8-K12G3

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(d) of the
                         SECURITIES EXCHANGE ACT OF 1934

                                  July 31, 2006

                               SAN JOAQUIN BANCORP
               (Exact Name of Registrant as Specified in Charter)


          CALIFORNIA                 _________              20-5002515
 (State or other jurisdiction       (Commission            (IRS Employer
       of incorporation)           File Number)         Identification No.)


                     1000 TRUXTUN AVENUE
                   BAKERSFIELD, CALIFORNIA                           93301
          (Address of principal executive offices)                 (Zip code)


     Registrant's telephone number, including area code:         (661) 281-0300

                                       N/A
          (Former Name or Former Address, If Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[_]    Written communications  pursuant to Rule 425 under the Securities Act (17
CFR 230.425)

[_]    Soliciting  material  pursuant to Rule 14a-12  under the Exchange Act (17
CFR 240.14a-12)

[_]    Pre-commencement  communications  pursuant  to Rule  14d-2(b)  under  the
Exchange Act (17 CFR 240.14d-2(b))

[_]    Pre-commencement  communications  pursuant  to Rule  13e-4(C)  under  the
Exchange Act (17 CFR 240.13e-4(c))




ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

See Item 8.01 below.

ITEM 8.01 OTHER EVENTS.

                COMPLETION OF BANK HOLDING COMPANY REORGANIZATION

On May 9, 2006, San Joaquin Bank, a California state chartered bank (the
"Bank"), announced its intention to reorganize into a bank holding company form.
San Joaquin Bancorp, a California corporation ("Bancorp") was incorporated on
May 6, 2006 in connection with the contemplated reorganization into bank holding
company form.

On May 9, 2006, the Bank, Bancorp and San Joaquin Reorganization Corp., a
California corporation and wholly- owned subsidiary of Bancorp ("Reorganization
Corp."), entered into an Agreement and Plan of Reorganization pursuant to which
Reorganization Corp. would be merged (the "Merger") with and into the Bank, with
the Bank being the surviving corporation. Upon consummation of the Merger, the
Bank would become a wholly-owned subsidiary of Bancorp and the shareholders of
the Bank would receive one share of Bancorp common stock in exchange for each
share of Bank common stock held by such shareholder.

At the Bank's Annual Meeting of Shareholders on June 20, 2006, the Merger was
approved by the affirmative vote of a majority of the outstanding shares of the
Bank's common stock. A copy of the Proxy Statement/Offering Circular as
distributed to the Bank's shareholders in connection with the Annual Meeting is
filed as Exhibit 99.6.

On July 31, 2006, an Agreement of Merger was filed with the Secretary of State
of the State of California and the Merger became effective as of the close of
business on July 31, 2006. As a result of the Merger, the Bank has become a
wholly-owned subsidiary of Bancorp and the one-for-one share exchange described
above has been completed. The securities issued in connection with the Merger
were issued in reliance upon an exemption from registration with the Securities
Exchange Commission (the "Commission") as provided by Section 3(a)(12) of the
Securities Act of 1933, as amended, and similar provisions under applicable
state law which provide exemptions from the securities registration or
qualification provisions. In addition, Bancorp assumed all outstanding stock
options of the Bank exercisable into shares of Bank common stock upon
consummation of the Merger. Such stock options continue to have, and be subject
to, the same terms and conditions of such stock options immediately prior to the
consummation of the Merger, except that such options are now exercisable into
Bancorp common stock.

The directors and officers of Bancorp following the Merger are the same
directors and officers of the Bank, except that Bruce Maclin is Chief Executive
Officer and Bart Hill is the President of Bancorp.

Attached as Exhibit 99.1 and incorporated herein by reference is a copy of the
press release dated August 1, 2006, with respect to the consummation of the
Merger.

Prior to the Merger, the Bank's common stock was registered under Section 12(g)
of the Securities Exchange Act of 1934 (the "Exchange Act"). The Bank was
subject to the information requirement of the Exchange Act and in accordance
with Section 12(i) thereof, filed annual and quarterly reports, proxy statements
and other information with the Federal Deposit Insurance Corporation ("FDIC").
As a result of the Merger, Bancorp is a successor issuer to the Bank as provided
in Rule 12g-3(a) under the Exchange Act and Bancorp's common stock is deemed
registered under Section 12(g) of the Exchange Act. Bancorp has become subject
to the information requirements of the Exchange Act and will file reports, proxy
statements and other information with the SEC. This Current Report on Form 8-K
is Bancorp's initial report to the Securities and Exchange Commission under the
Exchange Act.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.

See the Bank's Annual Report on Form 10-K for the fiscal year ended December 31,
2005, as amended by Amendment No.1 to Annual Report on Form 10-K for the fiscal

                                      2



year ended December 31, 2005, as filed with the FDIC and Quarterly Report on
Form 10-Q for the quarter ended March 31, 2006, filed with the FDIC pursuant to
Section 12(i) of the Exchange Act and filed herewith as Exhibits 99.2, 99.3 and
99.4, respectively.

(b) PRO FORMA FINANCIAL INFORMATION.

        Not applicable.

(c) EXHIBITS.

     3.1       Articles of Incorporation of San Joaquin Bancorp
     3.2       Bylaws of San Joaquin Bancorp
     4.1       Specimen Common Stock Certificate
     21.1      Subsidiaries of San Joaquin Bancorp
     99.1      Press Release dated August 1, 2006
     99.2      Annual Report on Form 10-K for the fiscal year ended December 31,
               2005 of San Joaquin Bank, as filed with the FDIC
     99.3      Amendment No. 1 to Annual Report on Form 10-K for the fiscal year
               ended December 31, 2005 of San Joaquin Bank, as filed with the
               FDIC
     99.4      Quarterly Report on Form 10-Q for the quarter ended March 31,
               2006 of San Joaquin Bank, as filed with the FDIC
     99.5      Current Report on Form 8-K dated August 1, 2006, as filed with
               the FDIC by San Joaquin Bank on August 2, 2006
     99.6      Proxy Statement/Offering Circular of San Joaquin Bank and San
               Joaquin Bancorp, dated May 15, 2006
     99.7      San Joaquin Bancorp Stock Option Plan
     99.8      San Joaquin Bancorp 1999 Stock Incentive Plan
     99.9      Form of Incentive Stock Option Agreement pursuant to 1999 Stock
               Incentive Plan of San Joaquin Bancorp
     99.10     Form of Non-Qualified Stock Option Agreement pursuant to 1999
               Stock Incentive Plan of San Joaquin Bancorp
     99.11     Amended and Restated Executive Salary Continuation Agreement
               dated June 18, 2004 between San Joaquin Bank and Bruce Maclin
     99.12     Amended and Restated Executive Salary Continuation Agreement
               dated June 18, 2004 between San Joaquin Bank and Bart Hill
     99.13     Amended and Restated Executive Salary Continuation Agreement
               dated June 13, 2003 between San Joaquin Bank and Stephen Annis
     99.14     Amended and Restated Executive Salary Continuation Agreement
               dated June 11, 2003 between San Joaquin Bank and John W. Ivy
     99.15     Change in Control Agreement dated January 28, 1999 between San
               Joaquin Bank and Bruce Maclin
     99.16     First Amendment to Change in Control Agreement dated June 7, 2001
               between San Joaquin Bank and Bruce Maclin
     99.17     Second Amendment to Change in Control Agreement dated April 30,
               2003 between San Joaquin Bank and Bruce Maclin
     99.18     Change in Control Agreement dated January 28, 1999 between San
               Joaquin Bank and Bart Hill
     99.19     First Amendment to Change in Control Agreement dated June 7, 2001
               between San Joaquin Bank and Bart Hill
     99.20     Second Amendment to Change in Control Agreement dated April 30,
               2003 between San Joaquin Bank and Bart Hill
     99.21     Change in Control Agreement dated June 7, 2001 between San
               Joaquin Bank and Stephen Annis
     99.22     First Amendment to Change in Control Agreement dated April 30,
               2003 between San Joaquin Bank and Stephen Annis
     99.23     Change in Control Agreement dated June 7, 2001 between San
               Joaquin Bank and John W. Ivy
     99.24     First Amendment to Change in Control Agreement dated April 30,
               2003 between San Joaquin Bank and John W. Ivy

                                       3


     99.25     Deferred Fee Agreement dated October 9, 1996 between San Joaquin
               Bank and Louis Barbich
     99.26     Addendum to Deferred Fee Agreement dated April 30, 2003 between
               San Joaquin Bank and Louis Barbich
     99.27     Agreement dated October 22, 2005 between San Joaquin Bank and
               Continental Stock Transfer and Trust Company regarding the
               appointment of Continental Stock Transfer and Trust Company as
               the Bank's transfer agent.
     99.28     Resolution of the Board of Directors of San Joaquin Bank
               increasing the applicable limit on annual benefits payable to
               Bruce Maclin and Bart Hill pursuant to their Amended and Restated
               Executive Salary Continuation Agreements dated June 18, 2004
     99.29     Statement relating to the payment of club dues for Executive
               Officers of San Joaquin Bank

                                       4




                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

Date:    August 3, 2006                         SAN JOAQUIN BANCORP


                                                By:      /s/ BART HILL
                                                         -------------
                                                Name     Bart Hill
                                                Title:   President

                                       5



                                  EXHIBIT INDEX

EXHIBIT NO.    DESCRIPTION
- -----------    -----------------------------------------

3.1            Articles of Incorporation of San Joaquin Bancorp

3.2            Bylaws of San Joaquin Bancorp

4.1            Specimen Common Stock Certificate

21.1           Subsidiaries of San Joaquin Bancorp

99.1           Press Release dated August 1, 2006

99.2           Annual Report on Form 10-K for the fiscal year ended December 31,
               2005 of San Joaquin Bank, as filed with the FDIC

99.3           Amendment No. 1 to Annual Report on Form 10-K for the fiscal year
               ended December 31, 2005 of San Joaquin Bank, as filed with the
               FDIC

99.4           Quarterly Report on Form 10-Q for the quarter ended March 31,
               2006 of San Joaquin Bank, as filed with the FDIC

99.5           Current Report on Form 8-K dated August 1, 2006, as filed with
               the FDIC by San Joaquin Bank on August 2, 2006

99.6           Proxy Statement/Offering Circular of San Joaquin Bank and San
               Joaquin Bancorp, dated May 15, 2006

99.7           San Joaquin Bancorp Stock Option Plan

99.8           San Joaquin Bancorp 1999 Stock Incentive Plan

99.9           Form of Incentive Stock Option Agreement pursuant to 1999 Stock
               Incentive Plan of San Joaquin Bancorp

99.10          Form of Non-Qualified Stock Option Agreement pursuant to 1999
               Stock Incentive Plan of San Joaquin Bancorp

99.11          Amended and Restated Executive Salary Continuation Agreement
               dated June 18, 2004 between San Joaquin Bank and Bruce Maclin

99.12          Amended and Restated Executive Salary Continuation Agreement
               dated June 18, 2004 between San Joaquin Bank and Bart Hill

99.13          Amended and Restated Executive Salary Continuation Agreement
               dated June 13, 2003 between San Joaquin Bank and Stephen Annis

99.14          Amended and Restated Executive Salary Continuation Agreement
               dated June 11, 2003 between San Joaquin Bank and John W. Ivy

99.15          Change in Control Agreement dated January 28, 1999 between San
               Joaquin Bank and Bruce Maclin

99.16          First Amendment to Change in Control Agreement dated June 7, 2001
               between San Joaquin Bank and Bruce Maclin

99.17          Second Amendment to Change in Control Agreement dated April 30,
               2003 between San Joaquin Bank and Bruce Maclin

99.18          Change in Control Agreement dated January 28, 1999 between San
               Joaquin Bank and Bart Hill

99.19          First Amendment to Change in Control Agreement dated June 7, 2001
               between San Joaquin Bank and Bart Hill

99.20          Second Amendment to Change in Control Agreement dated April 30,
               2003 between San Joaquin Bank and Bart Hill

99.21          Change in Control Agreement dated June 7, 2001 between San
               Joaquin Bank and Stephen Annis

99.22          First Amendment to Change in Control Agreement dated April 30,
               2003 between San Joaquin Bank and Stephen Annis

99.23          Change in Control Agreement dated June 7, 2001 between San
               Joaquin Bank and John W. Ivy

99.24          First Amendment to Change in Control Agreement dated April 30,
               2003 between San Joaquin Bank and John W. Ivy

99.25          Deferred Fee Agreement dated October 9, 1996 between San Joaquin
               Bank and Louis Barbich

99.26          Addendum to Deferred Fee Agreement dated April 30, 2003 between
               San Joaquin Bank and Louis Barbich

99.27          Agreement dated October 22, 2005 between San Joaquin Bank and
               Continental Stock Transfer and Trust Company regarding the
               appointment of Continental Stock Transfer and Trust Company as
               the Bank's transfer agent.

99.28          Resolution of the Board of Directors of San Joaquin Bank
               increasing the applicable limit on annual benefits payable to
               Bruce Maclin and Bart Hill pursuant to their Amended and Restated
               Executive Salary Continuation Agreements dated June 18, 2004

99.29          Statement relating to the payment of club dues for Executive
               Officers of San Joaquin Bank

                                        6

EX-3.(I)

                                                                     Exhibit 3.1

                            ARTICLES OF INCORPORATION
                                       OF
                               SAN JOAQUIN BANCORP

ARTICLE ONE:   NAME
               ----

               The name of this corporation is:

               SAN JOAQUIN BANCORP


ARTICLE TWO:   PURPOSES
               --------

               The purpose of this corporation is to engage in any lawful act or
        activity for which a corporation may be organized under the General
        Corporation Law of California other than the banking business, the trust
        company business, or the practice of a profession permitted to be
        incorporated by the California Corporations Code.


ARTICLE THREE: AGENT FOR SERVICE OF PROCESS
               ----------------------------

               The name and complete business address in the State of California
        of the corporation's initial agent for service of process is:

               Stephen M. Annis
               4600 California Avenue
               Bakersfield, CA  93309


ARTICLE FOUR:  CAPITALIZATION
               --------------

               This corporation is authorized to issue two classes of shares
        designated "Common Stock," and "Preferred Stock," respectively. The
        number of shares of Common Stock authorized to be issued is 20,000,000,
        and the number of shares of Preferred Stock authorized to be issued is
        5,000,000. The Preferred Stock may be issued from time to time in one or
        more series. The Board of Directors is authorized to fix the number of
        shares of any series of Preferred Stock and to determine the designation
        of any such series. The Board of Directors is also authorized to
        determine or alter the rights, preferences, privileges and restrictions
        granted to or imposed upon any wholly unissued series of Preferred
        Stock, and, within the limits and restrictions stated in any resolution
        or resolutions of the Board of Directors originally fixing the number of
        shares constituting any series, to increase or decrease (but not below
        the number of shares of such series then outstanding) the number of
        shares of any such series subsequent to the issue of shares of that
        series.



ARTICLE FIVE:  LIMITATION ON LIABILITY OF DIRECTORS AND
               ----------------------------------------
               INDEMNIFICATION OF AGENTS
               -------------------------

               The liability of the directors of this corporation for monetary
        damages shall be eliminated to the fullest extent permissible under
        California law. The corporation is authorized to provide indemnification
        of agents (as defined in Section 317 of the Corporations Code) through
        bylaw provisions, agreements with agents, vote of shareholders or
        disinterested directors, or otherwise, in excess of the indemnification
        otherwise permitted by Section 317 of the Corporations Code and to the
        fullest extent permissible under California law, subject to the limits
        on such excess indemnification set forth in Section 204 of the
        Corporations Code. This corporation is authorized to purchase and
        maintain insurance on behalf of its agents against any liability
        asserted against or incurred by the agent in such capacity or arising
        out of the agent's status as such. Any amendment, repeal or modification
        of any provision of this Article Five shall not adversely affect any
        right or protection of an agent of the corporation existing at the time
        of such amendment, repeal or modification. If after the effective date
        of this Article Five, California law is amended in a manner which
        permits a corporation to indemnify its agents or limit the monetary or
        other liability of its directors to a greater extent than is permitted
        on such effective date, the reference in this Article to "California
        law" shall to that extent be deemed to refer to California law as so
        amended.


ARTICLE SIX:   ACTION WITHOUT MEETING
               ----------------------

               Any action required to be taken at any annual or special meeting
        of shareholders of this corporation, or any action which may be taken at
        any annual or special meeting of shareholders, may be taken without a
        meeting and without prior notice, if a consent in writing, setting forth
        the action so taken, shall be signed by the holders of outstanding stock
        having not less than the minimum number of votes that would be necessary
        to authorize or take such action at a meeting at which all shares
        entitled to vote thereon were present and voted; provided that the board
        of directors of this corporation, by resolution, shall have previously
        approved such action.

ARTICLE SEVEN: CUMULATIVE VOTING
               -----------------

               No holder of any class of stock of the corporation shall be
        entitled to cumulative votes in connection with any election of
        directors of the corporation. This provision shall become effective only
        when the corporation becomes a listed corporation within the meaning of
        Section 301.5 of the Corporations Code.

        Dated: April 25, 2006


                                             /s/ Bruce Maclin
                                        ---------------------------------
                                        Bruce Maclin, Incorporator

EX-3.(II)

                                                                   Exhibit 3.2

                                    BYLAWS OF

                               SAN JOAQUIN BANCORP






                                    ARTICLE I

                                CORPORATE OFFICES
                                -----------------

      1.1   Principal Office.
            ----------------

      The Board of Directors shall fix the location of the principal executive
office of this Corporation at any place which is within Kern County, State of
California.

      1.2   Other Offices.
            -------------

      The Board of Directors may at any time establish branch offices at any
place or places where the Corporation is qualified to do business.



                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS
                            ------------------------

      2.1   Place of Meetings.
            -----------------

      Meetings of shareholders shall be held at any place within or outside Kern
County, but within the State of California, designated by the Board of
Directors. In the absence of any such designation, shareholders' meetings shall
be held at the principal executive office of this Corporation.

      2.2   Annual Meetings.
            ---------------

      The annual meeting of the shareholders shall be held each year on a date
and at a time designated by the Board of Directors. The date designated shall be
within five (5) months after the end of this Corporation's fiscal year and
within fifteen (15) months after the last annual meeting.

      2.3   Special Meetings.
            ----------------

      A special meeting of the shareholders may be called at any time by the
Board of Directors, or by the Chairman of the Board, or by the President, or by
one or more shareholders holding shares in the aggregate entitled to cast no
less than 10% of the votes at the meeting. If a special meeting is called by any
person or persons other than the Board of Directors, the request shall be in
writing, specifying the time of the meeting and the general nature of the



business proposed to be transacted. The request shall be delivered personally or
sent by registered mail or by telegraphic or other facsimile transmission to one
or more of the Chairman of the Board, the President or the Secretary of this
Corporation. The officer receiving the request shall cause notice to be given
promptly to the shareholders entitled to vote, in accordance with the provisions
of sections 2.4 and 2.5 of these Bylaws, that a meeting will be held at the time
requested by the person or persons calling the meeting not less than 30 nor more
than 60 days after the receipt of the request. If the notice is not given within
20 days after receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this section shall be
construed as limiting, fixing or affecting the time when a meeting of
shareholders called by action of the Board of Directors may be held.

      2.4   Notice of Shareholders' Meetings.
            --------------------------------

      All notices of meetings of shareholders shall be sent or otherwise given
in accordance with section 2.5 of these Bylaws not less than 10 nor more than 60
days before the date and hour of the meeting. The notice shall specify the
place, date and time of the meeting and (i) in the case of a special meeting,
the general nature of the business to be transacted, or (ii) in the case of the
annual meeting, those matters which the Board of Directors, at the time of
giving the notice, intends to present for action by the shareholders. The notice
of any meeting at which directors are to be elected shall include the name of
any nominee or nominees whom, at the time of the notice, management intends to
present for election. If action is proposed to be taken at any meeting for
approval of (i) a contract or transaction in which a director has direct or
indirect financial interest, pursuant to section 310 of the California
Corporations Code (the "Code"), (ii) an amendment of the Articles of
Incorporation of this Corporation, pursuant to section 902 of the Code, (iii) a
reorganization of this Corporation, pursuant to section 1201 of the Code, (iv) a
voluntary dissolution of this Corporation, pursuant to section 1900 of the Code,
or (v) a distribution in dissolution other than in accordance with the rights of
outstanding preferred shares, pursuant to section 2007 of the Code, the notice
shall also state the general nature of that proposal.

      2.5   Manner of Giving Notice
            -----------------------

      Notice of any meeting of shareholders shall be given either personally or
by first-class mail or telegraphic or other written or electronic communication,
charges prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of this Corporation or given by the shareholder to the
Corporation for the purpose of notice. If no such address appears on the
Corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by first-class mail or telegraphic or other written
communication to the Corporation's principal executive office, or if published
at least once in a newspaper of general circulation in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written or electronic communication. If any notice addressed to a shareholder
at the address of that shareholder appearing on the books of this Corporation is
returned to the Corporation by the United States Postal Service marked to
indicate that the United States Postal Service is unable to deliver the notice
to the shareholder at that address, all future notices or reports shall be
deemed to have been duly given without further mailing if these shall be
available to the shareholder on written demand of the shareholder at the
principal executive office of this Corporation for a period of one year from the
date of the giving of the notice or report.


                                      -2-


      2.6   Affidavit of Notice.
            -------------------

      An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting shall be executed by the Secretary, assistant secretary,
or any transfer agent of this Corporation giving the notice, and shall be filed
and maintained in the records of this Corporation.

      2.7   Agendas for Annual Meetings of Shareholders.
            -------------------------------------------

      At any annual meeting of shareholders only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be (i) specified in the notice
of meeting (or any supplement thereto) given by, or at the direction of, the
Board of Directors, (ii) otherwise properly brought before the meeting by, or at
the direction of, the chairman of the meeting, or (iii) otherwise properly
brought before the meeting by a shareholder entitled to vote at such meeting.
For business to be properly brought before a meeting by a shareholder, the
shareholder must have given timely notice thereof in writing to the Secretary of
the Corporation and must have been a shareholder of record at the time such
notice is given. To be timely, a shareholder's notice shall be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 60 days nor more than 90 days prior to the first anniversary date of
the preceding year's annual meeting; provided, however, that in the event that
the date of the annual meeting is advanced by more than 20 days, or delayed by
more than 60 days, from such anniversary date, notice by the shareholder to be
timely must be so delivered or mailed and received not earlier than 90 days
prior to such annual meeting and not later than the close of business on the
later of the 60 days prior to such annual meeting or the 10th day following the
day on which public announcement of the date of such meeting is first made. Such
shareholder's notice to the Secretary shall set forth (i) as to each matter the
shareholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, and (ii) as to the shareholder giving the notice
(a) the name and record address of the shareholder, (b) the class and the number
of shares of capital stock of the Corporation which are beneficially owned by
the shareholder and (c) any material interest of the shareholder in such
business. No business shall be conducted at an annual meeting of shareholders
unless proposed in accordance with the procedures set forth herein. The chairman
of the meeting shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting in accordance with the
foregoing procedure and such business shall not be transacted. To the extent
this section 2.7 shall be deemed by the Board of Directors or the United States
Securities and Exchange Commission or any applicable bank regulatory authority,
or finally adjudged by a court of competent jurisdiction, to be inconsistent
with the right of shareholders to request inclusion of a proposal in the
Corporation's proxy statement pursuant to Rule 14a-8 promulgated under the
Securities Exchange Act of 1934, as amended, such rule shall prevail.

      2.8   Quorum.
            ------

                                      -3-

      The presence in person or by proxy of the holders of a majority of the
shares entitled to vote at any meeting of shareholders shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum, if any action taken, other than adjournment, is approved by at
least a majority of the shares required to constitute a quorum.

      2.9   Adjourned Meeting.
            -----------------

      Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
shares represented at that meeting, either in person or by proxy, but in the
absence of a quorum, no other business may be transacted at that meeting, except
as provided in section 2.8 of these Bylaws. When any meeting of shareholders,
either annual or special, is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place are announced at a
meeting at which the adjournment is taken, unless a new record date for the
adjourned meeting is fixed, or unless the adjournment is for more than 45 days
from the date set for the original meeting, in which case the Board of Directors
shall set a new record date. Notice of any such adjourned meeting shall be given
to each shareholder of record entitled to vote at the adjourned meeting in
accordance with the provisions of sections 2.4 and 2.5 of these Bylaws. At any
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting.

      2.10  Voting Generally.
            ----------------

      The shareholders entitled to vote at any meeting shall be determined in
accordance with the provisions of section 2.15 of these Bylaws subject to the
provisions of sections 702 to 704, inclusive, of the Code, which relate to
voting shares held by a fiduciary, in the name of a corporation, or in joint
ownership or subject to a voting trust. In the discretion of the chairman of the
meeting, the shareholders vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder of record before the voting has begun. On any matter other than
elections of directors, any shareholder may vote part of the shares in favor of
the proposal and refrain from voting the remaining shares or vote them against
the proposal, but, if the shareholder fails to specify the number of shares
which the shareholder is voting affirmatively, it will be conclusively presumed
that the shareholder's approving vote is with respect to all shares that the
shareholder is entitled to vote. If a quorum is present, the affirmative vote of
the majority of the shares represented at the meeting and entitled to vote on
any manner, other than the election of directors, shall be the act of the
shareholders, unless the vote of a greater number or voting by classes is
required by Code or by the Articles of Incorporation.

      2.11  Cumulative Voting for Directors.
            -------------------------------

      Subject to the Articles of Incorporation, at a shareholders' meeting at
which directors are to be elected, no shareholder shall be entitled to cumulate
votes, that is, to cast for any one or more candidates a number of votes greater
than the number of the shareholder's shares, unless the candidates' names have
been placed in nomination prior to commencement of the voting and a shareholder

                                      -4-


has given notice prior to commencement of the voting of the shareholder's
intention to cumulate votes. If any shareholder has given such a notice, then
every shareholder entitled to vote may cumulate votes for candidates in
nomination and give one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of votes to which that
shareholder's shares are entitled, or distribute the shareholder's votes on the
same principle among all of the candidates, as the shareholder thinks fit. The
candidates receiving the highest number of votes, up to the number of directors
to be elected, shall be elected.

      2.12  Waiver of Notice or Consent by Absent Shareholders.
            --------------------------------------------------

      The transactions of any meeting of shareholders, either annual or special,
however called and noticed, and wherever held, shall be as valid as though had
at a meeting duly held after regular call and notice, if a quorum be present
either in person or by proxy, and if, either before or after the meeting, each
person entitled to vote, who was not present in person or by proxy, signs a
written waiver of notice or a consent to a holding of the meeting, or an
approval of the minutes. The waiver of notice or consent need not specify either
the business to be transacted or the purpose of any annual or special meeting of
shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the last sentence of section 2.4
of these Bylaws, the waiver or consent shall state the general nature of the
proposal. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting. Attendance by a
person at a meeting shall also constitute a waiver of notice of that meeting,
except when the person objects, at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened, and except that attendance at a meeting is not a waiver of any right
to object to the consideration of matters not included in the notice of the
meeting if that objection is expressly made at the meeting.

      2.13  Shareholder Action by Written Consent without a Meeting.
            -------------------------------------------------------

      Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take that action at a meeting at which all
shares entitled to vote on that action were present and voted, provided that the
Board of Directors of this Corporation, by resolution, shall have previously
approved any such action. In the case of election of directors, a consent
otherwise conforming to the requirements of the preceding sentence shall be
effective only if signed by the holders of all outstanding shares entitled to
vote for the election of directors; provided, however, that a director may be
elected at any time to fill a vacancy on the Board of Directors that has not
been filled by the directors and that was not created by the removal of a
director by the written consent of the holders of a majority of the outstanding
shares entitled to vote for the election of directors. All such consents shall
be filed with the Secretary of this Corporation and shall be maintained in the
corporate records. Any shareholder giving a written consent, or the
shareholder's proxy holders, or a transferee of the shares or a personal
representative of the shareholder or their respective proxy holders, may revoke
the consent by a writing received by the Secretary of this Corporation before
written consents of the number of shares required to authorize the proposed
action have been filed with the Secretary.

      2.14  Notice of Action Taken by Written Consent Without a Meeting.
            ------------------------------------------------------------

                                      -5-


      If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the Secretary of this Corporation
shall give prompt notice of the corporate action approved by the shareholders
without a meeting. This notice shall be given in the manner specified in section
2.5 of these Bylaws. In the case of approval of (i) contracts or transactions in
which a director has a direct or indirect financial interest, pursuant to
section 310 of the Code, (ii) indemnification of agents of this Corporation,
pursuant to section 317 of the Code, (iii) a reorganization of this Corporation,
pursuant to section 1201 of the Code, and (iv) a distribution in dissolution
other than in accordance with the rights of outstanding preferred shares,
pursuant to section 2007 of the Code, the notice shall be given at least 10 days
before the consummation of any action authorized by that approval.

      2.15  Record Dates for Shareholder Notice, Voting, and Giving Consents.
            -----------------------------------------------------------------

      For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give consent to corporate action without a
meeting, the Board of Directors may fix, in advance, a record date, which shall
be not more than 60 days, nor less than 10 days, before the date of any such
meeting nor more than 60 days before any such action without a meeting, and in
this event only shareholders of record on the date so fixed are entitled to
notice and to vote or to give consents, as the case may be, notwithstanding any
transfer of any shares on the books of this Corporation after the record date,
except as otherwise provided in the Articles of Incorporation or in the Code. If
the Board of Directors does not fix a record date:

            (a) The record date for determining shareholders entitled to notice
                of or to vote at a meeting of shareholders shall be at the close
                of business on the business day next preceding the day on which
                notice is given, or, if notice is waived, at the close of
                business on the business day preceding the day on which the
                meeting is held.

            (b) The record date for determining shareholders entitled to give
                consent to corporate action in writing without a meeting, (i)
                when no prior action by the Board of Directors has been taken,
                shall be the day on which the first written consent is given, or
                (ii) whey prior action of the Board of Directors has been taken,
                shall be at the close of business on the day on which the Board
                of Directors adopts the resolution relating to that action, or
                the 60th day before the date of such other action, whichever is
                later.

      2.16  Proxies.
            -------

      Every person entitled to vote for directors or on any other matter shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the Secretary of this
Corporation. A proxy shall be deemed signed if the shareholder's name is placed
on the proxy, whether by manual signature, typewriting, telegraphic
transmission, or otherwise, by the shareholder or the shareholder's attorney in
fact. A validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) revoked by the person executing it,
before the vote pursuant to that proxy, by a writing delivered to the
Corporation stating that the proxy is revoked, or by a subsequent proxy executed
by, or attendance at the meeting and voting in person by, the person executing

                                      -6-


the proxy; or (ii) written notice of the death or incapacity of the maker of
that proxy is received by the Corporation before the vote pursuant to that proxy
is counted; provided, however that no proxy shall be valid after the expiration
of 11 months from the date of the proxy, unless otherwise provided in the proxy.
The revocability of a proxy that states on its face that it is irrevocable shall
be governed by the provisions of sections 705(e) and 705(f) of the Code.

      2.17  Inspectors of Election.
            ----------------------

      Before any meeting of shareholders, the Board of Directors may appoint
inspectors of election to act at the meeting or any adjournment. If no
inspectors of election are so appointed, the chairman of the meeting may, and on
the request of any shareholder or a shareholder's proxy shall, appoint
inspectors of election at the meeting. The number of inspectors shall be either
one or three. If inspectors are appointed at a meeting on the request of one or
more shareholders or proxies, the holders of a majority of shares or their
proxies present at the meeting shall determine whether one or three inspectors
are to be appointed. If any person appointed as inspector fails to appear or
fails or refuses to act, the chairman of the meeting may, and upon the request
of any shareholder or a shareholder's proxy shall, appoint a person to fill that
vacancy. These inspectors shall:

            (a) Determine the number of shares of outstanding and the voting
                power of each, the shares represented at the meeting, the
                existence of a quorum, and the authenticity, validity, and
                effect of proxies;

            (b) Receive votes, ballots, or consents;

            (c) Hear and determine all challenges and questions in any way
                arising in connection with the right to vote;

            (d) Count and tabulate all votes or consents;

            (e) Determine the result; and

            (f) Do any other acts that may be proper to conduct the election or
                vote with fairness to all shareholders.

      2.18  Conduct of Meetings.
            -------------------

      The date and time of the opening and the closing of the polls for each
matter upon which the shareholders will vote at a meeting shall be announced at
the meeting by the person presiding over the meeting. The Board of Directors may
adopt by resolution such rules and regulations for the conduct of the meeting of
shareholders as it shall deem appropriate. Except to the extent inconsistent
with such rules and regulations as adopted by the Board of Directors, the
chairman of any meeting of shareholders shall have the right and authority to
prescribe such rules, regulations and procedures and to do all such acts as, in
the judgment of such chairman, are appropriate for the proper conduct of the
meeting. Such rules, regulations or procedures, whether adopted by the Board of
Directors or prescribed by the chairman of the meeting, may include, without
limitation, the following: (i) the establishment of an agenda or order of
business for the meeting, (ii) rules and procedures for maintaining order at the
meeting and the safety of those present, (iii) limitations on attendance at or
participation in the meeting to shareholders of record of the Corporation, their

                                      -7-


duly authorized and constituted proxies or such other persons as the chairman of
the meeting shall determine, (iv) restrictions on entry to the meeting after the
time fixed for the commencement thereof, and (v) limitations on the time
allotted to questions or comments by participants. Unless and to the extent
determined by the Board of Directors or the chairman of the meeting, meetings of
shareholders shall not be required to be held in accordance with the rules of
parliamentary procedure.

                                   ARTICLE III

                                    DIRECTORS
                                    ---------

      3.1   Powers.
            ------

      Subject to the provisions of the Code and any limitations in the Articles
of Incorporation and these Bylaws relating to action required to be approved by
the shareholders or by the outstanding shares, the business and affairs of this
Corporation shall be managed and all corporate powers shall be exercised by or
under the direction of the directors.

      3.2   Number and Qualification of Directors.
            -------------------------------------

      If the corporation has only one (1) shareholder, the authorized number of
directors shall be one (1); provided, however, that upon the election or
appointment of additional directors in a manner authorized under the Code, the
number of directors of this Corporation shall not be less than seven (7) nor
more than thirteen (13). The exact number of directors shall be fixed from time
to time, within the limits specified in this section 3.2 of these Bylaws, (i) by
a resolution duly adopted by the Board of Directors; or (ii) by a bylaw or
amendment thereof duly adopted by the vote of a majority of the shares entitled
to vote represented at a duly held meeting at which a quorum is present, or by
the written consent of the holders of a majority of the outstanding shares
entitled to vote; or (iii) by approval of the shareholders (as defined in
section 153 of the Code). The indefinite number of directors may be changed by a
duly adopted amendment to the Articles of Incorporation and this bylaw adopted
by the vote of a majority of the shares entitled to vote represented at a duly
held meeting at which a quorum is present, or by the written consent of the
holders of a majority of the outstanding shares entitled to vote, provided that
no amendment may change the stated maximum number of authorized directors to a
number greater than two times the stated minimum number of directors minus one.
Subject to the foregoing provisions for changing the number of directors, the
exact number of directors of this Corporation has been fixed at 10. Each
director of this Corporation must hold in his or her individual name at least
200 shares of the common stock of this Corporation within one year following the
date of election. No person shall be a member of the Board of Directors (a) who
has not been a resident for a period of at least two years immediately prior to
his or her election of a county in which any subsidiary of this Corporation
maintains an office unless the election of such person shall be approved by the
affirmative vote of at least two-thirds (2/3's) of the members of the Board of
Directors of this Corporation then in office, or (b) who owns, together with his
or her family residing with him or her, directly or indirectly, more than one
percent of the outstanding shares of any banking corporation, affiliate or
subsidiary thereof, bank holding company, industrial loan company, savings bank
or association or finance company, other than this Corporation or any affiliate
or subsidiary of this Corporation, or (c) who is a director, officer, employee,

                                      -8-


agent, nominee, or attorney of any banking corporation, affiliate, or subsidiary
thereof, bank holding company, industrial loan company, savings bank or
association or finance company, other than this Corporation or any affiliate or
subsidiary of this Corporation, or (d) who has or is the nominee of anyone who
has any contract, arrangement or understanding with any banking corporation, or
affiliate or subsidiary thereof, bank holding company, industrial loan company,
savings bank or association or finance company, other than this Corporation or
any affiliate or subsidiary of this Corporation, or with any officer, director,
employee, agent, nominee, attorney or other representative of such covered
entity, that he or she will reveal or in any way utilize information obtained as
a director of this Corporation or that he or she will, directly or indirectly,
attempt to effect or encourage any action of this Corporation.

      3.3   Nomination of Directors.
            -----------------------

      Nominations for election to the Board of Directors may be made by the
Board of Directors or by any shareholder of any outstanding class of capital
stock of the Corporation entitled to vote for the election of directors.
Nominations, other than those made by the Board of Directors shall be made in
writing and shall be delivered or mailed to the President of the Corporation not
less than 30 days nor more than 60 days prior to any meeting of shareholders
called for the election of directors, provided, however, that if less than 21
days' notice of the meeting is given to shareholders, such nomination shall be
mailed or delivered to the President of the Corporation not later than the close
of business on the seventh day following the day on which the notice of meeting
was mailed. Such notification shall contain the following information as to each
proposed nominee and as to each person, acting alone or in conjunction with one
or more other persons, in making such nomination or in organizing, directing or
financing such nomination or solicitation of proxies to vote for the nominee:
(a) the name, age, residence address and business address of each proposed
nominee and each such person and the date as of which such nominee commenced
residency at such residence address; (b) the principal occupation or employment,
the name, type of business and address of the organization or other entity in
which such employment is carried on of each proposed nominee and of each such
person; (c) if the proposed nominee is an attorney, a statement as to whether or
not either he or she or any firm with whom he or she has a relationship as
partner, associate, of counsel, employee, or otherwise, acts as legal counsel
for any banking corporation, affiliate or subsidiary thereof, bank holding
company, industrial loan company, savings bank or association or finance
company, other than this Corporation or any affiliate or subsidiary of this
Corporation; (d) a statement as to each proposed nominee and a statement as to
each such person stating whether the nominee or person concerned has been a
participant in any proxy contest within the past ten years, and, if so, the
statement shall indicate the principals involved, the subject matter of the
contest, the outcome thereof, and the relationship of the nominee or person to
the principals; (e) the amount of stock of the Corporation owned beneficially,
directly or indirectly, by each proposed nominee or by members of his or her
family residing with him or her and the names of the registered owners thereof;
(f) the amount of stock of the Corporation owned of record but not beneficially
by each proposed nominee or by members of his or her family residing with him or
her and by each such person or by members of his or her family residing with him
or her and the names of the beneficial owners thereof; (g) if any shares
specified in (e) or (f) above were acquired in the last two years, a statement


                                      -9-


of the dates of acquisition and amounts acquired on each date; (h) a statement
showing the extent of any borrowings to purchase shares of the Corporation
specified in (e) or (f) above acquired within the preceding two years, and if
funds were borrowed otherwise than pursuant to a margin account or bank loan in
the regular course of business of a bank, the material provisions of such
borrowings and the names of the lenders; (i) the details of any contract,
arrangement or understanding relating to the securities of the Corporation, to
which each proposed nominee or to which each such person is a party, such as
joint venture or option arrangements, puts or calls, guaranties against loss, or
guaranties of profit or arrangements as to the division of losses or profits or
with respect to the giving or withholding of proxies, and the name or names of
the persons with whom such contracts, arrangements or understandings exist; (j)
the details of any contract, arrangement, or understanding to which each
proposed nominee or to which such person is a party with any banking
corporation, affiliate or subsidiary thereof, bank holding company, industrial
loan company, savings bank or association or finance company, other than this
Corporation or any affiliate or subsidiary of this Corporation, or with any
officer, director, employee, agent, nominee, attorney, or other representative
of such covered entity; (k) a description of any arrangement or understanding of
each proposed nominee and of each such person with any person regarding future
employment or with respect to any future transaction to which the Corporation
will or may be a party; (l) a statement as to each proposed nominee and a
statement as to each such person as to whether or not the nominee or person
concerned will bear any part of the expense incurred in any proxy solicitation,
and, if so, the amount thereof; (m) a statement as to each proposed nominee and
a statement as to each such person describing any conviction for a felony that
occurred during the preceding ten years involving the unlawful possession,
conversion or appropriation of money or other property, or the payment of taxes;
(n) the total number of shares that will be voted for each proposed nominee; (o)
the amount of stock, if any, owned, directly or indirectly, by each proposed
nominee or by members of his or her family residing with him or her, in any
banking corporation, affiliate or subsidiary thereof, bank holding company,
industrial loan company, savings bank or association or finance company, other
than this Corporation or any affiliate or subsidiary of this Corporation; and
(p) the identity of any banking corporation, affiliate or subsidiary thereof, or
bank holding company or industrial loan company, savings bank or association or
finance company, other than this Corporation or any affiliate or subsidiary of
this Corporation, as to which such nominee or any other such person serves as a
director, officer, employee, agent, consultant, advisor, nominee or attorney,
together with a description of such relationship.

      3.4   Election and Term of Office of Directors.
            ----------------------------------------

      The chairman of the meeting may, in his or her discretion, determine
and declare to the meeting that a nomination not made in accordance with the
foregoing procedure shall be disregarded.  The Directors shall be elected at
each annual meeting of the shareholders to hold office until the next annual
meeting and until a successor has been elected and qualified.

      3.5   Vacancies.
            ---------

      Vacancies in the Board of Directors may be filled by a majority of the
remaining directors, though less than a quorum, or by a sole remaining director,
except that a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the

                                      -10-


vote of a majority of the shares entitled to vote represented at a meeting at
which a quorum is present, or by the written consent of holders of all of the
outstanding shares entitled to vote. Each director so elected shall hold office
until the next annual meeting of the shareholders and until a successor has been
elected and qualified. A vacancy or vacancies in the Board of Directors shall be
deemed to exist in the event of a director's death, resignation, or removal, or
if the Board of Directors by resolution declares vacant the office of a director
who has been declared of unsound mind by an order of court or convicted of a
felony, or if the authorized number of directors is increased, or if the
shareholders fail, at any meeting of shareholders at which any director or
directors are elected, to elect the number of directors to be voted for at that
meeting. The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors, but any such election by
written consent and not involving a vacancy created by removal shall require the
consent of a majority of the outstanding shares entitled to vote.

