively, in the following tables.                      

                                                                [Download Table]


     Company:                                               For Capital      
                                     Actual               Adequacy Purposes  
                              ---------------------    ----------------------
                                                         Minimum      Minimum
                                 Amount      Ratio        Amount       Ratio 
As of December 31, 1997:                                                     
                                                                             
 Total capital                                                               
  (to risk weighted assets)   $19,084,000    13.64%    $11,195,000     8.00% 
 Tier I capital                                                              
  (to risk weighted assets)   $15,374,000    10.99%    $ 5,597,000     4.00% 
 Tier I capital                                                              
  (to average assets)         $15,374,000     7.91%    $ 7,772,000     4.00% 

                                                                [Download Table]


                                                            For Capital      
                                     Actual               Adequacy Purposes  
                              ---------------------    ----------------------
                                                         Minimum      Minimum
                                 Amount      Ratio        Amount       Ratio 
As of December 31, 1996:                                                     
                                                                             
 Total capital                                                               
  (to risk weighted assets)   $17,895,000    13.55%    $10,564,000      8.0% 
 Tier I capital                                                              
  (to risk weighted assets)   $13,104,000     9.92%    $ 5,282,000      4.0% 
 Tier I capital                                                              
  (to average assets)         $13,104,000     7.04%    $ 7,444,000      4.0% 
                                                        [Enlarge/Download Table]

     Bank:                                                                      To Be       
                                                                         Categorized as Well
                                                                          Capitalized Under 
                                                      For Capital         Prompt Corrective 
                                     Actual         Adequacy Purposes     Action Provisions 
                             -------------------  -------------------   --------------------
                                                    Minimum   Minimum   Minimum      Minimum
                               Amount     Ratio     Amount     Ratio     Amount       Ratio 

                                                                                            
As of December 31, 1997:                                                                    
 Total capital                                                                              
  (to risk weighted assets)  $18,431,000  13.21%  $11,160,000   8.00%  $13,950,000   10.00% 
 Tier I capital                                                                             
  (to risk weighted assets)  $13,521,000   9.69%  $ 5,580,000   4.00%  $ 8,370,000    6.00% 
 Tier I capital                                                                             
  (to average assets)        $13,521,000   6.97%  $ 7,755,000   4.00%  $ 9,694,000    5.00% 

As of December 31, 1996:                                                                    
 Total capital                                                                              
  (to risk weighted assets)  $17,416,000  13.22%  $10,540,000    8.0%  $13,174,000    10.0% 
 Tier I capital                                                                             
  (to risk weighted assets)  $12,647,000   9.60%  $ 5,270,000    4.0%  $ 7,905,000     6.0% 
 Tier I capital                                                                             
  (to average assets)        $12,647,000   6.81%  $ 7,407,000    4.0%  $ 9,286,000     5.0% 

Under federal and California state banking laws, dividends            
paid by the Bank to the Company in any calendar year may not                    
exceed certain limitations without the prior written approval of                
the appropriate bank regulatory agency.  At December 31, 1997,                  
the amount available for such dividends without prior written                   
approval was approximately $3,317,000.  Similar restrictions                    
apply to the amounts and terms of loans, advances and other                     
transfers of funds from the Bank to the Company.                                

Dividends subsequent to year-end - On January 20, 1998, the           
Board of Directors declared a $.15 per share cash dividend                      
payable February 17, 1998 to shareholders of record on February                 
3, 1998.                                                                        

20.  FAIR VALUE OF FINANCIAL INSTRUMENTS                                        

SFAS No. 107, Disclosures About Fair Value of Financial               
Instruments requires certain disclosures regarding the estimated                
fair value of financial instruments for which it is practicable                 
to estimate.  Although management uses its best judgment in                     
assessing fair value, there are inherent weaknesses in any                      
estimating technique that may be reflected in the fair values                   
disclosed.  The fair value estimates are made at a discrete point               
in time based on relevant market data, information about the                    
financial instruments, and other factors.  Estimates of fair                    
value of instruments without quoted market prices are subjective                
in nature and involve various assumptions and estimates that are                
matters of judgment.  Changes in the assumptions used could                     
significantly affect these estimates.  Fair value has not been                  
adjusted to reflect changes in market conditions subsequent to                  
December 31, 1997, therefore, estimates presented herein are not                
necessarily indicative of amounts which could be realized in a                  
current transaction.                                                            

The following estimates and assumptions were used as of               
December 31, 1997 and 1996 to estimate the fair value of each                   
class of financial instruments for which it is practicable to                   
estimate that value.                                                            

(a)  Cash and Cash Equivalents - The carrying amount                  
represents a reasonable estimate of fair value.                                 

(b)  Securities - Available for sale securities are carried           
at market based on quoted market prices, if available.  If a                    
quoted market price is not available, fair value is estimated                   
using quoted market prices for similar securities.                              

(c)  Loans Receivable - Commercial loans, residential                 
mortgages, and construction loans, are segmented by fixed and                   
adjustable rate interest terms, by maturity, and by performing                  
and nonperforming categories.                                                   

The fair value of performing loans is estimated by              
discounting contractual cash flows using the current interest                   
rates at which similar loans would be made to borrowers with                    
similar credit ratings and for the same remaining maturities.                   
Assumptions regarding credit risk, cash flow, and discount rates                
are judgmentally determined using available market information.                 

The fair value of nonperforming loans and loans                 
delinquent more than 30 days is estimated by discounting                        
estimated future cash flows using current interest rates with an                
additional risk adjustment reflecting the individual                            
characteristics of the loans.                                                   

(d)  Deposit Liabilities - Noninterest bearing and interest           
bearing demand deposits and savings accounts are payable on                     
demand and are assumed to be at fair value.  Time deposits are                  
based on the discounted value of contractual cash flows.  The                   
discount rate is based on rates currently offered for deposits of               
similar size and remaining maturities.                                          

(e)  Other Borrowed Funds - The fair value of other borrowed          
funds is estimated by discounting the contractual cash flows                    
using the current interest rate at which similar borrowings for                 
the same remaining maturities could be made.                                    

(f)  Convertible Subordinated Debentures - The carrying               
amount represents a reasonable estimate of fair value.                          

(g)  Commitments to Fund Loans/Standby Letters of Credit -            
The fair values of commitments are estimated using the fees                     
currently charged to enter into similar agreements, taking into                 
account the remaining terms of the agreements and the present                   
creditworthiness of the counterparties.  The differences between                
the carrying value of commitments to fund loans or stand by                     
letters of credit and their fair value is not significant and                   
therefore not included in the following table.                                  