      3.6   Resignation.
            -----------

      Any director may resign effective on giving written notice to the Chairman
of the Board, the President, the Secretary, or the Board of Directors, unless
the notice specifies a later time for that resignation to become effective. If
the resignation of a director is effective at a future time, the Board of
Directors may elect a successor to take office when the resignation becomes
effective. No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.

      3.7   Place of Meetings and Meetings by Telephone.
            -------------------------------------------

      Regular meetings of the Board of Directors may be held at any place within
the State of California that has been designated from time to time by resolution
of the Board of Directors. In the absence of such a designation, regular
meetings shall be held at the principal executive office of this Corporation.
Special meetings of the Board of Directors shall be held at any place within the
State of California that has been designated in the notice of the meeting or, if
not stated in the notice or there is no notice, at the principal executive
office of this Corporation. Any meeting, regular or special, may be held by
conference telephone or similar communication equipment, so long as all
directors participating in the meeting can hear one another, and all such
directors shall be deemed to be present in person at the meeting.

      3.8   Annual Meetings.
            ---------------

      Within 30 days after each annual meeting of shareholders, the Board of
Directors shall hold a regular meeting for the purpose of organization and the
transaction of other business. Notice of this meeting shall not be required.

      3.9   Other Regular Meetings.
            ----------------------

      Other regular meetings of the Board of Directors shall be held without
call at such time as shall from time to time be fixed by the Board of Directors.
Such regular meetings may be held without notice.

      3.10  Special Meetings.
            ----------------


                                      -11-


      Special meetings of the Board of Directors for any purpose may be called
at any time by the Chairman of the Board or the President or the Secretary.

      3.11  Notice of Special Meetings.
            --------------------------

      Notice of the time and place of special meetings shall be delivered
personally or by telephone (including a voice messaging system or other system
or technology designed to record and communicate messages), electronic mail or
other electronic means to each director or sent by first-class mail or telegram,
charges prepaid, addressed to each director at that director's address as it is
shown on the records of this Corporation. In case the notice is mailed, it shall
be deposited in the United States mail at least four days before the time of the
holding of the meeting. In case the notice is delivered personally or by
telephone or telegram, it shall be delivered personally or by telephone
(including voice messaging or other system or technology), electronic mail or
other electronic means or to the telegraph company at least 24 hours before the
time of the holding of the meeting. Any oral notice given personally or by
telephone (including voice messaging or other system or technology), electronic
mail or other electronic means may be communicated either to the director or to
a person at the office of the director who the person giving the notice has
reason to believe will promptly communicate it to the director. The notice need
not specify the purpose of the meeting nor the place if the meeting is to be
held, at the principal executive office of this Corporation.

      3.12  Quorum.
            ------

      A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in section 3.14
of these Bylaws. Every act or decision done or made by a majority of the
directors present at a meeting held at which a quorum is present shall be
regarded as the act of the Board of Directors, subject to the provisions of
section 310 of the Code as to approval of contracts or transactions in which a
director has a direct or indirect material financial interest, section 311 of
the Code as to appointment of committees, and section 317(e) of the Code as to
indemnification of directors. A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved by at least a majority of the required quorum
for that meeting.

      3.13  Waiver of Notice.
            ----------------

      The transactions of any meeting of the Board of Directors, however called
and noticed or wherever held, shall be as valid as though had at a meeting held
after regular call and notice if a quorum is present and if, either before or
after the meeting, each of the directors not present signs a written waiver of
notice, a consent to holding the meeting or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents, and approvals shall be filed with the corporate records
or made a part of the minutes of the meeting. Notice of the meeting shall also
be deemed given to any director who attends the meeting without protesting
before or at its commencement the lack of notice to that director.

                                      -12-


      3.14  Adjournment.
            -----------

      A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.

      3.15  Notice of Adjournment.
            ---------------------

      Notice of the time and place of holding an adjourned meeting need not be
given, unless the meeting is adjourned for more than 24 hours, in which case
notice of the time and place shall be given before the time of the adjourned
meeting in the manner specified in section 3.11 of these Bylaws, to the
directors who were not present at the time of the adjournment.

      3.16  Action Without Meeting.
            ----------------------

      Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting, if all members of the Board of Directors shall
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
Board of Directors. Such written consent or consents shall be filed with the
minutes of the proceedings of the Board of Directors.

      3.17  Fees and Compensation of Directors.
            ----------------------------------

      Directors and members of committees may receive such compensation for
their services, and such reimbursement of expenses, as may be fixed by the Board
of Directors. This section shall not be construed to preclude any director from
serving the Corporation in any other capacity as an officer, agent, employee, or
otherwise and receiving compensation for those services.

                                  ARTICLE IV

                                  COMMITTEES

      4.1   COMMITTEES OF DIRECTORS.
            -----------------------

      The Chairman of the Board shall recommend to the Board of Directors one or
more committees, each consisting of two or more directors, to serve at the
pleasure of the Board of Directors. The Chairman of the Board may designate one
or more directors as alternate members of any committee, who may replace any
absent member at any meeting of the committee. Any committee, to the extent
provided in the resolution of the Board of Directors, shall have all the
authority of the Board of Directors, except with respect to:

            (a)  the approval of any action which, under the Code, also requires
                 shareholders' approval or approval of the outstanding shares;

            (b)  the filling of vacancies on the Board of Directors or on any
                 committee;

            (c)  the fixing of compensation of the directors for serving on the
                 Board of Directors or on any committee;

                                      -13-


            (d)  the amendment or repeal of Bylaws or the adoption of new
                 Bylaws;

            (e)  the amendment or repeal of any resolution of the Board of
                 Directors which by its express terms is not so amendable or
                 repealable;

            (f)  a distribution to the shareholders of this Corporation, except
                 at a rate or in a periodic amount or within a price range
                 determined by the Board of Directors;

            (g)  the appointment of any other committees of the Board of
                 Directors or the members of these committees; or

            (h)  the taking of any other action which cannot, by statute, be
                 done without approval of the Board of Directors.

      4.2   Meetings and Action of Committees.
            ---------------------------------

      Meetings and action of committees shall be governed by and held and taken
in accordance with the provisions of section 3.7 of these Bylaws as to place of
meetings, section 3.9 of these Bylaws as to regular meetings, section 3.10 of
these Bylaws as to special meetings, section 3.11 of these Bylaws as to notice
of special meetings, section 3.12 of these Bylaws as to quorum, section 3.13 of
these Bylaws as to waiver of notice, section 3.14 of these Bylaws as to
adjournment, and section 3.16 of these Bylaws as to action without a meeting,
with such changes in the context of those sections as are necessary to
substitute the committee and its members for the Board of Directors and its
members, except that the time of regular meetings of committees may be
determined either by resolution of the Board of Directors or by resolution of
the committee; special meetings of committees may also be called by resolution
of the Board of Directors; and notice of special meetings of committees shall
also be given to all alternate members who shall have the right to attend all
meetings of the committee. The Board of Directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
Bylaws.



                                    ARTICLE V

                                    OFFICERS
                                    --------

      5.1   Officers.
            --------

      The officers of this Corporation shall be a President, a Secretary, a
Chief Financial Officer and a Chairman of the Board. The Corporation may also
appoint a Chief Executive Officer, who may, but is not required to be, the same
person designated as the Chairman of the Board or President. The Corporation may
also have, at the discretion of the Board of Directors, a vice chairman, one or
more vice presidents, one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be appointed in accordance with the
provisions of section 5.3 of these Bylaws. Any number of offices may be held by
the same person.

                                      -14-


      5.2   Election of Officers.
            --------------------

      The officers of this Corporation, except such officers as may be appointed
in accordance with the provisions of sections 5.3 or 5.5 of these Bylaws, shall
be chosen by the Board of Directors and each shall serve at the pleasure of the
Board of Directors, subject to the rights, if any, of an officer under any
contract of employment.

      5.3   Subordinate Officers.
            --------------------

      The Board of Directors may appoint, or may empower the Chairman of the
Board or President to appoint, such other officers as the business of this
Corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in the Bylaws or as the
Board of Directors may from time to time determine.

      5.4   Removal and Resignation of Officers.
            -----------------------------------

      Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
Board of Directors, at any regular or special meeting of the Board of Directors,
or, except in case of an officer chosen by the Board of Directors, by any
officer upon whom such power of removal may be conferred by the Board of
Directors. Any officer may resign at any time by giving written notice to the
Corporation, Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of this Corporation under any contract to which the officer is a
party.

      5.5   Vacancies in Offices.
            --------------------

      A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these Bylaws for regular appointments to that office.

      5.6   Chairman of the Board.
            ---------------------

      The Chairman of the Board shall, if present, preside at meetings of the
shareholders and the Board of Directors, and exercise and perform such other
powers and duties as may be from time to time assigned to him or her by the
Board of Directors or prescribed by the Bylaws.

      5.7   Vice Chairman And/or Chief Executive Officer.
            --------------------------------------------

      In the absence or disability of the Chairman, the Vice Chairman or Chief
Executive Officer (who is not also the President), if any, shall perform all the
duties of the Chairman of the Board. The Vice Chairman and Chief Executive
Officer shall have such other powers and duties as may be prescribed by the
Board of Directors or these Bylaws.

                                      -15-


      5.8   President.
            ---------

      Subject to such supervisory powers, if any, as maybe given by the Board of
Directors to the Chairman of the Board or to a separate Chief Executive Officer,
the President shall be the chief executive officer of this Corporation and
shall, subject to the control of the Board of Directors, have general
supervision, direction and control of the business and the officers of this
Corporation. In absence of the Chairman of the Board (or any Chief Executive
Officer who is not also the President), the President shall preside at all
meetings of the shareholders and at all meetings of the Board of Directors,
unless otherwise specified by the Board of Directors. The President shall have
the general duties of management usually vested in the office of the President
of a Corporation, and shall have such other powers and duties as may be
prescribed by the Board of Directors or these Bylaws.

      5.9   Vice Presidents.
            ---------------

      In the absence or disability of the President , the vice presidents, if
any, in order of their rank as fixed by the Board of Directors or, if not
ranked, a vice president designated by the Board of Directors, shall perform all
the duties of the President, and when so acting shall have all the powers of,
and be subject to all the restrictions upon, the President. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the Board of Directors or the Bylaws,
and the President, or the Chairman of the Board.

      5.10  Secretary.
            ---------

      The Secretary shall keep or cause to be kept, at the principal executive
office or such other place as the Board of Directors may direct, a book of
minutes of all meetings and actions of directors, committees of directors, and
shareholders, with the time and place of holding, whether regular or special
and, if special, how authorized, the notice given, the names of those present at
directors' meetings or committee meetings, the number of shares present or
represented at shareholders' meetings, and the proceedings. The Secretary shall
keep, or cause to be kept, at the principal executive office or at the office of
this Corporation's transfer agent or registrar, as determined by the resolution
of the Board of Directors, a share register, or a duplicate share register,
showing the names of all shareholders and their addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the same, and the number and date of cancellation of every certificate
surrendered for cancellation. The Secretary shall give, or cause to be given,
notice of all meetings of the shareholders and of the Board of Directors
required by the Bylaws or by law to be given, and shall have such other powers
and perform such other duties as may be prescribed by the Board of Directors or
by the Bylaws, the President or the Chairman of the Board.

      5.11  Chief Financial Officer.
            -----------------------

      The Chief Financial Officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of this Corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,

                                      -16-


retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director. The Chief Financial Officer shall
deposit all moneys and other valuables in the name and to the credit of this
Corporation with such depositaries as may be designated by the Board of
Directors. The Chief Financial Officer shall disburse the funds of this
Corporation as may be ordered by the Board of Directors, shall render to the
President and directors, whenever they request it, an account of all of his or
her transactions as Chief Financial Officer and of the financial condition of
this Corporation, and shall have other powers and perform such other duties as
may be prescribed by the Board of Directors or the Bylaws, the President or the
Chairman of the Board.

                                   ARTICLE VI

                INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
                -------------------------------------------------
                                AND OTHER AGENTS
                                ----------------


      6.1   Agents, Proceedings and Expenses.
            --------------------------------

      For the purposes of the following eight sections, "agent" means any person
who is or was a director, officer, employee, or other agent of this Corporation,
or is or was serving at the request of this Corporation as a director, officer,
employee or agent of another foreign or domestic corporation, partnership, joint
venture, trust or other enterprise, or was a director, officer, employee, or
agent of a foreign or domestic corporation which was a predecessor corporation
of this Corporation or of another enterprise at the request of such predecessor
corporation; "proceeding" means any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative, or investigative; and
"expenses" includes, without limitation, attorneys' fees and any expenses of
establishing a right to indemnification under this Article 0.

      6.2   Actions Other Than by the Corporation.
            -------------------------------------

      This Corporation shall indemnify any director or officer of this
Corporation, and may, in its discretion, indemnify any other person, who was or
is a party, or is threatened to be made a party, to any action or proceeding,
other than an action by or in the right of this Corporation, by reason of the
fact that the person is or was an agent of this Corporation, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such action or proceeding if that person acted in good faith
and in a manner reasonably believed to be in the best interests of this
Corporation and, in the case of a criminal proceeding, had no reasonable cause
to believe the conduct was unlawful. The termination of any proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner reasonably believed to be in the best
interests of this Corporation or that the person had reasonable cause to believe
that the conduct was unlawful.

      6.3   Actions by the Corporation.
            --------------------------

      This Corporation shall indemnify any director or officer of this
Corporation, and may, in its discretion, indemnify any other person, who was or

                                      -17-


is a party, or is threatened to be made a party, to any threatened, pending or
completed action by or in the right of this Corporation to procure a judgment in
its favor by reason of the fact that that person is or was an agent of this
Corporation, against expenses actually and reasonably incurred in connection
with the defense or settlement of that action if that person acted in good
faith, in a manner believed to be in the best interests of this Corporation and
with such care, including reasonable inquiry, as an ordinarily prudent person in
a like position would use under similar circumstances. No indemnification shall
be made under this section:

            (a)   in respect of any claim, issue, or matter as to which that
                  person shall have been adjudged to be liable to this
                  Corporation in the performance of duty to this Corporation,
                  unless and only to the extent that the court in which that
                  action was brought shall determine upon application that, in
                  view of all the circumstances of the case, that person is
                  fairly and reasonably entitled to indemnity for the expenses
                  which the court shall determine; or

            (b)   of amounts paid in settling or otherwise disposing of a
                  threatened or pending action, with or without court approval;
                  or

            (c)   of expenses incurred in defending a threatened or pending
                  action which is settled or otherwise disposed of without court
                  approval.

      6.4   Successful Defense by Agent.
            ---------------------------

      To the extent that an agent of this Corporation has been successful on the
merits in defense of any proceeding referred to in sections 6.2 or 6.3 of these
Bylaws, or in defense of any claim, issue, or matter therein, the agent shall be
indemnified against expenses actually and reasonably incurred by the agent in
connection therewith.

      6.5   Required Approval.
            -----------------

      Except as provided in section 6.4 of these Bylaws, indemnification shall
be made by this Corporation only if authorized in the specific case on a
determination that indemnification of the agent is proper in the circumstances
because the agent has met the applicable standard of conduct set forth in
sections 6.2 or 6.3 of these Bylaws by:

            (a)   a majority vote of a quorum consisting of directors who are
                  not parties to the proceeding;

            (b)   approval by the affirmative vote of a majority of the shares
                  of this Corporation entitled to vote represented at a duly
                  held meeting at which a quorum is present or by the written
                  consent of holders of a majority of the outstanding shares
                  entitled to vote. For this purpose, the shares owned by the
                  person to be indemnified shall not be considered outstanding
                  or entitled to vote thereon; or

            (c)   the court in which the proceeding is or was pending on
                  application made by this Corporation or the agent or the

                                     -18-

                  attorney or other person rendering services in connection with
                  the defense, whether or not such application by the agent,
                  attorney, or other person is opposed by this Corporation.

      6.6   Advance of Expenses.
            -------------------

      Expenses (including attorney's fees) incurred by any officer or director
in defending any action or proceeding for which indemnification is required by
this Article VI or otherwise authorized by the Board of Directors shall be
advanced by this Corporation before the final disposition of the action or
proceeding on receipt of an undertaking by or on behalf of the agent to repay
that amount unless it shall ultimately be determined that the agent is not
entitled to be indemnified under this Article VI.

      6.7   Indemnity Not Exclusive.
            -----------------------

      The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any Bylaw, agreement, vote of shareholders or directors or
otherwise, both as to action in an official capacity and as to action in another
capacity while holding such office. The rights to indemnity hereunder shall
continue as to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of the person.

      6.8   Limitations.
            -----------

      No indemnification or advance shall be made, except as provided in section
6.4 or section 6.5(b), in any circumstance where it appears:

            (a)   that it would be inconsistent with a provision of the
                  articles, a resolution of the shareholders, or an agreement in
                  effect at the time of the accrual of the alleged cause of
                  action asserted in the proceeding in which the expenses were
                  incurred or other amounts were paid, which prohibits or
                  otherwise limits indemnification; or

            (b)   that it would be inconsistent with any condition expressly
                  imposed by a court in approving a settlement.

      6.9   Insurance.
            ---------

      This Corporation shall have the power to purchase and maintain insurance
on behalf of any person who was or is an agent of this Corporation against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such whether or not this Corporation would have the
power to indemnify the agent against that liability under the provisions of this
section.

      6.10  Indemnity Agreements.
            --------------------

      The Board of Directors is authorized to enter into a contract with any
director, officer, employee or agent of the corporation, or any person who is or
was serving at the request of the corporation as a director, officer, employee

                                      -19-


or agent of another corporation, partnership, joint venture, trust or other
enterprise, including employee benefit plans, or any person who was a director,
officer, employee or agent of a corporation which was a predecessor corporation
of the corporation or of another enterprise at the request of such predecessor
corporation, providing for indemnification rights equivalent to or, if the Board
of Directors so determines and to the extent permitted by applicable law,
greater than, those provided for in this Article VI.

      6.11  Amendment, Repeal or Modification.
            ---------------------------------

      Any amendment, repeal or modification of any provision of this Article VI
shall not adversely affect any right or protection of a director, officer or
other agent of the corporation existing at the time of such amendment, repeal or
modification.



                                   ARTICLE VII

                               RECORDS AND REPORTS
                               -------------------


      7.1   Maintenance and Inspection of Share Register.
            --------------------------------------------

      The Corporation shall keep at its principal executive office, or at the
office of its transfer agent or registrar, if either be appointed, a record of
its shareholders, giving names and addresses of all shareholders and the number
and class of shares held by each shareholder. A shareholder or shareholders of
this Corporation holding at least five percent in the aggregate of the
outstanding voting shares of this Corporation may (i) inspect and copy the
records of shareholders' names and addresses and shareholdings during usual
business hours on five days prior written demand on the Corporation, and (ii)
obtain, on written demand and on the tender of the usual charges for such list,
a list of the shareholders' names and addresses who are entitled to vote for the
election of directors, and their shareholdings, as of the most recent record
dates for which that list has been compiled or as of a date specified by the
shareholder after the date of demand. This list shall be made available to any
such shareholder on or before the later of five days after the demand is
received, or the date specified in the demand as the date as of which the list
is to be compiled. The record of shareholders shall also be open to inspection
on the written demand of any shareholder or holder of a voting trust
certificate, at any time during usual business hours, for a purpose reasonably
related to the holder's interests as a shareholder or as the holder of a voting
trust certificate. Any inspection and copying under this section may be made in
person or by an agent or attorney of the shareholder or holder of a voting trust
certificate making the demand.

      7.2   Maintenance and Inspection of Bylaws.
            ------------------------------------

      The Corporation shall keep at its principal executive office the original
or a copy of the Bylaws as amended to date, which shall be open to inspection by
the shareholders at all reasonable times during office hours.

                                      -20-


      7.3   Maintenance and Inspection of Other Corporate Records.
            -----------------------------------------------------

      The accounting books and records and minutes of proceedings of the
shareholders and the Board of Directors and any committee or committees of the
Board of Directors shall be kept at such place or places designated by the Board
of Directors or, in the absence of such designation, at the principal executive
office of this Corporation. The minutes shall be kept in written form and the
accounting books and records shall be kept in either written form or in any
other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written demand
of any shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as the holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. No such right of
inspection shall extend to any confidential information relating to the
depositors, borrowers or other customers of this Corporation or other
information which the Corporation may not disclose under applicable law or
lawful agreements with third parties.

      7.4   Inspection by Directors.
            -----------------------

      Every director shall have the absolute right at any reasonable time to
inspect all books, records and documents of every kind and the physical
properties of this Corporation. This inspection by a director may be made in
person or by an agent or attorney and the right of inspection includes the right
to copy and make extracts of documents.

      7.5   Annual Report to Shareholders.
            -----------------------------

      The Board of Directors shall cause an annual report to be sent to the
shareholders not later than 120 days after the close of the fiscal year adopted
by the Corporation. This report shall be sent at least 15 days before the annual
meeting of shareholders to be held during the next fiscal year and in the manner
specified for giving notice to shareholders of this Corporation. The annual
report shall contain a balance sheet as of the end of the fiscal year and an
income statement and statement of changes in financial position for the fiscal
year, accompanied by any report of independent accountants or, if there is no
such report, the certificate of an authorized officer of this Corporation that
the statements were prepared without audit from the books and records of this
Corporation.

      7.6   Financial Statements.
            --------------------

      A copy of any annual financial statement and any income statement of this
Corporation for each quarterly period of each fiscal year, and any accompanying
balance sheet of this Corporation as of the end of each such period, that has
been prepared by the Corporation shall be kept in the principal executive office
of this Corporation for 12 months and each such statement shall be exhibited at
all reasonable times to any shareholder demanding an examination of any such
statement or a copy shall be mailed to any such shareholder. If a shareholder or
shareholders holding at least five percent of the outstanding shares of any
class of stock of this Corporation makes a written request to the Corporation

                                      -21-


for an income statement of this Corporation for the three-month, six-month or
nine-month period of the then current fiscal year ended more than 30 days before
the date of the request, and a balance sheet of this Corporation as of the end
of that period, the Chief Financial Officer shall cause that statement to be
prepared, if not already prepared, and shall deliver personally or mail that
statement or statements to the person making the request within 30 days after
the receipt of the request. If the Corporation has not sent to the shareholders
its annual report for the last fiscal year, this report shall likewise be
delivered or mailed to the shareholder or shareholders within 30 days after the
request. The Corporation shall also, on the written request of any shareholder,
mail to the shareholder a copy of the last annual, semi-annual, or quarterly
income statement which it has prepared, and a balance sheet as of the end of
that period. The quarterly income statements and balance sheets referred to in
this section shall be accompanied by the report, if any, of any independent
accountants engaged by the Corporation or the certificate of an authorized
officer of this Corporation that the financial statements were prepared without
audit from the books and records of this Corporation.

      7.7   Annual Statement of General Information.
            ---------------------------------------

      The Corporation shall each year file with the Secretary of the State of
California, on the prescribed form, a statement setting forth the authorized
number of directors, the names and complete business or residence addresses of
all incumbent directors, the number of vacancies on the Board of Directors, if
any, the names and complete business or residence addresses of the chief
executive officer, Secretary, and Chief Financial Officer, the street address of
its principal executive office or principal business office in this state, and
the general type of business constituting the principal business activity of
this Corporation, together with a designation of the agent of this Corporation
for the purpose of service of process, all in compliance with section 1502 of
the Code.



                                  ARTICLE VIII

                            GENERAL CORPORATE MATTERS
                            -------------------------


      8.1   Record Date for Purposes Other Than Notice and Voting.
            -----------------------------------------------------

      For purposes of determining the shareholders entitled to receive payment
of any dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other action, other than action by
shareholders by written consent without a meeting, the Board of Directors may
fix, in advance, a record date, which shall not be more than 60 days before any
such action, and in that case only shareholders of record on the date so fixed
are entitled to receive the dividend, distribution or allotment of rights or to
exercise the rights, as the case may be, notwithstanding any transfer of any
shares on the books of this Corporation after the record date as fixed, except
as otherwise provided in the Code. If the Board of Directors does not fix a
record date, the record date for determining shareholders for any such purpose
shall be at the close of business on the day on which the Board of Directors
adopts the applicable resolution or the 60th day before the date of that action,
whichever is later.

                                      -22-


      8.2   Checks, Drafts, Evidences of Indebtedness.
            -----------------------------------------

      All checks, drafts, or other orders for payment of money, notes, or other
evidences of indebtedness, issued in the name of or payable to the Corporation,
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by resolution of the Board of Directors.

      8.3   Corporate Contracts and Instruments, Execution Of.
            -------------------------------------------------

      The Board of Directors, except as otherwise provided in these Bylaws, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of this Corporation and
this authority may be general or confined to specific instances; and, unless so
authorized or ratified by the Board of Directors, or within the agency power of
an officer, no officer, agent, or employee shall have any power or authority to
bind the Corporation by any contract or engagement or to pledge its credit or to
render it liable for any purpose or for any amount.

      8.4   Certificate for Shares.
            ----------------------

      A certificate or certificates for shares of the capital stock of this
Corporation shall be issued to each shareholder when any of these shares are
fully paid. All certificates shall be signed in the name of this Corporation by
the Chairman of the Board, or the President or vice president, and by the Chief
Financial Officer or the Secretary or an assistant secretary, certifying the
number of shares and the class or, series of shares owned by the shareholder.
Any or all of the signatures on the certificate may be facsimile. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed on a certificate shall have ceased to be that officer,
transfer agent, or registrar before that certificate is issued, it may be issued
by the Corporation with the same effect as if that person were an officer,
transfer agent, or registrar at the date of issue.

      8.5   Lost Certificates.
            -----------------

      Except as provided in this section, no new certificates for shares shall
be issued to replace an old certificate unless the latter is surrendered to the
Corporation and cancelled at the same time. The Board of Directors may, in case
any share certificate or certificate for any other security is lost, stolen, or
destroyed, authorize the issuance of a replacement certificate on such terms and
conditions as the Board of Directors may require, including provision for
indemnification of this Corporation secured by a bond or other adequate security
sufficient to protect the Corporation against any claim that may be made against
it, including any expense or liability, on account of the alleged loss, theft or
destruction of the certificate or the issuance of the replacement certificate.

      8.6   Representation of Shares of Other Corporations.
            ----------------------------------------------

      The Chairman of the Board, the President, the Chief Financial Officer or
any other person authorized by resolution of the Board of Directors or by any of
the foregoing designated officers, is authorized to vote on behalf of this
Corporation any and all shares of any other corporation or corporations, foreign


                                      -23-


or domestic, standing in the name of this Corporation. The authority granted to
these officers to vote or represent on behalf of this Corporation any and all
shares held by the Corporation in any other corporation or corporations may be
exercised by any of these officers in person or by any person authorized to do
so by a proxy duly executed by these officers.

      8.7   Construction and Definitions.
            ----------------------------

      Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the Code shall govern the construction of these
Bylaws.



                                   ARTICLE IX

                                   AMENDMENTS
                                   ----------


      9.1   Amendment by Shareholders.
            -------------------------

      New Bylaws may be adopted or these Bylaws may be amended or repealed by
the vote or written consent of holders of a majority of the outstanding shares
entitled to vote.

      9.2   Amendment by Directors.
            ----------------------

      Subject to the rights of the shareholders as provided in section 8.7 of
these Bylaws, Bylaws may be adopted, amended, or repealed by the Board of
Directors; provided, however, that the Board of Directors may adopt a bylaw or
amendment of a bylaw changing the authorized number of directors only for the
purpose of fixing the exact number of directors within the limits specified in
the Articles of Incorporation or in section 3.2 of these Bylaws.



                                    ARTICLE X

                                 INTERPRETATION
                                 --------------

      Reference in these Bylaws to any provision of the California Corporations
Code shall be deemed to include all amendments thereof.


                                      -24-








                               SAN JOAQUIN BANCORP

                        CERTIFICATE OF ADOPTION OF BYLAWS

The undersigned hereby certifies that he is the duly elected, qualified and
acting Secretary of San Joaquin Bancorp, a California corporation (the
"Company"), and that the foregoing bylaws were adopted as the Company's
bylaws on May 9, 2006 by the Company's Sole Incorporator.


The undersigned has executed this Certificate as of May 9, 2006.



                                              /s/ Stephen M. Annis
                                          --------------------------------------
                                          Stephen M. Annis, Secretary


                                      -25-

EX-4

EX-21

                               San Joaquin Bancorp

                                                                    Exhibit 21.1

                         Subsidiaries of the Registrant

     San Joaquin Bank, a California state chartered bank.

EX-99

                                                                    Exhibit 99.1

    SAN JOAQUIN
        BANK
                                        Administrative Offices
                              1000 Truxtun Avenue    Phone: (661) 281-0360
                              Bakersfield, CA 93301  Fax: (661) 281-0366
- --------------------------------------------------------------------------------

                                  NEWS RELEASE

                SAN JOAQUIN BANK COMPLETES PLAN OF REORGANIZATION

Tuesday, August 1, 2006

BAKERSFIELD, CA-(Business Wire)-August 1, 2006 - San Joaquin Bank:

San  Joaquin  Bank   announced   today  that  it  had   completed  its  plan  of
reorganization  into a holding company  structure  effective July 31, 2006. As a
result  of the  reorganization,  the  Bank is now  wholly-owned  by San  Joaquin
Bancorp.  The  shareholders  of the Bank  are now  shareholders  of San  Joaquin
Bancorp.  President  Bart  Hill  said,  "WE  ARE  PLEASED  WITH  THE  ADDITIONAL
FLEXIBILITY  PROVIDED BY THE  FORMATION  OF A HOLDING  COMPANY,  BUT EXPECT THAT
THERE WILL BE NO CHANGES  REGARDING  THE WAY THE BANK  DELIVERS  SERVICES TO ITS
CUSTOMERS."

Under  the  plan of  reorganization,  each  share  of  common  stock of the Bank
represents  one share of the  common  stock of San  Joaquin  Bancorp.  An actual
exchange of Bank share  certificates  will not be mandatory because the existing
Bank share certificates are deemed to represent shares of Bancorp.  However, new
Bancorp share certificates will be issued when future transactions occur.

In  connection  with the  reorganization,  San Joaquin  Bancorp  will assume all
reporting and disclosure  obligations  previously  performed by San Joaquin Bank
and begin to file periodic  reports with the Securities and Exchange  Commission
pursuant to the  Securities  Exchange Act of 1934.  In  addition,  shares of San
Joaquin  Bancorp's  common stock will be listed on the OTC Bulletin  Board under
the  ticker  symbol  "SJQU" and the  common  stock of the Bank,  with the ticker
symbol "SJQN", has been delisted from the OTC Bulletin Board.

Established in 1980 and  headquartered in Bakersfield,  California,  San Joaquin
Bank is a full-service, community bank with three banking offices in Bakersfield
and one in Delano.  San Joaquin Bank emphasizes  professional,  personal banking
service   directed   primarily  to  small  and   medium-sized   businesses   and
professionals.  The Bank also provides a full range of banking services that are
available to individuals, public entities, and non-profit organizations.

Certain  statements in this press release,  including  statements  regarding the
intent,  belief or  current  expectations  of the  Bank,  its  directors  or its
officers,  are  "forward-looking"  statements  (as such term is  defined  in the
Private Securities  Litigation Reform Act of 1995).  Because such statements are
subject to risks and  uncertainties,  actual results may differ  materially from
those expressed or implied by such forward-looking statements.

Contacts:

Bart Hill                       Steve Annis
President & CEO                 Executive Vice President & CFO
(661) 281-0300                  (661) 281-0300

Company Website: www.sjbank.com


                                       1

EX-99

                                                                    Exhibit 99.2

                      FEDERAL DEPOSIT INSURANCE CORPORATION
                   550 17th Street NW, Washington, D.C. 20429
                                    FORM 10-K

(MARK ONE)
|X|  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

|_|  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

     FOR THE TRANSITION PERIOD FROM __________ TO __________

                          FDIC CERTIFICATE NUMBER 23266

                                SAN JOAQUIN BANK
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            CALIFORNIA                                    95-3426405
            ----------                                    ----------
 (State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                       Identification No.)

 1301 - 17TH STREET, BAKERSFIELD, CALIFORNIA                 93301
 -------------------------------------------                 -----
  (Address of principal executive offices)                (Zip Code)

                                 (661) 281-0300
                                 --------------
              (Registrant's telephone number, including area code)

                           COMMON STOCK (NO PAR VALUE)
                           ---------------------------
          (Securities registered pursuant to section 12(g) of the Act)

Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act. Yes |_| No |X|

Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes  |_|   No  |X|

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by  reference in Part III of this Form 10-K or any  attachment  to
this Form 10-K. |_|

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one):
  Large accelerated filer |_|  Accelerated filer |_|  Non-accelerated filer |X|

         Indicate  by check  mark  whether the registrant is a shell company (as
         defined in Rule 12b-2 of the Exchange Act).  Yes  |_|   No  |X|

The  aggregate  market value of the Common Stock held by  non-affiliates  of the
registrant  as of June 30,  2005,  as reported on the OTC  Bulletin  Board,  was
approximately  $58,667,243.  Shares of Common  Stock  held by each  officer  and
director and by each person who owns 5% or more of the outstanding  Common Stock
have been excluded,  in that such persons may be deemed to be  affiliates.  This
determination of affiliate status is not necessarily a conclusive  determination
for other purposes.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
Common Stock, as of the latest practicable date: 3,472,712 shares outstanding at
February 14, 2006.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement  relating to the registrant's  Annual
Meeting of Shareholders,  to be held May 16, 2006, are incorporated by reference
in Items 10, 11, 12, 13, and 14 of Part III to the extent described therein.



                                SAN JOAQUIN BANK

                                    FORM 10-K

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

                                      INDEX

                                                                            PAGE
                                                                            ----
PART I
ITEM 1.    BUSINESS ........................................................   2
ITEM 1A.   RISK FACTORS ....................................................  10
ITEM 2.    PROPERTIES ......................................................  13
ITEM 3.    LEGAL PROCEEDINGS ...............................................  14
ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............  14

PART II
ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
           MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES................  15
ITEM 6.    SELECTED FINANCIAL DATA..........................................  17
ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATION.............................................  18
ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......  40
ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA......................  42
ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE.............................................  67
ITEM 9A.   CONTROLS AND PROCEDURES..........................................  67
ITEM 9B.   OTHER INFORMATION................................................  67

PART III
ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...............  68
ITEM 11.   EXECUTIVE COMPENSATION...........................................  68
ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...  68
ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................  68
ITEM 14.   PRINCIPAL ACCOUNTING FEES AND SERVICES...........................  68

PART IV
ITEM 15    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES ......................  69

This annual report on Form 10-K contains  forward-looking  statements  about San
Joaquin Bank for which it claims the  protection  of the safe harbor  provisions
contained in the Private  Securities  Litigation  Reform Act of 1995,  including
statements  with regard to  descriptions  of our plans or objectives  for future
operations,  products or services,  and forecasts of our  revenues,  earnings or
other  measures  of  economic  performance.  Forward-looking  statements  can be
identified by the fact that they do not relate strictly to historical or current
facts. They often include the words "believe," "expect," "anticipate," "intend,"
"plan,"  "estimate," or words of similar meaning, or future or conditional verbs
such as "will," "would," "should," "could," or "may."

Forward-looking   statements,   by  their  nature,  are  subject  to  risks  and
uncertainties.  A number of factors  -- many of which are beyond our  control --
could cause actual  conditions,  events or results to differ  significantly from
those described in the  forward-looking  statements and reported  results should
not be considered an  indication of our future  performance.  Some of these risk
factors include, among others, certain credit, market, operational and liquidity
risks  associated  with our  business  and  operations,  changes in business and
economic  conditions  in  California  and  nationally,  rising  interest  rates,
potential acts of terrorism  (which are beyond our control),  volatility of rate
sensitive deposits and assets,  value of real estate collateral securing many of
our loans, accounting estimates and judgments,  compliance costs associated with
the company's internal control structure and procedures for financial reporting.
These risk factors are not exhaustive and additional  factors that could have an
adverse  effect on our business and  financial  performance  are set forth under
"Risk Factors" in Item 1A and elsewhere in this annual report on Form 10-K.

Forward-looking  statements  speak only as of the date they are made.  We do not
undertake  to update  forward-looking  statements  to reflect  circumstances  or
events that occur after the date forward-looking statements are made.

                                       1


                                     PART I

ITEM 1.  BUSINESS

GENERAL

San Joaquin Bank commenced  operations as a California  state-chartered  Bank in
December 1980 and is the oldest  independent  community  bank  headquartered  in
Bakersfield, Kern County, California. At December 31, 2005, San Joaquin Bank had
total  consolidated  assets of  $627,014,000,  total  consolidated  deposits  of
$575,533,000,  total  consolidated net loans of $400,397,000,  and shareholders'
equity of  $39,290,000.

San Joaquin Bank has four banking  offices within Kern County,  California.  The
Main  Office is  located at 1301 - 17th  Street,  Bakersfield,  California.  The
Rosedale Branch located at 3800 Riverlakes Drive,  Bakersfield,  California,  is
owned by the Company,  as are the Stockdale  Branch  located at 4600  California
Avenue and the  Administrative  Center located at 1000 Truxtun  Avenue,  both in
Bakersfield,  California.  The Main  Office and the  Delano  Branch at 1613 Inyo
Street, Delano, are both leased facilities.

In 1987, San Joaquin Bank formed a subsidiary,  the Kern Island Company ("KIC"),
to acquire,  develop,  sell or operate  commercial or residential  real property
located in the Company's geographic market area. In 1993 San Joaquin Bank formed
a limited  partnership,  Farmersville  Village  Grove  Associates  (a California
limited  partnership)  ("FVGA"),  to  acquire  and  operate  low-income  housing
projects  under the  auspices of the Rural  Economic and  Community  Development
Department (formerly Farmers Home  Administration),  United States Department of
Agriculture.  KIC is the 5%  general  partner  and San  Joaquin  Bank is the 95%
limited partner.

The  investment  in  FVGA  is  shown  on the  Company's  consolidated  financial
statements as "Investment in real estate." This investment consists of a 48-unit
seniors  apartment  project,  located in Farmersville,  placeCityTulare  County,
StateCalifornia.  This project is financed by the Rural  Economic and  Community
Development  Department  (formerly Farmers Home  Administration),  United States
Department of Agriculture ("RECD").  The Company acquired the project by a grant
deed executed in lieu of foreclosure  pursuant to a judgment entered December 3,
1991, in Kern County  Superior  Court.  The deed was executed in settlement of a
$400,000 loan owed to the Company. Concurrent with the acquisition,  the Company
assumed an $880,000  loan payable to the RECD.  The project is operated by FVGA.
The FVGA apartment project generates a positive cash flow,  therefore additional
investment  in the project by San Joaquin Bank is not  required.  Because of the
subsidized rent program  sponsored by RECD under which this apartment project is
operated,  the owner of the project was  eligible  and did receive a federal tax
credit in the amount of $600,000, which was amortized over a period of 10 years.
Both KIC and FVGA exist  solely to own and  operate the  Farmersville  apartment
project. Management does not anticipate any additional cash infusion required by
San Joaquin Bank and the effects of the operation of KIC and FVGA on the Company
are negligible.

Through  its  network  of  banking   offices,   San  Joaquin   Bank   emphasizes
professional,   personal  banking  service  directed   primarily  to  small  and
medium-sized  businesses and professionals.  Although San Joaquin Bank's primary
focus is toward the small and medium-sized business and professional market, the
Bank also  provides a full  range of  banking  services  that are  available  to
individuals, public entities, and non-profit organizations.

San Joaquin Bank offers a wide range of deposit accounts. These include personal
and business checking and savings accounts, interest-bearing negotiable order of
withdrawal  ("Super NOW")  accounts,  money market  accounts,  time deposits and
individual retirement accounts.

San  Joaquin  Bank also  provides a full array of  lending  services,  including
commercial,  consumer installment,  and real estate loans.  Commercial loans are
loans to local community businesses and may be unsecured or secured by assets of
the business and/or its principals. Consumer installment loans include loans for
automobiles,  home  improvements,  debt  consolidation and other personal needs.
Real estate loans include short-term commercial loans secured by real estate and
construction loans.

San Joaquin Bank originates  loans that are guaranteed  under the Small Business
Investment  Act and in the  past has sold  SBA  loans in the  secondary  market,
although the Bank  currently  retains SBA loans in its  portfolio.

The Bank also offers a wide range of  specialized  services  designed to attract
and  service  the needs of  commercial  customers  and  account  holders.  These

                                       2


services  include ACH origination  services,  Internet  banking for business and
individual  customers,  safe  deposit,  MasterCard  and  Visa  merchant  deposit
services, messenger pick-up service, cash management sweep accounts,  MasterCard
MasterMoney(TM) ATM/Check cards, and Visa and MasterCard credit cards.

San Joaquin  Bank is subject to  examination  by the Federal  Deposit  Insurance
Corporation ("FDIC") and the California Department of Financial Institutions.

At December 31, 2005, San Joaquin Bank employed 135 persons of whom 21 were Bank
officers,  79 were  full-time  employees and 35 were  part-time  employees.  San
Joaquin Bank believes that its employee relations are satisfactory.

COMPETITION

The banking and financial services industry in California generally,  and in San
Joaquin Bank's market area specifically, is highly competitive. The increasingly
competitive environment is a result primarily of changes in regulation,  changes
in  technology  and  product  delivery  systems,  and the  accelerating  pace of
consolidation among financial services  providers.  The Bank competes for loans,
deposits,   and  customers  with  other  commercial  banks,   savings  and  loan
associations,  securities and brokerage companies, mortgage companies, insurance
companies,  finance  companies,  money market funds,  credit  unions,  and other
non-bank financial service providers.  Many of these competitors are much larger
in total assets and  capitalization,  have greater access to capital markets and
offer a broader range of financial services than San Joaquin Bank.