(h)  Interest Rate Swap Agreements - The fair value of the            
interest rate swap agreements is estimated by discounting the                   
contractual cash flows using the interest rates in effect at year               
end over the remaining maturity.                                                

The estimated fair values of the Company's financial                  
instruments as of December 31, are as follows:                                  

                                                        [Enlarge/Download Table]

                                                1997                       1996             
                                        Carrying      Fair         Carrying         Fair    
                                         Amount       Value         Amount          Value   
                                                                                            
FINANCIAL ASSETS:                                                                           
Cash and cash equivalents            $ 19,064,000 $ 19,064,000  $ 16,940,000    $ 16,940,000
Available for sale securities          48,465,000   48,465,000    52,569,000      52,569,000
Loans receivable                      121,062,000  118,884,000   113,625,000     112,499,000

FINANCIAL LIABILITIES:                                                                      
Deposits                              174,732,000  174,683,000   170,343,000     170,271,000
Other borrowed funds                    2,650,000    2,533,000     2,650,000       2,606,000
Convertible subordinated debentures     2,468,000    2,468,000     3,690,000       3,690,000

                                         Credit       Fair          Credit           Fair   
                                          Risk        Value          Risk            Value  
OFF BALANCE SHEET ITEMS:                                                                    
Interest rate swap agreements:                                                              
  Pay variable/receive variable            -       $(106,000)          -           $(68,000)
  Pay fixed/receive variable               -         (31,000)          -                -   

21.  CONDENSED FINANCIAL INFORMATION OF CALIFORNIA COMMUNITY                    
BANCSHARES CORPORATION                                                

The condensed financial statements of California Community            
Bancshares Corporation are presented below:                                     

                                                                [Download Table]


CALIFORNIA COMMUNITY BANCSHARES CORPORATION                      
CONDENSED BALANCE SHEETS                                         
DECEMBER 31, 1997 AND 1996                                       
-----------------------------------------------------------      
                                            1997         1996    
                                                                 
Assets:                                                          
Cash and cash equivalents               $   168,000  $    94,000 
Investments in subsidiary                13,993,000   12,913,000 
Note receivable from Bank                 3,669,000    3,669,000 
Other assets                                455,000      478,000 
                                        -----------  ----------- 
Total                                   $18,285,000  $17,154,000 
                                        ===========  =========== 
Liabilities and shareholders' equity:                            
Other liabilities                       $    64,000  $    95,000 
Convertible subordinated debentures       2,468,000    3,690,000 

Shareholders' equity:                                            
 Common stock, no par value:  authorized,                        
  2,000,000 shares; outstanding,                                 
  1,110,036 and 994,519 as of                                    
  December 31, 1997 and 1996             12,561,000   11,135,000 
 Retained earnings                        3,317,000    2,510,000 
 Net unrealized loss on securities                               
  available for sale, net of tax effect    (125,000)    (276,000)
                                        -----------  ----------- 
Total                                   $18,285,000  $17,154,000 
                                        ===========  =========== 

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                                                                [Download Table]

CONDENSED STATEMENTS OF INCOME                                

YEAR ENDED DECEMBER 31, 1997 AND PERIOD FROM FEBRUARY 29, 1996
(DATE OF MERGER WITH BANK) TO DECEMBER 31, 1996               
-----------------------------------------------------------   
                                        1997       1996       
                                                              
INCOME:                                                       
Dividends from subsidiary           $  750,000   $  710,000   
Interest income on note                                       
 receivable from Bank                  295,000      251,000   
                                    ----------   ----------   
Total income                         1,045,000      961,000   

EXPENSE:                                                      
Convertible subordinated                                      
 debenture interest expense            223,000      254,000   
Other                                  314,000      120,000   
                                    ----------   ----------   
Total expense                          537,000      374,000   

Income before equity in                                       
 undistributed income of subsidiary    508,000      587,000   
Equity in undistributed                                       
 income of subsidiaries                931,000      972,000   
                                    ----------   ----------   
Net income                          $1,439,000   $1,559,000   
                                    ==========   ==========   

                                                                [Download Table]

CONDENSED STATEMENTS OF CASH FLOWS                            
YEAR ENDED DECEMBER 31, 1997 AND PERIOD FROM FEBRUARY 29, 1996
(DATE OF MERGER WITH BANK) TO DECEMBER 31, 1996               
-----------------------------------------------------------   
                                        1997        1996      
                                                              
CASH FLOWS FROM OPERATING ACTIVITIES:                         
 Net income                         $1,439,000   $1,559,000   
 Adjustments to reconcile net                                 
  income to net cash provided                                 
  by operating activities:                                    
  Equity in undistributed income                              
   of subsidiary                      (931,000)    (972,000)  
  Effect of changes in:                                       
   Other assets                         25,000     (478,000)  
   Other liabilities                   (31,000)      95,000   
                                    ----------   ----------   
Net cash provided by operating                                
 activities                            502,000      204,000   
                                    ----------   ----------   

CASH FLOWS FROM FINANCING ACTIVITIES:                         
 Cash dividends paid                  (632,000)    (442,000)  
 Cash proceeds from stock                                     
  options exercised                                 204,000   
 Increase in note receivable from Bank           (3,669,000)  
 Convertible subordinated debentures              4,025,000   
 Other                                              (24,000)  
                                    ----------   ----------   
Net cash used in financing activities (428,000)    (110,000)  
                                    ----------   ----------   

INCREASE IN CASH AND CASH EQUIVALENTS   74,000       94,000   

CASH AND CASH EQUIVALENTS:                                    
 Beginning of year                      94,000        -       
                                    ----------   ----------   
 End of year                        $  168,000   $   94,000   
                                    ----------   ----------   
ADDITIONAL INFORMATION:                                       
 Common stock issued on conversion                            
  of debentures net of debenture                              
  offering costs of $90,000 and                               
  $28,000 in 1997 and 1996,                                   
  respectively                      $1,132,000   $  307,000   
                                    ----------   ----------   
 Cash payments for interest                                   
  paid on convertible                                         
  subordinated debentures           $  248,000   $  180,000   
                                    ----------   ----------   

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the            
Securities Exchange Act of 1934, as amended, the Registrant has                 
duly caused this report to be signed on its behalf by the                       
undersigned, thereunto duly authorized.                                         

CALIFORNIA COMMUNITY BANCSHARES CORPORATION                                     
--------------------------------------------                                    
Registrant                                                                      

By:/s/ Walter O. Sunderman                                                      
----------------------------------------                                        
Walter O. Sunderman                                                             
President and Chief Executive Officer                                           
(Principal Executive Officer)                                                   