ECONOMIC CONDITIONS,  GOVERNMENT POLICIES,  LEGISLATION,  AND REGULATION

San Joaquin Bank's profitability, like most financial institutions, is primarily
dependent on interest rate differentials. In general, the difference between the
interest rates paid by San Joaquin Bank on interest-bearing liabilities, such as
deposits and other  borrowings,  and the interest  rates received by San Joaquin
Bank on its interest-earning assets, such as loans extended to its customers and
securities held in its investment  portfolio,  comprise the major portion of San
Joaquin Bank's  earnings.  These rates are highly sensitive to many factors that
are beyond the control of San Joaquin  Bank,  such as  inflation,  recession and
unemployment.  The impact that future  changes in domestic and foreign  economic
conditions might have on San Joaquin Bank cannot be predicted.

The business of San Joaquin Bank is also  influenced  by the fiscal  policies of
the  federal  government,  the  monetary  policies  of the  federal  government,
particularly  those implemented by the Board of Governors of the Federal Reserve
System  (the  "Federal  Reserve"),  and  regulatory  policies,  particularly  as
promulgated  by the FDIC.  The  Federal  Reserve  implements  national  monetary
policies through the actions of the Federal Open Market Committee ("FOMC").  The
objectives of the FOMC include curbing inflation and combating recession through
its  open-market  operations  in U.S.  Government  securities,  by adjusting the
required  level of reserves for depository  institutions  subject to its reserve
requirements,  and by varying the target federal funds rate  applicable to funds
purchased and sold between  financial  institutions on an overnight  basis,  and
discount rates applicable to borrowings by depository institutions.  The actions
of the  Federal  Reserve in these  areas  influence  the  growth of bank  loans,
investments,   and   deposits   and  also  affect   interest   rates  earned  on
interest-earning assets and paid on interest-bearing liabilities. The nature and
impact on San Joaquin Bank of any future changes in monetary and fiscal policies
cannot be predicted.

From time to time, legislation,  as well as regulations,  are enacted which have
the effect of  increasing  the cost of doing  business,  limiting  or  expanding
permissible  activities,  or affecting the competitive balance between banks and
other financial services providers. Proposals to change the laws and regulations
governing the  operations  and taxation of banks,  bank holding  companies,  and
other financial  institutions  and financial  services  providers are frequently
made in the  U.S.  Congress,  in the  state  legislatures,  and  before  various
regulatory  agencies.  This  legislation  may change  banking  statutes  and the
operating environment of San Joaquin Bank in substantial and unpredictable ways.
If enacted,  such  legislation  could  increase  or  decrease  the cost of doing
business,  limit or expand  permissible  activities  or affect  the  competitive
balance among banks,  savings  associations,  credit unions, and other financial
institutions.  San Joaquin  Bank cannot  predict  whether any of this  potential
legislation  will be  enacted,  and if  enacted,  the  effect  that  it,  or any
implementing  regulations,  would have on the financial  condition or results of
operations of San Joaquin Bank.

                                       3


SUPERVISION AND REGULATION

Banks  are  extensively  regulated  under  both  federal  and  state  law.  This
regulation  is intended  primarily  for the  protection  of  depositors  and the
deposit  insurance fund and not for the benefit of  shareholders  of San Joaquin
Bank. The following is a summary of certain  statutes and regulations  affecting
the Bank. It is not intended to be an exhaustive description of the statutes and
regulations  applicable to the Bank's business. The description of statutory and
regulatory  provisions  is  qualified  in  its  entirety  by  reference  to  the
particular statutory or regulatory provisions.

Moreover, major new legislation and other regulatory changes affecting the Bank,
banking,  and the  financial  services  industry in general have occurred in the
past and can be expected to occur in the future.  The nature,  timing and impact
of new and amended laws and regulations cannot be accurately predicted.

REGULATORY ENFORCEMENT AUTHORITY

The enforcement  powers available to federal banking regulators  include,  among
other  things,   the  ability  to  assess  civil  money   penalties,   to  issue
cease-and-desist  or removal orders and to initiate  injunctive  actions against
banking  organizations  and  institution-affiliated  parties,  as defined in the
Federal Deposit Insurance Act ("FDIA").  In general,  these enforcement  actions
may be initiated  for  violations of law and  regulations  and unsafe or unsound
practices.  Other  actions or  inactions  may provide the basis for  enforcement
action,   including   misleading  or  untimely  reports  filed  with  regulatory
authorities  or  noncompliance  with  consumer  protection  laws.  Under certain
circumstances,  federal and state laws require public  disclosure and reports of
certain  criminal  offenses  and also final  enforcement  actions by the federal
banking agencies.

FDIC INSURANCE PREMIUMS

The Bank pays deposit insurance premiums to the FDIC based on an assessment rate
established by the FDIC for Bank Insurance  Fund-member  institutions.  The FDIC
has  established  a risk-based  premium  system under which the FDIC  classifies
institutions based on their capital ratios and on other relevant information and
generally  assesses higher rates on those institutions that tend to pose greater
risks to the federal deposit insurance funds. The FDIA does not require the FDIC
to charge  all  banks  deposit  insurance  premiums  when the  ratio of  deposit
insurance  reserves to insured  deposits is maintained  above specified  levels.
However,  because of general economic conditions and recent bank failures, it is
possible that the ratio of deposit insurance  reserves to insured deposits could
fall below the minimum ratio that FDIA requires,  which would result in the FDIC
setting  deposit  insurance  assessment  rates  sufficient  to increase  deposit
insurance  reserves to the required  ratio.  The Bank cannot predict whether the
FDIC will be required  to increase  deposit  insurance  assessments  above their
current levels.

In February 2006,  Congress enacted the Federal Deposit  Insurance Reform Act of
2005 (the  "FDIR  Act").  As a result of the  passage  of the FDIR Act:  (i) the
FDIC's Bank Insurance  Fund will be merged with the FDIC's  Savings  Association
Insurance  Fund  creating the Deposit  Insurance  Fund (the "DIF") no later than
July 1, 2006;  (ii) the $100,000 per account  insurance level will be indexed to
reflect  inflation;  (iii)  deposit  insurance  coverage for certain  retirement
accounts will be increased to $250,000 on April 1, 2006;  and (iv) a cap will be
placed  on the  level of the DIF and  dividends  will be paid to banks  once the
level of the DIF exceeds the specified threshold.

CAPITAL REQUIREMENTS AND PROMPT CORRECTIVE ACTION

The FDIC has  risk-based  capital  adequacy  guidelines  intended  to  provide a
measure of capital  adequacy that reflects the degree of risk  associated with a
bank's operations for both transactions reported on the balance sheet as assets,
and transactions such as letters of credit and recourse arrangements,  which are
recorded as  off-balance  sheet items.  Under these  guidelines,  nominal dollar
amounts of assets and credit  equivalent  amounts of off-balance sheet items are
multiplied by one of several risk  adjustment  percentages,  which range from 0%
for assets with low credit risk, such as certain U.S. government securities,  to
100%  for  assets  with  relatively  higher  credit  risk,  such  as  investment
securities that carry below-investment grade ratings.

The FDIC takes into  consideration  concentrations of credit risk and risks from
nontraditional  activities,  as well as an institution's ability to manage those
risks,  when  determining  the  adequacy  of  an  institution's   capital.  This
evaluation is made as a part of the  institution's  regular safety and soundness
examination. The federal banking agencies also consider interest rate risk (when

                                       4


the interest  rate  sensitivity  of an  institution's  assets does not match the
sensitivity of its liabilities or its off-balance  sheet position) in evaluation
of a bank's capital adequacy.

In January  2006,  the FDIC,  along with three other  federal  bank  regulators,
proposed interagency guidance on credit concentrations entitled, "Concentrations
in Commercial Real Estate Lending, Sound Risk Management Practices." In general,
the proposed guidance,  if adopted in its current form, would require banks with
either (a) more than 100% of total  capital in loans for  construction  and land
development,  or (b)  more  than  300% of total  capital  in  loans  secured  by
commercial real estate to adopt heightened risk management  practices.  The Bank
currently has more than 100% of total capital in loans for construction and land
development  and loans  secured by  commercial  real estate in excess of 300% of
total capital.

The FDIC may increase such minimum  requirements  for all banks or for specified
banks. Increases in the minimum required ratios could adversely affect the Bank,
including its ability to pay dividends.

The Basel  Committee  on  Banking  Supervision,  an  international  organization
comprised of  representatives  of central  banks of the Group of Ten  countries,
continues to evaluate  certain aspects of the proposed New Basel Capital Accord,
with  the  goal  of  implementation  by  2007.  The  New  Basel  Capital  Accord
incorporates  three pillars that address (a) minimum capital  requirements,  (b)
supervisory  review,  which  relates to an  institution's  capital  adequacy and
internal  assessment  process,  and (c)  market  discipline,  through  effective
disclosure to encourage safe and sound banking practices.  Embodied within these
pillars are aspects of risk assessment that relate to credit risk, interest rate
risk and operational risk, among others, and certain proposed  approaches by the
Basel Committee to complete such  assessments may be considered  complex.  It is
possible that under the New Basel Capital Accord large complex institutions that
are capable of implementing  sophisticated  risk assessment  procedures would be
permitted to operate with less capital than other  institutions.  This could put
banks  that do not have  such  sophisticated  risk  assessment  procedures  at a
competitive  disadvantage.  The Bank  continues to monitor the status of the New
Basel Accord.

As discussed above, the FDIC has promulgated regulations and adopted a statement
of policy regarding the capital adequacy of state-chartered  banks,  which, like
the Bank, are not members of the Federal Reserve System.  Moreover, the FDIC has
promulgated  regulations  to implement  the system of prompt  corrective  action
established  by the  FDIA.  Under  the  regulations,  a bank is given one of the
following  ratings  based  upon  its  regulatory  capital:  "well  capitalized,"
"adequately capitalized," "undercapitalized,"  "significantly undercapitalized,"
and "critically undercapitalized."

Immediately upon becoming  undercapitalized,  an institution  becomes subject to
prompt  corrective  action  provisions of the FDIA,  including for example,  (i)
restricting payment of capital distributions and management fees, (ii) requiring
that the FDIC  monitor  the  condition  of the  institution  and its  efforts to
restore its capital,  (iii) requiring  submission of a capital restoration plan,
(iv) restricting the growth of the institution's  assets and (v) requiring prior
approval of certain expansion proposals.

In addition,  an institution  generally must file a written capital  restoration
plan which meets  specified  requirements  with the  appropriate  FDIC  regional
director within 45 days of the date that the  institution  receives notice or is
deemed   to   have   notice   that   it   is   undercapitalized,   significantly
undercapitalized  or  critically  undercapitalized.  An  institution,  which  is
required  to submit a  capital  restoration  plan,  must  concurrently  submit a
performance guaranty by each company that controls the institution. A critically
undercapitalized  institution  generally is to be placed in  conservatorship  or
receivership within 90 days unless the FDIC formally determines that forbearance
from such action would better protect the deposit insurance fund.

                                       5


The  following  tables  present  the  regulatory  capital   requirements  to  be
classified as well  capitalized and the capital ratios for the Bank, at December
31, 2005 and 2004, respectively (note 20).



                                                                                               To Be Categorized
                                                                                                Well Capitalized
                                                                  For Capital Adequacy       Under Prompt Corrective
                                               Actual                   Purposes                Action Provisions
                                       ----------------------  --------------------------  ----------------------------
                                        Amount      Ratio       Amount       Ratio              Amount      Ratio
- -----------------------------------------------------------------------------------------------------------------------
  As of December 31, 2005
- -----------------------------------------------------------------------------------------------------------------------
                                                                                          
  Total risk-based capital ratio      $51,510,000   10.51%   $ 39,208,000     8.00%          $49,010,000    10.00%
  Tier 1 risk-based capital ratio      39,372,000    8.03%     19,612,000     4.00%           29,419,000     6.00%
  Tier 1 leverage ratio                39,372,000    6.44%     24,455,000     4.00%           30,568,000     5.00%

  As of December 31, 2004
- -----------------------------------------------------------------------------------------------------------------------
  Total risk-based capital ratio      $44,122,000   11.50%   $ 30,694,000    8.00%           $38,367,000    10.00%
  Tier 1 risk-based capital ratio      33,306,000    8.68%     15,348,000    4.00%            23,023,000     6.00%
  Tier 1 leverage ratio                33,306,000    6.66%     20,004,000    4.00%            25,005,000     5.00%


As of December 31, 2005, the Bank was well  capitalized  for the above purposes.
The FDIC may revise  capital  requirements  applicable to banking  organizations
beyond current levels.  As discussed  above,  changes to the risk-based  capital
adequacy  framework  are  currently  under  consideration.  Accordingly,  it  is
impossible to predict whether higher or different  capital  requirements will be
imposed and, if so, at what levels and on what schedules.  Therefore,  there can
be no assurance as to what effect such higher or different requirements may have
on the Bank.

BROKERED DEPOSITS

Section 29 of the FDIA and FDIC  regulations  generally  limit the ability of an
insured  depository  institution  to  accept,  renew or roll  over any  brokered
deposit depending on the institution's capital category. These restrictions have
not had a  material  impact  on the  operations  of the  Bank  because  the Bank
historically has not relied upon brokered deposits as a source of funding.

ACTIVITIES AND INVESTMENTS OF INSURED STATE-CHARTERED BANKS

Section 24 of the FDIA  generally  limits the activities as principal and equity
investments of FDIC-insured, state-chartered banks to those that are permissible
for national  banks.  In 1999, the FDIC  substantially  revised its  regulations
implementing  Section  24 of the  FDIA  to  ease  the  ability  of  FDIC-insured
state-chartered  banks to engage  in  certain  activities  not  permissible  for
national banks, and to expedite FDIC review of bank  applications and notices to
engage in such activities.

Further,  the  Gramm-Leach-Bliley  Act (the "GLBA")  permits  national banks and
state banks,  to the extent  permitted under state law, to engage in certain new
activities  which  are  permissible  for  subsidiaries  of a  financial  holding
company. In order to form a financial subsidiary,  a national bank or state bank
must be  well-capitalized,  and such banks  would be subject to certain  capital
deduction,  risk management and affiliate transaction rules, among other things.
In addition,  the FDIC's final rules  governing the  establishment  of financial
subsidiaries  adopt the position that activities that a national bank could only
engage in through a financial subsidiary, such as securities underwriting,  only
may be conducted in a financial  subsidiary by a state nonmember bank.  However,
activities  that a  national  bank  could  not  engage in  through  a  financial
subsidiary,  such as real  estate  development  or  investment,  continue  to be
governed by the FDIC's standard activities rules. The final rules provide that a
state bank subsidiary that engages only in activities that the bank could engage
in directly  (regardless of the nature of the activities)  will not be deemed to
be a financial subsidiary.

                                       6


COMMUNITY INVESTMENT AND CONSUMER PROTECTION LAWS

In  connection  with its  retail  banking  activities,  the Bank is subject to a
variety of federal laws  designed to protect  depositors  and  borrowers  and to
promote lending to various sectors of the economy and population. Included among
these are:

     o    the Community Reinvestment Act ("CRA");

     o    the Electronic Funds Transfer Act;

     o    the Equal Credit Opportunity Act;

     o    the Expedited Funds Availability Act;

     o    the Fair Credit Reporting Act;

     o    the Fair Debt Collection Practices Act;

     o    the Home Mortgage Disclosure Act;

     o    the Home Ownership and Protection Act;

     o    the Real Estate Settlement Procedures Act;

     o    the Truth in Savings Act; and

     o    the Truth in Lending Act.

The Bank is subject to rules and regulations  implementing  such laws which were
promulgated  by, among other  regulators,  the Board of Governors of the Federal
Reserve system,  the FDIC, the U.S.  Department of Housing and Urban Development
and the Federal Trade Commission.

The CRA requires the FDIC to evaluate the Bank's  performance in helping to meet
the credit needs of their entire communities,  including low-and-moderate-income
neighborhoods,  consistent with their safe and sound banking operations,  and to
take this record into consideration when evaluating  certain  applications.  The
CRA does not establish  specific lending  requirements or programs for financial
institutions,  nor does it limit an institution's discretion to develop the type
of products  and  services  that it believes  are best suited to its  particular
community, consistent with the purposes of the CRA.

Recent   amendments  to  CRA   regulations  by  the  FDIC  have  created  a  new
classification of "intermediate small bank," which includes banks that have $250
million or more but less than $1 billion in assets.  San Joaquin Bank  currently
qualifies as an "intermediate small bank" for CRA purposes.  The CRA performance
of  intermediate  small banks is measured  using a lending  test and a community
development test. An intermediate  small bank may elect to be treated as a large
bank for CRA purposes, if it maintains the necessary data.

The FDIC's CRA regulations for large banks are based upon objective  criteria of
the performance of institutions  under three key assessment tests: (i) a lending
test, to evaluate the institution's record of making loans in its service areas;
(ii) an investment  test, to evaluate the  institution's  record of investing in
community development projects,  affordable housing, and programs benefiting low
or moderate  income  individuals  and  businesses;  and (iii) a service test, to
evaluate the institution's delivery of services through its branches,  ATMs, and
other offices.  As of the date of its most recent CRA evaluation in September of
2005,  the  Bank  was  rated  in  the  highest   category  for  CRA  compliance,
"outstanding."

CUSTOMER INFORMATION SECURITY

The FDIC and other bank  regulatory  agencies have adopted final  guidelines for
establishing  standards for safeguarding  nonpublic  personal  information about
customers that implement provisions of the GLBA (the "Guidelines").  Among other
things, the Guidelines require each financial institution, under the supervision
and ongoing  oversight  of its Board of Directors  or an  appropriate  committee

                                       7


thereof, to develop,  implement and maintain a comprehensive written information
security program designed to ensure the security and confidentiality of customer
information,  to  protect  against  any  anticipated  threats  or hazards to the
security or integrity of such information;  and to protect against  unauthorized
access to or use of such  information  that could result in substantial  harm or
inconvenience to any customer.

PRIVACY

The GLBA requires  financial  institutions to implement  policies and procedures
regarding the disclosure of nonpublic  personal  information  about consumers to
nonaffiliated  third  parties.  In  general,  the statute  requires  the Bank to
explain to consumers its policies and  procedures  regarding  the  disclosure of
such nonpublic personal  information,  and, except as otherwise required by law,
the Bank is prohibited from disclosing  such  information  except as provided in
its policies and procedures.

THE USA PATRIOT ACT

The USA PATRIOT Act of 2001 (the "PATRIOT Act"), designed to deny terrorists and
others the ability to obtain  anonymous  access to the United  States  financial
system, has significant implications for depository institutions, broker-dealers
and other  businesses  involved  in the  transfer  of money.  The  PATRIOT  Act,
together  with  the  implementing  regulations  of  various  federal  regulatory
agencies,  requires  financial  institutions  to implement  additional  or amend
existing policies and procedures with respect to, among other things, anti-money
laundering compliance; suspicious activities and currency transaction reporting;
and due diligence on customers.

GOVERNMENT POLICIES AND LEGISLATION

The  policies  of  regulatory  authorities,  including  the  FDIC,  have  had  a
significant  effect on the operating results of commercial banks in the past and
are  expected  to do so in the  future.  An  important  function  of the Federal
Reserve System is to regulate aggregate national credit and money supply through
such means as open market dealings in securities,  establishment of the discount
rate on member  bank  borrowings,  and changes in reserve  requirements  against
member bank  deposits.  Policies of these  agencies  may be  influenced  by many
factors, including inflation, unemployment,  short-term and long-term changes in
the  international  trade  balance  and fiscal  policies  of the  United  States
government.  Such  policies  have had, and will  continue to have, a significant
effect on the operating results of financial institutions.

The United States Congress has periodically  considered and adopted  legislation
that has  resulted  in further  deregulation  of both banks and other  financial
institutions,  including mutual funds, securities brokerage firms and investment
banking  firms.  No  assurance  can  be  given  as  to  whether  any  additional
legislation will be adopted or as to the effect such  legislation  would have on
the  business of the Bank.  In  addition to the  relaxation  or  elimination  of
geographic  restrictions  on  banks  and bank  holding  companies,  a number  of
regulatory and legislative  initiatives  have the potential for eliminating many
of the product  line  barriers  presently  separating  the  services  offered by
commercial banks from those offered by non-banking institutions.

SARBANES-OXLEY

On July 30, 2002, the President signed into law the  Sarbanes-Oxley  Act of 2002
("Sarbanes-Oxley"). The stated goals of Sarbanes-Oxley are to increase corporate
responsibility,  to provide for enhanced  penalties for  accounting and auditing
improprieties at publicly traded companies and to protect investors by improving
the accuracy and reliability of corporate disclosures pursuant to the securities
laws.

Sarbanes-Oxley generally applies to all companies,  both U.S. and non-U.S., that
file  or  are  required  to  file  periodic  reports  under  the  Exchange  Act.
Sarbanes-Oxley includes very specific additional disclosure requirements and new
corporate  governance rules. These new requirements  prompted the Securities and
Exchange  Commission  (the "SEC") and  securities  exchanges to adopt  extensive
additional disclosure, corporate governance and other related rules and mandated
further studies of certain issues. Sarbanes-Oxley represents significant federal
involvement in matters  traditionally left to state regulatory systems,  such as
the regulation of the accounting profession, and to state corporate law, such as
the relationship between a board of directors and management and between a board
of directors and its committees.

                                       8


Sarbanes-Oxley addresses, among other matters:

     o    independent audit committees for reporting  companies whose securities
          are listed on national  exchanges or automated  quotation systems (the
          "Exchanges")  and  expanded  duties  and  responsibilities  for  audit
          committees;
     o    certification of financial  statements by the chief executive  officer
          and the chief financial officer;
     o    the forfeiture of bonuses or other  incentive-based  compensation  and
          profits  from the sale of an  issuer's  securities  by  directors  and
          senior  officers  in  the  twelve  month  period   following   initial
          publication   of  any   financial   statements   that  later   require
          restatement;
     o    a  prohibition  on  insider  trading  during  pension  fund  black out
          periods;
     o    disclosure of off-balance sheet transactions;
     o    a prohibition  on personal  loans to directors and officers under most
          circumstances;
     o    expedited  filing  requirements  relating to trading by insiders in an
          issuer's securities on Form 4;
     o    disclosure  of a code of ethics  and filing a Form 8-K for a change or
          waiver of such code;
     o    "real time" filing of periodic reports;
     o    the  formation  of  the  Public  Company  Accounting  Oversight  Board
          ("PCAOB") to oversee public  accounting  firms and the audit of public
          companies that are subject to securities laws;
     o    auditor independence; and
     o    various  increased  criminal  penalties  for  violations of securities
          laws.

Given the extensive role of the SEC, the PCAOB and the Exchanges in implementing
rules relating to  Sarbanes-Oxley's  new requirements and the  federalization of
certain  elements  traditionally  within the sphere of state  corporate law, the
impact of Sarbanes-Oxley on reporting companies will be significant. Many of the
new rules  promulgated by the SEC, PCAOB and Exchanges were  implemented  during
2004,  however,  other rules  including but not limited to new internal  control
evaluation  and reporting  rules will only begin to be  implemented  in 2006 and
2007. As a result,  it is impossible to predict with any precision how these new
rules,  regulations  and changes in corporate  law and  governance  will finally
impact public companies including the Bank.

We have implemented  procedures to comply with the various requirements provided
in Sarbanes-Oxley and the rules promulgated by the SEC and the FDIC thereunder.

FUTURE LEGISLATION

Various  legislation,  including proposals to change  substantially the laws and
regulations  governing  the  banking  industry  and  the  financial  institution
regulatory  system,  is from  time to time  introduced  in  Congress,  in  state
legislatures and before various bank regulatory  agencies.  This legislation may
change banking statutes and the operating environment of the Bank in substantial
and unpredictable ways. If enacted,  this legislation could increase or decrease
the cost of doing business, limit or expand permissible activities or affect the
competitive balance among banks, savings associations,  credit unions, and other
financial  institutions.  The Bank cannot predict  whether any of this potential
legislation  will be  enacted  and,  if  enacted,  the  effect  that it,  or any
implementing  regulations,  would  have  on  the  Bank's  business,  results  of
operations or financial condition.  It is likely, however, that the current high
level of  enforcement  and  compliance-related  activities  of federal and state
authorities will continue and potentially increase.

RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS

Under  California law, the Bank is prohibited from making  distributions  to its
shareholders  in an amount that exceeds the lesser of its retained  earnings and
its net income for the three preceding fiscal years (less any distributions paid
during such time).  With the prior  approval of the  Commissioner  of  Financial
Institutions  of the State of  California  (the  "Commissioner"),  a  California
chartered  bank may make a  distribution  up to the greater of (a) its  retained
earnings;  (b) its net income for its last fiscal  year;  and (c) its net income
for the current fiscal year. If the  Commissioner  finds that the  shareholders'
equity of a bank is not  adequate,  the  Commissioner  may order the bank not to
make any distribution to the shareholders of the bank.

The power of the board of  directors  of an insured  depository  institution  to
declare a cash  dividend or other  distribution  with respect to capital is also
subject to federal  statutory and regulatory  restrictions that limit the amount
available for such distribution depending upon the earnings, financial condition
and cash  needs of the  institution,  as well as  general  business  conditions.
FDICIA prohibits insured depository  institutions from paying management fees to
any  controlling  persons or, with certain  limited  exceptions,  making capital

                                       9


distributions,  including  dividends,  if after such transaction the institution
would be undercapitalized.

The  federal  banking  agencies  also  have  authority  to  prohibit  depository
institutions  from engaging in business  practices that are considered unsafe or
unsound, possibly including payment of dividends or other payments under certain
circumstances even if such payments are not expressly prohibited by statute.

CURRENT ACCOUNTING  PRONOUNCEMENTS

The  Bank  has  adopted  SFAS  No.  130,   "Reporting   Comprehensive   Income."
Comprehensive  income  is  equal  to  net  income  plus  the  change  in  "other
comprehensive  income," as defined by SFAS No. 130. This statement  requires the
Bank to report income and (loss) from non-owner sources.  The component of other
comprehensive  income  currently  applicable  to the Bank is the net  unrealized
holding gain or loss on available for sale  securities and  unrealized  gains or
loss from  changes in fair value of interest  rate cap  contracts.  SFAS No. 130
requires that an entity:  (a) classify  items of other  comprehensive  income by
their nature in a financial statement, and (b) report the accumulated balance of
other comprehensive income separately from common stock and retained earnings in
the equity section of the balance sheet.

In December  2002,  the Financial  Accounting  Standards  Board issued SFAS 148,
"Accounting  for  Stock-Based  Compensation - Transition and  Disclosure."  This
statement applies to financial statements for fiscal years ending after December
15,  2002.  It  is  an  amendment  of  SFAS  123,  "Accounting  for  Stock-Based
Compensation," to provide  alternative  methods of transition for an entity that
voluntarily  changes  to the fair value  method of  accounting  for  stock-based
employee  compensation  and also amends the  disclosure  provisions of SFAS 123.
SFAS 123 defines a fair value based  method of  accounting  for  employee  stock
options or similar equity instruments.

However,  both also allow an entity to continue to measure compensation cost for
those plans using the intrinsic  value based method of accounting  prescribed by
APB Opinion No. 25,  Accounting  for Stock Issued to  Employees.  Under the fair
value based method, compensation cost is measured at the grant date based on the
value of the award and is recognized over the service  period,  which is usually
the vesting period. Under the intrinsic value based method, compensation cost is
the  excess,  if any, of the quoted  market  price of the stock at grant date or
other  measurement  date over the amount an  employee  must pay to  acquire  the
stock.

The Bank has elected to continue  accounting for stock-based  compensation under
APB Opinion No. 25 and disclose pro forma net income and earnings per share,  as
if the fair value based method of accounting  defined in Statements  123 and 148
had been applied.

SFAS 123 was revised in December  2004 to require  that,  effective  for periods
beginning  after June 15,  2005,  the Company  begin using the fair market value
method for valuing and  accounting  for stock  options.  On April 14, 2005,  the
Securities  and Exchange  Commission  announced the adoption of a new rule which
delayed the implementation  date for the new requirements until the beginning of
the  next  fiscal  year  (2006).  The  Company  has  decided  to  apply  the new
requirements in 2006 on a prospective basis.

ITEM 1A. RISK FACTORS

CHANGES IN INTEREST RATES MAY ADVERSELY AFFECT OUR PROFITABILITY

Our earnings are impacted by changing interest rates.  Changes in interest rates
impact the demand for new loans,  the rates received on loans and securities and
the rates paid on deposits and other  borrowings.  The relationship  between the
rates  received  on  earning  assets  and the  rates  paid  on  interest-bearing
liabilities is known as interest rate spread. In general,  the wider the spread,
the more San Joaquin  Bank earns.  Interest  rates are highly  sensitive to many
factors that are beyond our control,  including general economic  conditions and
policies of various governmental and regulatory agencies and, in particular,  of
the Federal  Reserve Board.  Changes in monetary  policy,  including  changes in
interest  rates,  could  influence not only the interest we receive on loans and
the amount of interest we pay on deposits and borrowings, but such changes could
also affect our ability to originate loans and obtain deposits.  If the interest
rates paid on deposits and other  borrowings  increase at a faster rate than the
interest  rates received on loans and other  investments,  our earnings could be
adversely  affected.  Our  earnings  could  also be  adversely  affected  if the
interest  rates received on loans and other  investments  fall more quickly than
the interest rates paid on deposits and other borrowings.

                                       10


IF OUR LOAN QUALITY DECLINES, OUR ALLOWANCE FOR LOAN LOSSES MAY BE INADEQUATE

We maintain an allowance for loan losses, which is a reserve established through
a provision for loan losses  charged to expense,  that  represents  management's
estimate  of  probable  losses  that  have been  incurred  within  the  existing
portfolio of loans.  The  allowance is necessary to reserve for  estimated  loan
losses and risks  inherent  in the loan  portfolio.  The level of the  allowance
reflects   management's   continuing  evaluation  of  credit  risks,  loan  loss
experience,  current loan  portfolio  quality,  present  economic and regulatory
conditions and unidentified  losses inherent in the current loan portfolio.  The
determination  of  the  appropriate  level  of the  allowance  for  loan  losses
inherently  involves  a high  degree of  subjectivity  and  requires  us to make
significant  estimates of current credit risks and future  trends,  all of which
may undergo  material  changes.  Any  increases in the allowance for loan losses
will result in a decrease in net income and may have a material  adverse  effect
on our financial condition and results of operations.

Our PROFITABILITY  DEPENDS  SIGNIFICANTLY ON ECONOMIC CONDITIONS IN PLACECENTRAL
CALIFORNIA

Our operations are concentrated in Kern County,  California. As a result of this
geographic  concentration,  the local  economic  conditions  have a  significant
impact on the demand for our products and services as well as the ability of our
customers to repay loans,  the value of the  collateral  securing  loans and the
stability  of our deposit  funding  sources.  A  significant  decline in general
economic conditions, caused by inflation, recession, acts of terrorism, outbreak
of hostilities or other  international  or domestic  occurrences,  unemployment,
drought and other adverse weather  conditions,  changes in securities markets or
other  factors  could  impact local  economic  conditions  and, in turn,  have a
material adverse effect on our financial condition and results of operations.

WE FACE STRONG COMPETITION IN OUR AREA WHICH COULD HURT OUR BUSINESS

The  banking  and  financial  services  business  in our  market  area is highly
competitive.   Such  competitors  primarily  include  national,   regional,  and
community banks within the markets in which we operate. We also face competition
from savings and loans,  credit unions and other financial  services  companies.
Our ability to compete successfully  depends on a number of factors,  including,
among other things:  Personalized  service,  relationships between our customers
and key  managers,  rates we offer on our deposit and loan  products and product
differentiation.  Failure to perform in any of these areas  could  significantly
weaken the  Company's  competitive  position and in turn,  adversely  affect our
financial condition.

WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION AND SUPERVISION

We are subject to extensive federal and state regulation and supervision.  These
regulations  affect our lending  practices,  dividend  policy and growth.  Newly
enacted and changes to existing  statutes,  regulations  or regulatory  policies
could  subject us to  additional  costs  and/or  limit the types of services and
products we may continue to offer or offer in the future. Failure to comply with
laws,  regulations or policies could result in sanctions by regulatory agencies,
civil monetary  penalties and/or  reputation  damage,  any of which could have a
material  adverse  effect on our  business,  financial  condition and results of
operations.

IF WE FAIL TO MAINTAIN EFFECTIVE INTERNAL CONTROLS OVER FINANCIAL REPORTING,  OR
WE FAIL TO COMPLY IN A TIMELY MANNER WITH SECTION 404 OF THE  SARBANES-OXLEY ACT
OF 2002, THE PRICE OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED.

We are required to establish  and maintain  appropriate  internal  controls over
financial  reporting.  Failure to establish  those  controls,  or any failure of
those  controls  once  established,   could  adversely  impact  our  disclosures
regarding  our  business,  financial  condition  or results of  operations.  Our
management  has reviewed the adequacy of our internal  controls  over  financial
reporting, and management believes that our internal controls provide reasonable
assurance  that the financial  statements  are accurate,  prepared in accordance
with generally accepted accounting principles and that our assets are adequately
safeguarded.  Our  independent  auditors  have not yet conducted a review of our
internal controls over financial  reporting,  however,  we believe there will be
such a review during fiscal year 2007 when the  independent  auditors review our
compliance  with the  requirements of Section 404 of the  Sarbanes-Oxley  Act of
2002. Rules adopted by the SEC pursuant to Section 404 require annual assessment
of a company's internal control over financial reporting, and attestation of its
assessment by the  company's  independent  registered  public  accountants.  The
standards  that must be met for  management to assess the internal  control over
financial  reporting  as effective  are new and complex and require  significant
documentation,  testing and possible remediation to meet the detailed standards.
Management's  assessment of internal  controls over  financial  reporting at any
time may identify  weaknesses  and  conditions  that need to be addressed in our

                                       11


internal  controls  over  financial  reporting  or other  matters that may raise
concerns for you. Any actual or perceived weaknesses and conditions that need to
be addressed in our internal  controls over financial  reporting,  disclosure of
management's  assessment of our internal  controls over  financial  reporting or
disclosure  of  our  public  accounting  firm's  attestation  to  or  report  on
management's  assessment of our internal  controls over financial  reporting may
have an adverse impact on the price of our common stock. For example,  if we are
unable to adequately  maintain or improve our internal  controls over  financial
reporting,  we may report that our  internal  controls are  ineffective  and our
external  auditors  will  not be able to  issue an  unqualified  opinion  on the
effectiveness  of our internal  controls.  Ineffective  internal  controls  over
financial  reporting  could  also  cause  investors  to lose  confidence  in our
reported financial information, which would likely have a negative effect on the
trading  price of our  securities  or could  affect  our  ability  to access the
capital markets and which could result in regulatory  proceedings against us by,
among others,  the Federal  Deposit  Insurance  Corporation  and the  Securities
Exchange Commission.

WE MIGHT BE UNABLE TO RECRUIT OR RETAIN  NECESSARY  PERSONNEL,  WHICH COULD SLOW
THE DEVELOPMENT AND DEPLOYMENT OF OUR PRODUCTS AND SERVICES.

Our future  success and ability to sustain our growth  depend upon the continued
service of our  executive  officers,  and other key  personnel  and upon  hiring
additional key personnel.  The unexpected loss of services of one or more of our
key personnel  could have a material  adverse impact on our business  because of
their  skills,  knowledge of our market,  years of industry  experience  and the
difficulty of promptly finding qualified replacement personnel.  In addition, if
we are unable to recruit and sustain  necessary  personnel,  the development and
deployment of our products and services would be hindered, and, as a result, our
results of operation would be materially affected.

OUR TECHNOLOGY AND SYSTEMS MAY EXPERIENCE AN  INTERRUPTION OR BREACH IN SECURITY
We rely heavily on technology and  information  systems to conduct our business.
Any failure, interruption or breach in security of these systems could result in
failures or disruptions in our customer relationship management, general ledger,
deposit, loan and other systems.  While we have policies and procedures designed
to prevent or limit the effect of the failure,  interruption  or security breach
of our systems, there can be no assurance that any such failures,  interruptions
or  security   breaches  will  not  occur.   The  occurrence  of  any  failures,
interruptions or security breaches could damage our reputation, result in a loss
of customer business, subject us to additional regulatory scrutiny, or expose us
to civil litigation and possible financial liability,  any of which could have a
material adverse effect on our financial condition and results of operations.

YOUR ABILITY TO SELL YOUR SHARES OF COMMON STOCK AT THE TIMES AND IN THE AMOUNTS
YOU WANT MAY BE LIMITED

Although our common stock is listed for trading on the Over-the-Counter Bulletin
Board,  the trading volume in our common stock is less than that of other larger
financial  services  companies.  We are not  listed  on the  Nasdaq or any other
securities   exchange.   While   there   are   several   investment   securities
brokers/dealers  who make a  market  in our  common  stock,  there is no  active
trading  market  for our  common  stock and thus you may not be able to sell the
shares of common  stock that you own at the times and in the  amounts  you would
otherwise like to.

SIGNIFICANT   RELIANCE  ON  LOANS  SECURED  BY  REAL  ESTATE  MAY  INCREASE  OUR
VULNERABILITY  TO  DOWNTURNS  IN THE  CALIFORNIA  REAL  ESTATE  MARKET AND OTHER
VARIABLES IMPACTING THE VALUE OF REAL ESTATE.

A large  portion  of our  assets  consist  of loans  secured  by real  estate in
California. At December 31, 2005, approximately 81.46% of our loans were secured
by real estate.  Conditions in the  California  real estate market  historically
have influenced the level of  non-performing  assets. A real estate recession in
the San Joaquin Valley in California  and/or Kern County could adversely  affect
our results of operations. In addition, California has experienced, on occasion,
significant natural disasters,  including  earthquakes,  fires and flooding. The
occurrence  of one or more of such  catastrophes  could  impair the value of the
collateral for our real estate secured loans and adversely  affect us. In recent
years, real estate prices in our market area have risen  significantly.  If real
estate prices were to fall in our market area, the security for many of our real
estate secured loans could be reduced and we could incur  significant  losses if
borrowers of real estate secured loans default,  and the value of our collateral
is insufficient to cover our losses.

                                       12


OUR DIRECTORS AND EXECUTIVE OFFICERS  BENEFICIALLY OWN A SIGNIFICANT  PORTION OF
OUR OUTSTANDING COMMON STOCK.

As of December 31, 2005,  our  directors and  executive  officers  together with
their  affiliates,  beneficially  owned  approximately  24.9% of our outstanding
voting  common  stock  (not  including  vested  options).   As  a  result,  such
shareholders  would  most  likely  control  the  outcome  of  corporate  actions
requiring  shareholder  approval,  including  the election of directors  and the
approval of significant corporate transactions,  such as a merger or sale of all
or  substantially  all of our  assets.  We can  provide  no  assurance  that the
investment  objectives  of  such  shareholders  will be the  same  as our  other
shareholders.

ITEM 2. PROPERTIES

The  following  properties  are owned by the Bank and are  unencumbered.  In the
opinion of Management, all such properties are adequately covered by insurance.



- -----------------------------------------------------------------------------------------------
                       Use of          Square Feet of    Land and        Date of
Name and Location      Facilities      Interior Space    Building Costs  Acquisition
- -----------------      ----------      --------------    --------------  -----------
- -----------------------------------------------------------------------------------------------
                                                             
Administration         Administrative  10,000            $879,000        06/01/1996
1000 Truxtun Ave.      Office and
Bakersfield, CA 93301  data center

- -----------------------------------------------------------------------------------------------
Rosedale               Branch Office   12,600            $3,562,000      02/01/2002 (land)
3800 Riverlakes Dr.                                                      08/01/2004 (building)
Bakersfield, CA 93312

- -----------------------------------------------------------------------------------------------
Stockdale              Branch Office   5,914             $3,317,000      2/27/2004
4600 California Ave.
Bakersfield, CA 93309
- -----------------------------------------------------------------------------------------------


The following  facilities are leased by the Bank as of December 31, 2005. In the
opinion of Management, all such properties are adequately covered by insurance.



- -----------------------------------------------------------------------------------------------
                       Use of          Square Feet of   Land and               Lease
Name and Location      Facilities      Interior Space   Building Costs         Expiration Date
- -----------------      ----------      --------------   --------------         ---------------
- -----------------------------------------------------------------------------------------------
                                                                   

Main Office            Head Office     6,311          $ 6,829.74 per month*    2/28/2006**
1301-17th St.
Bakersfield, CA 93301

- -----------------------------------------------------------------------------------------------
Delano Office          Branch Office   1,690          $1,521.00 per month      9/30/2006
1613 Inyo St.
Delano, CA
- -----------------------------------------------------------------------------------------------

*    This rent amount is subject to a periodic cost of living adjustment based upon the producer
     price index as published by the U.S. Bureau of Labor Statistics. The next adjustment is due
     on March 1, 2013.

**   On February 2, 2006,  the Bank  exercised its option to renew the lease for ten years.  The
     New lease  expires on  2/28/2016  and is  subject to an option to renew for one  additional
     ten-year term.


All of the Bank's  existing  facilities  are  considered  to be adequate for the
Bank's present and anticipated future use.

                                       13


ITEM 3. LEGAL PROCEEDINGS

There  are no  material  pending  legal  proceedings  to  which  the Bank or any
subsidiary is a party or of which their property is subject, other than routine,
ordinary,  litigation  incidental to the business of the Bank or any subsidiary.
None of the ordinary  routine  litigation in which the Bank or any subsidiary is
involved is expected to have material adverse impact upon the financial position
or results of operations of the Bank or any subsidiary.

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

None.

                                       14


                                     PART II


ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

The capital  stock of San Joaquin Bank is  currently  traded on the OTC Bulletin
Board under the symbol "SJQN." The Bank has not filed an application for listing
of its Common  Stock on any  national  stock  exchange  or market,  nor does the
Bank's Management have plans at present to file such an application.

The following  table  summarizes  the range of sales prices of the Bank's common
stock for each  quarter  during the last two  fiscal  years as quoted on the OTC
Bulletin Board.  The quotations  reflect the price that would be received by the
seller without  markups,  mark-downs or commissions and may not have represented
actual transactions:

                                               High          Low
                                               ----          ---
    2005
    ----
    Fourth Quarter                            $34.60        $30.80
    Third Quarter                             $31.65        $26.55
    Second Quarter                            $28.90        $26.25
    First Quarter                             $28.00        $26.15

    2004
    ----
    Fourth Quarter                            $27.75        $22.10
    Third Quarter                             $23.00        $21.50
    Second Quarter                            $23.25        $20.05
    First Quarter                             $23.10        $18.50

As of February 14, 2006,  there were 735 holders of record of the Bank's  common
stock  (including  holders who may be  nominees  for an  undetermined  number of
beneficial owners).  This figure may not include some beneficial owners who hold
shares in nominee name.