By:/s/ Andrew S. Popovich                                                       
----------------------------------------                                        
Andrew S. Popovich                                                              
Executive Vice President and Chief Administrative Officer                       
(Principal Financial and Accounting Officer)                                    

Dated:  March 17, 1998                                                          

Pursuant to the requirements of the Securities Exchange Act           
of 1934, as amended, this Report has been signed below by the                   
following persons on behalf of the registrant and in the                        
capacities and on the dates indicated.                                          

NAME AND SIGNATURE:           TITLE          DATE                               
-------------------------     --------       --------------                     
/s/ Dorce Daniel              Director       March 17, 1998                     
-------------------------                                                       
DORCE DANIEL                                                                    

/s/ William J. Hennig         Director       March 17, 1998                     
-------------------------                                                       
WILLIAM J. HENNIG                                                               

/s/ Bernard E. Moore          Director       March 17, 1998                     
-------------------------                                                       
BERNARD E. MOORE                                                                

/s/ Melvin M. Norman          Director       March 17, 1998                     
-------------------------                                                       
MELVIN M. NORMAN                                                                

/s/ Stephen R. Schwimer       Director       March 17, 1998                     
-------------------------                                                       
STEPHEN R. SCHWIMER                                                             

/s/ Donald E. Sheahan         Director       March 17, 1998                     
-------------------------                                                       
DONALD E. SHEAHAN                                                               

/s/ Gary E. Stein             Director       March 17, 1998                     
-------------------------                                                       
GARY E. STEIN                                                                   

/s/ Walter O. Sunderman       Director       March 17, 1998                     
-------------------------                                                       
WALTER O. SUNDERMAN                                                             

/s/ John C. Usnick            Director       March 17, 1998                     
-------------------------                                                       
JOHN C. USNICK                                                                  

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

Exhibits

to

FORM 10 - KSB 

ANNUAL REPORT 

UNDER 

SECTION 13 OR 15(D) OF  

THE SECURITIES EXCHANGE ACT OF 1934 

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

CALIFORNIA COMMUNITY BANCSHARES CORPORATION 

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EXHIBIT 10.22 - FIRST AMENDMENT TO THE SUNDERMAN EMPLOYMENT                     
AGREEMENT AMENDED MAY 20, 1997                                                  

First Amendment To The Sunderman Employment Agreement                           

This First Amendment to the Employment Agreement amended and          
restated effective August 1, 1993, between Continental Pacific                  
Bank ("Employer") and Walter O. Sunderman ("Employee"),                         

WITNESSETH:                                                                     

WHEREAS, Employer and Employee desire to amend and to                 
clarify said Employment Agreement; and                                          

WHEREAS, at the May 20, 1997 meeting of Employer's Board of           
Directors, the Board approved certain amendments to said                        
Employment Agreement;                                                           

NOW, THEREFORE, Employer and Employee hereby agree to amend           
said Employment Agreement effective May 20, 1997 as follows:                    

1.     Section 6(b) - the first paragraph shall be revised            
to read as follows:                                                             

"In the event this Agreement or Employee's employment       
is terminated by Employer within either six (6) months prior to                 
or twelve (12) months after the occurrence of a Change of Control               
(unless pursuant to paragraph 7(a)(i) through 7(a)(iv)), then                   
Employer or any assignee or successor in interest shall pay                     
Employee (in accordance with Section 6(e)) a benefit equal to two               
(2) times Employee's then current or last set annual base salary                
under Section 4(a) of this Agreement; provided, however, that any               
benefits under Section 6(c) shall reduce the benefit hereunder.                 
The benefit under this Section 6(b) shall begin thirty (30) days                
following the later of Employee's termination of employment or                  
the consummation of the Change of Control and shall be reduced by               
any payment of the additional one (1) year of salary that is made               
under Section 7(b)."                                                            

2.     Section 6(c) shall be amended to read as follows:              

"In the event a Change of Control occurs but neither        
Employee's employment nor this Agreement is terminated within six               
(6) months before consummation of the Change in Control as set                  
forth above, Employer or any assignee or successor in interest                  
shall pay Employee (in accordance with Section 6(e)) a benefit                  
equal to one (1) year of Employee's then current annual base                    
salary.  The benefit under this Section 6(c) shall begin thirty                 
(30) days following the consummation of the Change of Control."                 

3.     Section 6(d) shall be amended to read as follows:              

"In the event a Change of Control of Employer is            
consummated for a total purchase or investment price or value of                
more than 1.75 times Employer's book value as of the end of the                 
month prior to announcement of the transaction calculated in                    
accordance with the FDIC's regulatory capital requirements but on               
a fully diluted basis, Employer or any assignee or successor in                 
interest shall pay Employee (in accordance with Section 6(e)) an                
additional incentive benefit calculated pursuant to the                         
provisions of Schedule 2 of this Agreement, fully incorporated by               
this reference.  The benefit under this Section 6(d) shall begin                
thirty (30) days following the consummation of the Change of                    
Control."                                                                       

4.     Section 6(e) shall be renumbered as 6(f) and a new             
section 6(e) shall be added to read as follows:                                 

"(e) Any benefits payable under Sections 6(b), (c) and      
(d) are intended to be an unfunded promise to pay such benefits                 
for purposes of the Internal Revenue Code of 1986, as amended.                  
When Employee accrues rights to any such benefits, Employer shall               
establish a trust and contribute assets to such trust in an                     
amount equal to Employee's accrued benefits.  Such trust shall be               
a "grantor trust", of which Employer is the grantor, within the                 
meaning of subpart E, part I, subchapter J, chapter 1, subtitle A               
of the Internal Revenue Code of 1986, as amended.  The trustee                  
shall be mutually acceptable to Employer and Employee.  The                     
principal of the trust, and any earnings thereon shall be held                  
separate and apart from other funds of Employer and shall be used               
exclusively for the uses and purposes of Employee and general                   
creditors as herein set forth.  Any assets held by the trust will               
be subject to the claims of Employer's general creditors under                  
federal and state law in the event of insolvency as defined under               
the trust.  Employee and his beneficiaries shall have no                        
preferred claim on, or any beneficial ownership interest in, any                
assets of the Trust.  Any rights created under Sections 6(b),                   
(c), and (d) shall be unsecured contractual rights of Employee                  
and his beneficiaries against Employer.                                         

Benefits payable under Sections 6(b), (c) and (d) plus      
interest shall be paid in monthly installments of $6,000.00                     
over a period of at least thirty-six (36) months and                            
until all amounts held on behalf of Employee are paid (i.e.,                    
benefits plus interest).  The trustee shall invest any amounts                  
held in certificates of deposit offered by insured institutions                 
or U.S. government securities or similar securities of other                    
institutions.  In making such investments, the trustee shall                    
maximize the earnings of the trust taking into account its                      
liquidity needs."                                                               