San Joaquin Bank has paid a cash  dividend in each of the last eight years.  The
most recent dividend paid was $0.24 per share, payable to shareholders of record
as of February 27, 2006. The following  sets forth the cash dividend  history of
the Bank.

     o    A $0.12 per  share  cash  dividend  was paid to  shareholders  of
          record as of March 25, 1999.
     o    A $0.15 per  share  cash  dividend  was paid to  shareholders  of
          record as of March 3, 2000.
     o    A $0.17 per  share  cash  dividend  was paid to  shareholders  of
          record as of February 12, 2001.
     o    A $0.18 per  share  cash  dividend  was paid to  shareholders  of
          record as of February 22, 2002.
     o    A $0.20 per  share  cash  dividend  was paid to  shareholders  of
          record as of February 7, 2003.
     o    A $0.20 per  share  cash  dividend  was paid to  shareholders  of
          record as of February 20, 2004.
     o    A $0.22 per  share  cash  dividend  was paid to  shareholders  of
          record as of February 25, 2005.
     o    A $0.24 per  share  cash  dividend  was paid to  shareholders  of
          record as of February 27, 2006.

The Bank expects that comparable cash dividends will be paid in future years.

Under California law, the Bank may declare a cash dividend out of the Bank's net
profits  up to the  lesser of the  Bank's  retained  earnings  or the Bank's net
income for the last  three (3)  fiscal  years  (less any  distributions  made to
shareholders  during such period),  or, with the prior  written  approval of the
Commissioner,  in an amount  not  exceeding  the  greatest  of (i) the  retained
earnings of the Bank;  (ii) the net income of the Bank for its last fiscal year;
or (iii) the net income of the Bank for its current  fiscal year. The payment of
any cash  dividends  by the Bank will  depend not only upon the Bank's  earnings
during a  specified  period,  but also on the Bank  meeting  certain  regulatory
capital  requirements.  See  "Item  1 -  Restrictions  on  Dividends  and  Other
Distributions" herein.

                                       15


SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The  following  table  provides  information  as of December  31, 2005 about the
Bank's  common stock that may be issued upon the  exercise of options  under the
Bank's 1989 Stock Option Plan or 1999 Stock Incentive Plan that were approved by
our  shareholders  or that may be issued upon the  exercise  of options  granted
outside of these equity compensation plans.



                                                                                  Number of Securities
                                                                                   Remaining Available
                                  Number of Securities                             for Future Issuance
                                   to be Issued upon        Weighted-average          under Equity
                                      Exercise of          Exercise Price of       Compensation Plans
                                  Outstanding Options,    Outstanding Options,    (Excluding Securities
                                  Warrants and Rights     Warrants and Rights      Reflected in Column
Plan Category                            (#)(a)                  ($)(b)                (a))(#)(c)
- ---------------------------------------------------------------------------------------------------------
                                                                              
Equity compensation plans
 Approved by shareholders             436,666(1)                $14.09                 240,535(2)

Equity compensation plans not
 Approved by shareholders                   -                        -                       -
- ---------------------------------------------------------------------------------------------------------
     Total                            436,666(1)                $14.09                 240,535(2)

     1)   Represents  options granted under the 1989 Stock Option Plan to purchase  130,916 shares of the
          Bank's common stock and options granted under the 1999 Stock Incentive Plan to purchase 305,750
          shares of the Bank's common stock.

     2)   Represents 240,535 shares reserved for issuance under the 1999 Stock Incentive Plan.


ISSUER PURCHASES OF EQUITY SECURITIES

The Bank did not  purchase  any  shares of its  common  stock  during the fourth
quarter of fiscal year 2005.

                                                   16


ITEM 6. SELECTED FINANCIAL DATA

The  following  table  presents  selected  historical   financial   information,
including share and per share information. The selected financial and other data
as of and for the five years ended December 31, 2005 is derived in part from the
audited  Financial  Statements  of the Bank  presented  elsewhere in this annual
report on Form 10-K.  The  selected  historical  financial  data set forth below
should be read in  conjunction  with,  and is  qualified in its entirety by, the
historical  financial  statements  of the  Bank,  including  the  related  notes
included elsewhere herein.



                                                                      At December 31,
                                              ---------------------------------------------------------------
 (DATA IN THOUSANDS, EXCEPT PER SHARE DATA)      2005         2004         2003         2002          2001
                                              ----------   ----------   ----------   ----------    ----------
                                                                                    
   Total Assets                               $  627,014   $  496,705   $  415,501   $  337,388    $  300,038
   Cash & Due froms banks                         24,355       24,082       20,980       19,608        13,152
   Federal Funds Sold                              1,700            -       31,000        9,300        25,000
   Securities available-for-sale                   2,428        2,494            -            -           -
   Securities held-to-maturity                   167,636      122,912       80,563       56,959        48,253
   Total Loans, gross                            408,950      326,879      268,620      237,507       202,926
   Allowance for loan losses                       7,003        5,487        4,819        4,276         3,507
   Deferred loan fees                              1,550        1,023          845          529           326
   Investment in real estate                         710          686          745          805           864
   Total deposits                                575,533      442,976      376,261      304,410       272,313
   Federal funds purchased and securities
     sold under agreements to repurchase               -        8,663        6,380        4,919         3,736
   Long-term debt and other borrowings             6,797        6,805          813          820           827
   Total shareholders' equity                     39,290       33,159       28,209       24,420        21,538

 SELECTED STATEMENT OF OPERATIONS DATA:          2005         2004         2003         2002          2001
 --------------------------------------       ----------   ----------   ----------   ----------    ----------
   Interest income                                32,269       22,055       18,112       17,592        18,537
   Interest expense                                9,046        3,615        2,983        4,091         7,016
   Net interest income before
     provision for loan losses                    23,223       18,440       15,129       13,501        11,521
   Provision for loan losses                       1,200        1,200        1,470        1,670         1,037
   Net interest income after
     provision for loan losses                    22,023       17,240       13,659       11,831        10,484
   Noninterest income                              2,711        3,070        2,927        2,866         2,133
   Noninterest expense                            13,276       11,337       10,261        8,737         7,711
   Income before taxes                            11,458        8,973        6,325        5,960         4,922
   Income tax expense                              4,785        3,516        2,138        2,365         2,047
   Net income                                 $    6,673   $    5,457   $    4,187   $    3,595    $    2,875

 SHARE DATA:                                     2005         2004         2003         2002          2001
                                              ----------   ----------   ----------   ----------    ----------
 Net income per share (basic)                 $     1.95   $     1.61   $     1.25   $     1.10    $     0.89
 Net income per share (diluted)               $     1.83   $     1.51   $     1.18   $     1.06    $     0.86
 Book Value per share (1)                     $    13.47   $    11.39   $     9.85   $     8.84    $     7.68
 Cash dividend per share                      $     0.24   $     0.22   $     0.20   $     0.18    $     0.17
 Weighted average common shares outstanding    3,421,380    3,387,864    3,339,850    3,280,283     3,245,019
 Period end shares outstanding                 3,435,896    3,396,134    3,352,151    3,294,291     3,259,224

     1)   Shareholders' equity and loan loss reserve divided by shares outstanding

                                                  17




                                                                      At December 31,
                                              ---------------------------------------------------------------
 KEY OPERATING RATIOS:                           2005         2004         2003         2002          2001
                                              ----------   ----------   ----------   ----------    ----------
 PERFORMANCE RATIOS:
                                                                                    
   Return on Average Equity (1)                  18.57%      17.85%     15.92%     15.62%       14.25%
   Return on Average Assets (2)                   1.19%       1.19%      1.11%      1.12%        1.07%
   Net interest spread (3)                        3.78%       4.13%      4.17%      4.26%        3.82%
   Net interest margin (4)                        4.56%       4.49%      4.48%      4.69%        4.82%
   Efficiency ratio (5)                          51.19%      52.71%     56.83%     53.38%       56.41%
   Net loans (6) to total deposits               69.57%      72.32%     69.89%     76.40%       74.40%
   Dividend payout ratio (7)                     12.31%      13.66%     16.00%     16.67%       19.10%
   Average shareholders' equity to
     average total assets                         6.41%       6.64%      6.98%      7.21%        7.54%

  ASSET QUALITY RATIOS:
   Nonperforming and restructured loans
     to total loans (8)                           0.18%       0.63%      0.65%      1.84%        1.00%
   Nonperforming and restructured assets
     to total loans and OREO (9)                  0.35%       0.84%      0.92%      2.17%        1.42%
   Net charge-offs to average total loans         0.17%       0.17%      0.20%      0.22%        0.09%
   Allowance for loan losses to total loans       1.72%       1.68%      1.79%      1.80%        1.73%
   Allowance for loan losses to
     nonperforming and restructured loans       963.27%     267.53%    276.48%     97.74%      172.59%

  CAPITAL RATIOS:
   Tier 1 capital to adjusted total assets        6.44%       6.66%      6.89%      7.28%        7.24%
   Tier 1 capital to total risk weighted assets   8.03%       8.68%      8.81%      8.91%        9.14%
   Total capital to total risk weighted assets   10.51%      11.50%     10.06%     10.14%       10.39%

     1)   Net income divided by average shareholders' equity.
     2)   Net income divided by average assets.
     3)   Dollar weighted  average  interest income yield less dollar weighted average interest expense
          rate.
     4)   Net interest income divided by average interest-earning assets.
     5)   Noninterest  expense as a percentage of the sum of net interest  income before  provision for
          loan losses and noninterest income excluding securities gains and losses.
     6)   Total gross loans less the allowance for loan losses, deferred fees and related costs.
     7)   Dividends declared per share as a percentage of net income per share.
     8)   Nonperforming loans consist of nonaccrual loans, loans past due 90 days or more.
     9)   Nonperforming  assets consist of nonperforming  and restructured  loans and other real estate
          owned (OREO).


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS
OF OPERATION

The  following  discussion  addresses  information  pertaining  to the financial
condition and results of operations  of San Joaquin Bank and  Subsidiaries  (the
"Bank") that may not be  otherwise  apparent  from a review of the  consolidated
financial  statements  and related  footnotes.  It should be read in conjunction
with those  statements  and notes  thereto  appearing  elsewhere  in this annual
report on Form 10-K.

This annual report on Form 10-K contains  forward-looking  statements  about San
Joaquin Bank for which it claims the  protection  of the safe harbor  provisions
contained in the Private  Securities  Litigation  Reform Act of 1995,  including
statements  with regard to  descriptions  of our plans or objectives  for future
operations,  products or services,  and forecasts of our  revenues,  earnings or
other  measures  of  economic  performance.  Forward-looking  statements  can be
identified by the fact that they do not relate strictly to historical or current
facts. They often include the words "believe," "expect," "anticipate," "intend,"
"plan,"  "estimate," or words of similar meaning, or future or conditional verbs
such as "will," "would," "should," "could," or "may."

                                       18


Forward-looking   statements,   by  their  nature,  are  subject  to  risks  and
uncertainties.  A number of factors  -- many of which are beyond our  control --
could cause actual  conditions,  events or results to differ  significantly from
those described in the  forward-looking  statements and reported  results should
not be considered an  indication of our future  performance.  Some of these risk
factors include, among others, certain credit, market, operational and liquidity
risks  associated  with our  business  and  operations,  changes in business and
economic  conditions  in  California  and  nationally,  rising  interest  rates,
potential acts of terrorism  (which are beyond our control),  volatility of rate
sensitive deposits and assets,  value of real estate collateral securing many of
our loans, accounting estimates and judgments,  compliance costs associated with
the company's internal control structure and procedures for financial reporting.
These risk factors are not exhaustive and additional  factors that could have an
adverse  effect on our business and  financial  performance  are set forth under
"Risk Factors" in Item 1A and elsewhere in this annual report on Form 10-K.

Forward-looking  statements  speak only as of the date they are made.  We do not
undertake  to update  forward-looking  statements  to reflect  circumstances  or
events that occur after the date forward-looking statements are made.

CRITICAL ACCOUNTING POLICIES

GENERAL

Our financial  statements are prepared in accordance with accounting  principles
generally  accepted  in the United  States of America  ("GAAP").  The  financial
information  contained  within  our  statements  is,  to a  significant  extent,
financial  information  that is based on  measures of the  financial  effects of
transactions  and events that have  already  occurred.  We use  historical  loss
factors,  among other  factors,  in  determining  the inherent  loss that may be
present in our loan portfolio. Actual losses could differ significantly from the
historical and other factors that we use.  Estimates,  assumptions and judgments
are necessary  when assets and  liabilities  are required to be recorded at fair
value,  when a valuation  write-down or valuation reserve related to an asset on
our books is  required  due to a decline in value or when an asset or  liability
needs to be recorded  contingent on a future event.  Other estimates that we use
are related to the expected useful lives of our depreciable assets. In addition,
GAAP itself may change from one previously acceptable method to another method.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is an estimate of the losses that may be sustained
in our  loan  portfolio.  The  allowance  is based on two  basic  principles  of
accounting:  (1)  Statement of Financial  Accounting  Standards  ("SFAS") No. 5,
"Accounting for Contingencies,"  which requires that losses be accrued when they
are probable of occurring and  estimable,  and (2) SFAS No. 114,  "Accounting by
Creditors for Impairment of a Loan," which requires that losses be accrued based
on the differences between the value of collateral, present value of future cash
flows or  values  that  are  observable  in the  secondary  market  and the loan
balance.

Our allowance for loan losses has three basic components: the formula allowance,
the specific allowance and the unallocated  allowance.  Each of these components
is determined based upon estimates that can and do change when the actual events
occur.  The formula  allowance uses historical  losses as an indicator of future
losses and,  as a result,  could  differ  from the loss  incurred in the future.
However,  since this history is updated  with the most recent loss  information,
management  believes the errors that might  otherwise  occur are mitigated.  The
specific  allowance  uses  various  techniques  to arrive at an  estimate of the
expected loss.  Historical loss  information and fair market value of collateral
are used to  estimate  those  losses.  The use of  these  values  is  inherently
subjective  and our actual  losses could be greater or less than the  estimates.
The  unallocated  allowance  addresses  losses that are  attributable to various
factors including  economic events,  industry or geographic sectors whose impact
on the portfolio  are believed to be probable,  but have yet to be recognized in
either the formula or specific allowances. For further information regarding our
allowance for loan losses,  see "Allowance for Loan Losses"  discussion later in
this item.

STOCK BASED AWARDS

SFAS 123 was revised in December  2004 to require  that,  effective  for periods
beginning  after June 15,  2005,  the Company  begin using the fair market value
method for valuing and  accounting  for stock  options.  On April 14, 2005,  the
Securities  and Exchange  Commission  announced the adoption of a new rule which
delayed the implementation  date for the new requirements until the beginning of
the  next  fiscal  year  (2006).  The  Company  has  decided  to  apply  the new

                                       19


requirements in 2006 on a prospective  basis.  Effective  December 31, 2005, the
Board of Directors of the Bank voted to  accelerate  the vesting of all unvested
options to acquire the Company's common stock that were outstanding at that date
(the  "Acceleration"),  except that no options to  non-employee  directors  were
affected by the  Acceleration.  A total of 158,870 shares subject to option were
impacted by the Acceleration.  As a result of the  acceleration,  and based upon
estimated Black-Scholes value calculations,  the Company will not be required to
recognize  pretax  compensation  expense related to the  accelerated  options of
approximately  $833,000.  Had the Acceleration  not occurred,  the Company would
have had to  recognize  this  expense  over the next five years when the Company
becomes subject to the requirements of SFAS No. 123R,  "Share-Based Payment," on
January 1, 2006.  Under  applicable  accounting  guidance,  the  company did not
record a charge related to the  Acceleration.  As a result of the  acceleration,
certain  options granted to the Company's  Chairman of the Board,  Bruce Maclin,
Chief  Executive  Officer,  Bart  Hill,  and two other  highest  paid  executive
officers (together the "Named Executive  Officers")  exceeded the $100,000 limit
established by IRS regulation ss.1.422-4. As such, the excess options granted to
the Named Executive Officers must be treated as non-statutory options. All other
terms and conditions of the accelerated  options remained  unchanged as a result
of the Acceleration.  Based upon information available to Management at the date
of this report,  management expects that the effect of implementation will be to
increase future annual  compensation  expense in 2006 by approximately  $122,000
and decrease future annual net income by approximately $104,000 after tax.

OVERVIEW

At December 31,  2005,  we had total  consolidated  assets of  $627,014,000  (an
increase of 26.23%  compared to the  $496,705,000 in assets at the end of 2004),
total consolidated deposits of $575,533,000 (an increase of 29.92% over the 2004
level  of  $442,976,000),  total  consolidated  net  loans of  $400,397,000  (an
increase 24.98% compared to the $320,369,000 in net loans at year end 2004), and
consolidated shareholders' equity of $39,290,000 (an increase of 18.49% compared
to $33,159,000 at the end of 2004).

We reported  record annual net income of $6,673,000  for the year ended December
31,  2005.  Net income  increased  $1,216,000,  or 22.28%,  over the  $5,457,000
reported  in 2004,  which was an  increase of  $1,270,000,  or 30.33%,  from the
$4,187,000  reported  in 2003.  Diluted  earnings  per share for the year  ended
December  31,  2005  increased  21.19% to $1.83  compared to the $1.51 for 2004,
which was an increase of 27.97% from $1.18 in 2003.  For the year ended December
31, 2005, the  annualized  return on average equity (ROAE) and return on average
assets  (ROAA)  were 18.57% and 1.19%,  respectively,  as compared to 17.85% and
1.19%,  respectively,  for the same period in 2004. We have  experienced  steady
growth  in both  loan and  deposit  volumes  while,  at the same  time,  we have
continued to maintain control over our overhead and other fixed expenses,  which
has resulted in our record  earnings  performance.  Our growth in deposits stems
from continued local advertising and business promotion  activities.  There have
been no special  promotions or other deposit  campaigns  utilized during 2005 to
attract new deposits, nor have we relied upon brokered deposits of any kind.

During the three year period from  December 31, 2002 to December  31, 2005,  the
Bank's total  assets,  total  loans,  and total  deposits  have grown by 85.84%,
72.18%, and 89.07%, respectively.

We ended  2005 with a Tier 1 capital  ratio of 6.44%,  a Tier 1 capital  to risk
weighted asset ratio of 8.03%,  and a total capital to risk weighted asset ratio
of 10.51%.  At the end of 2004,  these  ratios  were  6.66%,  8.68% and  11.50%,
respectively.  We met all the criteria under current regulatory guidelines for a
"well capitalized" bank as of December 31, 2005.

                                       20


The  following  table  provides  a summary of the major  elements  of income and
expense for the three years ended December 31:



                                                      Increase (Decrease)           Increase (Decrease)
(DATA IN THOUSANDS, EXCEPT PER SHARE DATA)    2005    Amount    % Change     2004    Amount  % Change     2003
                                            -----------------------------  ---------------------------  --------
                                                                                    
INTEREST INCOME
  Loans (including fees)                    $26,212   $ 6,740     34.61%   $19,472  $ 3,449    21.53%    $16,023

  Investment securities                       5,337     3,005    128.86%     2,332      552    31.01%      1,780
  Federal funds sold and other
    interest-bearing balances                   720       469    186.85%       251      (58)  -18.77%        309
                                           --------  --------   --------  --------  -------   -------    -------
      Total Interest Income                  32,269    10,214     46.31%    22,055    3,943    21.77%     18,112
                                           --------  --------   --------  --------  -------   -------    -------

INTEREST EXPENSE
  Deposits
                                              8,631     5,355    163.46%     3,276      399    13.87%      2,877
  Fed funds purchased and securities
    sold under agreements to repurchase          37      (19)    -33.93%        56        1     1.82%         55
  Long term debt and other borrowings           378        95     33.57%       283      232   454.90%         51
                                           --------  --------   --------  --------  -------   -------    -------
      Total Interest Expense                  9,046     5,431    150.24%     3,615      632    21.19%      2,983
                                           --------  --------   --------  --------  -------   -------    -------

Net Interest Income                          23,223     4,783     25.94%    18,440    3,311    21.89%     15,129
Provision for loan losses                     1,200         -      0.00%     1,200     (270)  -18.37%      1,470
                                           --------  --------   --------  --------  -------   -------    -------
Net Interest Income After
  Loan Loss Provision                        22,023     4,783     27.74%    17,240    3,581    26.22%     13,659
                                           --------  --------   --------  --------  -------   -------    -------

NONINTEREST INCOME
  Service charges and fees on deposits          887       (97)    -9.86%       984     (155)  -13.61%      1,139
  Other service charges and fees              1,151       137     13.51%     1,014       94    10.22%        920
  Net gain on sale of fixed assets               11       (32)   -74.42%        43       43                    -
  Other                                         662      (367)   -35.67%     1,029      161    18.55%        868
                                           --------  --------   --------  --------  -------   -------    -------
      Total Noninterest Income                2,711      (359)   -11.69%     3,070      143     4.89%      2,927
                                           --------  --------   --------  --------  -------   -------    -------

NONINTEREST EXPENSE
  Salaries and employee benefits              7,815     1,017     14.96%     6,798    1,300    23.64%      5,498
  Occupancy                                     895       387     76.18%       508      (61)  -10.72%        569
  Fumiture and equipment                      1,025       263     34.51%       762       98    14.76%        664
  Other                                       3,541       272      8.32%     3,269     (261)   -7.39%      3,530
                                           --------  --------   --------  --------  -------   -------    -------
     Total Noninterest Expense               13,276     1,939     17.10%    11,337    1,076    10.49%     10,261
                                           --------  --------   --------  --------  -------   -------    -------

Income Before Taxes
                                             11,458     2,485     27.69%     8,973    2,648    41.87%      6,325
Income Taxes                                  4,785     1,269     36.09%     3,516    1,378    64.45%      2,138
                                           --------  --------   --------   --------  -------   -------   -------
NET INCOME                                  $ 6,673   $ 1,216     22.28%   $ 5,457   $1,270    30.33%   $  4,187
                                           ========  ========   ========   ========  =======   =======   =======

Basic Earnings per Share                    $  1.95   $  0.34     21.10%   $ 1.61    $ 0.36    28.85%   $   1.25
                                           ========  ========   ========   ========  =======   =======   =======
Diluted Earnings per Share                  $  1.83   $  0.31     20.81%   $ 1.51    $ 0.33    28.25%   $   1.18
                                           ========  ========   ========   ========  =======   =======   =======


NET INTEREST INCOME

Net  interest  income,  the  difference  between  interest  earned  on loans and
investments and interest paid on deposits and other borrowings, is the principal
component  of our  earnings.  The  following  tables  provide a  summary  of the
components of net interest  income and the changes within the components for the
periods  indicated.  The  second  and third  tables  set forth a summary  of the
changes in interest income and interest  expense due to changes in average asset
and liability balances (volume) and changes in average interest rates (rate) for
the periods indicated.

                                       21


DISTRIBUTION  OF ASSETS,  LIABILITIES & SHAREHOLDERS'  EQUITY,  RATES & INTEREST
MARGIN



                                                                 Twelve Months Ended December 31
(DOLLARS IN THOUSANDS)                         2005                            2004                            2003
                                  ------------------------------  -----------------------------  -------------------------------
                                      Avg                 Avg         Avg                 Avg         Avg                 Avg
                                    Balance   Interest   Yield      Balance   Interest   Yield      Balance   Interest   Yield
                                  ------------------------------  -----------------------------  -------------------------------
ASSETS
Earning assets:
                                                                                               
  Loans (1)(2)(3)                 $ 328,132   $ 26,212   7.99%    $ 279,812   $ 19,472    6.96%    $ 236,927   $ 16,023   6.76%
  Taxable investments               156,451      5,268   3.37%      110,109      2,293    2.08%       69,212      1,740   2.51%
  Tax-exempt investments              1,183         69   5.83%        1,005         39    3.88%        1,015         40   3.94%
  Fed funds sold & int-bearing       23,258        720   3.10%       19,538        251    1.28%       30,510        309   1.01%
                                  ------------------------------  -----------------------------  -------------------------------

Total earning assets                509,024     32,269   6.34%      410,464     22,055    5.37%      337,664     18,112   5.36%
                                  ------------------------------  -----------------------------  -------------------------------

Cash & due from banks                26,347                          23,770                           20,374
Other assets                         25,571                          26,026                           18,935
                                  ---------                       ---------                        ---------
Total Assets                      $ 560,942                       $ 460,260                        $ 376,973
                                  =========                       =========                        =========

LIABILITIES
Interest-bearing liabilities:
  NOW & money market               $213,249     $5,471   2.57%      168,403      1,522    0.90%    $ 154,405      1,270   0.82%
  Savings                           106,552      2,602   2.44%       86,972      1,377    1.58%       63,816      1,135   1.78%
  Time deposits                      24,171        558   2.31%       24,268        377    1.55%       25,582        472   1.85%
  Other borrowings                    8,893        415   4.67%       11,215        339    3.02%        6,451        106   1.64%
                                  ------------------------------  -----------------------------  -------------------------------
Total interest-bearing
liabilities                         352,865      9,046   2.56%      290,858      3,615    1.24%      250,254      2,983   1.19%
                                  ------------------------------  -----------------------------  -------------------------------

Noninterest-bearing deposits        166,573                         131,935                           97,073
Other liabilities                     5,570                           6,888                            3,343
                                  ---------                       ---------                        ---------

Total Liabilities                   525,008                         429,681                          350,670

SHAREHOLDERS' EQUITY
Shareholders' equity                 35,934                          30,579                           26,303
                                  ---------                       ---------                        ---------
Total Liabilities &
  Shareholders' Equity            $ 560,942                       $ 460,260                        $ 376,973
                                  =========                       =========                        =========

Net Interest Income &
   Net Interest Margin (4)                    $ 23,223   4.56%                $ 18,440    4.49%                $ 15,129   4.48%
                                              ================                =================                ================

     1)   Loan interest income includes fee income of $1,907,000 $1,536,000, and $895,000 for the years ended December 31, 2005,
          2004, and 2003, respectively.

     2)   Includes the average  allowance for loan losses of $6,026,000,  $5,524,000,  and $5,255,000 and average  deferred loan
          fees of $1,315,000, $934,000, and $804,000 for the years ended December 31, 2005, 2004, and 2003, respectively.

     3)   Includes nonperforming and restructured loans of $727,000, $2,051,000, and $1,743,000 for the years ended December 31,
          2005, 2004, and 2003, respectively.

     4)   Net interest margin is computed by dividing net interest income by the total average earning assets.

                                                               22



SUMMARY OF CHANGES IN INTEREST INCOME AND EXPENSE



- --------------------------------------------------------------------------------
                                            Twelve Months Ended December 31
(DOLLARS IN THOUSUNDS)                               2005 over 2004
- --------------------------------------------------------------------------------
                                         Volume           RATE       Net Change
- --------------------------------------------------------------------------------
Earning Assets:

Net loans (1)(2)                        $ 3,363          $ 3,377      $ 6,740
Taxable investments                         965            2,010        2,975
Tax-exempt investments (3)                    7               23           30
Federal funds sold & other
  interest-bearing balances                  48              421          469
- --------------------------------------------------------------------------------
Total                                     4,383            5,831       10,214
- --------------------------------------------------------------------------------
Interest-Bearing Liabilities:

NOW & money market accounts                 405            3,544        3,949
Savings deposits                            310              915        1,225
Time deposits                                (2)             183          181
Other borrowings                            (70)             146           76
- --------------------------------------------------------------------------------
Total                                       643            4,788        5,431
- --------------------------------------------------------------------------------
Interest Differential                   $ 3,740          $ 1,043      $ 4,783
================================================================================

- --------------------------------------------------------------------------------
                                            Twelve Months Ended December 31
                                                     2004 over 2003
- --------------------------------------------------------------------------------
                                           Volume          Rate      Net Change
- --------------------------------------------------------------------------------
Earning Assets:

Net loans (1)(2)                        $ 2,900           $  549      $ 3,449
Taxable investments                       1,028             (475)         553
Tax-exempt investments (3)                    0               (1)          (1)
Federal funds sold & other
  interest-bearing balances                (111)              53          (58)
- --------------------------------------------------------------------------------

Total                                     3,817              126        3,943
- --------------------------------------------------------------------------------
Interest-Bearing Liabilities:

NOW & money market accounts                 115              137          252
- --------------------------------------------------------------------------------
Savings deposits                            412             (170)         242
- --------------------------------------------------------------------------------
Time deposits                               (24)             (71)         (95)
- --------------------------------------------------------------------------------
Other borrowings                             78              155          233
- --------------------------------------------------------------------------------

Total                                       581               51          632
- --------------------------------------------------------------------------------
Interest Differential                   $ 3,236           $   75      $ 3,311
================================================================================

1)      Loan interest income includes fee income of $1,907,000,  $1,536,000, and
        $895,000  for the  years  ended  December  31,  2005,  2004,  and  2003,
        respectively.
2)      The average  balance of  non-performing  and  restructured  loans is not
        significant  as a  percentage  of total  loans  and,  as such,  has been
        included in net loans.
3)      The amount of  tax-exempt  securities  that we hold is  minimal  and the
        amount derived from these securities is not significant, therefore there
        have  been no  adjustments  made to  reflect  interest  earned  on these
        securities on a tax-equivalent  basis. The effective  federal  statutory
        tax rate was  41.76%,  39.18%  and  33.80%  for  2005,  2004,  and 2003,
        respectively.

                                       23


Net interest income, before provision for loan loss, for the year ended December
31,  2005 was  $23,223,000,  an  increase  of  $4,783,000  (25.94%)  compared to
$18,440,000  for the year ended December 31, 2004,  which  increased  $3,311,000
(21.89%) over $15,129,000 for the year ended December 31, 2003.

The net interest  margin for the year ended December 31, 2005 was 4.56% compared
to 4.49% for the year  ended  December  31,  2004,  and 4.48% for the year ended
December 31, 2003. The net interest margin in 2005 reflects the effect of the 25
basis point  increases in the federal  funds rate that occurred in the months of
February,  March,  May,  June,  August,  September,  November and December 2005,
respectively.  The net  interest  margin for 2004  reflects the effect of the 25
basis point  increases in interest  rates that occurred in each of the months of
June, August, September,  November and December 2004. The net interest margin in
the year of 2003 reflects the effect of the 25 basis point  decrease in interest
rates that occurred in June 2003. If interest rates remain at current levels, we
would expect the net  interest  margin to remain about the same during the first
quarter  of 2006.  In a rising  rate  environment,  the net  interest  margin is
expected  to  improve.  Conversely,  in a  declining  rate  environment  the net
interest margin would be expected to decline.

2005 COMPARED TO 2004

Total  interest  income for the year ended  December  31,  2005 was  $32,269,000
compared to $22,055,000 for the same period of 2004, an increase of $10,214,000,
or 46.31%.  Average loans increased  $48,320,000  (17.27%) from  $279,812,000 at
December 31, 2004 to  $328,132,000  at December 31,  2005,  increasing  interest
income by  $3,363,000  for the year ended  December 31,  2005.  During that same
year-over-year period, the average yield on loans increased by 103 basis points,
resulting in an increase in interest income on loans of $3,377,000. The combined
effect was an increase of $6,740,000 in interest  income earned on average loans
during 2005 compared to 2004.  Average taxable investment  securities  increased
from  $110,109,000 at December 31, 2004 to $156,451,000 at December 31, 2005, an
increase of $46,342,000 (42.09%). This increase in taxable investment securities
volume caused  interest  income to increase by $965,000  during the year of 2005
compared to the year of 2004.  The rates of return earned on taxable  investment
securities  increased by 129 basis  points  during this  year-over-year  period,
increasing interest income on taxable investment securities by $2,010,000 during
the year ended  December 31, 2005 compared to the year ended  December 31, 2004.
These two  factors  resulted  in an  increase  in  interest  earned  on  taxable
investment  securities  of  $2,975,000  in 2005  versus the same period of 2004.
Average  federal funds sold and other  interest  bearing  balances  increased by
$3,720,000  (19.04%) to  $23,258,000  at December 31, 2005  compared to the same
period in 2004. This volume increase  resulted in an increase in interest income
of $48,000 on the sale of federal funds during 2005 compared to 2004,  while the
increase of 182 basis points in the average  yield on federal  funds sold caused
an increase in interest  income of  $421,000  during this time  period.  The net
result was an increase of  $469,000  in  interest  income on federal  funds sold
during 2005 compared to 2005.

Interest expense for the year ended December 31, 2005 was $9,046,000 compared to
$3,615,000  for the same period of 2004,  an increase of  $5,431,000  (150.24%).
Average NOW and money market deposits  increased from  $168,403,000 for the year
ended  December 31, 2004 to  $213,249,000  in 2005,  an increase of  $44,846,000
(26.63%).  This increased  volume of  interest-bearing  deposits  resulted in an
increase in interest expense of $405,000 during 2005 compared to 2004, while the
167 basis point increase in average rates during the same period caused interest
expense to  increase  by  $3,544,000.  The result was an  increase  in  interest
expense on NOW and money  market  accounts of  $3,949,000  during the year ended
December 31, 2005 compared to 2004.  Average savings  deposits  increased during
2005  to  $106,552,000,   compared  to  $86,972,000  in  2004,  an  increase  of
$19,580,000  (22.51%).  Because of this  increase  in volume,  interest  expense
increased $310,000. During the same period, interest rates increased by 86 basis
points,  resulting  in an  increase  of  interest  expense of  $915,000  in 2005
compared  to 2004.  The net result was an  increase  of  $1,225,000  in interest
expense on average  savings  deposits  during 2005 versus  2004.  Time  deposits
during the year ended  December 31, 2005  decreased to  $24,171,000  compared to
$24,268,000  during the year ended  December  31,  2004,  a reduction of $97,000
(0.40%).  This decline in average time deposits caused interest  expense to drop
by  $2,000  in 2005  compared  to 2004,  while the 76 basis  point  increase  in
interest rates on time deposits caused interest  expense to increase by $183,000
during  this same time  period.  These two  factors  resulted  in an increase in
interest expense on time deposits of $181,000 in 2005 compared to 2004.  Average
other  borrowings,  consisting  primarily of securities sold under agreements to
repurchase and a six million dollar subordinated note, decreased during the year
ended December 31, 2005 to $8,893,000  compared to  $11,215,000  during the year
ended  December 31, 2004, a decrease of  $2,322,000  (20.70%).  This decrease in
volume caused  interest  expense to decrease by $70,000  during 2005 compared to
2004,  while a 165  basis  point  increase  in  interest  rates  paid  on  other
borrowings  caused  interest  expense to increase  by $146,000  during this same
year-over-year  time  period.  The net  result  was an  increase  of  $76,000 in
interest expense on other borrowings during 2005 compared to 2004.


                                       24


2004 COMPARED TO 2003

Total  interest  income for the year ended  December  31,  2004 was  $22,055,000
compared to $18,112,000  for the same period of 2003, an increase of $3,943,000,
or 21.77%.  Average loans increased  $42,885,000  (18.10%) from  $236,927,000 at
December 31, 2003 to  $279,812,000  at December 31,  2004,  increasing  interest
income by $2,900,000 for the year ended December 31, 2004, and the average yield
on loans during that same  year-over-year  period  increased by 20 basis points,
thereby increasing interest income on loans by $549,000. The combined effect was
an increase of $3,449,000 in interest income earned on average loans during 2004
compared  to  2003.  Average  taxable  investment   securities   increased  from
$69,212,000  at December  31, 2003 to  $110,212,000  at December  31,  2004,  an
increase of $40,897,000 (59.09%). This increase in taxable investment securities
volume caused interest income to increase by $1,028,000  during the year of 2004
compared to the year of 2003.  The rates of return earned on taxable  investment
securities  declined  by 43 basis  points  during  this  year-over-year  period,
reducing interest income on taxable investment securities by $475,000 during the
year ended December 31, 2004 compared to the year ended December 31, 2003. These
two factors resulted in a net increase in interest earned on taxable  investment
securities of $553,000 in 2004 versus the same period of 2003.  Average  federal
funds sold decreased by $10,972,000 (35.96%) to $19,538,000 at December 31, 2004
compared to the same period in 2003. This volume decrease resulted in a decrease
in interest income of $111,000 on the sale of federal funds during 2004 compared
to 2003,  while the increase of 27 basis points in the average  yield on federal
funds sold caused an increase  in  interest  income of $53,000  during this time
period.  The net result was a decrease of $58,000 to interest  income on federal
funds sold during 2004 compared to 2003.

Interest expense for the year ended December 31, 2004 was $3,615,000 compared to
$2,983,000  for the same period of 2003,  an increase  of  $632,000,  or 21.19%.
Average  interest-bearing  demand deposits  increased from  $154,405,000 for the
year ended December 31, 2003 to $168,403,000 in 2004, an increase of $13,998,000
(9.07%).  This  increased  volume of  interest-bearing  deposits  resulted in an
increase in interest expense of $115,000 during 2004 compared to 2003, while the
8 basis point  increase in average rates during the same period caused  interest
expense to increase by $137,000.  The result was an increase in interest expense
on  interest-bearing  demand deposits of $252,000 during the year ended December
31, 2004 compared to 2003.  Average savings  deposits  increased  during 2004 to
$86,972,000,  compared  to  $63,816,000  in 2003,  an  increase  of  $23,156,000
(36.29%).  Because  of this  increase  in  volume,  interest  expense  increased
$412,000, however, interest rates decreased by 20 basis points, resulting in the
decline of interest expense by $170,000 in 2004 compared to 2003. The net result
was an increase of $242,000  in  interest  expense on average  savings  deposits
during 2004 versus 2003.  Time deposits  during the year ended December 31, 2004
decreased to $24,268,000  compared to $25,582,000 during the year ended December
31,  2003,  a reduction  of  $1,314,000  (5.14%).  This  decline in average time
deposits  caused  interest  expense to drop by $24,000 in 2004 compared to 2003,
and the 30  basis  point  decline  in  interest  rates on time  deposits  caused
interest expense to decrease by $71,000 during this same time period.  These two
factors  resulted  in the  reduction  of  interest  expense on time  deposits by
$95,000 in 2004 compared to 2003. Average other borrowings, consisting primarily
of  securities  sold under  agreements to  repurchase  and a six million  dollar
subordinated  note,  increased  during  the  year  ended  December  31,  2004 to
$11,215,000  compared to $6,451,000  during the year ended December 31, 2003, an
increase of $4,764,000 (73.85%). This increase in volume caused interest expense
to increase by $78,000  during  2004  compared to 2003,  while a 138 basis point
increase in interest rates paid on other  borrowings  caused interest expense to
increase by $155,000 during this same year-over-year time period. The net result
was an increase of $233,000 in interest expense on other borrowings  during 2004
compared to 2003.

 PROVISION FOR LOAN LOSSES

We made a $1,200,000 addition to the allowance for loan losses in the year ended
December 31, 2005 compared to a $1,200,000  addition in the year ended  December
31, 2004,  which was a decrease of 18.37% compared to the addition of $1,470,000
to the  allowance  for loan  losses in the year ended  December  31,  2003.  The
provision for loan losses is based upon in-depth  analysis,  in which Management
considers many factors, including, the rate of loan growth, changes in the level
of past due,  nonperforming  and  classified  assets,  changing  portfolio  mix,
overall credit loss experience,  recommendations of regulatory authorities,  and
prevailing  local and national  economic  conditions  to establish  the required
level  of the  allowance  for  loan  losses.  Based  upon  information  known to
Management at the date of this report,  Management believes that these additions
to the total allowance for loan losses allow the Company to maintain an adequate
reserve  to absorb  losses  inherent  in the loan  portfolio.  The ratios of the
allowance for loan losses to nonperforming  and restructured  loans were 963.27%
at December 31, 2005,  267.53% at December 31, 2004, and 276.48% at December 31,
2003.  The ratio of the  allowance  for loan  losses to total loans was 1.72% at
December 31, 2005, 1.68% at December 31, 2004, and 1.79% at December 31, 2003.

                                       25


NONINTEREST INCOME

COMPONENTS OF NONINTEREST INCOME

(DOLLARS IN THOUSANDS)                               2005             2004
- ---------------------------------------------------------------------------
Service charges on deposit accounts              $    887         $    984
Other service charges and fees                      1,151            1,014
Net gain on sale of premises and equipment             11               43
Other                                                 662            1,029
- ---------------------------------------------------------------------------
Total Noninterest Income                         $  2,711         $  3,070
===========================================================================

Noninterest income consists primarily of service charges on deposit accounts and
fees for miscellaneous  services.  Noninterest income totaled $2,711,000 for the
year ended  December 31, 2005, a decrease of $359,000  (11.69%) from  $3,070,000
for the year ended  December 31, 2004,  which  increased  $143,000  (4.89%) from
$2,927,000 in 2003. Service charges on deposit accounts decreased $97,000 during
the year of 2005 compared to the year of 2004. During the year of 2004,  service
charges decreased $155,000 compared to 2003. The decrease in service charges and
fees over the two years was the result of customers  maintaining higher balances
in their  accounts  thereby  offsetting  service  charges and fees that would be
charged  against  those  accounts.  Other  service  charges  and fees  increased
$137,000  during the year of 2005 compared to the year of 2004.  During the year
of 2004,  other service  charges and fees  increased  $94,000  compared to 2003.
Other noninterest and miscellaneous income were down $367,000 during the year of
2005  compared to the year of 2004,  which was up $161,000  compared to 2003. In
2004, the Bank was reimbursed by the Superfund  Redevelopment  Program for costs
incurred in association with the clean up of soil contamination of real property
that  was held as  collateral  by the  bank,  which  resulted  in  higher  other
noninterest  income in the first nine  months of 2004,  as  compared to the same
period in 2005. The Bank has no significant  exposure to  environmental  cleanup
costs related to this property.