5.     Section 6(f) as renumbered shall be revised by                 
replacing the period of the last sentence with:                                 

", and (iii) Employee shall have the right to elect, if               
permitted under section 280G of the Code, which payments included               
as Total Payments shall be reduced in order to comply with the                  
limit imposed by section 280G of the Code."                                     

IN WITNESS WHEREOF, this First Amendment is executed as of            
June 17, 1997.                                                                  

Continental Pacific Bank               Employee                                 

By: /s/ Bernard E. Moore               /s/ Walter O. Sunderman                  

Its: Chairman                                                                   

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EXHIBIT 10.23 - FIRST AMENDMENT TO THE POPOVICH EMPLOYMENT                      
AGREEMENT AMENDED MAY 20, 1997                                                  

First Amendment To The Popovich Employment Agreement                            

This First Amendment to the Employment Agreement amended and          
restated effective August 1, 1993, between Continental Pacific                  
Bank ("Employer") and Andrew S. Popovich ("Employee"),                          

WITNESSETH: 

WHEREAS, Employer and Employee desire to amend and to                 
clarify said Employment Agreement; and                                          

WHEREAS, at the May 20, 1997 meeting of Employer's Board of           
Directors, the Board approved certain amendments to said                        
Employment Agreement;                                                           

NOW, THEREFORE, Employer and Employee hereby agree to amend           
said Employment Agreement effective May 20, 1997 as follows:                    

1.     Section 6(b) - the first paragraph shall be revised            
to read as follows:                                                             

"In the event this Agreement or Employee's employment       
is terminated by Employer within either six (6) months prior to                 
or twelve (12) months after the occurrence of a Change of Control               
(unless pursuant to paragraph 7(a)(i) through 7(a)(iv)), then                   
Employer or any assignee or successor in interest shall pay                     
Employee (in accordance with Section 6(e)) a benefit equal to two               
(2) times Employee's then current or last set annual base salary                
under Section 4(a) of this Agreement; provided, however, that any               
benefits under Section 6(c) shall reduce the benefit hereunder.                 
The benefit under this Section 6(b) shall begin thirty (30) days                
following the later of Employee's termination of employment or                  
the consummation of the Change of Control and shall be reduced by               
any payment of the additional six (6) months salary that is made                
under Section 7(b)."                                                            

2.     Section 6(c) shall be amended to read as follows:              

"In the event a Change of Control occurs but neither        
Employee's employment nor this Agreement is terminated within six               
(6) months before consummation of the Change in Control as set                  
forth above, Employer or any assignee or successor in interest                  
shall pay Employee (in accordance with Section 6(e)) a benefit                  
equal to six (6) months of Employee's then current annual base                  
salary.  The benefit under this Section 6(c) shall begin thirty                 
(30) days following the consummation of the Change of Control."                 

3.     Section 6(d) shall be amended to read as follows:              

"In the event a Change of Control of Employer is            
consummated for a total purchase or investment price or value of                
more than 1.75 times Employer's book value as of the end of the                 
month prior to announcement of the transaction calculated in                    
accordance with the FDIC's regulatory capital requirements but on               
a fully diluted basis, Employer or any assignee or successor in                 
interest shall pay Employee (in accordance with Section 6(e)) an                
additional incentive benefit calculated pursuant to the                         
provisions of Schedule 2 of this Agreement, fully incorporated by               
this reference.  The benefit under this Section 6(d) shall begin                
thirty (30) days following the consummation of the Change of                    
Control."                                                                       

4.     Section 6(e) shall be renumbered as 6(f) and a new             
section 6(e) shall be added to read as follows:                                 

"(e) Any benefits payable under Sections 6(b), (c) and      
(d) are intended to be an unfunded promise to pay such benefits                 
for purposes of the Internal Revenue Code of 1986, as amended.                  
When Employee accrues rights to any such benefits, Employer shall               
establish a trust and contribute assets to such trust in an                     
amount equal to Employee's accrued benefits.  Such trust shall be               
a "grantor trust", of which Employer is the grantor, within the                 
meaning of subpart E, part I, subchapter J, chapter 1, subtitle A               
of the Internal Revenue Code of 1986, as amended.  The trustee                  
shall be mutually acceptable to Employer and Employee.  The                     
principal of the trust, and any earnings thereon shall be held                  
separate and apart from other funds of Employer and shall be used               
exclusively for the uses and purposes of Employee and general                   
creditors as herein set forth.  Any assets held by the trust will               
be subject to the claims of Employer's general creditors under                  
federal and state law in the event of insolvency as defined under               
the trust.  Employee and his beneficiaries shall have no                        
preferred claim on, or any beneficial ownership interest in, any                
assets of the Trust.  Any rights created under Sections 6(b),                   
(c), and (d) shall be unsecured contractual rights of Employee                  
and his beneficiaries against Employer.                                         

Benefits payable under Sections 6(b), (c) and (d) plus      
interest shall be paid in monthly installments of $8,000.00 over                
a period of at least thirty-six (36) months and until all amounts               
held on behalf of Employee are paid (i.e., benefits plus                        
interest).  The trustee shall invest any amounts held in                        
certificates of deposit offered by insured institutions or U.S.                 
government securities or similar securities of other                            
institutions.  In making such investments, the trustee shall                    
maximize the earnings of the trust taking into account its                      
liquidity needs."                                                               

5.     Section 6(f) as renumbered shall be revised by                 
replacing the period of the last sentence with:                                 

", and (iii) Employee shall have the right to elect, if               
permitted under section 280G of the Code, which payments included               
as Total Payments shall be reduced in order to comply with the                  
limit imposed by section 280G of the Code."                                     

IN WITNESS WHEREOF, this First Amendment is executed as of            
June 17, 1997.                                                                  

Continental Pacific Bank               Employee                                 

By: /s/ Bernard E. Moore               /s/ Andrew S. Popovich                   

Its: Chairman                                                                   

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EXHIBIT 10.24 - FIRST AMENDMENT TO THE ALFSTAD EMPLOYMENT                       
AGREEMENT AMENDED MAY 20, 1997                                                  

First Amendment To The Alfstad Employment Agreement                             

This First Amendment to the Employment Agreement amended and          
restated effective August 1, 1993, between Continental Pacific                  
Bank ("Employer") and Ronald A. Alfstad ("Employee"),                           

WITNESSETH: 