NONINTEREST EXPENSE

COMPONENTS OF NONINTEREST EXPENSE

(DOLLARS IN THOUSANDS)                   2005           2004           2003
- --------------------------------------------------------------------------------
Salaries and employee benefits        $   7,815      $   6,798      $   5,498
Occupancy                                   895            508            569
Funiture and equipment                    1,025            762            664
Promotion                                   667            473            518
Travel, meals and lodging                   165            192            169
Professional services                       934            719            810
Office supplies and expenses                665            528            462
Regulatory assessments                      113             90            116
Insurance                                   317            329            246
Director related expenses                   189            253            268
Other                                       491            685            941
- --------------------------------------------------------------------------------
  Total                               $  13,276      $  11,337      $  10,261
================================================================================

Noninterest  expense was  $13,276,000  in 2005,  an increase of  $1,939,000,  or
17.10% from $11,337,000 in 2004,  which increased  $1,076,000,  or 10.49%,  from
$10,261,000 in 2003. Salary and employee benefits increased  $1,017,000 (14.96%)
in 2005 due to normal salary  increases,  increases in group  medical  insurance
premiums and workers'  compensation  premiums,  and the addition of new staff as
compared to the prior year.  In 2004,  salary and  employee  benefits  increased
$1,300,000  (23.64%) due to normal salary increases,  increases in group medical
insurance premiums and workers'  compensation  premiums as compared to the prior
year, and as a result of hiring  additional  personnel for our Rosedale  branch.
While the Rosedale  Branch did not officially  open until August 25, 2004,  some
new employees were hired in July 2004 for training purposes, and others were not
hired until August.  Consequently, a full year's expense of the new personnel at
Rosedale  was not  reflected  until  2005.  Occupancy  and fixed  asset  expense
increased by $650,000  (51.18%)  during the year of 2005 compared to the year of
2004,  which  decreased  $37,000  (3.00%)  compared  to the year of 2003.  These
variances  were due to normal  fluctuations  in  janitorial  expense,  utilities
expenses and other  occupancy-related  expenses, as well as additional occupancy

                                       26


expenses  for the new  Rosedale  branch.  All other  expenses for the year ended
December 31, 2005 totaled  $3,541,000,  an increase of $272,000 (8.32%) compared
to  $3,269,000  for the year of 2004,  which was a decrease of $261,000  (7.39%)
compared to 2003. The increases in other noninterest expense over the last three
years was primarily due to increases in advertising and marketing  expense,  and
increases in professional services which includes audit fees and legal fees. The
efficiency  ratio for the year ended  December  31, 2005 was 51.19%  compared to
52.71%  for the year  ended  December  31,  2004 and  56.83%  for the year ended
December 31, 2003.

PROVISION FOR INCOME TAXES

During the year of 2005, we recorded  income tax expense of $4,785,000  compared
to $3,516,000  during the year of 2004, and $2,138,000  during the year of 2003.
The effective tax rate for the year ended December 31, 2005 was 41.76%  compared
to 39.18% for same period in 2004 and 33.80% in 2003. The effective tax rate was
lower in 2003 due to a deferred  tax  adjustment  being  made.  A  deferred  tax
liability is created as a result of timing  differences  when certain income and
expense items are recognized for income tax reporting purposes. The deferred tax
adjustment  was based upon a review by our external  auditors  which  determined
that we had previously  over-accrued our deferred tax liability.  Also, in 2003,
the Bank  received  a  federal  low  income  housing  tax  credit as a result of
operations  of  Farmersville  Village  Grove  Associates,  a California  limited
partnership  in  which  the Bank is the 95%  limited  Partner  and  Kern  Island
Company,  a subsidiary of the Bank, is the 5% general  partner.  This tax credit
was fully  utilized in 2003,  resulting  in a lower  effective  tax rate in 2003
compared to 2004 and 2005.

SECURITIES

The Bank maintains an investment  portfolio  consisting of U.S.  Treasury,  U.S.
Government   agencies  and  corporations,   and  other  securities.   Investment
securities are held in safekeeping by an independent custodian. The objective of
our investment  portfolio is to maintain a prudent yield and provide  collateral
to pledge for deposits of public funds and other borrowing facilities.  For more
information  on  investment  securities,  see notes 1 and 2 to the  consolidated
financial  statements.  The following table shows the distribution of the Bank's
investment portfolio:

DISTRIBUTION OF SECURITIES IN THE BANK'S INVESTMENT PORTFOLIO



(DOLLARS IN THOUSANDS)                                                  At December 31
                                                            -----------------------------------
                                                                              
Held to Maturity                                                2005          2004         2003
                                                                ----          ----         ----

  U.S. Treasury securities                                  $   29,016    $  51,576    $  15,015
  Securities of U.S. government
    agencies and corporations                                   74,587       42,560       64,504
  Other securities                                              64,033       28,776        1,044
                                                            ----------    ---------    ---------
      Total                                                 $  167,636    $ 122,912    $  80,563
                                                            ==========    =========    =========
      Fair Value                                            $  164,959    $ 122,360    $  80,685
                                                            ==========    =========    =========



(DOLLARS IN THOUSANDS)                                                   At December 31
                                                            -----------------------------------
Available for Sale (carrying amount)                             2005         2004         2003
                                                                 ----         ----         ----
    U.S. Treasury securities                                $      - $          - $          -
    Securities of U.S. government agencies
     and corporations                                              -            -            -
    Other securities                                            2,428         2,494          -
                                                            ---------     ---------    --------
      Total                                                 $   2,428     $   2,494    $     -
                                                            =========     =========    ========



                                       27



MATURITY DISTRIBUTION AND AVERAGE YIELD ON SECURITIES



(DOLLARS IN THOUSANDS)                            After One          After Five
                                 Within One       but Within         but Within           After Ten
Held-to-Maturity                   Year           Five Years         Ten Years              Years                 Other
                               ------------     ------------       ------------           ---------              -------
                                                                                                 
 U.S. Treasury securities        $  21,999        $  7,017          $    -              $       -                 $   -
    Weighted average yield            2.03%           2.47%

 Securities of U.S. government
   agencies and corporations         4,006          64,856              5,631                  94                     -
    Weighted average yield            1.80%           4.18%              4.90%               5.32%

Other securities                         -           1,473              3,534              59,026                     -
    Weighted average yield                            3.57%              3.87%               4.30%
                                 ---------        ---------          --------           ---------               -------
     Total                       $  26,005        $ 73,346            $ 9,165            $ 59,120                 $   -
                                 =========        =========          ========          ==========               =======
     Weighted average yield           1.99%           4.00%              4.50%               4.31%
                                 =========        =========          ========          ==========               =======






(DOLLARS IN THOUSANDS)                                 After One          After Five
                                  Within One          but Within          but Within           After Ten
Available-for-Sale                   Year             Five Years           Ten Years             Years               Other
                                 ------------        ------------        ------------          ---------            -------
                                                                                                 
 U.S. Treasury securities       $          -      $             -      $            -       $          -         $         -

    Weighted average yield

 Securities of U.S.
   government agencies and
   corporations                            -                    -                   -                  -                   -
    Weighted average yield

Other securities                                                                                                       2,428
    Weighted average yield                 -                    -                   -                  -                4.73%
                              --------------      ---------------     ---------------     ----------------    ---------------
     Total                    $            -      $             -     $             -     $            -      $        2,428
                              ==============      ===============     ===============     ================    ==============
     Weighted average yield                                                                                             4.73%
                              ==============      ===============     ===============     ================    ==============



At  December  31,  2005,   held-to-maturity  securities  had  a  fair  value  of
$164,959,000 with an amortized cost basis of $167,636,000.  On an amortized cost
basis,  held-to-maturity investments increased $44,724,000 from the December 31,
2004 balance of $122,912,000,  which had increased $42,349,000 from the December
31, 2003 balance of $80,563,000.  The change in held-to-maturity investments was
primarily due to  maturities of U.S.  Treasury  securities  (down  $22,560,000),
purchases of U.S. Government Agency securities (up $32,027,000) and purchases of
other  securities,  which consist  primarily of mortgage  backed  securities (up
$35,257,000) in 2005. The unrealized pretax loss on held-to-maturity  securities
at  December  31,  2005 was  $2,677,000,  as  compared  to a loss of $552,000 at
December 31, 2004, an increase of  $2,125,000.  This increase in the  unrealized
holding loss on  held-to-maturity  securities was caused by the general increase
in short-term  interest rates. As a general rule, the market price of fixed rate
investment  securities  will decline as interest rates rise,  which is precisely
what  happened.  Inasmuch  as these  investment  securities  are  classified  as
held-to-maturity,  we expect to hold all such securities  until they reach their
respective maturity dates and, therefore,  we do not anticipate  recognizing any
losses on these securities.  The Bank had $2,428,000 in securities classified as
available-for-sale at December 31, 2005.  Available-for-sale securities are held
at fair value which included an unrealized loss of $72,000.

                                       28


LOANS

The following  table  summarizes the composition of the Bank's loan portfolio at
December 31 for the years indicated:

LOAN PORTFOLIO DISTRIBUTION




                                                   2005            2004         2003        2002           2001
(DOLLARS IN THOUSANDS)                          ---------       ----------   ----------   ---------    ----------
                                                                                        

Commercial and industrial loans                 $  55,895      $   61,593   $   67,855   $  63,247     $   59,021
Real estate loans                                       -               -            -           -              -
   Construction and land development              100,115          78,903       50,003      24,445         23,084
   Secured by residential properties               13,468          11,194        7,198       9,181          7,202
   Secured by farmland                             47,665          44,757       33,873      37,358          3,261
   Secured by commercial properties               171,873         114,143       91,724      87,370         67,082
Installment loans                                   1,719           2,018        3,479       3,406          2,478
Loans to finance agricultural production           18,211          13,549       12,970      12,433         40,166
All other loans                                         4             722        1,518          67            632
                                                ---------      ----------    ---------   ---------     ----------
                                                  408,950         326,879      268,620     237,507        202,926
Less:  Allowance for possible loan losses           7,003           5,487        4,819       4,276          3,507
Less:  Deferred loan fees                           1,550           1,023          845         529            326
                                                ---------      ----------    ---------   ---------     ----------
   Net Loans                                     $400,397        $320,369     $262,956    $232,702       $199,093
                                                =========      ==========    =========   =========     ==========



[OBJECT OMITTED]][GRAPHIC OMITTED]

The ending  balance for net loans at  December  31,  2004 was  $400,397,000,  an
increase of $80,028,000 (24.98%) from the year-end 2004 balance of $320,369,000,
which was an increase of $57,413,000  (21.83%) from the 2003 year-end balance of
$262,956,000.

For 2005 compared to 2004, the most significant percentage changes in the Bank's
loan portfolio were as follows:  commercial and industrial  loans have decreased
$5,698,000 from  $61,593,000 at December 31, 2004 to $55,895,000 at December 31,
2005 (9.25%);  construction loans have increased $21,212,000 from $78,903,000 at
December 31, 2004 to  $100,115,000  at December 31, 2005  (26.88%);  real estate
loans  secured  by  residential   properties  have  increased   $2,274,000  from
$11,194,000  at December 31, 2004 to  $13,468,000 at December 31, 2005 (20.31%);
loans secured by farmland have increased $2,908,000 from $44,757,000 at December
31, 2004 to $47,665,000 at December 31, 2005 (6.50%);  real estate loans secured
by  commercial  properties  have  increased  $57,730,000  from  $114,143,000  at
December 31, 2004 to $171,873,000  at December 31, 2005 (50.58%);  and, loans to
finance  agricultural   production  increased  $4,662,000  from  $13,549,000  at
December  31, 2004 to  $18,211,000  at December  31,  2005  (34.41%).  All other
categories  of loans have remained  fairly  stable  compared to the December 31,
2004 balances.

For 2004 compared to 2003, the most significant percentage changes in the Bank's
loan portfolio were as follows:  commercial and industrial  loans have decreased
$6,262,000 from  $67,855,000 at December 31, 2003 to $61,593,000 at December 31,
2004 (9.23%);  construction loans have increased $28,900,000 from $50,003,000 at
December  31, 2003 to  $78,903,000  at December 31, 2004  (57.80%);  real estate
loans  secured  by  residential   properties  have  increased   $3,996,000  from
$7,198,000 at December 31, 2003 to  $11,194,000  at December 31, 2004  (55.52%);
loans  secured by  farmland  have  increased  $10,884,000  from  $33,873,000  at
December 31, 2003 to $44,757,000 at December 31, 2004 (32.13%); and, real estate
loans secured by commercial and  professional  office  properties have increased
$22,419,000  from  $91,724,000 at December 31, 2003 to  $114,143,000 at December
31, 2004  (24.44%).  All other  categories of loans have remained  fairly stable
compared to the December 31, 2003 balances.

Real estate loans have  continued to be a major factor in the ongoing  growth of
the  loan  portfolio  and  Bank  earnings,   and  current  economic  projections
considered  by  management  for Kern  County and the  greater  Bakersfield  area
indicate that loan demand for Kern County and the greater  Bakersfield area will
remain fairly constant over the next few quarters.  The Bank had $333,121,000 in
real estate loans at December 31, 2005 as compared to  $248,997,000  at December
31,  2004.  For  more  information  on  loans,  see  Note 3 to the  consolidated
financial statements.  Rising interest rates could have a negative impact on the
size of the Bank's  construction  loan  portfolio as increased  rates  typically
restrain construction activity in Kern County.

                                       29


The  following  table  summarizes  the maturity  distribution  and interest rate
sensitivity of commercial, real estate construction loans, and agriculture loans
at December 31, 2005:

LOAN MATURITY DISTRIBUTION

 (dollars in thousands)                   Within One  One to Five     After Five
                                             Year        Years           Years
- --------------------------------------------------------------------------------
 Real estate construction loans           $    87,475 $   11,260    $   1,380
 Loans to finance agricultural production      11,636      6,301          274
 Commercial loans                              29,874     21,545        4,476
- --------------------------------------------------------------------------------
      Total                               $   128,985 $   39,106    $   6,130
- --------------------------------------------------------------------------------

LOANS DUE AFTER ONE YEAR WITH PREDETERMINED  INTEREST RATES AND WITH FLOATING OR
ADJUSTABLE RATES

 (dollars in thousands)
- ----------------------------------------------------------
 Real estate construction loans
    with fixed interest rates                 $          -
    with variable interest rates                    12,640
 Loans to finance agriculture production
    with fixed interest rates                            -
    with variable interest rates                     6,575
 Commercial and industrial loans
    with fixed interest rates                            -
    with variable interest rates                    26,021
                                             --------------
 Total Fixed Rate Loans                       $          -
                                             ==============
 Total Variable Rate Loans                    $     45,236
                                             ==============

 Total                                        $     45,236
                                             ==============


COMMITMENTS AND LETTERS OF CREDIT

Loan commitments are agreements to lend to a customer  provided that there is no
violation of any condition  established in the agreement.  Commitments generally
have fixed  expiration  dates or other  termination  clauses.  Since many of the
commitments  are  expected  to  expire  without  being  drawn  upon,  the  total
commitment  amounts do not necessarily  represent  future funding  requirements.
Loan commitments are subject to the Bank's normal credit policies and collateral
requirements.  Standby  letters of credit  commit the Bank to make  payments  on
behalf of customers when certain specified future events occur.  Standby letters
of credit are  subject to the  Bank's  normal  credit  policies  and  collateral
requirements.  Commercial lines of credit are lines of credit that are available
to customers but have not been funded. The following table sets forth the Bank's
commitments and letters of credit at the dates indicated:



(dollars in thousands)                 2005           2004           2003            2002          2001
                                   ------------   ------------   ------------    ------------  ------------
                                                                                  
Commitments to extend credit        $224,027       $160,185        $146,654       $  91,920      $  59,867
Standby letters of credit           $  8,676       $  7,129        $  4,922       $   4,889      $     180




CREDIT QUALITY

We assess and manage  credit risk on an ongoing  basis  through a formal  credit
review  program and approval  policies,  internal  monitoring and formal lending
policies.  We  believe  our  ability  to  identify  and  assess  risk and return
characteristics of our loan portfolio are critical for profitability and growth.
We  emphasize  credit  quality  in the  loan  approval  process,  active  credit
administration and regular  monitoring.  With this in mind, we have designed and
implemented a  comprehensive  loan review and grading  system that  functions to
monitor and assess the credit risk inherent in the loan portfolio.

                                       30


Ultimately,  the credit  quality of our loans may be  influenced  by  underlying
trends in the national and local economic and business  cycles.  Our business is
mostly  concentrated  in Kern  County,  California.  Our economy is  diversified
between agriculture, oil, light industry, and warehousing and distribution. As a
result,  we lend  money  to  individuals  and  companies  dependent  upon  these
industries.

We have significant  extensions of credit and commitments to extend credit which
are secured by real estate, totaling approximately  $426,398,000 at December 31,
2005.  Although we believe this real estate  concentration  has no more than the
normal risk of collectibility,  a substantial decline in the economy in general,
or a decline in real  estate  values in our primary  market area in  particular,
could have an adverse impact on the  collectibility of these loans. The ultimate
recovery of these loans is generally dependent on the successful operation, sale
or  refinancing  of the real  estate.  We monitor  the  effects  of current  and
expected  market  conditions  and other  factors on the  collectibility  of real
estate loans.  When, in our judgment,  these loans are impaired,  an appropriate
provision for losses is recorded.  The more significant  assumptions we consider
involve  estimates of the  following:  lease,  absorption  and sale rates;  real
estate  values  and  rates  of  return;   operating  expenses;   inflation;  and
sufficiency  of collateral  independent  of the real estate  including,  in most
instances, personal guarantees.  Notwithstanding the foregoing,  abnormally high
rates of impairment due to general or local economic  conditions could adversely
affect our future prospects and results of operations.

In  extending  credit  and  commitments  to  borrowers,   we  generally  require
collateral  and/or  guarantees  as  security.  The  repayment  of such  loans is
expected  to come  from cash flow and from  proceeds  from the sale of  selected
assets of the borrowers.  Our  requirement for collateral  and/or  guarantees is
determined  on a  case-by-case  basis in connection  with our  evaluation of the
creditworthiness  of the  borrower.  Collateral  held  varies  but  may  include
accounts receivable, inventory, property, plant and equipment,  income-producing
properties,  residences  and other real  property.  We secure our  collateral by
perfecting  our  interest  in  business  assets,  obtaining  deeds of trust,  or
outright  possession  among other means.  Loan losses from lending  transactions
related to real estate and agriculture compare favorably with our loan losses on
our loan portfolio as a whole.

We believe that our lending  policies and  underwriting  standards  will tend to
mitigate  losses in an economic  downturn;  however,  there is no assurance that
losses  will  not  occur  under  such  circumstances.   Our  loan  policies  and
underwriting  standards  include,  but are not  limited  to, the  following:  1)
maintaining  a  thorough   understanding   of  our  service  area  and  limiting
investments  outside of this area, 2) maintaining an understanding of borrowers'
knowledge  and  capacity  in their  fields of  expertise,  3) basing real estate
construction  loan approval not only on  salability of the project,  but also on
the borrowers'  capacity to support the project financially in the event it does
not  sell  within  the  original  projected  time  period,  and  4)  maintaining
conforming  and  prudent  loan  to  value  and  loan  to cost  ratios  based  on
independent  outside  appraisals  and  ongoing  inspection  and  analysis of our
construction  lending activities.  In addition,  we strive to diversify the risk
inherent in the construction portfolio by avoiding  concentrations to individual
borrowers and on any one project.

CLASSIFIED LOANS

We have  established a system of evaluation of all loans in our loan  portfolio.
Based upon the evaluation  performed,  each loan is assigned a risk rating. This
risk rating system  quantifies the risk we believe we have assumed when entering
into a credit transaction. The system rates the strength of the borrower and the
facility or  transaction,  which  provides a tool for risk  management and early
problem loan recognition.

For each new credit  approval,  credit  review,  credit  extension or renewal or
modification of existing facilities,  the approving officers assign risk ratings
utilizing an eight point rating scale.  The rating assigned by the officers must
then be justified in writing in the Credit Memorandum that accompanies each loan
or credit  facility.  The risk ratings are a measure of credit risk based on the
historical, current and anticipated financial characteristics of the borrower in
the current risk environment.  We assign risk ratings on a scale of 1 to 8, with
1 being the highest quality rating and 8 being the lowest quality rating.  Loans
rated an 8 are charged off.

The primary  accountability  for risk rating management resides with the account
officer.  The Credit Review  Department is  responsible  for confirming the risk
rating  after  reviewing  all the credit  factors  independently  of the account
officer. The rating assigned to a credit is the one determined to be appropriate
by the Credit Review Department.

The loans we consider "classified" are those that have a credit risk rating of 6
through 8. These are the loans and other credit  facilities  that we consider to
be of the greatest risk to us and, therefore,  they receive the highest level of
attention by our account officers and senior credit management officers.

                                       31


A loan that is classified may be either a "performing" or "nonperforming"  loan.
A performing loan is one wherein the borrower is making all payments as required
by the loan agreements and can include "impaired" loans. A nonperforming loan is
one wherein the borrower is not paying as agreed and/or is not meeting  specific
other performance requirements that were agreed to in the loan documentation. We
include all non-accrual  loans,  restructured  loans,  and loans 90 days or more
past due and still accruing within the classified loan category.

The  following  table  summarizes  the Bank's  classified  loans for the periods
indicated:


                          2005              2004
                      ------------      ------------
                          (dollars in thousands)
 Classified Loans       $    4,676        $    4,962
 OREO                          710               686
                       -----------       -----------

 Total                  $    5,386        $    5,648
                       -----------       -----------

The loans and other credit facilities considered classified are also allocated a
specific  amount in the allowance for loan losses,  as further  explained in the
"Allowance for Loan Losses" section herein.  As of December 31, 2005, other than
for classified  loans  disclosed in the above table and impaired loans discussed
elsewhere  in this  report,  management  was not aware of any other  loans as to
which management had serious doubts as to the ability of the borrowers to comply
with the present repayment terms.

NONACCRUAL, PAST DUE, RESTRUCTURED LOANS AND OTHER REAL ESTATE OWNED (OREO)

We generally place loans on nonaccrual  status when they become 90 days past due
as to principal or interest,  unless the loan is well secured and in the process
of  collection.  When a loan is placed on  nonaccrual  status,  the  accrued and
unpaid interest receivable is reversed and the loan is accounted for on the cash
or cost  recovery  method  thereafter,  until  qualifying  for return to accrual
status.  Generally, a loan may be returned to accrual status when all delinquent
interest and principal  become current in accordance  with the terms of the loan
agreement and remaining principal is considered  collectible or when the loan is
both well secured and in the process of  collection.  Loans or portions  thereof
are charged off when, in Management's opinion,  collection appears unlikely. The
following table sets forth nonaccrual loans,  loans past due 90 days or more and
still accruing,  restructured loans performing in compliance with modified terms
and OREO at December 31, 2005, 2004, 2003, 2002,and 2001:



(data in thousands, except percentages)                  2005            2004           2003          2002          2001
                                                       --------        --------       --------      --------      --------
                                                                                                

Past due 90 days or more and still accruing
   Commercial                                        $       -        $      2      $       -      $      -     $       47
   Real Estate                                               -               -              -            83            196
   Consumer and other                                        -               -              -            13             16

Nonaccrual:
   Commercial                                                -               -            169         1,040            119
   Real Estate                                             727           2,049          1,535         2,777          1,608
   Consumer and other                                        -               -              -            22              3

Restructured (in compliance with modified
   terms)                                                    -               -             39           440              43
                                                    ----------       ---------     ----------     ----------   ------------
Total nonperforming and restructured loans                 727           2,051          1,743         4,375           2,032
Other real estate owned                                    710             686            745           805             864
                                                    ----------       ---------     ----------     ----------   ------------
Total nonperforming and restructured assets          $   1,437        $  2,737      $   2,488      $  5,180     $     2,896
                                                    ==========       =========     ==========     =========    ============

Allowance for loan losses as a percentage of
   nonperforming and restructured loans                963.27%         267.53%        276.48%         97.74%        172.59%
Nonperforming and restructured loans to total loans      0.18%           0.63%          0.65%          1.84%          1.00%
Allowance for loan losses to nonperforming and
   restructured assets                                 487.33%         200.47%        193.69%         82.55%        121.10%
Nonperforming and restructured assets total assets       0.23%           0.55%          0.60%          1.54%          0.97%




                                       32


Nonperforming  loans  and  restructured  loans  decreased  $1,324,000  from  the
December 31, 2004 balance,  which increased  $308,000 from the December 31, 2003
balance. The majority of the decrease in nonperforming and restructured loans in
2005 compared to 2004 was caused by a decrease in nonaccrual loans. During 2005,
the Bank closely  monitored  and actively  pursued the  collection  of all loans
classified  as   nonperforming.   At  December  31,  2005,   nonperforming   and
restructured  loans were 0.18% of total loans  compared to 0.63% at December 31,
2004 and 0.65% at December 31, 2003. The ratio of nonperforming and restructured
assets to total  assets was 0.23% at  December  31,  2005  compared  to 0.55% at
December 31, 2004 and 0.60% at December 31, 2003.

Under generally accepted  accounting  principles,  a loan is considered impaired
when,  based on current  information  and events,  it is probable that we may be
unable to collect all amounts due according to the contractual terms of the loan
agreement.  Impaired  loans are measured  based on the present value of expected
future cash flows  discounted  at the loan's  effective  interest  rate or, as a
practical expedient,  at the loan's observable market price or the fair value of
the collateral if the loan is collateral-dependent.  Under some circumstances, a
loan  which  is  deemed  impaired  may  still  perform  in  accordance  with its
contractual terms.  Loans that are considered  impaired are generally not placed
on nonaccrual status unless the loan becomes 90 days or more past due.

Generally, it is the bank's policy, that when a loan is nonaccrual, payments are
applied  against  the  principal  balance  of the loan  until  such time as full
collection of the principal  balance is expected.  The amount of gross  interest
income that would have been  recorded  for  nonaccrual  loans for the year ended
December 31, 2005, if all such loans had been current in  accordance  with their
original terms, was $23,000.

The amount of interest  income that was recognized on nonaccrual  loans from all
cash payments,  including those related to interest owed from prior years,  made
during the year  ended  December  31,  2005,  totaled  $0.  Total cash  payments
received  during  the year  which  were  applied  against  the book  balance  of
nonaccrual  loans  outstanding  at  December  31,  2005,  totaled  approximately
$84,000.

ALLOWANCE FOR LOAN LOSSES

The following  table  summarizes the Bank's loan loss experience for the periods
indicated:

LOAN LOSS ALLOWANCE, CHARGE OFFS & RECOVERIES



(data in thousands, except percentages)                                2005          2004          2003        2002        2001
                                                                   -----------   -----------    ----------  ----------- -----------
                                                                                                          

Beginning Balance                                                    $   5,487     $   4,819      $   4,276   $   3,507   $   2,655

   Provision Charged To Expense                                          1,200         1,200          1,470       1,670       1,037
   Loans Charged Off:
      Commercial Loans                                                    (51)          (20)          (538)       (343)       (175)
      Real Estate Loans
         Construction                                                        -             -              -           -           -
         Secured by Residential Properties                                   -             -            (7)           -           -
         Secured by Commercial Properties                                (800)         (798)              -           -           -
      Installment Loans                                                    (9)           (1)           (28)       (166)        (27)
   Recoveries:
      Commercial Loans                                                      81            76             35          16          16
      Real Estate Loans                                                    188           250              -           -           -
      Installment Loans                                                     29             9             12          19           1
                                                                    ----------    ----------     ----------  ----------  ----------
   Net Charge-offs                                                       (562)         (484)          (526)       (474)       (185)
   Reclassification  from  (to)  reserve for off-balance sheet risks       878          (48)          (401)       (427)           -
                                                                    ----------    ----------     ----------  ----------  ----------
Ending Balance                                                       $   7,003     $   5,487      $   4,819   $   4,276   $   3,507
                                                                    ==========    ==========     ==========  ==========  ==========

Ending Loan Portfolio                                                $ 408,950     $ 326,879      $ 268,620   $ 237,507   $ 202,926
                                                                    ==========    ==========     ==========  ==========  ==========
Allowance for loss as a percentage of ending loan portfolio              1.71%         1.68%          1.79%       1.80%       1.73%


                                       33


ALLOCATION FOR THE ALLOWANCE FOR LOAN LOSSES

We maintain an allowance for loan losses to absorb  losses  inherent in the loan
portfolio.  The  allowance is based on our regular  assessments  of the probable
losses inherent in the loan portfolio and to a lesser extent, unused commitments
to provide  financing.  Determining the adequacy of the allowance is a matter of
judgment,  which reflects  consideration of all significant  factors that affect
the  collectibility  of the portfolio as of the evaluation date. Our methodology
for  measuring  the  appropriate  level of the  allowance  relies on several key
elements,   which  include  the  formula  allowance,   specific  allowances  for
identified problem loans and the unallocated reserve. The unallocated  allowance
contains  amounts that are based on our evaluation of existing  conditions  that
are not  directly  measured in the  determination  of the  formula and  specific
allowances.

The formula  allowance is  calculated  by applying  loss factors to  outstanding
loans and certain  unused  commitments,  in each case based on the internal risk
grade of such loans and  commitments.  Changes in risk grades of both performing
and nonperforming loans affect the amount of the formula allowance. Loss factors
are  based on our  historical  loss  experience  and may be  adjusted  for other
factors that, in our judgment,  affect the collectibility of the portfolio as of
the evaluation date. At December 31, 2005, the formula  allowance was $3,866,000
compared to $2,966,000 at December 31, 2004 and $3,328,000 at December 31, 2003.
The increase in the formula  allowance  was primarily a result of an increase in
the volume of the loan portfolio.

In addition to the formula  allowance  calculated by the application of the loss
factors  to the  standard  loan  categories,  specific  allowances  may  also be
calculated.   Quarterly,   all   significant   classified   loans  are  analyzed
individually  based on the source and adequacy of repayment and specific type of
collateral,  and an  assessment  is made of the adequacy of the formula  reserve
relative to the individual  loan. A specific  allocation  either higher or lower
than the  formula  reserve  will be  calculated  by  Management  based  upon the
higher/lower-than-normal probability of loss and the adequacy of the collateral.
At December 31, 2005 the specific  allowance was $1,412,000 on a classified loan
base  of  $4,676,000,  compared  to a  specific  allowance  of  $1,165,000  on a
classified  loan  base  of  $4,962,000  at  December  31,  2004,  $416,000  on a
classified  loan base of  $3,682,000  at  December  31,  2003,  $2,020,000  on a
classified  loan base of  $15,157,000  at December 31, 2002, and $1,502,000 on a
classified loan Base of $12,176,000 at December 31, 2001.

At December 31, 2005, there was $1,724,000 in the allowance for loan losses that
was  unallocated  compared to $1,172,000  that was  unallocated  at December 31,
2004,  $822,000 that was  unallocated  as of December 31, 2003,  and $0 that was
unallocated  as of December 31, 2002,  and December 31, 2001.  In the opinion of
Management,  and based upon an  evaluation of potential  losses  inherent in the
loan portfolio,  it was necessary to establish additional  unallocated allowance
amounts  above the amounts  allocated  using the formula and specific  allowance
methods,  based upon  Management's  evaluation of the following  factors:

     o    The current  national  and local  economic  and  business  conditions,
          trends and  developments,  including the  condition of various  market
          segments within our lending area;

     o    Changes in lending  policies and  procedures,  including  underwriting
          standards and collection, charge-off, and recovery practices;

     o    Changes  in the  nature,  mix,  concentrations  and volume of the loan
          portfolio;

     o    The  effect of other  external  factors  such as legal and  regulatory
          requirements  on the level of estimated  credit  losses in our current
          portfolio.

There can be no assurance that the adverse impact of any of these  conditions on
us will not be in excess of the combined allowance for loan losses as determined
by us at December 31, 2005 and set forth in the preceding paragraph.

The allowance for loan losses includes  $878,000  reclassified  from the reserve
for  off-balance  sheet items.  The Bank  evaluates the reserve for  off-balance
sheet items in accordance with SFAS No. 5, "Accounting for Contingencies." Under
SFAS No. 5,  off-balance  sheet items include  unfunded  commitments and standby
letters of credit.  At December  31, 2004,  the bank had  reserved  $878,000 for
probable losses relating to off-balance  sheet items. In 2005, it was determined
that the potential for losses  relating to  off-balance  sheet items was remote.
Therefore,  the  balance  of  $878,000  previously  classified  as  reserve  for

                                       34


off-balance  sheet items was  reclassified  to the  allowance  for loan  losses.
Further  discussion  of SFAS  No.  5 is  included  in note 1 under  the  caption
"Allowance  for  possible  loan  losses  and  liability  for  off-balance  sheet
exposure."

The  allowance  for loan losses  totaled  $7,003,000  or 1.71% of total loans at
December 31, 2005 compared to $5,487,000 or 1.68% of total loans at December 31,
2004,  $4,819,000  or 1.79% of total loans at December 31, 2003,  $4,276,000  or
1.80% of total loans at December  31,  2002,  and  $3,507,000  or 1.73% of total
loans at December 31, 2001. At these dates, the allowance  represented  963.27%,
267.53%,  276.48%,  97.74%, and 172.59% of nonperforming and restructured loans,
respectively.

It is the Bank's  policy to maintain  the  allowance  for loan losses at a level
adequate  for  risks  inherent  in the  loan  portfolio.  Based  on  information
currently available to analyze loan loss potential,  including economic factors,
overall credit quality, historical delinquency and history of actual charge-offs
as of  December  31,  2005,  we believe  that the  allowance  for loan losses is
adequate.  However,  no prediction of the ultimate level of loans charged off in
future years can be made with any certainty.

IMPAIRED LOANS

At December 31,  2005,  the recorded  investment  in loans that were  considered
impaired  under  SFAS  No.  114 was $0.  At  December  31,  2004,  the  recorded
investment in loans  considered  impaired was $1,754,000 of which $1,754,000 was
included in nonaccrual loans and $0 was included in restructured loans and $0 in
other loans  identified as impaired.  Impaired  loans had  valuation  allowances
totaling  $0 and  $184,000  as of  December  31,  2005 and  December  31,  2004,
respectively.  Between  December 31, 2004 and December 31, 2005,  total impaired
loans  decreased by  $1,754,000.  Other than the impaired  loans and  classified
loans, we are not aware of any other potential problem loans which were accruing
and current at December 31, 2005,  where  serious doubt exists as to the ability
of the borrower to comply with the present repayment terms. In this report,  the
terms "impaired" and  "classified"  will not necessarily be used to describe the
same loans.  "Impaired" loans are those loans that meet the definition  outlined
in SFAS No. 114.  "Classified"  loans generally refer to those loans that have a
credit risk rating of 6 through 8, as further  discussed in the section  "Credit
Quality" above.

The  following  table  summarizes  the  Bank's  impaired  loans for the  periods
indicated:

                              2005             2004

                              (dollars in thousands)
Impaired Loans               $     -        $    1,754
Specific reserves            $     -        $      184



LIQUIDITY

Liquidity  management refers to our ability to provide funds on an ongoing basis
to  meet  fluctuations  in  deposit  levels  as  well as the  credit  needs  and
requirements  of its  clients.  Both assets and  liabilities  contribute  to our
liquidity position.  Federal funds lines, short-term investments and securities,
and loan repayments contribute to liquidity, along with deposit increases, while
loan  funding  and  deposit  withdrawals  decrease  liquidity.   We  assess  the
likelihood of projected  funding  requirements by reviewing  historical  funding
patterns,  current and forecasted  economic  conditions and individual  customer
funding needs.

Our sources of liquidity consist of overnight funds sold to correspondent banks,
and unpledged marketable investments.  On December 31, 2005, consolidated liquid
assets totaled $150,422,000,  or 23.99% of total assets compared to $143,852,000
or 29.0% of total assets on December 31, 2004. In addition to liquid assets,  we
maintain  short-term lines of credit with  correspondent  banks. At December 31,
2005, the Bank had three unused lines of credit with three different  banks. The
credit lines total  $15,000,000  and have variable  interest  rates based on the
individual lending bank's daily federal fund rates, and are due on demand. These
are  uncommitted  lines  under  which  availability  is subject to federal  fund
balances of the issuing banks.  Additionally we have borrowing capacity with the
Federal  Home  Loan Bank in the  amount of  $18,066,000.  We serve  primarily  a
business  and  professional  customer  base and, as such,  our  deposit  base is
susceptible  to  economic  fluctuations.  Accordingly,  we strive to  maintain a
balanced position of liquid assets to volatile and cyclical deposits.

                                       35



CAPITAL RESOURCES

The  current  and  projected  capital  position of the Company and the impact of
capital plans and long-term strategies are reviewed regularly by management. The
Company's capital position  represents the level of capital available to support
continued operations and expansion.

The  Company's  primary  capital  resource  is  shareholders'  equity  which was
$39,290,000  at December 31, 2005 compared to  $33,159,000 at December 31, 2004.
The  change  is the  result  of the  year's  earnings,  the  increase  in  other
comprehensive  income or loss, the payout of a cash dividend to  shareholders in
February  2005,  and issuance of stock in connection  with employee stock option
plans. At December 31, 2005, the Bank's Tier 1 leverage ratio, Tier 1 risk-based
capital ratio, and Total risk based capital ratio were 6.44%, 8.03%, and 10.51%,
respectively.  Bank  Management  can employ  various  means to manage the Bank's
capital  ratios  including  controlling  asset growth and  dividend  payouts and
raising additional  capital.  Management believes it has the ability to maintain
adequate capital to support operations and continued expansion.

CONTRACTUAL OBLIGATIONS



Long-term debt consists of the following at December 31:

                                                                         2005         2004
                                                                      ----------  -----------
                                                                           

Mortgage note payable, 9% stated rate - matures 2030                $   797,000     $   805,000


Subordinated Note, 3 month LIBOR + 2.7% floating rate - due 2019      6,000,000       6,000,000
                                                                   ------------    ------------

Total Long-Term Debt                                                $ 6,797,000     $ 6,805,000
                                                                   ============    ============


The mortgage note payable is secured by a 48-unit seniors apartment project (see
Note 9) and is payable in monthly installments of $2,300 including interest at a
stated rate of 9%. The loan matures in 2030.  The note is  classified as a Rural
Rental Housing (RRH) loan issued pursuant to the Housing Act of 1949.  Under the
RRH program, the borrower pays interest at a rate lower than the stated rate.

The Subordinated  Note, which was issued pursuant to a Purchase  Agreement dated
April 5, 2004 by and between the Company and NBC Capital  Markets  Group,  Inc.,
matures in 2019.  The Company may redeem the  Subordinated  Note,  at par, on or
after April 23, 2009,  subject to compliance with California and federal banking
regulations. The Subordinated Note resets quarterly and bears interest at a rate
equal to the three-month LIBOR index plus a margin of 2.70%.

Estimated  future  maturities  of  long-term  debt at  December  31, 2005 are as
follows:

Years Ending
December 31
- -----------
2006                                    $        9,000
2007                                            10,000
2008                                            11,000
2009                                            12,000
2010                                            13,000
Thereafter                                   6,742,000
                                        --------------
                                        $    6,797,000
                                        ==============

The bank also has lease obligations. These contractual obligations are discussed
in Item 2 above.

                                       36


FINANCIAL RATIOS

The following table shows key financial ratios for the periods indicated:

                                                        2005    2004    2003
                                                     -------- -------- ---------
Return on Average Total Assets                           1.19%    1.19%   1.11%
Return on Average Shareholders' Equity                  18.57%   17.85%  15.92%
Average Shareholders' Equity to Average Total Assets     6.41%    6.64%   6.98%
Net interest Margin                                      4.56%    4.49%   4.48%
Efficiency Ratio                                        51.19%   52.71%  56.83%
Dividend Payout ratio                                   12.31%   13.66%  16.00%


DEPOSIT CATEGORIES

The Bank primarily  attracts  deposits from local businesses and  professionals.
Although San Joaquin Bank's  primary focus is toward the small and  medium-sized
business and professional market, the Bank also provides a full range of banking
services that are available to  individuals,  public  entities,  and  non-profit
organizations.

                                       37


The following table  summarizes the Bank's average  balances of deposits and the
rates paid for the periods indicated:

DEPOSIT DISTRIBUTION AND AVERAGE RATES PAID



                                                            2005
                                    --------------------------------------------------

                                                     Percent of
 Interest Bearing Deposits:           Avg Balance  Total Deposits  Interest   Avg Rate
 -------------------------------------------------------------------------------------
                                                                   

   Now and Money Market               $ 213,249          41.77% $   5,471      2.57%
   Savings                              106,552          20.87%     2,602      2.44%
   Time Deposits                         24,171           4.73%       558      2.31%

 Total Interest Bearing Deposits        343,972          67.37%     8,631      2.51%
 -------------------------------------------------------------------------------------
 Noninterest Bearing Demand Deposits    166,573          32.63%
 -------------------------------------------------------------------------------------
 Total                                $ 510,545         100.00% $   8,631      1.69%
 -------------------------------------------------------------------------------------

                                                            2004
                                    --------------------------------------------------

                                                     Percent of
 Interest Bearing Deposits:           Avg Balance  Total Deposits  Interest   Avg Rate
 -------------------------------------------------------------------------------------
   Now and Money Market               $ 168,403          32.98% $   1,522      0.90%
   Savings                               86,972          17.04%     1,377      1.58%
   Time Deposits                         24,268           4.75%       377      1.55%

 Total Interest Bearing Deposits        279,643          54.77%     3,276      1.17%
 -------------------------------------------------------------------------------------
 Noninterest Bearing Demand Deposits    131,935          25.84%
 -------------------------------------------------------------------------------------
 Total                                $ 411,578          80.62% $   3,276      0.80%
 -------------------------------------------------------------------------------------

                                                            2003
                                    --------------------------------------------------

                                                     Percent of
 Interest Bearing Deposits:           Avg Balance  Total Deposits  Interest   Avg Rate
 -------------------------------------------------------------------------------------
   Now and Money Market               $ 154,405          30.24% $   1,270      0.82%
   Savings                               63,816          12.50%     1,135      1.78%
   Time Deposits                         25,582           5.01%       472      1.85%

 Total Interest Bearing Deposits        243,803          47.75%     2,877      1.18%
 --------------------------------------------------------------------------------------
 Noninterest Bearing Demand Deposits    97,073           19.01%
 --------------------------------------------------------------------------------------
 Total                                $ 340,876          66.77% $   2,877      0.84%
 --------------------------------------------------------------------------------------


                                       38


MATURITY DISTRIBUTION OF TIME DEPOSITS IN AMOUNTS OF $100,000 OR MORE

The following  table  summarizes time remaining to maturity of time deposits and
IRAs of $100,000 or more:

  Time deposits of $100,000 or more with a remaining maturity of.
  (dollars in thousands)

   Three months or less
                                                $   10,558
     Over three months through six months            4,658
     Over six months through one year                2,979
     Over one year                                   2,014
                                                ----------
    Total                                       $   20,209
                                                ----------


SHORT TERM BORROWINGS

The  following  table sets forth the  short-term  borrowings of the Bank for the
periods indicated:


 (dollars in thousands)                 2005           2004           2003
 -------------------------------------------------------------------------
 Repurchase agreements

  Balance at end of period      $          -   $      6,663     $    6,380

  Maximum Balance                      6,796          7,452          7,913

  Average Balance                      2,042          6,741          6,424

  Interest                                35             55             55

  Average rate for the year            1.72%          0.82%          0.86%

  Average rate at period end           0.00%          0.83%          0.86%



OFF-BALANCE SHEET ITEMS

We have certain ongoing commitments under operating leases. These commitments do
not significantly impact operating results. As of December 31, 2005 and December
31, 2004,  commitments  to extend credit and standby  letters of credit were the
only financial  instruments with off-balance sheet risk, except for the interest
rate cap contracts described herein.