WHEREAS, Employer and Employee desire to amend and to                 
clarify said Employment Agreement; and                                          

WHEREAS, at the May 20, 1997 meeting of Employer's Board of           
Directors, the Board approved certain amendments to said                        
Employment Agreement;                                                           

NOW, THEREFORE, Employer and Employee hereby agree to amend           
said Employment Agreement effective May 20, 1997 as follows:                    

1.     Section 6(b) - the first paragraph shall be revised            
to read as follows:                                                             

"In the event this Agreement or Employee's employment       
is terminated by Employer within either six (6) months prior to                 
or twelve (12) months after the occurrence of a Change of Control               
(unless pursuant to paragraph 7(a)(i) through 7(a)(iv)), then                   
Employer or any assignee or successor in interest shall pay                     
Employee (in accordance with Section 6(e)) a benefit equal to two               
(2) times Employee's then current or last set annual base salary                
under Section 4(a) of this Agreement; provided, however, that any               
benefits under Section 6(c) shall reduce the benefit hereunder.                 
The benefit under this Section 6(b) shall begin thirty (30) days                
following the later of Employee's termination of employment or                  
the consummation of the Change of Control and shall be reduced by               
any payment of the additional six (6) months salary that is made                
under Section 7(b)."                                                            

2.     Section 6(c) shall be amended to read as follows:              

"In the event a Change of Control occurs but neither        
Employee's employment nor this Agreement is terminated within six               
(6) months before consummation of the Change in Control as set                  
forth above, Employer or any assignee or successor in interest                  
shall pay Employee (in accordance with Section 6(e)) a benefit                  
equal to six (6) months of Employee's then current annual base                  
salary.  The benefit under this Section 6(c) shall begin thirty                 
(30) days following the consummation of the Change of Control."                 

3.     Section 6(d) shall be renumbered as 6(e) and a new             
section 6(d) shall be added to read as follows:                                 

"(d) Any benefits payable under Sections 6(b) and (c)       
are intended to be an unfunded promise to pay such benefits for                 
purposes of the Internal Revenue Code of 1986, as amended.  When                
Employee accrues rights to any such benefits, Employer shall                    
establish a trust and contribute assets to such trust in an                     
amount equal to Employee's accrued benefits.  Such trust shall be               
a "grantor trust", of which Employer is the grantor, within the                 
meaning of subpart E, part I, subchapter J, chapter 1, subtitle A               
of the Internal Revenue Code of 1986, as amended.  The trustee                  
shall be mutually acceptable to Employer and Employee.  The                     
principal of the trust, and any earnings thereon shall be held                  
separate and apart from other funds of Employer and shall be used               
exclusively for the uses and purposes of Employee and general                   
creditors as herein set forth.  Any assets held by the trust will               
be subject to the claims of Employer's general creditors under                  
federal and state law in the event of insolvency as defined under               
the trust.  Employee and his beneficiaries shall have no                        
preferred claim on, or any beneficial ownership interest in, any                
assets of the Trust.  Any rights created under Sections 6(b) and                
(c) shall be unsecured contractual rights of Employee and his                   
beneficiaries against Employer.                                                 

Benefits payable under Sections 6(b) and (c) plus           
interest shall be paid in monthly installments of $2,500.00 over                
a period of at least thirty-six (36) months and until all amounts               
held on behalf of Employee are paid (i.e., benefits plus                        
interest).  The trustee shall invest any amounts held in                        
certificates of deposit offered by insured institutions or U.S.                 
government securities or similar securities of other                            
institutions.  In making such investments, the trustee shall                    
maximize the earnings of the trust taking into account its                      
liquidity needs."                                                               

4.     Section 6(e) as renumbered shall be revised by                 
replacing the period of the last sentence with:                                 

", and (iii) Employee shall have the right to elect, if               
permitted under section 280G of the Code, which payments included               
as Total Payments shall be reduced in order to comply with the                  
limit imposed by section 280G of the Code."                                     

IN WITNESS WHEREOF, this First Amendment is executed as of            
June 17, 1997.                                                                  

Continental Pacific Bank               Employee                                 

By: /s/ Bernard E. Moore               /s/ Ronald A. Alfstad                    

Its: Chairman                                                                   

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EXHIBIT 10.25 - FORM OF DIRECTORS INDEMNIFICATION AGREEMENT WITH                
AMENDMENT DATED AS OF NOVEMBER 11, 1997                                         

INDEMNIFICATION AGREEMENT 

THIS AGREEMENT dated as of November 11, 1997  by and between          
California Community Bancshares Corporation, a Delaware corporation             
("CCBC")  and ____________ ("Director").                                        

    W I T N E S S E T H:

WHEREAS, Director has served and continues to serve as a              
director of CCBC;                                                               

WHEREAS, CCBC recognizes that service as a director of a              
Delaware corporation involves certain economic risks: and                       

WHEREAS, CCBC wishes to indemnify Director against such risks         
to the fullest extent permitted by applicable law.                              

NOW, THEREFORE, in consideration of the mutual covenants              
herein contained, the parties hereby agree as follows:                          

1.     Service as a Director.  Director has heretofore served         
as a director of CCBC and hereby agrees to serve as a director of               
CCBC until such time as he resigns from such directorship or fails              
to be renominated or reelected thereto.                                         

2.     Indemnification.                                               

(a)     CCBC hereby agrees to indemnify Director and hold him         
harmless with respect to any liabilities, damages, expenses,                    
judgments, fines and amounts paid in settlement actually and                    
reasonably incurred by him in connection with any threatened or                 
actual claim, action, suit,  proceeding or investigation brought                
against Director by reason of the fact that he is or was a director             
of CCBC or is or was serving at the request of CCBC as a director,              
officer, employee or agent of another corporation, partnership,                 
joint venture, trust or other enterprise, including, without                    
limitation, any subsidiary of CCBC, to the fullest extent now or                
hereafter permitted by applicable law.  With regard to any such                 
matter, it shall be presumed that Director was acting in good faith             
within the scope of his employment or authority as he could                     
reasonably have perceived it under the circumstances and  for a                 
purpose he could reasonably have believed under the circumstances               
was in the best interests of CCBC, unless a judicial finding is                 
made to the contrary that is not reversed on appeal.  Termination               
of any proceeding by judgment, order, settlement or conviction or               
upon a plea of nolo contendere or its equivalent, shall not, of                 
itself, create a presumption that Director did not act in good                  
faith and in a manner which complied with the above standard.                   

(b)      To the extent that Director is successful on the             
merits or otherwise in defense of any proceeding referred to above,             
or in defense of any claim, issue or matter therein, Director shall             
be indemnified against expenses (including, but not limited to,                 
attorneys' fees at both trial and appellate levels) actually and                
reasonably incurred by him in connection therewith, without the                 
necessity of an independent determination that Director met any                 
appropriate standard of conduct.  CCBC agrees to pay all expenses               
incurred by Director in defending a civil or criminal proceeding in             
advance of the final disposition of such proceeding upon receipt of             
an undertaking by or on behalf of Director to repay such amount if              
he is ultimately found not to be entitled to indemnification                    
pursuant to the terms contained herein.                                         

(c)     If CCBC fails to provide indemnification or                   
advancement of expenses, or both, to Director and it is determined              
by the court conducting any proceeding, or another court of                     
competent jurisdiction, that Director is entitled to                            
indemnification as required herein or is fairly and reasonably                  
entitled to indemnification or advancement of expenses, or both, in             
view of all relevant circumstances, regardless of whether such                  
person met the standard of conduct set forth above, CCBC shall pay              
to Director all expenses actually incurred, including attorneys'                
fees, in obtaining court ordered indemnification or advancement of              
expenses.                                                                       

(d)     Neither CCBC on the one hand nor Director on the other        
hand may settle or compromise any claim covered by the                          
indemnification set forth herein without the prior written consent              
of the other party hereto, provided that consent to such settlement             
or compromise shall not be unreasonably withheld by either party.               

(e)      If any action or proceeding shall be brought or              
asserted against Director in respect of which indemnification may               
be sought hereunder, Director shall promptly notify CCBC in                     
writing, and CCBC shall have the right to assume the defense                    
thereof, including the employment of counsel reasonably                         
satisfactory to Director and the payment of all expenses.  Director             
shall have the right to employ separate counsel in any such action              
and to participate in the defense thereof, but the fees and                     
expenses of such counsel shall be at the expense of Director unless             
(i) CCBC agrees to pay such fees and expenses, (ii) CCBC shall have             
failed promptly to assume the defense of such action or proceeding              
and employ counsel reasonably satisfactory to Director in any such              
action or proceeding, or (iii) the named parties to any such action             
or proceeding include both Director and CCBC and Director has                   
reasonably concluded based upon the advice of counsel that there                
may be one or more legal defenses available to him which are                    
different from or additional to those available to CCBC, in which               
case, if Director notifies CCBC in writing that he elects to employ             
separate counsel at the expense of CCBC, CCBC shall not have the                
right to assume the defense of such action or proceeding on behalf              
of Director and shall pay all expenses including attorneys' fees                
incurred by Director in such defense.                                           

(f)     Notwithstanding any other provision of this Agreement         
to the contrary, CCBC shall not make any "prohibited                            
indemnification payment " or "reasonable  payment," as such terms               
are defined or used in Part 359 of the regulations of the Federal               
Deposit Insurance Corporation, except  in compliance with the                   
provisions of such part or any successor regulations thereto.                   

3.     Applicable Law.     As stated above, it is the                 
intention of CCBC that the indemnification provided herein be to                
the fullest extent now or hereafter permitted by law.  The                      
indemnification obligations of CCBC shall be governed by the laws               
of the State of Delaware without regard to principles of conflicts              
of laws thereof.  In the event that any provision hereof is found               
to be invalid under applicable law, then the scope of such                      
provision shall be narrowed so that it provides Director with                   
indemnification to the fullest extent permissible under applicable              
law.                                                                            

4.     Notices.  All notices or other communications that are         
required or permitted hereunder shall be in writing and sufficient              
if delivered personally or sent by overnight delivery, telegram or              
telex or other facsimile transmission addressed as follows:                     

If to CCBC, to:            California Community Bancshares                      
 555 Mason Street, Suite 280
Vacaville, CA 95688-3985  
Attn. Walter O. Sunderman 
President & CEO           

With a required copy to:   Lillick &  Charles LLP                               
      2 Embarcadero Center, 27th Floor
San Francisco, CA 94111   
Attn. Ronald W. Bachli    

If to Director, to:      __________________                                     
__________________            
__________________            

Any notice hereunder shall be deemed delivered when actually          
received at the address of such party set forth herein.  Each party             
shall have the right to change either the persons or addresses to               
which notices and other communications shall be sent with respect               
to such party by a notice to the other party in accordance with                 
this Section 4.                                                                 

5.     Miscellaneous.     This Agreement constitutes the              
entire agreement between the parties with respect to the subject                
matter hereof and supersedes all prior agreements, understandings               
or arrangements between them relating thereto; provided, that the               
rights   of the Director hereunder shall be in addition to all                  
rights of the Director under Article VII of the Bylaws of CCBC and              
nothing contained herein shall be deemed to restrict any rights of              
the Director under Article VII of the Bylaws of CCBC.  This                     
Agreement shall be binding upon and shall inure to the benefit of               
the parties hereto and their respective successors, distributees                
and assigns.  This Agreement may be executed in any number of                   
counterparts, each of which shall be deemed an original, but all of             
which together shall constitute one and the same document.  Any                 
term or provision of this Agreement may be waived in writing at any             
time by the party that is entitled to the benefits thereof and any              
term or provision of this Agreement may be amended or supplemented              
at any time by a written instrument signed by each party hereto.                

IN WITNESS WHEREOF, the undersigned have executed this                
Indemnification Agreement as of the date and year first written                 
above.                                                                          

CALIFORNIA COMMUNITY                                                            
BANCSHARES CORPORATION                                                          

_______________________________                                                 
_______________________________                                                 
by:                                                                             
Its:                                                                            

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AMENDMENT TO INDEMNIFICATION AGREEMENT                                

WHEREAS, the undersigned has entered into an Indemnification                    
Agreement (the "Agreement") dated as November 11, 1997 with                     
California Community Bancshares ("CCBC"); and                                   

WHEREAS, CCBC has entered into a Plan of  Acquisition and Merger                
dated as of November 13, 1997 with SierraWest Bancorp ("Sierra")                
(the"Plan") pursuant to which CCBC will be merged with and into                 
Sierra, with Sierra as the surviving corporation (the "Merger");                
and                                                                             

WHEREAS, pursuant to Section 3.3(d) of the Plan Sierra agrees to                
indemnify the Directors and Officers of CCBC, as defined therein,               
, which indemnification continues for a period of four (4) years                
from the Effective Date of the Merger; and                                      

WHEREAS, in order to facilitate consummation of the Merger, the                 
undersigned desires to amend  the Agreement, conditioned upon                   
consummation of the Merger, to provide that the Agreement,                      
consistent with Section 3.3(d) of the Plan, shall expire four years             
from the Effective Date of the Merger.                                          

NOW THEREFORE, the undersigned hereby agrees that, subject to                   
consummation of the Merger, the Agreement consistent with Section               
3.3(d) of the Plan, shall expire four years from the Effective Date             
of the Merger.                                                                  

Other than specifically set forth herein, the Agreement               
remains in full force and effect and this amendment will have no                
effect if the Merger is not consummated                                         

IN WITNESS WHEREOF, the undersigned have executed this Amendment to             
Indemnification Agreement this 13 day of November, 1997.                        