We entered into two interest rate cap contracts with a third party to manage the
risk that changes in interest rates will affect the amount of future income over
our  fixed-rate  loans.  The interest rate cap  contracts  qualify as derivative
financial  instruments.  Under an interest rate cap contract, we agree to pay an
initial  fixed amount at the beginning of the contract in exchange for quarterly
payments from the third party when the three-month  LIBOR rate exceeds a certain
fixed level.

At December 31, 2005, we had interest rate cap contracts on $14,000,000 notional
amount of  indebtedness.  Interest rate cap contracts  with notional  amounts of
$7,000,000  and  $7,000,000  have cap rates of 6.50%,  and 6.00%,  respectively.
These two  outstanding  contracts  will mature on June 2, 2008.  The net gain or
loss on the  ineffective  portion of these  interest  rate cap contracts was not
material for the years ended December 31, 2005 and 2004.

The interest rate cap contracts are considered to be a hedge against  changes in
the amount of future  cash flows  associated  with our  interest  income for our
fixed-rate loans.  Accordingly,  the interest rate cap contracts are recorded at
fair value in our consolidated balance sheet and the related unrealized gains or
losses on these contracts are recorded in shareholders' equity as a component of
other comprehensive  income. These deferred gains and losses are amortized as an
adjustment  to  interest  expense  over the same  period  in which  the  related
interest payments being hedged are recognized in income.  However, to the extent
that any of these  contracts  are not  considered  to be perfectly  effective in
offsetting the change in the value of the interest  payments  being hedged,  any
changes in fair value relating to the ineffective portion of these contracts are
immediately  recognized  in  income.  The net effect of this  accounting  on our
operating  results is that potential  loss in interest  income on the portion of
fixed-rate  loans being hedged is generally  recorded  based on a fixed interest
rate.

                                       39


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The goal for  managing  our assets and  liabilities  is to maximize  shareholder
value and earnings  while  maintaining  a high  quality  balance  sheet  without
exposing  ourselves to undue  interest  rate risk.  Our Board of  Directors  has
overall  responsibility for our interest rate risk management policies.  We have
an Asset/Liability  Management  Committee (ALCO), which establishes and monitors
guidelines to control the  sensitivity of earnings to changes in interest rates.
The company does not engage in trading  activities to manage interest rate risk,
however,  the Board of Directors has approved,  and the Company  currently uses,
derivatives to manage  interest rate risk.  These  derivatives  are discussed in
Item 7  under  the  caption  "Off-Balance  Sheet  Items"  and in  note 11 to the
consolidated  financial  statements.  Interest rate risk is the most significant
market risks  affecting the Bank.  Management does not believe the Company faces
other  significant  market  risks  such  as  foreign  currency  exchange  risks,
commodity risks, or equity price risks.

ASSET AND LIABILITY MANAGEMENT

Activities involved in asset/liability management include but are not limited to
lending,  accepting and placing  deposits,  investing in securities  and issuing
debt.   Interest  rate  risk  is  the  primary  market  risk   associated   with
asset/liability  management.  Sensitivity  of earnings to interest  rate changes
arises when yields on assets change in a different time period or in a different
amount from that of interest  costs on  liabilities.  To mitigate  interest rate
risk, the structure of the balance sheet is managed with the goal that movements
of interest  rates on assets and  liabilities  are  correlated and contribute to
earnings  even in  periods  of  volatile  interest  rates.  The  asset/liability
management  policy  sets  limits on the  acceptable  amount of  variance  in net
income, net interest income and market value of equity.

The following table  summarizes the interest rate  sensitivity  gaps inherent in
the Bank's asset and liability portfolios at December 31, 2005:



                                        Dec 2005-    Apr 2006-     Jan 2007-    Jan 2009-   Jan2011
(dollars in thousands)                  Mar 2006     Dec 2006      Dec 2008     Dec 2010    Dec 2015        Total
- ----------------------------------------------------------------------------------------------------------------------
                                                                                         
Interest Earning Assets:
  Interest-bearing deposits in banks    $     390    $       -     $       -    $        -   $       -     $     390
  Federal funds sold                        1,700            -             -             -           -         1,700
  Investment securities                    26,322       11,698        79,702        26,341      20,365       164,428
  Loans                                   259,529       73,801        19,153        11,811      32,879       397,173
- ----------------------------------------------------------------------------------------------------------------------
Total Interest Earning Assets           $ 287,941    $  85,499     $  98,855    $   38,152   $  53,244     $ 563,691
- ----------------------------------------------------------------------------------------------------------------------

Interest Bearing Liabilities:
  NOW and money market                  $ 262,578            -     $       -    $        -   $       -     $ 262,578
  Savings deposits                         99,604            -             -             -           -        99,604
  Time deposits                            14,237        9,644         3,204             -           -        27,085
  Other                                     6,000            -             -             -           -         6,000
- ----------------------------------------------------------------------------------------------------------------------
Total Interest Bearing Liabilities      $ 382,419        9,644         3,204             -           -     $ 395,267
- ----------------------------------------------------------------------------------------------------------------------

Interest Rate Gap                       $ (94,478)   $  75,855     $  95,651    $   38,152   $  53,244
Cumulative Interest Rate Gap            $ (94,478)   $ (18,623)    $  77,028    $  115,180   $ 168,424
Cumulative Gap to Total Assets             -15.07%       -2.97%       12.28%        18.37%      26.86%


The market values of assets or  liabilities  on which the interest rate is fixed
will increase or decrease with changes in market  interest rates. If San Joaquin
Bank invests funds in a fixed rate  long-term  security and then interest  rates
rise, the security is worth less than a comparable  security just issued because
of the lower yield on the original  fixed rate  security.  If the lower yielding
security  had to be sold,  San  Joaquin  Bank  would have to  recognize  a loss.
Correspondingly,  if  interest  rates  decline  after a fixed rate  security  is
purchased,  its value  increases.  Therefore,  while the value of the fixed rate
investment  changes  regardless  of which  direction  interest  rates move,  the
adverse  exposure to "market  risk" is primarily due to rising  interest  rates.
This  exposure is  lessened  by managing  the amount of fixed rate assets and by
keeping  maturities  relatively short.  However,  this strategy must be balanced
against the need for adequate  interest income because variable rate and shorter
fixed rate  securities  generally earn less interest than longer term fixed rate
securities.

                                       40


There  is  market  risk  relating  to San  Joaquin  Bank's  fixed  rate  or term
liabilities  as well as its assets.  For  liabilities,  the adverse  exposure to
market risk is to lower rates  because San Joaquin Bank must continue to pay the
higher rate until the end of the term.

Simulation  of earnings is the primary tool used to measure the  sensitivity  of
earnings to interest rate changes.  Using computer modeling  techniques,  we are
able to estimate the potential impact of changing interest rates on earnings.  A
balance sheet forecast is prepared  using inputs of actual loan,  securities and
interest bearing  liabilities (i.e.,  deposits and borrowings)  positions as the
beginning  base.  The  forecast  balance  sheet is  processed  against  multiple
interest rate scenarios.  The scenarios  include a 100, 200, and 300 basis point
rising rate  forecast,  a flat rate forecast and a 100, 200, and 300 basis point
falling rate forecast which take place within a one year time frame.  The latest
simulation  forecast  using  December 31, 2005 balances and measuring  against a
flat rate  environment,  calculated  that in a one-year  horizon an  increase in
interest  rates of 300 basis  points  would  result in an  increase  of $366,000
(1.24%) in net interest  income.  Conversely,  a 300 basis point  decrease would
result in a decrease  of  $178,000  (0.61%) in net  interest  income.  The basic
structure  of the  balance  sheet has not  changed  significantly  from the last
simulation run.

The  following  tables show the estimated  impact to net interest  income for an
instantaneous  shift in various  interest  rates for the periods  indicated (the
dollar change in net interest  income  represents  the  estimated  change in net
interest income for the next 12 months as compared to a flat rate environment):


  (dollars in thousands)        2005        2004
                              ---------  ---------
    Change in Interest Rates
    + 300 basis points        $    366   $     84
    + 200 basis points             305         24
    + 100 basis points             138       (50)
    - 100 basis points            (220)     (542)
    - 200 basis points            (474)     (934)
    - 300 basis points            (178)   (1,112)



The  simulations of earnings do not  incorporate  any  management  actions which
might moderate the negative consequences of interest rate deviations. Therefore,
in Management's  view,  they do not reflect likely actual results,  but serve as
conservative  estimates of interest rate risk.  Our risk profile has not changed
materially from that at year-end 2005.

San  Joaquin  Bank has  adequate  capital  to  absorb  any  potential  losses as
described  above as a result of a decrease  in interest  rates.  Periods of more
than one year are not  estimated  because it is believed that steps can be taken
to mitigate the adverse effects of such interest rate changes.

REPRICING RISK

One  component,  among  others,  of interest rate risk arises from the fact that
when interest  rates  change,  the changes do not occur equally for the rates of
interest  earned and paid because of  differences  in  contractual  terms of the
assets and  liabilities  held.  San Joaquin Bank has a large portion of its loan
portfolio tied to the prime interest rate. If the prime rate is lowered  because
of general market conditions,  e.g., other money-center banks are lowering their
lending  rates,  these loans will be  repriced.  If San Joaquin Bank were at the
same time to have a large  portion  of its  deposits  in  long-term  fixed  rate
certificates, net interest income would decrease immediately. Interest earned on
loans would decline while  interest  expense would remain at higher levels for a
period of time because of the higher rate still being paid on deposits.

A decrease in net interest income could also occur with rising interest rates if
San Joaquin Bank had a large portfolio of fixed rate loans and securities funded
by deposit  accounts  on which the rate is  steadily  rising.  This  exposure to
"repricing   risk"  is  managed  by  matching  the   maturities   and  repricing
opportunities of assets and  liabilities.  This is done by varying the terms and
conditions  of the products that are offered to depositors  and  borrowers.  For
example,  if many depositors want longer-term  certificates while most borrowers
are requesting loans with floating  interest rates, San Joaquin Bank will adjust
the interest rates on the certificates and loans to try to match up demand.  San
Joaquin Bank can then partially fill in mismatches by purchasing securities with
the appropriate maturity or repricing characteristics.


                                       41


BASIS RISK

Another component of interest rate risk arises from the fact that interest rates
rarely change in a parallel or equal manner.  The interest rates associated with
the various assets and liabilities  differ in how often they change,  the extent
to which  they  change,  and  whether  they  change  sooner or later  than other
interest  rates.  For example,  while the  repricing  of a specific  asset and a
specific  liability  may fall in the same period of a gap report,  the  interest
rate on the asset may rise 100 basis  points,  while market  conditions  dictate
that the liability  increases only 50 basis points.  While evenly matched in the
gap  report,  San Joaquin  Bank would  experience  an  increase in net  interest
income. This exposure to "basis risk" is the type of interest risk least able to
be managed, but is also the least dramatic. Avoiding concentration in only a few
types of assets or liabilities  is the best insurance that the average  interest
received and paid will move in tandem,  because the wider  diversification means
that many different rates, each with their own volatility characteristics,  will
come into play.  San Joaquin Bank has made an effort to minimize  concentrations
in certain types of assets and liabilities.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

                                                                         Page
                                                                         ----

Balance Sheet............................................................  43

Statement of Income......................................................  44

Statement of Changes in Shareholders' Equity.............................  45

Statement of Cash Flows..................................................  46

Notes to Consolidated Financial Statements...............................  47

Report of Independent Registered Public Accounting Firm..................  65

Management's Letter of Financial responsibility..........................  66

                                       42




CONSOLIDATED BALANCE SHEET

                                                                                December 31
                                                                   -----------------------------------
                                                                          2005              2004
- ------------------------------------------------------------------------------------------------------
                                                                                    
 ASSETS

 Cash and due from banks                                            $ 24,355,000          $ 24,082,000
 Interest-bearing deposits in banks                                      390,000               327,000
 Federal funds sold                                                    1,700,000                     -
                                                                   --------------  --------------------
        Total cash and cash equivalents                               26,445,000            24,409,000

 Investment securities (Note 2):
   Held to maturity (market value of $164,959,000 and $122,360,000
     as of December 31, 2005 and 2004, respectively)                 167,636,000           122,912,000
   Available for sale                                                  2,428,000             2,494,000
                                                                   -------------   -------------------
        Total Investment Securities                                  170,064,000           125,406,000

 Loans, net of unearned income                                       407,400,000           325,856,000
 Allowance for loan losses                                             7,003,000             5,487,000
                                                                   -------------   -------------------
        Net Loans (Note 3)                                           400,397,000           320,369,000

 Premises and equipment (Note 4)                                       7,677,000             7,752,000

 Investment in real estate (Note 5)                                      710,000               686,000

 Interest receivable and other assets                                 21,721,000            18,083,000
                                                                   -------------   -------------------
 TOTAL ASSETS                                                      $ 627,014,000         $ 496,705,000
                                                                   =============   ===================
- ------------------------------------------------------------------------------------------------------
 LIABILITIES

 Deposits:
   Noninterest-bearing demand deposits                             $ 186,266,000         $ 150,770,000
   NOW                                                                25,163,000            24,680,000
   Money market                                                      237,415,000           153,458,000
   Savings                                                            99,604,000            92,619,000
   Time deposits and IRAs of $100.000 or more (Note 7)                20,209,000            14,616,000
   Other time deposits and IRAs (Note 7)                               6,876,000             6,833,000
                                                                   -------------   -------------------
     Total Deposits                                                  575,533,000           442,976,000

 Federal funds purchased and securities sold under agreements
   to repurchase (Note 8)                                                      _             8,663,000
 Accrued interest payable and other liabilities                        5,394,000             5,102,000
 Long-term debt and other borrowings (Note 9)                          6,797,000             6,805,000
                                                                   -------------   -------------------
       Total Liabilities                                             587,724,000           463,546,000
                                                                   -------------   -------------------

 SHAREHOLDERS' EQUITY

 Common stock, no par value - 10,000,000 shares authorized;
   3,435,896 and 3,396,134 issued and outstanding
   at December 31, 2005 and 2004, respectively                         9,970,000             9,784,000
 Retained earnings                                                    29,445,000            23,527,000
 Accumulated other comprehensive income (loss) (Note 15)                (125,000)             (152,000)
                                                                   -------------   -------------------
       Total Shareholders' Equity                                     39,290,000            33,159,000
                                                                   -------------   -------------------
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                        $ 627,014,000         $ 496,705,000
                                                                   =============   ===================
- -------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these consolidated financial statements.


                                       43



CONSOLIDATED STATEMENT OF INCOME



                                                                     Years Ended December 31
                                                         --------------------------------------------------
                                                           2005               2004               2003
- -----------------------------------------------------------------------------------------------------------
                                                                                   

INTEREST INCOME
   Loans (including fees)                                $ 26,212,000     $   19,472,000    $    16,023,000
   Investment securities                                    5,337,000          2,332,000          1,780,000
   Fed funds sold and other interest-bearing balances         720,000            251,000            309,000
                                                       --------------     --------------    ---------------
       Total Interest Income                               32,269,000         22,055,000         18,112,000
                                                       --------------     --------------    ---------------
INTEREST EXPENSE
   Deposits                                                 8,631,000          3,276,000          2,877,000
   Fed funds purchased and securities sold under
     agreements to repurchase                                  37,000             56,000             55,000
   Long term debt and other borrowings                        378,000            283,000             51,000
                                                       --------------     --------------    ---------------
       Total Interest Expense                               9,046,000          3,615,000          2,983,000
                                                       --------------     --------------    ---------------

Net Interest Income                                        23,223,000         18,440,000         15,129,000
Provision for loan losses (Note 3)                          1,200,000          1,200,000          1,470,000
                                                       --------------     --------------    ---------------
Net Interest Income After Loan Loss Provision              22,023,000         17,240,000         13,659,000
                                                       --------------     --------------    ---------------

NONINTEREST INCOME
   Service charges and fees on deposits                       887,000            984,000          1,139,000
   Other service charges and fees                           1,151,000          1,014,000            920,000
   Net gain on sale of fixed assets                            11,000             43,000
   Other                                                      662,000          1,029,000            868,000
                                                       --------------     --------------    ---------------
       Total Noninterest Income                             2,711,000          3,070,000          2,927,000
                                                       --------------     --------------    ---------------

NOMNTEREST EXPENSE
   Salaries and employee benefits                           7,815,000          6,798,000          5,498,000
   Occupancy                                                  895,000            508,000            569,000
   Furniture and equipment                                  1,025,000            762,000            664,000
   Other (Note 13)                                          3,541,000          3,269,000          3,530,000
                                                       --------------     --------------    ---------------
       Total Noninterest Expense                           13,276,000         11,337,000         10,261,000
                                                       --------------     --------------    ---------------

Income Before Taxes                                        11,458,000          8,973,000          6,325,000
Income Taxes (Note 14)                                      4,785,000          3,516,000          2,138,000
                                                       --------------     --------------    ---------------

NET INCOME                                               $  6,673,000     $    5,457,000    $     4,187,000
                                                       ==============     ==============    ===============

Basic Earnings per Share (Note 16)                       $       1.95     $         1.61    $          1.25
                                                       ==============     ==============    ===============

Diluted Earnings per Share (Note 16)                     $       1.83     $         1.51    $          1.18
                                                       ==============     ==============    ===============

The accompanying notes are an integral part of these consolidated financial statements.




                                       44


CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY



                                                                    Other
                                        Common Stock            Comprehensive     Retained
                                     Shares        Amount       Income (Loss)     Earnings        Total
- -------------------------------------------------------------------------------------------------------------
                                                                               

Balance, December 31, 2002             3,294,291 $ 9,340,000    $   (146,000)  $ 15,226,000   $ 24,420,000

   Net income                                  -           -               -      4,187,000      4,187,000

   Stock options exercised                57,860     257,000               -              -        257,000

   Other comprehensive income,
     net of tax                                -           -          12,000              -         12,000

   Cash dividends                                                                  (667,000)      (667,000)
- ----------------------------------     ---------   ---------    -------------  -------------  -------------

Balance, December 31, 2003             3,352,151   9,597,000        (134,000)    18,746,000     28,209,000

   Net income                                  -           -               -      5,457,000      5,457,000

   Stock options exercised                43,983     187,000               -              -        187,000

   Other comprehensive income,
     net of tax                                -           -         (18,000)             -        (18,000)

   Cash dividends                              -           -                -      (676,000)      (676,000)
- ------------------------------------  ----------   ---------   ---------------  ------------   ------------
Balance, December 31, 2004             3,396,134   9,784,000        (152,000)    23,527,000     33,159,000


   Net income                                  -           -               -      6,673,000      6,673,000

   Stock options exercised                39,762     186,000               -              -        186,000

   Other comprehensive income,
     net of tax                                -           -          27,000              -         27,000

   Cash dividends                              -           -               -       (755,000)      (755,000)
- ------------------------------------  ----------  ----------   --------------   ------------      ---------

Balance December 31, 2005              3,435,896 $ 9,970,000    $   (125,000)  $ 29,445,000   $ 39,290,000
====================================  ========== ===========   ==============   ============   ============

The accompanying notes are an integral part of these consolidated financial statements.



                                       45


CONSOLIDATED STATEMENT OF CASH FLOWS



                                                                        Years Ended December 31
                                                             ----------------------------------------------
                                                                 2005             2004            2003
- -----------------------------------------------------------------------------------------------------------
                                                                                       
Cash Flows From Operating Activities:
  Net Income                                                      $ 6,673,000    $ 5,457,000     $  4,187,000
  Adjustments to reconcile net income
    to net cash provided by operating activities:
       Provision for possible loan losses                           1,200,000       1,200,000       1,470,000
       Depreciation and amortization                                  939,000         627,000         595,000
       Gain on sale of assets                                         (11,000)        (43,000)              -
       Deferred income taxes                                          549,000         417,000       1,023,000
       Amortization of investment securities' premiums
        and discounts                                                 167,000         381,000          514,000
       Increase in interest receivable and other assets            (4,123,000)       (916,000)      (1,951,000)
       Increase in accrued interest payable and other liabilities   1,170,000       1,274,000        1,015,000
                                                                -------------   -------------   ---------------
          Total adjustments                                          (109,000)      2,940,000        2,666,000
                                                                -------------   -------------   ---------------
             Net Cash Provided by Operating Activities              6,564,000       8,397,000        6,853,000
                                                                -------------   -------------   ---------------
Cash Flows From Investing Activities:
       Proceeds from maturing and called investment securities     62,065,000      62,028,000      35,876,000
       Purchases of investment securities                        (106,927,000)   (109,139,000)    (59,855,000)
       Net increase in loans made to customers                    (82,106,000)    (58,353,000)    (31,724,000)
       Net additions to premises and equipment                       (877,000)     (5,289,000)       (928,000)
                                                                -------------   -------------   --------------
             Net Cash Applied to Investing Activities            (127,845,000)   (110,753,000)    (56,631,000)
                                                                -------------   -------------   --------------

Cash Flows From Financing Activities:
       Net increase in demand deposits and savings accounts       126,921,000      69,294,000      74,643,000
       Net increase (decrease) in certificates of deposit           5,636,000      (2,579,000)     (2,791,000)
       Payments on long term debt and other borrowings                 (8,000)         (7,000)         (7,000)
       Proceeds from long term debt and other borrowings                    -       6,000,000               -
       Net increase (decrease) in fed funds purchased and
        securities sold under agreements to repurchase             (8,663,000)      2,282,000       1,462,000
       Cash dividends paid                                           (755,000)       (676,000)       (667,000)
       Proceeds from issuance of common stock                         186,000         187,000         257,000
                                                                -------------   -------------   --------------
             Net Cash Provided by Financing Activities            123,317,000      74,501,000      72,897,000
                                                                -------------   -------------   --------------

Net Increase (Decrease) in Cash and Cash Equivalents                2,036,000     (27,855,000)     23,119,000
Cash and cash equivalents, at beginning of period                  24,409,000      52,264,000      29,145,000
                                                                -------------   -------------   --------------

Cash and Cash Equivalents, at End of Period                     $  26,445,000    $ 24,409,000    $ 52,264,000
                                                                =============   =============   ==============

Supplemental disclosures of cash flow information
  Cash paid during the period for:
    Interest                                                    $   8,485,000    $  3,648,000    $  3,649,000
                                                                =============   =============   ==============
    Income taxes                                                $   5,622,000    $  3,918,000    $  3,919,000
                                                                =============   =============   ==============
The accompanying notes are an integral part of these consolidated financial statements. 46


                                       46


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

San Joaquin  Bank (the  "Company")  is a California  state-chartered  bank which
commenced  operations in December 1980. The Company has four operating branches,
three located in Bakersfield,  California,  and one in Delano,  California.  Its
deposit  accounts  are  insured by the  Federal  Deposit  Insurance  Corporation
("FDIC").  The majority of the  Company's  business  activity is with  customers
located  within the County of Kern,  California.  In 1987,  the Company formed a
subsidiary, Kern Island Company, to acquire, develop, sell or operate commercial
or residential  real property located in the Company's market area. In 1993, the
Company formed a limited  partnership,  Farmersville Village Grove Associates (a
California  limited  partnership),  to acquire  and operate  low-income  housing
projects  under the  auspices of the Rural  Economic and  Community  Development
Department (formerly Farmers Home  Administration),  United States Department of
Agriculture.  Kern Island Company is the 5% general partner and San Joaquin Bank
is the 95% limited partner (See Notes 5 and 9).

The following is a summary of the Company's significant accounting policies.

The accounting  and reporting  policies of San Joaquin Bank and its wholly owned
subsidiary,  Kern Island  Company,  conform to accounting  principles  generally
accepted  in the  United  States of  America  and  general  practice  in banking
industry.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America 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.

Material  estimates that are  particularly  susceptible  to  significant  change
relate  to the  determination  of the  allowance  for  losses  on loans  and the
valuation  of  real  estate  acquired  in  connection  with  foreclosures  or in
satisfaction of loans. In connection  with the  determination  of the allowances
for losses on loans and foreclosed real estate,  management obtains  independent
appraisals for significant properties

While  management  uses available  information to recognize  losses on loans and
foreclosed  real estate,  future  additions to the  allowances  may be necessary
based on changes in local economic conditions. In addition, regulatory agencies,
as an integral part of their examination process, periodically review the Bank's
allowances  for losses on loans and  foreclosed  real estate.  Such agencies may
require  the  Bank to  recognize  additions  to the  allowances  based  on their
judgments about information available to them at the time of their examination.

BASIS OF CONSOLIDATION

The consolidated  financial  statements  include the accounts of the Company and
its  wholly  owned  subsidiary,  with all  material  intercompany  accounts  and
transactions eliminated.

CASH AND DUE FROM BANKS

Cash and due from  banks  include  cash on hand and  balances  with the  Federal
Reserve Bank and other banks. The Company is required by federal  regulations to
maintain  certain  minimum  average  balances  with the Federal  Reserve,  based
primarily on the Company's average daily deposit balances. At December 31, 2005,
the Company had required  balances and  compensating  balances  with the Federal
Reserve of  $21,218,000.  Cash balances held in banks are insured up to $100,000
by the FDIC.  At December 31, 2005,  cash  balances in excess of FDIC  insurance
amounted to $743,000.

                                       47


INVESTMENT SECURITIES

The Company classifies its qualifying investments as trading, available for sale
or held to maturity,  in accordance  with Financial  Accounting  Standards Board
("FASB")   Statement  of  Financial   Accounting   Standard  ("SFAS")  No.  115,
"Accounting for Certain Investments in Debt and Equity  Securities."  Management
has reviewed the securities  portfolio and classified  securities as either held
to  maturity  or  available  for  sale.  The  Company's  policy  of  classifying
investments  as held to  maturity  is based upon its  ability  and  management's
intent to hold such  securities to maturity.  Securities  expected to be held to
maturity are carried at amortized  historical  cost.  All other  securities  are
classified  as available  for sale and are carried at fair value.  Fair value is
determined  based upon  quoted  market  prices.  Unrealized  gains and losses on
securities  available  for sale  are  included  in  shareholders'  equity  on an
after-tax basis.  Gains and losses on dispositions of investment  securities are
included  in  noninterest   income  and  are   determined   using  the  specific
identification  method.  At December 31, 2005, the Bank had securities that were
classified  as held to  maturity  and as  available  for sale in the  amount  of
$167,636,000 and $2,428,000, respectively.

LOANS

Loans are  stated at the  principal  amount  outstanding,  net of  deferred  and
unearned income and the allowance for possible loan losses. Interest on loans is
accrued monthly on a simple interest basis.

In general,  loans are placed on a non-accrual  basis when there is  significant
doubt as to  collectibility  of  interest  or  principal,  or when  interest  or
principal becomes 90 days past due unless the loan is secured and in the process
of  collection.  Interest  accrued but  uncollected  is reversed  when a loan is
placed on a non-accrual  basis. Loans are restored to an accrual basis only when
payments are current and the borrower has  demonstrated an ability and an intent
to perform in accordance with the terms of the loan agreement. Foreclosed assets
to be held and used are  treated  the same way they would be had the assets been
acquired  in  a  manner  other  than  through  foreclosure.   These  assets  are
periodically  reviewed for  impairment if conditions  indicate that the carrying
amount of the asset may not be recoverable.

The bank defers both  non-refundable  loan fees and direct  origination costs of
loans.  The deferred fees and costs are amortized  into income over the expected
lives of the related loans.

ALLOWANCE FOR POSSIBLE LOAN LOSSES AND LIABILITY FOR OFF-BALANCE SHEET EXPOSURE

SFAS No. 114,  "Accounting by Creditors for  Impairment of a Loan",  as amended,
and SFAS No. 5,  "Accounting  for  Contingencies",  are the  primary  sources of
guidance on  accounting  for loan losses and  liability  for  off-balance  sheet
exposure.  The  allowance  for loan losses is  maintained  at a level which,  in
management's  judgment,  is adequate to absorb  potential losses inherent in the
loan portfolio.  The amount of the allowance is based on management's evaluation
of the  collectibility  of the  loan  portfolio,  including  the  nature  of the
portfolio, credit concentrations, trends in historical loss experience, specific
impaired loans, and economic conditions.  A loan is considered impaired if it is
probable  that the lender  will be unable to collect  all  amounts due under the
contractual  terms of the loan  agreement.  Impaired loans are measured based on
the  present  value of  expected  future  cash  flows  discounted  at the loan's
effective interest rate or, as a practical  expedient,  at the loan's observable
market  price or the  fair  value of the  collateral  if the loan is  collateral
dependent.  Allowances  for impaired  loans are  generally  determined  based on
collateral values or the present value of estimated cash flows. The allowance is
increased  by a provision  for loan  losses,  which is charged to  expense,  and
reduced by charge-offs, net of recoveries.  Changes in the allowance relating to
impaired loans are charged or credited to the provision for loan losses.

Management  believes  that the  allowance  for possible loan losses is adequate.
While management uses available information to recognize losses on loans, future
additions  to the  allowance  may be  necessary  based on  changes  in  economic
conditions.  In  addition,  regulatory  agencies,  as an integral  part of their
examination  process,  review the  allowance  for possible  loan  losses.  These
agencies may require  additions to the allowance  based on their  judgment about
information available at the time of their examination.

Management  also  evaluates the liability for  off-balance  sheet  exposure from
unfunded  commitments  and standby letters of credit in accordance with SFAS No.
5. SFAS No. 5 states that if a loss contingency  exists, the likelihood that the
future event or events will confirm the loss or impairment of an asset can range

                                       48


from remote to probable.  Recognition  of a liability is required only if a loss
is  probable  and can  reasonably  be  estimated.  The  liability  for  unfunded
commitments  standby letters of credit is presented as part of other liabilities
in the balance sheet. The liability for unfunded commitments and standby letters
of credit was $0 and $878,000 at December 31, 2005 and 2004, respectively.

PREMISES AND EQUIPMENT

Premises and equipment are stated at cost,  less  accumulated  depreciation  and
amortization.  Depreciation  and  amortization  are computed on a  straight-line
basis over the  estimated  useful  lives of the assets which range from 25 years
for buildings,  5 to 20 years for leasehold  improvements  and 3 to 10 years for
furniture  and  equipment.  Maintenance  and repairs  are  charged to  operating
expenses and betterments are capitalized.

LEASES

The  Company  leases two of its branch  offices.  Leases  are  accounted  for as
capital  leases  or  operating  leases  based  upon  the  requirements  of GAAP.
Specifically,  when the terms of the lease  indicate that the company is leasing
the  building  for  most of its  useful  economic  life or the sum of the  lease
payments  represents most of the fair value of the building,  the transaction is
accounted  for as a capital lease wherein the building is recognized as an asset
of the Company and the net present  value of the  contracted  lease  payments is
recognized as a long-term liability.

OTHER REAL ESTATE OWNED

Other  real  estate  owned  consisting  of  properties  acquired  as a result of
foreclosure of loans or loans  considered  in-substance  foreclosures  where the
Bank is in the  process  of  foreclosing  are  carried  at the lower of the loan
balance or appraised value net of estimated selling costs.  Foreclosed assets to
be held and used are  treated  the same way they  would be had the  assets  been
acquired  in  a  manner  other  than  through  foreclosure.   These  assets  are
periodically  reviewed for  impairment if conditions  indicate that the carrying
amount of the asset may not be recoverable.

INCOME TAXES

There are two  components of income tax expense:  current and deferred.  Current
income tax expense  approximates taxes to be paid or refunded for the applicable
period.  Balance  sheet  amounts of  deferred  tax assets  and  liabilities  are
recognized for the expected tax  consequences of temporary  differences  between
the tax basis of assets and liabilities and their reported net amounts. Deferred
tax assets and liabilities  are reflected at currently  enacted income tax rates
applicable  to the period in which the  deferred tax assets or  liabilities  are
expected to be realized or settled. As changes in tax laws or rates are enacted,
deferred tax assets and  liabilities  are  adjusted  through the  provision  for
income  taxes.  The  provision  for  income  taxes is based on pretax  financial
accounting income.

DERIVATIVE FINANCIAL INSTRUMENTS

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as
amended,   provides  guidance  on  accounting  for  derivative  instruments.   A
derivative is typically  defined as an instrument  whose value is "derived" from
an underlying  instrument,  index or rate, such as a future,  forward,  swap, or
option contract, or other financial instrument with similar  characteristics.  A
derivative contract generally represents future commitments to exchange interest
payment  streams or  currencies  based on the contract or notional  amount or to
purchase or sell other  financial  instruments at specified terms on a specified
date.

The Company enters into interest rate cap contracts, which qualify as derivative
financial  instruments  for  non-trading  purposes  as an end user to hedge  the
interest rate exposure of existing  assets and  liabilities.  Interest rate caps
are  agreements  where,  for a fee, the  purchaser  obtains the right to receive
interest payments when a variable interest rate moves above or below a specified
cap rate. Such  instruments are primarily  linked to long-term debt,  short-term
borrowings  and  pools  of  similar  residential  mortgages.  Interest  rate cap
contracts  are  accounted  for on an  accrual  basis with  revenue  or  expenses
recognized as adjustments  to income or expense on the underlying  linked assets
or  liabilities.  These  contracts  are  recorded at fair  market  value and the
related  unrealized  gains  or  losses  on these  contracts  are  deferred  as a
component of other comprehensive income recorded in shareholders' equity.

Interest rate cap contracts  generally are not terminated.  When terminations do
occur,  gain or losses are recorded as  adjustments to the carrying value of the
underlying assets or liabilities and recognized as income or expense over either

                                       49


the remaining  expected  lives of such  underlying  assets or liabilities or the
remaining life of the instrument.  In circumstances  where the underlying assets
or  liabilities  are sold,  any remaining  carrying  value  adjustments  and the
cumulative change in value of any open positions are recognized immediately as a
component  of the  gain or loss on  disposition  of such  underlying  assets  or
liabilities.  If an interest  rate cap  contract is  considered  to be no longer
effective,  any deferred gain or loss on the contract is recognized  immediately
in income (see Note 6 for this presentation).

COMMON STOCK

The  Company  has  authorized  10,000,000  shares of common  stock.  Each  share
entitles  the  holder  to  one  vote.  There  are  no  dividend  or  liquidation
preferences,  participation  rights, call prices or dates,  conversion prices or
rates, sinking fund requirements, or unusual voting rights associated with these
shares.  All  pertinent  rights and  privileges  of stock  options  granted  are
explained  in Note 12.  The  Company  has also  authorized  5,000,000  shares of
preferred stock.  However, no preferred stock has been issued and outstanding at
December 31, 2005 and 2004.

COMPREHENSIVE INCOME (LOSS)

The  Company  has  adopted  SFAS  No.  130,  "Reporting  Comprehensive  Income."
Comprehensive  income  is  equal  to  net  income  plus  the  change  in  "other
comprehensive  income," as defined by SFAS No. 130. This statement  requires the
Company to report income and (loss) from non-owner sources.  The only components
of other  comprehensive  income  currently  applicable to the Company is the net
unrealized  gain or loss on interest rate cap  contracts and the net  unrealized
gain or loss on available for sale investment securities. FASB Statement No. 130
requires that an entity:  (a) classify  items of other  comprehensive  income by
their nature in a financial statement, and (b) report the accumulated balance of
other comprehensive income separately from common stock and retained earnings in
the equity section of the balance sheet.

EARNINGS PER SHARE

In February 1997, the FASB issued SFAS No. 128, "Earnings per Share",  which was
adopted  by the  Company  for the year ended  December  31,  1997.  SFAS No. 128
replaces the  presentation of primary  earnings per share with a presentation of
basic earnings per share based upon the weighted average number of common shares
for the period. It also requires dual presentation of basic and diluted earnings
per share for companies with complex  capital  structures  (see Note 16 for this
presentation).

STOCK-BASED COMPENSATION

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation - Transition and Disclosure."  This statement  applies to financial
statements  for fiscal years ending after  December 15, 2002. It is an amendment
of  SFAS  No.  123,  "Accounting  for  Stock-Based   Compensation,"  to  provide
alternative  methods of transition for an entity that voluntarily changes to the
fair value method of accounting for stock-based  employee  compensation and also
amends the  disclosure  provisions  of SFAS No. 123. SFAS No. 123 defines a fair
value based method of accounting  for employee  stock options or similar  equity
instruments.

However,  both also allow an entity to continue to measure compensation cost for
those plans using the intrinsic  value based method of accounting  prescribed by
APB Opinion No. 25,  Accounting  for Stock Issued to  Employees.  Under the fair
value based method, compensation cost is measured at the grant date based on the
value of the award and is recognized over the service  period,  which is usually
the vesting period. Under the intrinsic value based method, compensation cost is
the  excess,  if any, of the quoted  market  price of the stock at grant date or
other  measurement  date over the amount an  employee  must pay to  acquire  the
stock.

The Bank has elected to continue  accounting for stock-based  compensation under
APB Opinion No. 25 and disclose pro forma net income and earnings per share,  as
if the fair value based method of accounting defined in SFAS No. 123 and 148 had
been applied.

At December 31, 2005,  the Company has two  remaining  stock-based  compensation
plans which are described in Note 12. Also  described at Note 12 is another plan
that was eliminated  during 1997. Prior to 2004, the Company applied APB Opinion
25 and related  Interpretations  in accounting  for its plans.  Accordingly,  no
compensation  cost has been  recognized  for its fixed stock option  plans.  Had
compensation  cost for the Company's three stock-based  compensation  plans been
determined  based on the fair value at the grant  dates for awards  under  those
plans  consistent  with the method of SFAS No. 123 and 148,  the  Company 's net

                                       50


income and earnings  per share would have been reduced to the pro forma  amounts
indicated below:



                                                                Years Ended December 31
                                                         2005              2004               2003
                                                     ---------------    -------------  ----------------
                                                                               
Net Income, as reported                             $    6,673,000        $5,457,000    $     4,187,000

Add: Stock-based employee compensation
 expense included in reported net income
 net of related tax effects                                      -                 -                  -

Deduct: Total stock-based employee
   compensation expense determined under
   fair value method for all awards, net of
   related tax effects                                  (1,153,000)         (150,000)          (143,000)
                                                     ---------------   ---------------  ----------------
Pro Forma Net Income                                $    5,520,000    $    5,307,000    $     4,044,000
                                                     ===============  ================  ================
Earnings per Share:
   Basic-- as reported                              $         1.95    $         1.61    $          1.25
   Basic -- pro forma                               $         1.61    $         1.57    $          1.21

   Diluted-- as reported                            $         1.83    $         1.51    $          1.18
   Diluted -- pro forma                             $         1.51    $         1.47    $          1.15



SFAS No. 123 was revised in December 2004 to require that, effective for periods
beginning  after June 15,  2005,  the Company  begin using the fair market value
method for valuing and  accounting  for stock  options.  On April 14, 2005,  the
Securities  and Exchange  Commission  announced the adoption of a new rule which
delayed the implementation  date for the new requirements until the beginning of
the next fiscal year (2006).  The Company expects to apply the new  requirements
in 2006 on a prospective basis.

RECLASSIFICATIONS

Certain prior period amounts have been reclassified for comparative  purposes to
conform with the presentation in the current year financial statements.


NOTE 2 - INVESTMENT SECURITIES
         ---------------------

At December 31, 2005,  the  investment  securities  portfolio  was  comprised of
securities classified by the Bank as held to maturity (approximately 99%) and as
available for sale (the remaining 1%), in accordance with SFAS No. 115. The Bank
has the ability and intent to hold the 99% of the  securities in its  investment
portfolio to maturity. Therefore, the resulting investment securities classified
as held to maturity are being carried at amortized  cost. The Bank also invested
in securities that have no stated maturity.  As a result,  these securities were
classified as available for sale  securities.  The available for sale securities
are carried at fair value at December 31, 2005.

                                       51


The amortized cost and estimated market value of total investment  securities at
December 31 are as follows:



                                                                        2005
                                          ----------------------------------------------------------------------------
                                                                    Gross           Gross
                                           Amortized              Unrealized      Unrealized             Market
                                            Cost                    Gains            Losses              Value
                                          ----------------------------------------------------------------------------

                                                                                         
U.S. Treasury securities                 $ 29,016,000         $          -          $ 215,000        $   28,801,000
Securities of U.S. government
   agencies and corporations               74,587,000                    -            926,000            73,661,000
Other securities                           64,033,000                    -          1,536,000            62,497,000
                                         ------------         ------------          ---------         -------------
      Total Held to Maturity Securities   167,636,000                    -          2,677,000           164,959,000
                                            2,500,000                    -             72,000             2,428,000
      Total Available Sale Securities    ------------         ------------          ---------         -------------
         Total Securities                $170,136,000         $          -          2,749,000         $ 167,387,000
                                         ============         ============          =========         =============


                                                                        2004
                                          ----------------------------------------------------------------------------
                                                                    Gross           Gross
                                           Amortized              Unrealized      Unrealized             Market
                                            Cost                    Gains            Losses              Value
                                          ----------------------------------------------------------------------------
U.S. Treasury securities                 $ 51,576,000          $         -          $ 368,000          $ 51,208,000
Securities of U.S. government
    agencies and corporations              42,560,000                    -            159,000          $ 42,401,000
Other securities                           28,776,000                    -             25,000          $ 28,751,000
                                           ----------          -----------          ---------          ------------
    Total Held to Maturity Securities     122,912,000                    -            552,000           122,360,000
    Total Available for Sale Securities     2,500,000                    -              6,000             2,494,000
                                           ----------          -----------          ---------          ------------
        Total Securities                $ 125,412,000          $         -          $ 558,000         $ 124,854,000
                                        =============           ==========          =========         =============


As of  December  31,  2005 and  2004,  securities  carried  at  $15,029,000  and
$8,996,000,  respectively,  are pledged to secure  public and other  deposits of
$8,407,000 and $4,062,000, respectively, as required by law.