CALIFORNIA COMMUNITY                                                            
BANCSHARES CORPORATION                                                          

_______________________________                                                 
_______________________________                                                 
by:                                                                             
Its:                                                                            

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EXHIBIT 10.26 - FORM OF OFFICERS INDEMNIFICATION AGREEMENT WITH                 
AMENDMENT DATED AS OF NOVEMBER 11, 1997                                         

INDEMNIFICATION AGREEMENT 

THIS AGREEMENT dated as of  November 11, 1997  by and                 
between California Community Bancshares Corporation, a Delaware                 
corporation ("CCBC")  and ______________ ("Officer").                           

    W I T N E S S E T H:

WHEREAS, Officer has served and continues to serve as a               
officer of CCBC;                                                                

WHEREAS, CCBC recognizes that service as a officer of a               
Delaware corporation involves certain economic risks: and                       

WHEREAS, CCBC wishes to indemnify Officer against such risks          
to the fullest extent permitted by applicable law.                              

NOW, THEREFORE, in consideration of the mutual covenants              
herein contained, the parties hereby agree as follows:                          

1.     Service as a Officer. Officer has heretofore served as         
an Officer of CCBC and hereby agrees to serve as an Officer of CCBC             
until such time as he resigns from such Office  or fails to be                  
renominated or reelected thereto.                                               

2.     Indemnification.                                               

(a)     CCBC hereby agrees to indemnify Officer and hold him          
harmless with respect to any liabilities, damages, expenses,                    
judgments, fines and amounts paid in settlement actually and                    
reasonably incurred by him in connection with any threatened or                 
actual claim, action, suit,  proceeding or investigation brought                
against Officer by reason of the fact that he is or was an Officer              
of CCBC or is or was serving at the request of CCBC as an Officer,              
officer, employee or agent of another corporation, partnership,                 
joint venture, trust or other enterprise, including, without                    
limitation, any subsidiary of CCBC, to the fullest extent now or                
hereafter permitted by applicable law.  With regard to any such                 
matter, it shall be presumed that Officer was acting in good faith              
within the scope of his employment or authority as he could                     
reasonably have perceived it under the circumstances and  for a                 
purpose he could reasonably have believed under the circumstances               
was in the best interests of CCBC, unless a judicial finding is                 
made to the contrary that is not reversed on appeal.  Termination               
of any proceeding by judgment, order, settlement or conviction or               
upon a plea of nolo contendere or its equivalent, shall not, of                 
itself, create a presumption that Officer did not act in good faith             
and in a manner which complied with the above standard.                         

(b)      To the extent that Officer is successful on the              
merits or otherwise in defense of any proceeding referred to above,             
or in defense of any claim, issue or matter therein, Officer shall              
be indemnified against expenses (including, but not limited to,                 
attorneys' fees at both trial and appellate levels) actually and                
reasonably incurred by him in connection therewith, without the                 
necessity of an independent determination that Officer met any                  
appropriate standard of conduct.  CCBC agrees to pay all expenses               
incurred by Officer in defending a civil or criminal proceeding in              
advance of the final disposition of such proceeding upon receipt of             
an undertaking by or on behalf of Officer to repay such amount if               
he is ultimately found not to be entitled to indemnification                    
pursuant to the terms contained herein.                                         

(c)     If CCBC fails to provide indemnification or                   
advancement of expenses, or both, to Officer and it is determined               
by the court conducting any proceeding, or another court of                     
competent jurisdiction, that Officer is entitled to indemnification             
as required herein or is fairly and reasonably entitled to                      
indemnification or advancement of expenses, or both, in view of all             
relevant circumstances, regardless of whether such person met the               
standard of conduct set forth above, CCBC shall pay to Officer all              
expenses actually incurred, including attorneys' fees, in obtaining             
court ordered indemnification or advancement of expenses.                       

(d)     Neither CCBC on the one hand nor Officer on the other         
hand may settle or compromise any claim covered by the                          
indemnification set forth herein without the prior written consent              
of the other party hereto, provided that consent to such settlement             
or compromise shall not be unreasonably withheld by either party.               

(e)      If any action or proceeding shall be brought or              
asserted against Officer in respect of which indemnification may be             
sought hereunder, Officer shall promptly notify CCBC in writing,                
and CCBC shall have the right to assume the defense thereof,                    
including the employment of counsel reasonably satisfactory to                  
Officer and the payment of all expenses. Officer shall have the                 
right to employ separate counsel in any such action and to                      
participate in the defense thereof, but the fees and expenses of                
such counsel shall be at the expense of Officer unless (i) CCBC                 
agrees to pay such fees and expenses, (ii) CCBC shall have failed               
promptly to assume the defense of such action or proceeding and                 
employ counsel reasonably satisfactory to Officer in any such                   
action or proceeding, or (iii) the named parties to any such action             
or proceeding include both Officer and CCBC and Officer has                     
reasonably concluded based upon the advice of counsel that there                
may be one or more legal defenses available to him which are                    
different from or additional to those available to CCBC, in which               
case, if Officer notifies CCBC in writing that he elects to employ              
separate counsel at the expense of CCBC, CCBC shall not have the                
right to assume the defense of such action or proceeding on behalf              
of Officer and shall pay all expenses including attorneys' fees                 
incurred by Officer in such defense.                                            

(f)     Notwithstanding any other provision of this Agreement         
to the contrary, CCBC shall not make any "prohibited                            
indemnification payment " or "reasonable  payment," as such terms               
are defined or used in Part 359 of the regulations of the Federal               
Deposit Insurance Corporation, except  in compliance with the                   
provisions of such part or any successor regulations thereto.                   