The book  value  and  market  value of  securities  at  December  31,  2005,  by
contractual  maturity,  are shown below.  Expected  maturities  will differ from
contractual  maturities  because  issuers  may have the  right to call or prepay
obligations with or without call or prepayment penalties.


                                                Amortized          Market
                                                  Cost             Value
                                              ------------      -------------
Due in one year or less(*)                    $ 26,005,000       $ 27,881,000
Due after one year through five years(*)        73,346,000         70,378,000
Due after five years through ten years(*)        9,165,000          9,018,000
Due after ten years(*)                          59,120,000         57,682,000
                                             -------------      -------------
                                              $167,636,000      $ 164,959,000
                                             =============      =============


(*) Included in these  categories  is the Bank's  investment  in Small  Business
    Administration  Guaranteed  Loan  Pool  Certificates  with a book  value  of
    $1,298,000  and  $1,591,000 and market value of $1,301,000 and $1,590,000 at
    December 31, 2005 and 2004,  respectively.  These  certificates  can be sold
    without  penalty  prior to maturity at the fair market  value on the date of
    disposal.

                                       52






NOTE 3 - LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
         --------------------------------------------

Loans by major category consist of the following as of December 31:

                                                                                         
                                                                                2005                2004
                                                                            ------------       ------------
Commercial and industrial loans                                             $ 55,895,000       $ 61,593,000
Real estate loans                                                            333,121,000        248,997,000
Installment loans                                                              1,719,000          2,018,000
Loans to finance agricultural production                                      18,211,000         13,549,000
All other loans                                                                    4,000            722,000
                                                                            ------------       ------------
                                                                             408,950,000        326,879,000

Less: Allowance for possible loan losses                                       7,003,000          5,487,000
Less: Deferred loan fees                                                       1,550,000          1,023,000
                                                                            ------------       ------------
Net Loans                                                                   $400,397,000       $320,369,000
                                                                             ===========       ============

Changes in the allowance for possible loan losses are as follows:

                                                                              Years Ended December 31 2005
                                                                                2005                2004
                                                                            ------------       -------------
Beginning Balance                                                              5,487,000          4,819,000
Provision charged to expense                                                   1,200,000          1,200,000
Loans charged off                                                               (860,000)          (819,000)
Recoveries                                                                       298,000            335,000
Reclassification from (to) allowance for off-balance sheet risks (*)             878,000            (48,000)
                                                                            ------------       ------------
     Ending Balance                                                           $7,003,000         $5,487,000
                                                                            ============       ============



(*) Allowance  for  off-balance  sheet risks is presented as part of the accrued
    interest and other liabilities in the balance sheet.

At December 31, 2005 and 2004,  the Bank had loans  amounting  to  approximately
$4,676,000 and $4,962,000,  respectively,  that were specifically  classified as
loans that when based on current information and events, it is possible that the
bank will be unable to collect  all  amounts due  according  to the  contractual
terms  of the  loan  agreement.  Of  these  loans,  $1,664,000  and  $2,653,000,
respectively,   are  secured  by  real  estate,   and  $196,000  and   $513,000,
respectively, are SBA loans guaranteed by the U.S. Government.

There are no commitments to lend  additional  funds to the borrowers of impaired
or non-accrual loans at December 31, 2005.

Loans serviced for others, totaling approximately $21,511,000 and $13,330,000 at
December 31, 2005 and 2004,  respectively,  are not included in the accompanying
financial statements.

Most of the Bank's business is with customers located within the County of Kern,
California.  The following are specific  areas of  concentration  of credit risk
within the bank:

                                       53



REAL ESTATE

The Bank makes real estate loans for both  development and long-term financing.
The Bank's real estate loan portfolio was as follows at December 31:

                                           2005                   2004
                                       -------------          -------------
Construction and land development      $ 100,115,000          $ 78,903,000
Secured by residential properties         13,468,000           $11,194,000
Secured by farmland                       47,665,000            44,757,000
Secured by commercial properties         171,873,000           114,143,000
                                       -------------         -------------
                                       $ 333,121,000         $ 248,997,000
                                       =============         =============

OTHER INDUSTRIES

The Bank makes loans to customers  involved in various types of industries.  The
following are concentrations of credit risk by major industry groups at December
31:
                                          2005              2004
                                     -------------     --------------
  Construction                       $   99,976,000    $   67,962,000
  Agriculture                            65,826,000        58,266,000
  Church program                         64,167,000        24,287,000
  Commercial real estate                108,274,000        79,383,000
                                     --------------    --------------
                                     $  338,243,000    $  229,898,000
                                     ==============    ==============

NOTE 4 - PREMISES AND EOUIPMENT
         ----------------------
Premises and equipment at December 31 are summarized as follows:

                                                    2005           2004
                                                 -----------   ------------
Cost:
    Land                                          $  909,000    $    909,000
    Building                                       5,428,000       5,428,000
    Leasehold improvements - building                823,000       1,089,000
    Furniture and equipment                        4,062,000       4,817,000
    Construction in process                          217,000               -
                                                  ----------    ------------
      Total Cost                                   1,439,000      12,243,000
 Less: Accumulated depreciation and amortization   3,762,000       4,491,000
       Total Premesis and Equipment               ----------    ------------
                                                  $7,677,000    $  7,752,000
                                                  ==========    ============


Depreciation and amortization expense for premises and equipment amounted to
$879,000 and $580,000 in 2005 and 2004, respectively.

Two of the Company's branch office locations are subject to non-cancelable
operating lease agreements expiring at dates through the year 2006 with renewal
option periods extending through 2026. At December 31, 2005, minimum rental
commitments for non-cancelable operating leases are as follows:

Year Ending                                  Minimum
December 3l                                  Payments
- -----------                                  --------
2006                                         $ 27,000
                                             --------
Total Minimum Payments                       $ 27,000
                                             ========


                                       54


Minimum payments do not include rental payments that would be due if the Company
were to renew the leases when they expire in 2006.  Management  expects to renew
both leases when they expire in 2006.  Rent expense for the years ended December
31, 2005 and 2004 amounted to $139,000 and $142,000, respectively.


NOTE 5 - INVESTMENT IN REAL ESTATE
         -------------------------

The  investment  in other  real  estate  owned  consists  of a  48-unit  seniors
apartment  project  located  in  placeCityFarmersville,   StateCalifornia.  This
project is financed by the Rural Economic and Community  Development  Department
(formerly Farmers Home Administration),  United States Department of Agriculture
(RECD).  The Company  acquired  the project by a grant deed  executed in lieu of
foreclosure  pursuant to a judgment  entered  December  3, 1991,  in Kern County
Superior  Court.  The deed was executed in settlement of a $400,000 loan owed to
the Company.  Concurrent with the  acquisition,  the Company assumed an $880,000
loan  payable to the RECD (see Note 9). The project is operated by  Farmersville
Village Grove Associates, a California limited partnership, in which San Joaquin
Bank is the 95% limited  partner and its  wholly-owned  subsidiary,  Kern Island
Company, is the 5% general partner.

The  investment  in other  real  estate  owned was  originally  recorded  at the
outstanding  loan amount in addition to the balance of the note payable  assumed
by the Company as noted above, and consists of the following at December 31:

                                               2005          2004
                                           ----------   ------------
Cost:
    Building & improvements                $1,430,000   $  1,346,000
    Land                                       49,000         49,000
                                           ----------    -----------
        Total Cost                          1,479,000      1,395,000
Less: Accumulated depreciation                769,000        709,000
                                           ----------    -----------
        Total Investment in Real Estate    $  710,000    $   686,000
                                           ==========    ===========

Depreciation  expense for the  investment in real estate was $60,000 and $60,000
for the years  ended  December  31,  2005 and 2004.  The  carrying  value is not
considered  to  be  impaired.  The  Company  accounts  for  this  property  as a
foreclosed asset to be held and used, as the Company applied for and was granted
an  exemption  by the FDIC  from the  regulatory  requirement  to divest of real
estate owned within specified time periods.


NOTE 6 - INTEREST RATE CAP CONTRACTS
         ---------------------------

San Joaquin Bank entered into interest rate cap contracts  with a third party to
manage the risk that  changes in  interest  rates will  affect the amount of its
future income over the Bank's  fixed-rate loans. The interest rate cap contracts
qualify  as  derivative  financial  instruments.  Under  an  interest  rate  cap
contract, the Bank agrees to pay an initial fixed amount at the beginning of the
contract  in  exchange  for  quarterly  payments  from the third  party when the
three-month LIBOR rate exceeds a certain fixed level.

The interest rate cap contracts are considered to be a hedge against  changes in
the amount of future cash flows  associated  with the Bank's interest income for
the Bank's  fixed-rate loans.  Accordingly,  the interest rate cap contracts are
recorded at fair value in the Bank's consolidated  balance sheet and the related
unrealized  gains or losses on these  contracts  are  recorded in  shareholders'
equity as a component of other  comprehensive  income.  The cost of the interest
rate cap contract is being  amortized as an adjustment to interest  expense over
the same  period  in  which  the  related  interest  payment  being  hedged  are
recognized in income. However, to the extent that any of these contracts are not
considered to be perfectly  effective in  offsetting  the change in the value of
the interest  payments  being hedged,  any changes in fair value relating to the
ineffective portion of these contracts are immediately recognized in income.

 At December 31, 2005,  the Bank had interest  rate cap contracts on $14 million
notional amount of indebtedness.  The notional amount of $14 million will mature
on June 2,  2008.  The net  gain or loss on the  ineffective  portion  of  these
interest  rate cap  contracts  was not material for the year ended  December 31,
2005 and 2004.

                                       55




NOTE 7 - MATURITIES OF CERTIFICATES OF DEPOSIT

At December 31, 2005, the scheduled maturities of certificates of deposit are as
follows:

                      2006                  $   23,882,000
                      2007                       2,695,000
                      2008                         508,000
                                            --------------
                                             $  27,085,000
                                            ==============


NOTE 8 -  FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO
          ---------------------------------------------------------------
          REPURCHASE
          ----------

The Bank has lines of  credit  with  other  banks to meet  short-term  borrowing
needs.  These  borrowing  would be in the form of federal  funds  purchased.  At
December 31, 2005, the Bank had no outstanding  federal funds purchased.  Unused
credit lines  totaled  $15,000,000.  Rates are based on the  individual  lending
bank's  daily  federal  fund  rates.  These are  uncommitted  lines  under which
availability is subject to the issuing banks.

Securities sold under  agreements to repurchase  generally mature within one day
from the  transaction  date.  The Bank agrees to sell certain U.S.  Treasury and
U.S. Agency securities, which are owned by the Bank, to customers of the Bank on
an overnight basis, subject to master repurchase  agreements executed in advance
by the Bank and its customers.  U.S.  Treasury and U.S.  Agency  securities sold
under agreements to repurchase are delivered to a third-party correspondent bank
where  they are held in a separate  account,  segregated  from the Bank's  other
investment  securities  held at the same  correspondent  bank.  The Bank agrees,
under  the  terms  of  the  master  repurchase  agreements,  to  repurchase  all
securities  sold  under  this  program on the  maturity  date of the  repurchase
agreement.

Information  concerning  securities  sold  under  agreements  to  repurchase  is
summarized as follows:

                                                             2005
                                                      ----------------
 Average balance during the year                      $     2,042,000
 Average interest rate during the year                          1.72%
 Maximum balance during the year                      $     6,796,000

 Securities underlying the agreements at year-end:
   Carrying value                                                   -
   Estimated fair value                                             -


                                                             2004
                                                      ----------------
 Average balance during the year                      $     6,741,000
 Average interest rate during the year                          0.82%
 Maximum balance during the year                      $     7,452,000

 Securities underlying the agreements at year-end:
  Carrying value                                      $     9,023,000
  Estimated fair value                                $     8,998,000

                                       56




NOTE 9 - LONG-TERM DEBT AND OTHER BORROWINGS
         -----------------------------------
Long-term debt consists of the following at December 31:




                                                                           2005           2004
                                                                      ------------   -----------
                                                                               
 Mortgage note payable, 9% stated rate - matures 2030                 $    797,000   $   805,000

 Subordinated Note, 3 month LIBOR + 2.7% floating rate - due 2019        6,000,000     6,000,000
                                                                      ------------   -----------

   Total Long-Term Debt                                               $  6,797,000   $ 6,805,000
                                                                      ============   ===========




The mortgage note payable is secured by a 48-unit seniors apartment project (see
Note 5) and is payable in monthly installments of $2,300 including interest at a
stated rate of 9%. The loan matures in 2030.  The note is  classified as a Rural
Rental Housing (RRH) loan issued pursuant to the Housing Act of 1949.  Under the
RRH program, the borrower pays interest at a rate lower than the stated rate.

Estimated  future  maturities  of  long-term  debt at  December  31, 2005 are as
follows:

        Years Ending
        December 31
           2006                                     $      9,000
           2007                                           10,000
           2008                                           11,000
           2009                                           12,000
           2010                                           13,000

           Thereafter                                  6,742,000
                                                   -------------
                                                    $  6,797,000
                                                   =============

The  subordinated  note is a capital  security that  qualifies as Tier 2 capital
pursuant  to  capital   adequacy   guidelines   promulgated  by  the  FDIC.  The
subordinated note matures in 2019. The Company may redeem the Subordinated Note,
at par, on or after April 23, 2009,  subject to compliance  with  California and
federal banking  regulations.  The Subordinated  Note resets quarterly and bears
interest at a rate equal to the three-month LIBOR index plus a margin of 2.70%.

The Bank has borrowing capacity, both short and long-term, with the Federal Home
Loan Bank of San  Francisco in the amount of  $18,066,000  to  supplement  other
funding sources as the need arises. At December 31, 2005, there were no balances
outstanding under these credit lines.


NOTE 10 - CONTINGENCIES
          -------------

In the normal  course of business,  the Company  occasionally  becomes  party to
litigation.  In the opinion of  management,  based upon advice of legal counsel,
pending or  threatened  litigation  involving  the bank will not have a material
adverse effect upon its financial condition or results of operations.


NOTE 11 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
          -------------------------------------------------

The balance  sheet does not reflect  various  commitments  relating to financial
instruments with  off-balance  sheet risk which are used in the normal course of
business.  These  instruments  include  commitments to extend credit and standby
letters of credit.  Management  does not anticipate that the settlement of these
financial  instruments  will  have a  material  adverse  effect  on  the  bank's
financial position.

These financial instruments carry various degrees of credit risk. Credit risk is
defined as the  possibility  that a loss may occur  from the  failure of another
party to perform according to the terms of the contract.

                                       57


The  contractual  amounts of commitments to extend credit and standby letters of
credit  represent the amount of credit risk.  Since many of the  commitments and
letters of credit are expected to expire  without being drawn,  the  contractual
amounts do not necessarily represent future cash requirements.

Commitments  to extend  credit are legally  binding  loan  commitments  with set
expiration  dates.  They  are  intended  to be  disbursed,  subject  to  certain
conditions,  upon request of the borrower. The bank receives a fee for providing
a  commitment.  The  bank  evaluates  each  customer's   creditworthiness  on  a
case-by-case  basis. The amount of collateral  obtained,  if deemed necessary by
the bank upon the  extension  of credit,  is based on  management's  evaluation.
Collateral held varies but may include accounts receivable, inventory, property,
equipment and real estate.

Standby  letters  of  credit  are  provided  to  customers  to  guarantee  their
performance,  generally  in the  production  of  goods  and  services  or  under
contractual commitments in the financial market.

The following is a summary of various  financial  instruments  with  off-balance
sheet risk at December 31:

                                                     2005               2004
                                               ---------------    -----------
            Commitments to extend credit       $   224,027,000   $160,185,000
            Standby letters of credit          $    8,676,000     $ 7,129,000

NOTE 12 - STOCK OPTIONS AND PROFIT BONUS PLAN
          -----------------------------------
FIXED STOCK OPTION PLANS

Options on shares of the Company's common stock have been granted to certain key
employees  under a 1980 fixed option plan,  rescinded and re-drawn in 1984.  The
1980 plan expired  December 31, 1990,  and all  remaining  granted  options were
exercised in February of 1997.  Accordingly,  no options are available for grant
and no options exist to be exercised at December 31, 2005 under the 1980 plan.

On May 1, 1989,  the  Company's  shareholders  approved a new fixed option plan.
Under the 1989 fixed option plan,  the Company may grant options to its officers
and  employees  for up to  463,000  (as  adjusted  for  stock  splits  and stock
dividends declared through December 31, 1998) shares of common stock. Under this
plan, the exercise price of each option equals the market price of the Company's
stock  on the  date of  grant  and  each  option  is  exercisable  in  specified
increments  up to 10 years from the date of grant.  The 1989 plan  terminated on
May 1, 1999. Accordingly, no new options can be granted under the 1989 plan.

On June 4, 1999,  the Company's  shareholders  approved to grant options under a
new plan, to its officers and  employees.  The 1999 Plan's term is for ten years
to vest at twenty percent per year and to be at a price determined by a weighted
average mean between the bid and ask prices of the Company stock for thirty days
preceding the option grant date.

Effective December 31, 2005, the Board of Directors (the "Board") of San Joaquin
Bank (the "Company")  voted to accelerate the vesting of all unvested options to
acquire  the  Company's  common  stock that were  outstanding  at that date (the
"Acceleration"),  except that no options to non-employee directors were affected
by the  Acceleration.  A total of 158,870 shares subject to option were impacted
by the Acceleration.  As a result of the acceleration,  and based upon estimated
Black-Scholes value calculations,  the Company will not be required to recognize
pretax compensation  expense related to the accelerated options of approximately
$833,000.  Had the  Acceleration  not  occurred,  the Company  would have had to
recognize this expense over the next five years when the Company becomes subject
to the requirements of Financial  Accounting Standards Board Statement No. 123R,
"Share-Based Payment," on January 1, 2006. Under applicable accounting guidance,
the company does not expect to record a charge related to the Acceleration. As a
result of the acceleration, certain options granted to the Company's Chairman of
the Board,  Bruce Maclin,  Chief  Executive  Officer,  Bart Hill,  and two other
highest  paid  executive  officers  (together  the "Named  Executive  Officers")
exceeded the $100,000 limit established by IRS regulation  ss.1.422-4.  As such,
the excesS options  granted to the Named  Executive  Officers must be treated as
non-statutory options. All other terms and conditions of the accelerated options
remained unchanged as a result of the Acceleration.

                                       58


The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes American option-pricing model with the following  weighted-average
assumptions  used for grant in 2005 and 2004,  respectively:  dividend  yield of
0.88% for 2005 plan, 1.07% for 2004;  approximate  expected volatility of 29.05%
and 34.69%,  risk-free  interest rates of 3.99% and 3.81%; and expected lives of
7.91 and 7.86 years for 2005 and 2004, respectively.

A  summary  of the  status of the  Company's  two fixed  stock  option  plans as
adjusted for stock splits and stock dividends declared,  as of December 31, 2005
and 2004, and changes during the years ending on those dates is presented below:




                                                        2005                            2004
                                         --------------------------       -----------------------------
                                            Weighted-Average                           Weighted-Average
                                         Shares       Exercise Price       Shares        Exercise Price
                                         ------       --------------       ------        --------------
  Fixed Options:
                                                                                 
   Outstanding at beginning of year       420,078        $   11.36             408,561       $     9.03
   Granted                                 59,350            27.10              60,000            26.18
   Exercised                              (39,762)            4.67             (43,983)            4.26
   Expired                                 (3,000)           14.80              (4,500)           12.84
                                          --------       ---------             --------      ----------
  Outstanding at Year-End                 436,666        $   14.09             420,078       $    11.36
                                          =======        =========             =======       ==========

  Options exercisable at year-end         417,866                          273,948
  Weighted-average fair value of
   options granted during the year      $    8.89                        $   8.83



The following table summarizes information about fixed stock options outstanding
at December 31, 2005:


                                         Options Outstanding                         Options Exercisable
                          -------------------------------------------------    -------------------------------
         Range of             Number         Remaining         Weighted-           Number           Weighted-
    Weighted-Average      Outstanding at     Contractual        Average        Outstanding at       Average
     Exercise Prices        12/31/2005       Life (years)    Exercise Price      12/31/2005     Exercise Price
     ---------------        ----------       ------------    --------------      ----------     --------------
                                                                                  
        $5.76-8.49               107,986        2.36           $  7.40            106,986           $  7.40
        8.50-12.74               164,830        4.47             10.73            162,430             10.74
     12.75 - 18.99                45,800        2.77             14.67             42,200             14.60
     19.00 - 26.49                97,050        8.07             23.80             92,250             23.95
    $26.50 - 31.00                21,000        6.99             28.65             14,000             29.48
     --------------              -------        ----           -------            -------           -------
                                 436,666        4.69           $ 14.09            417,866           $ 13.82
                                 =======        ====           =======            =======           =======

NOTE 13 - OTHER EXPENSES
          --------------

Other expenses are summarized as follows for the years ended December 31:

                                                            2005               2004              2003
                                                       -----------       -----------       -----------
 Promotion                                             $   667,000       $   473,000       $   518,000
 Travel, meals and lodging                                 165,000           192,000           169,000
 Professional services                                     934,000           719,000           810,000
 Office supplies and expenses                              665,000           528,000           462,000
 Regulatory assessments                                    113,000            90,000           116,000
 Insurance                                                 317,000           329,000           246,000
 Director related expenses                                 189,000           253,000           268,000
 Other                                                     491,000           685,000           941,000
                                                       -----------       -----------       -----------
    Total                                              $ 3,541,000       $ 3,269,000       $ 3,530,000
                                                       ===========       ===========       ===========


                                       59



For the year ended December 31, 2005, total advertising  expense was $281,000 as
compared to $207,000 in 2004 and $246,000 in 2003.

NOTE 14 - INCOME TAXES
          ------------



The provision for income taxes consists of the following:

                                            2005               2004              2003
                                            ----               ----              ----
                                                                
   Current:
     Federal                          $   3,935,000     $   2,887,000    $    2,366,000
     State                                1,399,000         1,046,000           795,000
                                       ------------     -------------         ---------
                                          5,334,000         3,933,000         3,161,000
                                       ------------     -------------         ---------
    Deferred:
       Federal                             (433,000)          (96,000)         (546,000)
       State                               (116,000)         (321,000)         (477,000)
                                       -------------    --------------       -----------
                                           (549,000)         (417,000)       (1,023,000)
                                       -------------    --------------       -----------
    Total Provision For Income Taxes   $  4,785,000     $   3,516,000    $    2,138,000
                                       ============     ==============   ==============

The components of the net deferred tax asset  (included in other assets) were as
follows:

                                                          2005              2004
                                                                           ----
  Deferred Tax Assets:
    Allowance for loan losses                       $    2,161,000    $     2,364,000
    Accumulated depreciation                                62,000           (18,000)
    Salary continuation accrual                          1,667,000          1,142,000
    Unrealized loss on interest rate cap contract           96,000             65,000
    Other                                                  106,000             10,000
                                                    --------------    ---------------
      Net Deferred Tax Assets                       $    4,092,000    $     3,563,000
                                                    ==============    ===============



The applicable rate for current and future years is based on the average rate as
compared to the effective tax rate for the current period.  The Company believes
that no valuation  allowance is necessary due to the adequacy of future  taxable
income from reversals of temporary  differences and taxable income  exclusive of
temporary differences.

A  reconciliation  of the  Company's  provision  for income taxes and the amount
computed  by  applying  the U.S.  statutory  federal  income  tax rate of 35% at
December 31, 2005 and 2004, respectively, to pretax income is as follows:



                                                           2005              2004               2003
                                                    --------------    ---------------    --------------
                                                                                
  Tax computed at 35%, respectively                 $    4,010,000    $     3,140,000    $    2,214,000
  Increases (decreases) in taxes resulting from:
   Tax credits                                                                                  (50,000)
   State taxes, net of federal income tax benefit          834,000            471,000           207,000
   Other, net                                              (59,000)           (95,000)         (233,000)
                                                    --------------    ---------------    --------------
         Total Provision For Income Taxes           $    4,785,000    $     3,516,000    $    2,138,000
                                                    ==============    ===============    ==============
         Effective Tax Rate                                  41.76%             39.18%            33.80%
                                                    ===============   ================   ===============


In 1994, the California Tax Credit  Allocation  Committee (TCAC), in its role as
administrator  of the  Federal  and  California  low income  housing  tax credit
program,  granted  approval to the  Company  for Federal low income  housing tax
credits  in the amount of  approximately  $50,000  annually  for each of the ten
following years.  Use of these credits was contingent on the Company  performing
certain capital  improvements to a 48-unit senior apartment project owned by the
Company.  The Company completed the capital  improvements  during 1994 (see Note
5). As such,  the Company  began  utilizing the credits  beginning in 1994.  The
credits expired in 2004.

                                       60



NOTE 15 - OTHER COMPREHENSIVE INCOME (LOSS)
          ---------------------------------

The  other  comprehensive  income  (loss)  at  December  31,  2005 and 2004 were
presented as follows:



                                                                               2005                2004
                                                                            -------------   -----------
                                                                                            

Net unrealized holding gain (loss) arising during the period, before tax   $  44,000         $  (30,000)

Less: deferred tax benefit (liability)                                       (17,000)            12,000
                                                                           ----------        -----------
      Unrealized Holding Income (Loss), Net of Tax                            27,000            (18,000)

Accumulated unrealized holding income (loss),
   net of tax - beginning of the year                                       (152,000)          (134,000)
                                                                          ============        ==========

        Accumulated Unrealized Holding Income (Loss), Net
          of Tax - end of period                                          $ (125,000)        $ (152,000)
                                                                          ------------       -----------

NOTE 16 - BASIC AND DILUTED EARNINGS PER SHARE

Basic and diluted earnings per share are calculated as follows:

                                                                             Years Ended December 31
                                                                            2005               2004
                                                                           ----------        ---------
Basic Earnings per Share:
   Net income                                                             $ 6,673,000       $ 5,457,000
   Weighted average common shares outstanding                               3,421,000         3,388,000
                                                                          -----------    --------------
   Basic Earnings per Share                                               $      1.95              1.61
                                                                          ===========    ==============

Diluted Earnings per Share:
   Net income                                                             $6,673,000        $ 5,457,000
      Weighted average common shares outstanding                           3,421,000          3,388,000
      Dilutive effect of outstanding options                                 229,000            218,000
                                                                          -----------     -------------
   Weighted average common shares outstanding - diluted                    3,650,000          3,606,000
                                                                          -----------     -------------
   Diluted Earnings per Share                                             $     1.83        $      1.51
                                                                          ===========     =============


Earnings  per  share  are  based  on  the  weighted  average  number  of  shares
outstanding during the year.


NOTE 17 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
          -----------------------------------------------------

In  accordance  with SFAS No. 107,  "Disclosures  about Fair Value of  Financial
Instruments,"  the estimated fair values of financial  instruments are disclosed
as of December 31, 2005 and 2004.  SFAS No. 107 defines fair value as the amount
at which the  instrument  could be  exchanged in a current  transaction  between
willing parties, other than in a forced sale or liquidation.

Fair  value  estimates  were  based  on  existing   on-balance  sheet  financial
instruments  without  attempting  to estimate  the value of  anticipated  future
business  and the  value of  assets  and  liabilities  that  are not  considered
financial  instruments.  Where  possible,  the Bank has utilized  quoted  market
prices to estimate fair value. Since quoted market prices were not available for
a  significant  portion  of the  financial  instruments,  the fair  values  were
approximated using discounted cash flow techniques.

Fair value  estimates are made at a specific  point in time,  based on judgments
regarding future expected loss experience,  current  economic  conditions,  risk
conditions,  risk  characteristics  of various  financial  instruments and other
factors.  These  estimates  do not reflect  any  premium or discount  that could

                                       61


result  from  offering  for sale at one time the  Bank's  entire  holdings  of a
particular  financial  instrument.  These estimates are subjective in nature and
involve  uncertainties and matters of significant  judgment and therefore cannot
be determined with precision.  Changes in assumptions could significantly affect
the estimates.  Because no active market exists for a significant portion of the
financial  instruments  presented below and the inherent imprecision involved in
the estimation  process,  management does not believe the information  presented
reflects the amounts that would be received if the Bank's assets and liabilities
were sold nor does it  represent  the fair value of the Bank as an entity.  This
information is presented  solely for compliance with SFAS No. 107 and is subject
to change over time based on a variety of factors.

The  following  presents  the  carrying  value and  estimated  fair value of the
various classes of on-balance  sheet financial  instruments  held by the Bank at
December 31, 2005 and 2004:



                                                       December 31, 2005                December 31, 2004
                                                     -------------------------------------------------------
                                                     Carrying       Estimated         Carrying     Estimated
                                                     Value          Fair Value         Value      Fair Value
                                                     -----          ----------         -----      ----------
  Assets
  ------

                                                                                         
  Cash and cash equivalents                         $ 26,445,000   $ 26,445,000      $ 24,409,000   $  24,409,000

  Investment Securities                              170,064,000    167,388,000       125,406,000     124,854,000

  Loans, net                                         400,397,000    404,638,000       320,369,000     319,586,000

  Liabilities
  -----------

  Noninterest-bearing deposits                       186,266,000    186,266,000       150,770,000     150,770,000
  Interest-bearing transaction and savings accounts  362,182,000    360,555,000       270,757,000     269,425,000
  Time deposits                                       27,085,000     27,083,000        21,449,000      21,492,000
                                                      ----------     ----------        ----------      ----------
       Total deposits                                575,533,000    573,904,000       442,976,000     441,687,000

Federal funds purchased and securities sold under
  agreements to repurchase                                     -              -         8,663,000      14,663,000

  Other borrowed funds                                 6,797,000      6,313,000         6,805,000       6,383,000


The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instruments.  These assumptions were based on subjective
estimates of market conditions and perceived risks of the financial  instruments
at a certain point in time.

SHORT-TERM FINANCIAL INSTRUMENTS

Financial  instruments with maturities  within 90 days of the balance sheet date
are valued at the carrying amounts included in the balance sheet.  This approach
applies to cash and cash equivalents.

INVESTMENT SECURITIES

The carrying  amounts for  securities  maturing  within 90 days of the financial
statement  date are  assumed  to  approximate  fair value  provided  they do not
present unanticipated credit concerns. The fair value of longer term investments
and  mortgage-backed  securities was estimated based on bid prices  published in
financial newspapers or bid quotations received from securities dealers.

LOANS

Fair  values were  estimated  for  portfolios  of loans with  similar  financial
characteristics.  Loans were segregated by type such as commercial, real estate,
credit card and other  consumer.  Each loan category was further  segmented into
fixed and adjustable  rate interest  terms and by performing and  non-performing
categories.

The fair values of loans were determined  based on discounted cash flow modeling
techniques.  The discount  rate used was based on quoted  market rates for loans
where there is an active secondary market. The discount rate for all other loans
was based on the current  offer rates for loans made to  borrowers  with similar
credit risks and remaining maturities.

                                       62



Fair value for significant  nonperforming  loans was based on the carrying value
adjusted  for  anticipated  credit  loss risk,  estimated  time for  resolution,
valuation of the underlying collateral and other related resolution costs.

DEPOSIT LIABILITIES

The fair value of deposits with no stated maturity, such as non-interest bearing
demand  deposits,  savings  and money  market  accounts,  is equal to the amount
payable on demand.  The fair  value of  certificates  of deposit is based on the
discounted  value of  contractual  cash flows.  The discount  rate was estimated
using the rates currently offered for deposits of similar remaining maturities.

The fair value  estimated  does not include the benefit  that  results  from the
low-cost  funding  provided by the deposit  liabilities  compared to the cost of
borrowing funds in the market.

FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

The fair value of the Bank's  securities sold under  agreements to repurchase is
assumed to approximate fair value.

OTHER BORROWED FUNDS

The fair  value of the  Bank's  other  borrowed  funds  and  long-term  debt was
estimated by  discounting  contractual  cash flows using discount rates based on
current rate offered for debt of the same remaining maturity.


NOTE 18 - RELATIONSHIPS WITH RELATED PARTIES

As part of its normal banking activities, the Company has extended credit to and
received  deposits from certain members of its Board of Directors and management
and companies in which  directors  have an interest.  These related  parties had
deposits at the Bank approximating $9,083,000 and $5,955,000; and $6,640,000 and
$3,905,000 in outstanding loans at December 31, 2005 and 2004, respectively.  In
the  opinion  of  management,   all  such   extensions  of  credit  and  deposit
relationships are on terms similar to transactions with  non-affiliated  parties
and involve only normal credit risk with no undue  exposure.  Each loan has been
approved by the Loan  Committee of the Board of  Directors.  During  2005,  loan
disbursements  to related  parties  amounted to $12,965,000  and repayments from
such related parties amounted to $13,183,000.


NOTE 19 - RETIREMENT PLAN

401(k) PROFIT SHARING

The Company has a profit  sharing plan  covering  substantially  all  employees.
Under this plan,  employees may contribute a percentage of their compensation up
to the maximum allowable by law. The employer  contributes 50% of the employees'
contributions not to exceed 2.5% of the participating employees' compensation.

Total employer  contributions  to the plan for the years ended December 31, 2005
and 2004 were  $85,000 and  $75,000,  respectively.  In 2005,  the Company  also
contributed  a  $51,000   discretionary  special  contribution  for  non-officer
employees.

DEFERRED COMPENSATION PLAN

During 1997,  the Company  implemented  a Director  Deferred  Compensation  Plan
(DCP). This is a non-qualified plan for eligible directors.

SALARY CONTINUATION PLAN

During 1997, the Company implemented a Salary Continuation Plan (SCP). This is a
non-qualified plan in which the company agrees to pay key executives  additional


                                       63


benefits  in the  future,  usually at  retirement,  in return  for  satisfactory
performance  by the  executive.  The SCP is an unfunded  plan and is designed to
recover its costs through the use of a cash value life insurance  policy of each
participant.

As of  December  31, 2005 and 2004,  approximately  $3,637,000  and  $2,492,000,
respectively, had been accrued in conjunction with these agreements.

In order to fund  the DCP and SCP  plans,  the  Bank  purchased  life  insurance
policies in which it is owner and  beneficiary.  Aggregate cash surrender values
of these policies  approximate  $10,179,000  and $9,872,000 at December 31, 2005
and 2004, respectively.


NOTE 20 - REGULATORY MATTERS
          ------------------

The Bank is subject to various regulatory capital  requirements  administered by
the  federal  and  state  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 Bank's  financial  statements.  Under  capital  adequacy
guidelines and the regulatory  framework for prompt corrective  action, the Bank
must meet specific capital guidelines that involve quantitative  measures of the
Bank's assets,  liabilities,  and certain  off-balance-sheet items as calculated
under  regulatory   accounting   practices.   The  Bank's  capital  amounts  and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

Quantitative  measures  established by  regulations  to ensure capital  adequacy
require the Bank to maintain  minimum amounts and ratios (set forth in the table
below)  of  total  and  Tier  1  capital  (as  defined  in the  regulations)  to
risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average
assets (as defined). Management believes, as of December 31, 2005, that the Bank
meets all capital adequacy requirements to which it is subject.

As of June 30, 2005, the most recent  notification from the FDIC categorized the
Bank as  well-capitalized  under the regulatory  framework for prompt corrective
action  (there  are  no  conditions  or  events  since  that  notification  that
management  believes have changed the Bank's  category).  To be  categorized  as
well-capitalized,  the Bank  must  maintain  minimum  ratios as set forth in the
table  below.  The  following  table also sets forth the Bank's  actual  capital
amounts and ratios (dollar amounts in thousands):




                                                                                         To Be Categorized
                                                            For Capital Adequacy          Well Capitalized
                                        Actual                   Purposes                Under Prompt Corrective
                                                                                           Action Provisions
                              ----------------------------  --------------------------  ---------------------------
                                    Amount         Ratio         Amount      Ratio       Amount          Ratio
- --------------------------------------------------------------------------------------------------------------
 As of December 31, 2005
- --------------------------------------------------------------------------------------------------------------

                                                                                       
 Total risk-based capital ratio   $51,510,000       10.51%    $ 39,208,000   8.00%    $ 49,010,000       10.00%
 Tier 1 risk-based capital ratio   39,372,000        8.03%      19,612,000   4.00%      29,419,000        6.00%
 Tier 1 leverage ratio             39,372,000        6.44%      24,455,000   4.00%      30,568,000        5.00%

 As of December 31, 2004
- --------------------------------------------------------------------------------------------------------------------
 Total risk-based capital ratio  $$44,122,000       11.50%    $ 30,694,000   8.00%    $ 38,367,000       10.00%
 Tier 1 risk-based capital ratio   33,306,000        8.68%      15,348,000   4.00%      23,023,000        6.00%
 Tier 1 leverage ratio             33,306,000        6.66%      20,004,000   4.00%      25,005,000        5.00%
 ------------------------------------------------------------------------------------------------------------------


On April 5, 2004, the Bank issued a $6,000,000  floating rate  subordinated note
in a private placement (see Note 9). The Subordinated Note is a capital security
that  qualifies  as Tier 2  capital  pursuant  to  capital  adequacy  guidelines
promulgated by the FDIC. The Subordinated Note positively impacted the Company's
total  capital to risk  weighted  asset ratio for the period ended  December 31,
2005 and 2004.



                                       64


    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

    To the Board of Directors and
    Shareholders of San Joaquin Bank

    We have audited the  consolidated  balance sheet of San Joaquin Bank and its
    subsidiary  as of December 31, 2005 and 2004,  and the related  consolidated
    statements of income,  changes in shareholders'  equity,  and cash flows for
    each of the years in the three year period ended  December  31, 2005.  These
    consolidated  financial  statements are the  responsibility of the Company's
    management.   Our   responsibility   is  to  express  an  opinion  on  these
    consolidated financial statements based on our audits.

    We conducted our audits in accordance with auditing  standards of the Public
    Company Accounting Oversight Board (United States).  Those standards require
    that we plan and perform  the audits 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,  the  consolidated  financial  statements  referred to above
    present  fairly,  in all material  respects,  the financial  position of San
    Joaquin Bank and its  subsidiary  as of December 31, 2005 and 2004,  and the
    results  of their  operations  and their cash flows for each of the years in
    the three year period ended December 31, 2005 in conformity  with accounting
    principles generally accepted in the United States of America.


                                              /s/ BUSTER H. ARMSTRONG
                                              -----------------------
                                              BROWN ARMSTRONG PAULDEN
                                              McCOWN STARBUCK & KEETER
                                              ACCOUNTANCY CORPORATION


    Bakersfield, California
    February 3, 2006



                                       65



                 MANAGEMENT'S LETTER OF FINANCIAL RESPONSIBILITY


To Our Shareholders:

The  Management  of  San  Joaquin  Bank  is  responsible  for  the  preparation,
integrity,  reliability  and  consistency of the  information  contained in this
annual report. The consolidated financial statements,  which necessarily include
amounts based on judgments  and  estimates,  were  prepared in  conformity  with
generally accepted accounting principles and prevailing practices in the banking
industry.  All other  financial  information  appearing  throughout  this annual
report is  presented  in a manner  consistent  with the  consolidated  financial
statements.

Management  has  established  and  maintains a system of internal  controls that
provides reasonable assurance that the underlying financial records are reliable
for  preparing  the  consolidated  financial  statements,  and that  assets  are
safeguarded  from  unauthorized  use or loss.  This  system  includes  extensive
written  policies and operating  procedures and a  comprehensive  internal audit
function,  and is supported by the careful  selection and training of staff,  an
organizational structure providing for division of responsibility, and a Code of
Ethics covering standards of personal and business conduct.

Management  believes that, as of December 31, 2005, the  Corporation's  internal
control  environment  is  adequate  to provide  reasonable  assurance  as to the
integrity and reliability of the consolidated  financial  statements and related
financial information contained in the annual report.  However, there are limits
inherent in all systems of internal accounting control and Management recognizes
that errors or irregularities may occur. Based on the recognition that the costs
of such  systems  should not  exceed  the  benefits  to be  derived,  Management
believes the Bank's system provides an appropriate cost/benefit balance.

The system of internal  controls is under the general  oversight of the Board of
Directors  acting through its Audit  Committee,  which is comprised  entirely of
outside  directors.  The  Audit  Committee  monitors  the  effectiveness  of and
compliance  with  internal  controls  through a  continuous  program of internal
audit. This is accomplished through periodic meetings with Management,  internal
auditors  and  independent  auditors to assure  that each is carrying  out their
responsibilities.

The Corporation's  consolidated financial statements have been audited by Brown,
Armstrong,   Paulden,   McCown,  Starbuck  &  Keeter  Accountancy   Corporation,
independent certified public auditors elected by the shareholders. All financial
records and related data, as well as the minutes of  shareholders  and directors
meetings,  have  been  made  available  to them.  Management  believes  that all
representations  made to the independent  auditors during their audit were valid
and appropriate.


                         /s/ BART HILL
                         -------------
                         Bart Hill
                         DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER


                         /s/ STEPHEN M. ANNIS
                         --------------------
                         Stephen M. Annis
                         EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER


                                       66



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.