3.     Applicable Law.     As stated above, it is the                 
intention of CCBC that the indemnification provided herein be to                
the fullest extent now or hereafter permitted by law.  The                      
indemnification obligations of CCBC shall be governed by the laws               
of the State of  Delaware without regard to principles of conflicts             
of laws thereof.  In the event that any provision hereof is found               
to be invalid under applicable law, then the scope of such                      
provision shall be narrowed so that it provides Officer with                    
indemnification to the fullest extent permissible under applicable              
law.                                                                            

4.     Notices.  All notices or other communications that are         
required or permitted hereunder shall be in writing and sufficient              
if delivered personally or sent by overnight delivery, telegram or              
telex or other facsimile transmission addressed as follows:                     

If to CCBC, to:           California Community Bancshares                       
555 Mason Street, Suite 280 
Vacaville, CA 95688-3985    
Attn. Walter O. Sunderman   
President & CEO             

With a required copy to:  Lillick &  Charles LLP                                
    2 Embarcadero Center, 27th Floor
San Francisco, CA 94111     
Attn. Ronald W. Bachli      

If to Officer, to:       _____________________                                  
_____________________         
_____________________         

Any notice hereunder shall be deemed delivered when actually          
received at the address of such party set forth herein.  Each party             
shall have the right to change either the persons or addresses to               
which notices and other communications shall be sent with respect               
to such party by a notice to the other party in accordance with                 
this Section 4.                                                                 

5.     Miscellaneous.     This Agreement constitutes the              
entire agreement between the parties with respect to the subject                
matter hereof and supersedes all prior agreements, understandings               
or arrangements between them relating thereto; provided, that the               
rights   of the Officer hereunder shall be in addition to all                   
rights of the Officer under Article VII of the Bylaws of CCBC and               
nothing contained herein shall be deemed to restrict any rights of              
the Officer under Article VII of the Bylaws of CCBC.  This                      
Agreement shall be binding upon and shall inure to the benefit of               
the parties hereto and their respective successors, distributees                
and assigns.  This Agreement may be executed in any number of                   
counterparts, each of which shall be deemed an original, but all of             
which together shall constitute one and the same document.  Any                 
term or provision of this Agreement may be waived in writing at any             
time by the party that is entitled to the benefits thereof and any              
term or provision of this Agreement may be amended or supplemented              
at any time by a written instrument signed by each party hereto.                

IN WITNESS WHEREOF, the undersigned have executed this                
Indemnification Agreement as of the date and year first written                 
above.                                                                          

CALIFORNIA COMMUNITY                                                            
BANCSHARES CORPORATION                                                          

_______________________________                                                 
_______________________________                                                 
by:                                                                             
Its:                                                                            

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AMENDMENT TO INDEMNIFICATION AGREEMENT                                

WHEREAS, the undersigned has entered into an Indemnification                    
Agreement (the "Agreement") dated as November 11, 1997 with                     
California Community Bancshares ("CCBC"); and                                   

WHEREAS, CCBC has entered into a Plan of  Acquisition and Merger                
dated as of November 13, 1997 with SierraWest Bancorp ("Sierra")                
(the"Plan") pursuant to which CCBC will be merged with and into                 
Sierra, with Sierra as the surviving corporation (the "Merger");                
and                                                                             

WHEREAS, pursuant to Section 3.3(d) of the Plan Sierra agrees to                
indemnify the Directors and Officers of CCBC, as defined therein,               
, which indemnification continues for a period of four (4) years                
from the Effective Date of the Merger; and                                      

WHEREAS, in order to facilitate consummation of the Merger, the                 
undersigned desires to amend  the Agreement, conditioned upon                   
consummation of the Merger, to provide that the Agreement,                      
consistent with Section 3.3(d) of the Plan, shall expire four years             
from the Effective Date of the Merger.                                          

NOW THEREFORE, the undersigned hereby agrees that, subject to                   
consummation of the Merger, the Agreement consistent with Section               
3.3(d) of the Plan, shall expire four years from the Effective Date             
of the Merger.                                                                  

Other than specifically set forth herein, the Agreement               
remains in full force and effect and this amendment will have no                
effect if the Merger is not consummated                                         

IN WITNESS WHEREOF, the undersigned have executed this Amendment to             
Indemnification Agreement this 13 day of November, 1997.                        

CALIFORNIA COMMUNITY                                                            
BANCSHARES CORPORATION                                                          

____________________________                                                    
____________________________                                                    
by:                                                                             
Its:                                                                            

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EXHIBIT 23 - INDEPENDENT AUDITORS' CONSENT                                      

INDEPENDENT AUDITORS' CONSENT                                                   

We consent to the incorporation by reference in Registration Statement No.      
333-3166 of California Community Bancshares Corporation on Form S-8 of our      
report dated February 20, 1998 appearing in the Annual Report on Form 10-KSB of 
California Community Bancshares Corporation for the year December 31, 1997.     

/S/ DELOITTE & TOUCHE                                                           
----------------------                                                          

Sacramento, California                                                          
March 30, 1998                                                                  

Dates Referenced Herein   and   Documents Incorporated by Reference

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This ‘10KSB’ Filing		Date		First		Last			Other Filings
		12/31/07		4
		4/30/03		4		13
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		3/26/01		13
		12/31/99		4
		12/31/98		4
		10/31/98		4
Filed on:		4/23/98
		3/31/98		13
		3/30/98		24
		3/26/98		4
		3/24/98		1		4
		3/20/98		4
		3/17/98		15
		3/16/98		4
		3/12/98		4
		3/10/98		4
		3/3/98		4
		2/20/98		7		24
		2/17/98		13
		2/12/98		4
		2/6/98		4
		2/3/98		13
		1/29/98		4
		1/20/98		13
		1/15/98		4
		1/1/98		4
For Period End:		12/31/97		1		24
		12/15/97		4		13
		11/19/97		4		5			8-K
		11/13/97		4		23
		11/11/97		20		23
		10/15/97		4
		10/1/97		4
		9/30/97		4					10QSB
		8/5/97		4
		7/1/97		4
		6/30/97		4					10QSB,  4
		6/17/97		17		19
		6/1/97		4
		5/20/97		17		19
		3/26/97		4
		2/1/97		4
		12/31/96		4		14			10KSB,  5
		10/12/96		4					8-K
		10/8/96		5
		8/22/96		5
		7/15/96		5					8-K
		7/1/96		4
		5/24/96		5					8-K
		5/14/96		5					8-K
		4/1/96		4
		3/29/96		5
		3/14/96		4
		2/29/96		4		14
		2/22/96		5
		2/1/96		4
		1/1/96		4
		12/31/95		4		13
		12/20/95		4
		10/20/95		5
		10/5/95		4		13
		10/2/95		4
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		9/23/94		4
		8/12/94		4
		8/1/94		4		5
		1/1/94		4
		12/31/93		4
		11/8/93		4
		8/10/93		4
		8/1/93		4		19
		7/15/93		5
		5/13/93		4
		4/16/93		5
		4/4/93		5
		2/5/93		4		13
		1/15/93		5
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