ITEM 9A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The term  "disclosure  controls and  procedures" as defined in Rule 13a-15(e) of
the Securities Exchange Act of 1934, as amended,  (the "Exchange Act") refers to
the  controls  and  procedures  of a company  that are  designed  to ensure that
information  required to be  disclosed by a company in the reports that it files
pursuant  to  Regulation  13A  of  the  Exchange  Act  is  recorded,  processed,
summarized and reported  within  required time periods.  As of December 31, 2005
(the "Evaluation  Date"), we carried out an evaluation under the supervision and
with the  participation  of our Chief  Executive  Officer  and  Chief  Financial
Officer of the effectiveness of our disclosure controls and procedures. Based on
that evaluation,  our Chief Executive  Officer and Chief Financial  Officer have
concluded  that, as of the Evaluation  Date,  such controls and procedures  were
effective in ensuring  that required  information  will be disclosed on a timely
basis in our periodic reports filed with the FDIC under the Exchange Act.

CHANGES IN INTERNAL CONTROLS

The  evaluation  did not  identify  any  change  in our  internal  control  over
financial  reporting  that occurred  during the quarter ended  December 31, 2005
that has materially affected,  or is reasonably likely to materially affect, our
internal control over financial reporting.


ITEM 9B. OTHER INFORMATION

None.


                                       67



                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item will appear in the Bank's definitive proxy
statement  under the captions  "Nominees to the Board of Directors,"  "Executive
Officers,"  "Section 16 Compliance" and "Audit Committee" for the annual Meeting
of shareholders (the "2006 Proxy  Statement").  Such information either shall be
(i) deemed to be incorporated  herein by reference from that portion of the 2006
Proxy Statement, if filed with the FDIC not later than 120 days after the end of
the Bank's most recently completed fiscal year, or (ii) included as an amendment
to this report filed with the FDIC on Form 10-K/A not later than the end of such
120 day period.

The Bank has  adopted a Code of Ethics  that  applies  to the  Bank's  executive
officer,   principal  financial  officer,   principal   accounting  officer  and
controller,  and persons performing similar functions.  The Bank will provide to
any person without charge,  upon request,  a copy of this Code of Ethics. If you
would like to receive a copy, you can notify us by sending a written request to:

San Joaquin Bank
Corporate Secretary
1301 17th Street
Bakersfield, California 93301


ITEM 11. EXECUTIVE COMPENSATION

The  information  required by this item will appear in the 2006 Proxy  Statement
under the caption "Executive Compensation", and such information either shall be
(i) deemed to be incorporated  herein by reference from that portion of the 2006
Proxy Statement, if filed with the FDIC not later than 120 days after the end of
the Bank's most recently completed fiscal year, or (ii) included as an amendment
to this report filed with the FDIC on Form 10-K/A not later than the end of such
120 day period.


ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The  information  required by this item will appear in the 2006 Proxy  Statement
under the caption  "Security  Ownership of Directors and  Management",  and such
information  either shall be (i) deemed to be  incorporated  herein by reference
from that portion of the 2006 Proxy Statement,  if filed with the FDIC not later
than 120 days after the end of the Bank's most recently  completed  fiscal year,
or (ii)  included as an  amendment  to this  report  filed with the FDIC on Form
10-K/A not later than the end of such 120 day period.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required by this item will appear in the 2006 Proxy  Statement
under the caption "Bank  Transactions  With Directors and Management",  and such
information  either shall be (i) deemed to be  incorporated  herein by reference
from that portion of the 2006 Proxy Statement,  if filed with the FDIC not later
than 120 days after the end of the Bank's most recently  completed  fiscal year,
or (ii)  included as an  amendment  to this  report  filed with the FDIC on Form
10-K/A not later than the end of such 120 day period.


ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

The  information  required by this item will appear in the 2006 Proxy  Statement
under the caption "Audit Fees", and such information  either shall be (i) deemed
to be  incorporated  herein by  reference  from that  portion  of the 2006 Proxy
Statement,  if filed  with the FDIC not later than 120 days after the end of the
Bank's most recently  completed fiscal year, or (ii) included as an amendment to
this  report  filed with the FDIC on Form  10-K/A not later than the end of such
120 day period.

                                       68


                                     PART IV


ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The  following  documents  are filed as part of this  Annual  Report on Form
10-K:

1.   FINANCIAL STATEMENTS. See index to financial statements on Page 40.

2.   Financial  Statement  Schedules.   All  financial  statement  schedules  as
     required  by Item 8 and Item 15(d) of Form 10-K have been  omitted  because
     the information  requested is either not applicable or has been included in
     the consolidated financial statements or notes thereto.

3.   Exhibits. The exhibits listed under Item 15(b hereof are filed or furnished
     with, or incorporated by reference into, this Annual Report on Form 10-K.

(b)  Exhibits.  The  following  exhibits are filed or furnished as a part of, or
incorporated by reference into, this report on Form 10-K:

EXHIBIT        DESCRIPTION OF EXHIBIT
- -------        ----------------------
NUMBER

3.1       Articles of  Incorporation  of the  Registrant  dated January 3, 1980.
          (Incorporated   by   reference   from   Exhibit  3.1  filed  with  the
          Registrant's  registration  statement  on Form 10 filed  on April  30,
          2003)

3.1(a)    First Amendment to Articles of  Incorporation  of the Registrant dated
          April 30, 1982.  (Incorporated  by reference from Exhibit 3.1(a) filed
          with the Registrant's registration statement on Form 10 filed on April
          30, 2003)

3.1(b)    Second  Amendment to Articles of Incorporation of the Registrant dated
          May 24, 1989.  (Incorporated  by reference  from Exhibit  3.1(b) filed
          with the Registrant's registration statement on Form 10 filed on April
          30, 2003)

3.1(c)    Third Amendment to Articles of  Incorporation  of the Registrant dated
          March 28, 1997  (incorporated  by reference  from Exhibit 3.1(c) filed
          with the Registrant's registration statement on Form 10 filed on April
          30, 2003)

3.1(d)    Fourth  Amendment to Articles of Incorporation of the Registrant dated
          May 1, 1998. (Incorporated by reference from Exhibit 3.1(d) filed with
          the Registrant's  registration statement on Form 10 filed on April 30,
          2003)

3.1(e)    Fifth Amendment to Articles of  Incorporation  of the Registrant dated
          July 16, 1999.  (Incorporated  by reference  from Exhibit 3.1(e) filed
          with the Registrant's registration statement on Form 10 filed on April
          30, 2003)

3.2       Bylaws of the  Registrant  dated  January  3, 1980.  (Incorporated  by
          reference  from  exhibit  3.2  filed  with  Registrant's  registration
          statement on Form 10 filed on April, 30, 2003)

3.2(a)    First  Amendment  of Bylaws of the  Registrant  dated  July 28,  1989.
          (Incorporated   by  reference  from  Exhibit  3.2(a)  filed  with  the
          Registrant's  registration  statement  on Form 10 filed  on April  31,
          2003)


                                       69



EXHIBIT   DESCRIPTION OF EXHIBIT
- -------   ----------------------
NUMBER
- ------

3.2(b)    Second  Amendment of Bylaws of the Registrant  dated January 16, 1990.
          (Incorporated   by  reference  from  Exhibit  3.2(b)  filed  with  the
          Registrant's  registration  statement  on Form 10 filed  on April  31,
          2003)

3.2(c)    Third  Amendment  of Bylaws  of the  Registrant  dated  May 10,  1995.
          (Incorporated   by  reference  from  Exhibit  3.2(c)  filed  with  the
          Registrant's  registration  statement  on Form 10 filed  on April  31,
          2003)

3.2(d)    Fourth  Amendment of Bylaws of the Registrant dated February 22, 1999.
          (Incorporated   by  reference  from  Exhibit  3.2(d)  filed  with  the
          Registrant's  registration  statement  on Form 10 filed  on April  31,
          2003)

3.2(e)    Fifth  Amendment  of Bylaws of the  Registrant  dated  June 18,  2002.
          (Incorporated   by  reference  from  Exhibit  3.2(e)  filed  with  the
          Registrant's  registration  statement  on Form 10 filed  on April  31,
          2003)

4.1       Specimen Common Stock Certificate of the Registrant.

10.1*     Amended  and  Restated  1989  Stock  Option  Plan  of the  Registrant.
          (Incorporated   by   reference   from  Exhibit  10.1  filed  with  the
          Registrant's  registration  Statement  on Form 10 filed  on April  30,
          2003)

10.2*     1999  Stock  Incentive  Plan  of  the  Registrant.   (Incorporated  by
          reference from Exhibit 10.2 filed with the  Registrant's  registration
          Statement on Form 10 filed on April 30, 2003)

10.3*     Form of  Incentive  Stock  Option  Agreement  pursuant  to 1999  Stock
          Incentive  Plan of the  Registrant.  (Incorporated  by reference  from
          Exhibit 10 filed with Registrant's Form 8-K filed on March 15, 2005)

10.4*     Amended and Restated  Executive  Salary  Continuation  Agreement dated
          June 18, 2004 between the Registrant  and Bruce Maclin.  (Incorporated
          by  reference  from Exhibit  10.4 filed with the  Registrant's  Annual
          Report on Form 10-K filed on March 25, 2005)

10.5*     Amended and Restated  Executive  Salary  Continuation  Agreement dated
          June 18, 2004 between the Registrant and Bart Hill.  (Incorporated  by
          reference from Exhibit 10.5 filed with the Registrant's  Annual Report
          on Form 10-K filed on March 25, 2005)

10.6*     Amended and Restated  Executive  Salary  Continuation  Agreement dated
          June 13, 2003 between the Registrant and Stephen Annis.  (Incorporated
          by  reference  from Exhibit  10.5 filed with the  Registrant's  Annual
          Report on Form 10-K filed on March 29, 2004)

10.7*     Amended and Restated  Executive  Salary  Continuation  Agreement dated
          June 13, 2003 between the Registrant and John W. Ivy. (Incorporated by
          reference from Exhibit 10.6 filed with the Registrant's  Annual Report
          on Form 10-K filed on March 29, 2004)

10.8*     Change in  Control  Agreement  dated  January  28,  1999  between  the
          Registrant and Bruce Maclin.  (Incorporated  by reference from Exhibit
          10.7 filed with the  Registrant's  registration  statement  on Form 10
          Filed on April 30, 2003)

10.8(a)*  First  Amendment  to Change in  Control  Agreement  dated June 7, 2001
          between the  Registrant and Bruce Maclin.  (Incorporated  by reference
          from  Exhibit  10.7(a)  filed  with  the   Registrant's   registration
          statement on Form 10 Filed on April 30, 2003)



                                       70



EXHIBIT   DESCRIPTION OF EXHIBIT
- -------   ----------------------
NUMBER
- ------

10.8(b)*  Second  Amendment to Change in Control  Agreement dated April 30, 2003
          between the  Registrant and Bruce Maclin.  (Incorporated  by reference
          from Exhibit 10.7(b) filed with the Registrant's Annual Report on Form
          10-K filed on March 29, 2004)

10.9*     Change in  Control  Agreement  dated  January  28,  1999  between  the
          Registrant and Bart Hill. (Incorporated by reference from Exhibit 10.8
          filed with the Registrant's registration statement on Form 10 Filed on
          April 30, 2003)

10.9(a)*  First  Amendment  to Change in  Control  Agreement  dated June 7, 2001
          between the Registrant and Bart Hill.  (Incorporated by reference from
          Exhibit 10.8(a) filed with the Registrant's  registration statement on
          Form 10 Filed on April 30, 2003)

10.9(b)*  Second  Amendment to Change in Control  Agreement dated April 30, 2003
          between the Registrant and Bart Hill.  (Incorporated by reference from
          Exhibit 10.8(b) filed with the Registrant's Annual Report on Form 10-K
          filed on March 29, 2004)

10.10*    Change  in  Control  Agreement  dated  January  7,  2001  between  the
          Registrant and Stephen Annis.  (Incorporated by reference from Exhibit
          10.8 filed with the  Registrant's  registration  statement  on Form 10
          Filed on April 30, 2003)

10.10(a)* First  Amendment to Change in Control  Agreement  dated April 30, 2003
          between the Registrant and Stephen Annis.  (Incorporated  by reference
          from Exhibit 10.9(a) filed with the Registrant's Annual Report on Form
          10-K filed on March 29, 2004)

10.11*    Change  in  Control  Agreement  dated  January  7,  2001  between  the
          Registrant  and John W. Ivy.  (Incorporated  by reference from Exhibit
          10.8 filed with the  Registrant's  registration  statement  on Form 10
          Filed on April 30, 2003)

10.11(a)* First  Amendment to Change in Control  Agreement  dated April 30, 2003
          between the  Registrant  and John W. Ivy.  (Incorporated  by reference
          from Exhibit  10.10(a)  filed with the  Registrant's  Annual Report on
          Form 10-K filed on March 29, 2004)

10.12*    Deferred Fee Agreement  dated  October 9, 1996 between the  Registrant
          and Louis Barbich. (Incorporated by reference from Exhibit 10.11 filed
          with the Registrant's registration statement on Form 10 filed on April
          30, 2003)

10.13     Agreement   dated  October  22,  2005  between  the   Registrant   and
          Continental Stock Transfer and Trust Company regarding the appointment
          of  Continental  Stock Tranfer and Trust  Company as the  Registrant's
          transfer agent.

10.14*    Resolution of the Board of Directors  increasing the applicable  limit
          on annual  benefits  payable to Bruce Maclin and Bart Hill pursuant to
          their Amended and Restated  Executive Salary  Continuation  Agreements
          dated June 18, 2004.  (Incorporated  by reference  from Exhibit  10.14
          filed with the Registrant's  Annual Report on Form 10-K filed on March
          25, 2005)

10.15     Statement relating to the payment of club dues for Executive Officers.
          (Incorporated   by  reference   from  Exhibit  10.15  filed  with  the
          Registrant's Annual Report on Form 10-K filed on March 25, 2005)

21.1      List of  Registrant's  Subsidiaries.  (Incorporated  by reference from
          Exhibit 21.1 filed with Registrant's registration statement on Form 10
          filed on April 30, 2003)

24.1      Power of Attorney (included on signature page).

                                       71


EXHIBIT   DESCRIPTION OF EXHIBIT
- -------   ----------------------
NUMBER
- ------

31.1      Certification of Chief Executive  Officer pursuant to Rule 13a - 14(a)
          (17CFR  240.13a-14(a))  and Rule  15d-14(a),  as adopted  pursuant  to
          Section 302 of the Sarbanes-Oxley Act of 2002.

31.2      Certification of Chief Financial  Officer pursuant to Rule 13a - 14(a)
          (17CFR  240.13a-14(a))  and Rule  15d-14(a),  as adopted  pursuant  to
          Section 302 of the Sarbanes-Oxley Act of 2002.

32        Certification of Chief Executive  Officer and Chief Financial  Officer
          pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002.

- --------------
* Management contract, compensatory plan, or arrangement.



                                       72



SIGNATURES

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

March 21, 2006                                  SAN JOAQUIN BANK

                                                By: /s/ BART HILL
                                                Chief Executive Officer,
                                                President and Director


                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE  PRESENTS,  that each person whose  signature  appears
below  constitutes  and appoints Bruce Maclin and Bart Hill, and each of them as
his  true  and  lawful   attorneys-in-fact   and  agents,  with  full  power  of
substitution  and  resubstitution,  for him and in his name, place and stead, in
any and all capacities,  to sign any and all amendments to this Annual Report on
Form 10-K, and to file the same, with all exhibits thereto,  and other documents
in connection therewith,  with the Federal Deposit Insurance Corporation and any
other regulatory authority, granting unto said attorneys-in-fact and agents, and
each of them,  full power and authority to do and perform each and every act and
thing  requisite and necessary to be done in connection  therewith,  as fully to
all  intents  and  purposes  as he or she  might or could do in  person,  hereby
ratifying and confirming all that said  attorneys-in-fact  and agents, or either
of them, or their, his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this Annual Report on Form 10-K has been signed below by the  following  persons
in the capacities and on the dates indicated:



           SIGNATURE                              TITLE                            DATE
           ---------                              -----                            ----
                                                                        
        /s/ BRUCE MACLIN                  Chairman of the Board               March 21, 2006
        ----------------
          Bruce Maclin
                                    Chief Executive Officer, President
         /s/ BART HILL              and Director (Principal Executive
         -------------                  Officer)                              March 21, 2006
           Bart Hill
                                    Chief Financial Officer and Chief
      /s/ STEPHEN M. ANNIS            Accounting Officer (Principal           March 21, 2006
      --------------------           financial and accounting officer)
        Stephen M. Annis

     /s/ DONALD S. ANDREWS                       Director                     March 21, 2006
     ---------------------
       Donald S. Andrews

     /s/ MELVIN D. ATKINSON                      Director                     March 21, 2006
     ----------------------
       Melvin D. Atkinson

      /s/ LOUIS J. BARBICH                       Director                     March 21, 2006
      --------------------
        Louis J. Barbich

     /s/ ELVIN G. BERCHTOLD                      Director                     March 21, 2006
     ----------------------
       Elvin G. Berchtold

       /s/ ROGERS BRANDON                        Director                     March 21, 2006
       ------------------
         Rogers Brandon

        /s/ JERRY CHICCA                         Director                     March 21, 2006
        ----------------
          Jerry Chicca

    /s/ ROBERT B. MONTGOMERY                     Director                     March 21, 2006
    ------------------------
      Robert B. Montgomery

   /s/ VIRGINIA F. MOORHOUSE                     Director                     March 21, 2006
   -------------------------
     Virginia F. Moorhouse



                                       73



EXHIBIT 31.1

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bart Hill, certify that:

1.   I have reviewed this annual report on Form 10-K of San Joaquin Bank;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the Registrant as of, and for, the periods presented in this report;

4.   The  Registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

     (a)  Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          Registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     (b)  Evaluated the  effectiveness of the Registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (c)  Disclosed  in this  report  any  change in the  Registrant's  internal
          control over financial reporting that occurred during the Registrant's
          most recent fiscal quarter (the Registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  Registrant's  internal
          control over financial reporting.

5.   The Registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the Registrant's auditors and the audit committee of the Registrant's board
     of directors (or persons performing the equivalent functions):

     (a)  All significant  deficiencies and material weaknesses in the design or
          operation of internal  controls  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  Registrant's  ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  Registrant's  internal
          control over financial reporting.

Date:  March 21, 2006



/s/ BART HILL
- -------------
Bart Hill
Chief Executive Officer





EXHIBIT 31.2

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen M. Annis, certify that:

1.   I have reviewed this annual report on Form 10-K of San Joaquin Bank;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the Registrant as of, and for, the periods presented in this report;

4.   The  Registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

     (a)  Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          Registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     (b)  Evaluated the  effectiveness of the Registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (c)  Disclosed  in this  report  any  change in the  Registrant's  internal
          control over financial reporting that occurred during the Registrant's
          most recent fiscal quarter (the Registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  Registrant's  internal
          control over financial reporting.

5.   The Registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the Registrant's auditors and the audit committee of the Registrant's board
     of directors (or persons performing the equivalent functions):

     (a)  All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  Registrant's  ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  Registrant's  internal
          control over financial reporting.

Date:  March 21, 2006



/S/ STEPHEN M. ANNIS
- --------------------
Stephen M. Annis
Chief Financial Officer





EXHIBIT 32

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of San Joaquin Bank (the "Company") on Form
10-K for the year ended  December  31, 2005,  as filed with the Federal  Deposit
Insurance  Corporation,  each of the  undersigned,  in the capacities and on the
date indicated below, hereby certifies,  pursuant to 18 U.S.C.  Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The report fully  complies  with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934;

     (2)  The  information  contained  in the  report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.




/s/ BART HILL
- -------------
Bart Hill
Chief Executive Officer
(Principal Executive Officer)
March 21, 2006






/s/ STEPHEN M. ANNIS
- --------------------
Stephen M. Annis
Chief Financial Officer
(Principal Financial and Accounting Officer)
March 21, 2006

EX-99

                                                                    Exhibit 99.3
                      FEDERAL DEPOSIT INSURANCE CORPORATION
                   550 17th Street NW, Washington, D.C. 20429
                                   FORM 10-K/A
                                 AMENDMENT NO. 1
(MARK ONE)
|X|  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005
                               -----------

|_|  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

     FOR THE TRANSITION PERIOD FROM __________ TO __________

                          FDIC CERTIFICATE NUMBER 23266
                                                  -----

                                SAN JOAQUIN BANK
                                ----------------
             (Exact name of registrant as specified in its charter)

       CALIFORNIA                                            95-3426405
       ----------                                         -----------------
  (State or other jurisdiction of                         (I.R.S. Employer
   incorporation or organization)                         Identification No.)

1301 - 17TH STREET, BAKERSFIELD, CALIFORNIA                   93301
- --------------------------------------------                  -----
  (Address of principal executive offices)                  (Zip Code)

                                 (661) 281-0300
                                 --------------
              (Registrant's telephone number, including area code)

                           COMMON STOCK (NO PAR VALUE)
                           ---------------------------
          (Securities registered pursuant to section 12(g) of the Act)

Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act. Yes |_| No |X|

Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Act. Yes |_| No |X|

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one):

  Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |X|

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|

The  aggregate  market value of the Common Stock held by  non-affiliates  of the
registrant  as of June 30,  2005,  as reported on the OTC  Bulletin  Board,  was
approximately  $58,667,243.  Shares of Common  Stock  held by each  officer  and
director and by each person who owns 5% or more of the outstanding  Common Stock
have been excluded,  in that such persons may be deemed to be  affiliates.  This
determination of affiliate status is not necessarily a conclusive  determination
for other purposes.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
Common Stock, as of the latest practicable date: 3,474,212 shares outstanding at
April 18, 2006.

                       DOCUMENTS INCORPORATED BY REFERENCE



                                SAN JOAQUIN BANK

                                   FORM 10-K/A

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

                                      INDEX


                                                                            PAGE
                                                                            ----

PART II
ITEM 6.       SELECTED FINANCIAL DATA.........................................3

PART III
ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..............5
ITEM 11.      EXECUTIVE COMPENSATION..........................................10
ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..18
ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................20
ITEM 14.      PRINCIPAL ACCOUNTING FEES AND SERVICES..........................21

PART IV
ITEM 15.      EXHIBITS.......................................................22


EXPLANATORY NOTE:

This Amendment No. 1 to the Annual Report on Form 10-K for San Joaquin Bank (the
"Bank") for the fiscal year ended  December 31, 2005  (initially  filed on March
28, 2006, the "Original Filing"),  is being filed with respect to Item 6 of Part
II, Items 10, 11, 12, 13 and 14 of Part III, and Item 15 of Part IV.

This Amendment is  specifically  intended to make only the following  changes to
the Company's 10-K for the year ended December 31, 2005:

     1)   to correct an inadvertent error in Part II Item 6;

     2)   to furnish  the  information  required  in Items 10, 11, 12, 13 and 14
          which was  previously  incorporated  by reference from portions of the
          definitive proxy statement (the "Proxy Statement") for the 2006 Annual
          Meeting of Shareholders (the "Annual Meeting");

     3)   to update the cover  page to reflect  the  updated  list of  documents
          incorporated by reference;

     4)   to update the requisite Section 302 and Section 906 certifications and
          the signature page to reflect the filing date of this Amendment; and

     5)   to modify the list of  exhibits  in Item 15 of Part IV to reflect  the
          updated  certifications  and to  incorporate  by  reference  any other
          exhibits filed with the Original Filing.

All other  information  presented in the Original  Filing is  unaffected by this
Amendment,  and has thus not been  reiterated  herein.  All  information in this
Amendment  is as of the date of the  Original  Filing and does not  reflect  any
subsequent  information  or  events  occurring  after  the date of the  Original
Filing.


                                       1


FORWARD LOOKING STATEMENTS:

This annual  report on Form 10-K or any  amendments  to this Form 10-K  contains
forward-looking  statements  about San  Joaquin  Bank for  which it  claims  the
protection  of the safe harbor  provisions  contained in the Private  Securities
Litigation Reform Act of 1995,  including statements with regard to descriptions
of our plans or  objectives  for future  operations,  products or services,  and
forecasts of our revenues,  earnings or other measures of economic  performance.
Forward-looking statements can be identified by the fact that they do not relate
strictly to historical or current facts. They often include the words "believe,"
"expect,"  "anticipate,"  "intend,"  "plan,"  "estimate,"  or words  of  similar
meaning,  or future or  conditional  verbs  such as "will,"  "would,"  "should,"
"could," or "may."

Forward-looking   statements,   by  their  nature,  are  subject  to  risks  and
uncertainties.  A number of factors  -- many of which are beyond our  control --
could cause actual  conditions,  events or results to differ  significantly from
those described in the  forward-looking  statements and reported  results should
not be considered an  indication of our future  performance.  Some of these risk
factors include, among others, certain credit, market, operational and liquidity
risks  associated  with our  business  and  operations,  changes in business and
economic  conditions  in  California  and  nationally,  rising  interest  rates,
potential acts of terrorism  (which are beyond our control),  volatility of rate
sensitive deposits and assets,  value of real estate collateral securing many of
our loans, accounting estimates and judgments,  compliance costs associated with
the company's internal control structure and procedures for financial reporting.
These risk factors are not exhaustive and additional  factors that could have an
adverse  effect on our business and  financial  performance  are set forth under
"Risk Factors" in Item 1A and elsewhere in this annual report on Form 10-K.

Forward-looking  statements  speak only as of the date they are made.  We do not
undertake  to update  forward-looking  statements  to reflect  circumstances  or
events that occur after the date forward-looking statements are made.

                                       2



                                     PART II

ITEM 6. SELECTED FINANCIAL DATA

The  following  table  presents  selected  historical   financial   information,
including share and per share information. The selected financial and other data
as of and for the five years ended December 31, 2005 is derived in part from the
audited  Financial  Statements  of the Bank  presented  elsewhere in this annual
report on Form 10-K.  The  selected  historical  financial  data set forth below
should be read in  conjunction  with,  and is  qualified in its entirety by, the
historical  financial  statements  of the  Bank,  including  the  related  notes
included elsewhere herein.


                                                                                         At December 31,
                                                                                         ---------------
(data in thousands, except per share data)                     2005             2004           2003         2002        2001
                                                               ----             ----           ----         ----        ----
                                                                                                       
Total Assets                                              $   627,014      $   496,705   $    415,501   $     337,388 $   300,038
Cash & Due froms banks                                         24,355           24,082         20,980          19,608      13,152
Federal Funds Sold                                              1,700                -         31,000           9,300      25,000
Securities available-for-sale                                   2,428            2,494          -                   -
Securities held-to-maturity                                   167,636          122,912         80,563          56,959      48,253
Total Loans, gross                                            408,950          326,879        268,620         237,507     202,926
Allowance for loan losses                                       7,003            5,487          4,819           4,276       3,507
Deferred loan fees                                              1,550            1,023            845             529         326
Investment in real estate                                       710                686            745             805         864
Total deposits                                                575,533          442,976        376,261         304,410     272,313
Federal funds purchased and securities sold
   under agreements to repurchase                                   -            8,663          6,380           4,919       3,736
Long-term debt and other borrowings                             6,797            6,805            813             820         827
Total shareholders' equity                                     39,290           33,159         28,209          24,420      21,538

SELECTED STATEMENT OF OPERATIONS DATA:                          2005              2004           2003            2002        2001
                                                                ----              ----           ----            ----        ----
Interest income                                                32,269           22,055         18,112          17,592      18,537
Interest expense                                                9,046            3,615          2,983           4,091       7,016
Net interest income before
   provision for loan losses                                   23,223           18,440         15,129          13,501      11,521
Provision for loan losses                                       1,200            1,200          1,470           1,670       1,037
Net interest income after
provision for loan losses                                      22,023           17,240         13,659          11,831      10,484
Noninterest income                                              2,711            3,070          2,927           2,866       2,133
Noninterest expense                                            13,276           11,337         10,261           8,737       7,711
Income before taxes                                            11,458            8,973          6,325           5,960       4,922
Income tax expense                                              4,785            3,516          2,138           2,365       2,047
Net income                                                $     6,673      $     5,457   $      4,187   $       3,595 $     2,875

SHARE DATA:                                                     2005             2004           2003            2002        2001
- -----------                                                     ----             ----           ----            ----        ----
Net income per share (basic)                                    $1.95      $      1.61          $1.25   $        1.10 $      0.89
Net income per share (diluted)                                  $1.83      $      1.51          $1.18   $        1.06 $      0.86
Book Value per share (1)                                       $13.47      $     11.39          $9.85   $        8.84 $      7.68
Cash dividend per share                                         $0.22      $      0.20          $0.20   $        0.18 $      0.17
Weighted average common shares outstanding                  3,421,380        3,387,864      3,339,850       3,280,283   3,245,019
Period end shares outstanding                               3,435,896        3,396,134      3,352,151       3,294,291   3,259,224


1) Shareholders' equity and loan loss reserve divided by shares outstanding

                                       3



                                                                                           At December 31 ,
KEY OPERATING RATIOS:                                            2005             2004             2003          2002       2001
PERFORMANCE RATIOS:                                              ----             ----             ----          ----       ----
                                                                                                         
Return on Average Equity(1)                                     18.57%           17.85%         15.92%          15.62%     14.25%
Return on Average Assets(2)                                      1.19%            1.19%          1.11%           1.12%      1.07%
Net interest spread(3)                                           3.78%            4.13%          4.17%           4.26%      3.82%
Net interest margin(4)                                           4.56%            4.49%          4.48%           4.69%      4.82%
Efficiency ratio(5)                                             51.19%           52.71%         56.83%          53.38%     56.41%
Net loans (6) to total deposits                                 69.57%           72.32%         69.89%          76.40%     74.40%
Dividend payout ratio(7)                                        11.28%           12.42%         16.00%          16.67%     19.10%
Average shareholders' equity to
average total assets                                             6.41%            6.64%          6.98%           7.21%      7.54%

ASSET QUALITY RATIOS:
Nonperforming and restructured loans
   to total loans(8)                                             0.18%            0.63%          0.65%           1.84%      1.00%
Nonperforming and restructured asset s
   to total loans and OREO(9)                                    0.35%            0.84%          0.92%           2.17%      1.42%
Net charge-offs to average total loans                           0.17%            0.17%          0.20%           0.22%      0.09%
Allowance for loan losses to total loans                         1.72%            1.68%          1.79%           1.80%      1.73%
Allowance for loan losses to
   nonperforming and restructured loans                        963.27%          267.53%        276.48%         97.74%     172.59%

CAPITAL RATIOS:
   Tier 1 capital to adjusted total assets                       6.44%            6.66%          6.89%           7.28%      7.24%
   Tier 1 capital to total risk weighted as sets                 8.03%            8.68%          8.81%           8.91%      9.14%
   Total capital to total risk weighted assets                  10.51%           11.50%         10.06%          10.14%     10.39%


1)   Net income divided by average shareholders' equity.
2)   Net income divided by average assets.
3)   Dollar weighted  average interest income yield less dollar weighted average
     interest expense rate.
4)   Net interest income divided by average interest-earning assets.
5)   Noninterest  expense  as a  percentage  of the sum of net  interest  income
     before   provision  for  loan  losses  and  noninterest   income  excluding
     securities gains and losses.
6)   Total gross loans less the  allowance  for loan losses,  deferred  fees and
     related costs.
7)   Dividends declared per share as a percentage of basic earnings per share.
8)   Nonperforming  loans consist of nonaccrual loans, loans past due 90 days or
     more.
9)   Nonperforming  assets consist of nonperforming  and restructured  loans and
     other real estate owned (OREO).


                                       4


                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

BOARD OF DIRECTORS

The following table lists nominees for election to the office of director of the
Board at the Annual  Meeting and  certain  information  with  respect to them is
given  below.  All the  nominees  to the Board  currently  occupy  the office of
director.  The  information  has  been  furnished  to  the  Corporation  by  the
respective  nominees.  All of the  nominees  have  engaged  in  their  indicated
principal occupation for more than five years, unless otherwise indicated.


    ---------------------------------------  ------  --------------------------------------------------
                  Name                        Age      Position
    ---------------------------------------  ------  --------------------------------------------------
                                               
    Donald S. Andrews(1)                     69      Director
    ---------------------------------------  ------  --------------------------------------------------
    Melvin D. Atkinson                       51      Director
    ---------------------------------------  ------  --------------------------------------------------
    Louis J. Barbich(1)(2)                   62      Director
    ---------------------------------------  ------  --------------------------------------------------
    Elvin G. Berchtold                       84      Director
    ---------------------------------------  ------  --------------------------------------------------
    Rogers Brandon                           49      Director
    ---------------------------------------  ------  --------------------------------------------------
    Jerry Chicca(1)(2)                       49      Director
    ---------------------------------------  ------  --------------------------------------------------
    Bart Hill                                56      President, Chief Executive Officer and Director
    ---------------------------------------  ------  --------------------------------------------------
    Bruce Maclin                             64      Chairman of the Board
    ---------------------------------------  ------  --------------------------------------------------
    Robert B. Montgomery                     85      Director
    ---------------------------------------  ------  --------------------------------------------------
    Virginia F. (Ginger) Moorhouse(2)        61      Director
    ---------------------------------------  ------  --------------------------------------------------


    (1)    Member of the Audit Committee
    (2)    Member of the Credit Review Committee

DONALD S. ANDREWS has served as a member of the Bank's Board of Directors  since
1992. Mr. Andrews is currently active in Real Estate Development specializing in
planning and entitlements. Since 1959, his business background has been managing
partner of Sam Andrews & Son's  which  engages in the  business of  agricultural
farming,  marketing,  and of Bear Mountain  Cooling LLC, a fresh produce cooling
and shipping company. Mr. Andrews graduated from UCLA with a B.S. in Marketing.

MELVIN D. ATKINSON has served as a member of the Bank's Board of Directors since
2005.  Mr.  Atkinson is  President  and  Chairman of the Board of M.D.  Atkinson
Company,  Inc., a professional  property  management  service company in central
California. Mr. Atkinson graduated from California State College, Bakersfield in
1977.

LOUIS J. BARBICH has served as a member of the Bank's  Board of Directors  since
1990.  He is the  Chairman of the Audit  Committee.  Mr.  Barbich is a certified
public  accountant and President of the accounting  firm of Barbich,  Longcrier,
Hooper & King where he has practiced since 1982.

ELVIN G. BERCHTOLD has served as a member of the Bank's Board of Directors since
1980. Mr.  Berchtold has served as the President of E.G.  Berchtold  Company and
Berchtold  Equipment  Company,  heavy  equipment  dealerships  primarily for the
agribusiness  industry,  since 1965 and 1945,  respectively.  Mr.  Berchtold has
owned and operated Berchtold  Properties,  a real estate and investment company,
since 1950.

ROGERS  BRANDON has served as a member of the Bank's  Board of  Directors  since
2000. Mr.  Brandon is a partner and Vice President of American  General Media, a
business that owns and operates  radio  stations in the Western  United  States,
commencing 1978.

JERRY CHICCA has served as a member of the Bank's Board of Directors since 2004.
Mr. Chicca is a partner of Chicca Brothers/Twin Farms, an agricultural farming
company which is located in Buttonwillow, Wasco and Lost Hills.

BART HILL has served as the Bank's President and Chief Executive  Officer and as
a member of its  Board of  Directors  since  1987.  Mr.  Hill  earned a B.A.  in
Economics at University of California, Santa Barbara, and an M.S. in Agriculture
Economics at University of California, Davis. Mr. Hill serves as a member of the
board of directors of THE BAKERSFIELD CALIFORNIAN.

                                       5


BRUCE MACLIN has served as the Bank's  Chairman of the Board of Directors  since
1980  and  in a  full-time  capacity  since  1995.  Mr.  Maclin  graduated  from
University  of  California  at  Berkeley  (A.B.  1964)  and  the  University  of
California at Berkeley School of Law (Boalt Hall) (J.D. 1967).

ROBERT B.  MONTGOMERY  has served as a member of the Bank's  Board of  Directors
since 1980. Mr.  Montgomery has served as Chairman of the Board of Four Corners,
Inc., a fast food restaurant and real estate investment company, since 1990.

VIRGINIA F.  (GINGER)  MOORHOUSE  has served as a member of the Bank's  Board of
Directors since 2002. Ms.  Moorhouse has served as Publisher and Chairman of the
Board of THE BAKERSFIELD  CALIFORNIAN,  a newspaper  publishing  company,  since
1994.

director independence

The Board of Directors has considered  whether any relationships or transactions
related to a director were inconsistent with a determination  that a director is
independent.  Based on this  review,  the Board  affirmatively  determined  that
Donald S. Andrews,  Melvin D. Atkinson,  Louis J. Barbich,  Elvin G.  Berchtold,
Rogers  Brandon,  Jerry Chicca,  Robert B.  Montgomery  and Virginia F. (Ginger)
Moorhouse  are  "independent  directors,"  as that term is defined by applicable
rules of NASDAQ.

MEETINGS

The Corporation expects all Board members to attend all meetings,  including the
Annual  Meeting  of  shareholders,  except  for  reasons  of health  or  special
circumstances.  Last year nine directors attended the Annual Meeting.  The Board
held a total of 10 meetings during 2005. Every director attended at least 75% of
the  aggregate  of: (i) the 10 Board  meetings or that number of Board  meetings
held  during  the  period in which  they  served;  and (ii) the total  number of
meetings of any Committee of the Board on which such director served.

COMMITTEES OF THE BOARD

COMPENSATION COMMITTEE

In 2005, the Bank did not have a  Compensation  Committee.  The Board  performed
this function. The Board formed a Compensation Committee in January 2006.

MEMBERS: Louis J. Barbich, Chairman; Donald S. Andrews, Jerry Chicca, and Rogers
Brandon.

FUNCTIONS:   The  Compensation   Committee  is  responsible  for  reviewing  and
evaluating  the  performance  of  all  officers  in  the  Bank.  Each  officer's
contributions  to the overall  performance of the Bank and the attainment of the
Bank's goals are reviewed  annually by the Committee,  in  conjunction  with the
setting of compensation for each officer. Please refer to the Board Compensation
Report contained elsewhere in this proxy statement.

AUDIT COMMITTEE

MEMBERS: Louis J. Barbich,  Chairman; Donald S. Andrews, Jerry Chicca. The Board
of Directors has determined  that all members are  independent,  as that term is
defined by applicable rules of NASDAQ. The Board has also designated Mr. Barbich
as the  "audit  committee  financial  expert"  as  defined  by the  rules of the
Securities and Exchange Commission.

NUMBER OF MEETINGS IN 2005:  5

FUNCTIONS: The Audit Committee provides independent,  objective oversight of the
Bank's  accounting,   internal  controls  and  financial  reporting.  The  Audit
Committee selects and retains the independent  auditors and reviews the plan and
results of the  auditing  engagement.  The Audit  Committee  acts  pursuant to a
written  charter,  a copy of which is attached as an exhibit  hereto.  The Audit
Committee Report that follows more fully describes the  responsibilities and the
activities of the Audit Committee.

                                       6


CREDIT REVIEW COMMITTEE

MEMBERS:  Louis J. Barbich,  Chairman;  Jerry  Chicca;  and Virginia F. (Ginger)
Moorhouse.   The  Board  of  Directors  has  determined  that  all  members  are
independent, as that term is defined by applicable rules of NASDAQ.

NUMBER OF MEETINGS IN 2005:  3

Functions: The Credit Review Committee provides independent, objective oversight
of the Bank's  loan  portfolio  credit  review  activities.  The  Credit  Review
Committee  operates in accordance  with a written charter that has been approved
by the Board of Directors.

LOAN COMMITTEE

MEMBERS:  Bruce Maclin,  Chairman;  Bart Hill,  Robert B. Montgomery,  Donald S.
Andrews, Rogers Brandon.

NUMBER OF MEETINGS IN 2005: 52

FUNCTIONS: The Loan Committee is responsible for establishing and monitoring the
loan  policies  that govern the  operation  of the Bank's  lending  program.  In
accomplishing  its purpose,  the Loan  Committee  reviews and approves all loans
over $125,000 before the loans are funded, and monitors the overall  performance
of the loan portfolio.

INVESTMENT COMMITTEE

MEMBERS:  BRUCE MACLIN, CHAIRMAN; BART HILL, DONALD S. ANDREWS.

NUMBER OF MEETINGS IN 2005: 4

FUNCTIONS:   The  Investment  Committee  is  responsible  for  establishing  and
monitoring  the  investment  policy  that  governs the  operation  of the Bank's
investment  activities.  The Investment  Committee  accomplishes  its purpose by
monitoring  and reviewing all  significant  activities  undertaken in the Bank's
investment portfolio.

ASSET/LIABILITY MANAGEMENT COMMITTEE

MEMBERS: BRUCE MACLIN, CHAIRMAN; BART HILL, DONALD S. ANDREWS.

NUMBER OF MEETINGS IN 2005: 4

FUNCTIONS:  The Asset/Liability  Management Committee is responsible for setting
and monitoring the Asset/Liability  Management policy and the Interest Rate Risk
policy,  and  monitoring  and reviewing the overall  Asset/Liability  Management
program of the Bank.

TECHNOLOGY COMMITTEE

MEMBERS: LOUIS J. BARBICH, CHAIRMAN; BRUCE MACLIN, BART HILL

NUMBER OF MEETINGS IN 2005: 4

Functions:  The  Technology  Committee  establishes  the overall  priorities for
technology  utilization  and spending,  and monitors the Bank's  performance  in
achieving the technology goals and priorities established.

NOMINATING COMMITTEE

The full Board of Directors  performs functions similar to those of a nominating
committee.  Other than provisions in the Bank's bylaws  (discussed  below),  the
Bank does not have a written charter related to the director  nomination process
at this time.

                                       7


FUNCTIONS:  The Board recommends the slate of director  nominees to be presented
for election by the shareholders and screens and recommends qualified candidates
for  Board  membership.  A  majority  of the  members  of  the  full  Board  are
independent as described under "Director  Independence",  above. The Board seeks
to identify potential candidates for membership on the Bank's Board of Directors
through  conversations  with members of the Board,  senior  management and other
members  of the  community  served  by the Bank.  Mr.  Melvin  D.  Atkinson  was
recommended  to the full board by the Chairman of the Board and by the President
& CEO. Mr.  Atkinson was  appointed to the Board of Directors in September  2005
and is being  presented as a nominee for election for the first time at the 2006
shareholders'  meeting.  The  Board  believes  that  the  full  Board  functions
effectively as a nominating body. The Board will revisit this  determination and
will also review  whether a nomination  committee  charter or formal  nomination
policies will be adopted prior to the 2007 annual meeting of shareholders.

The  Board  of  Directors  will  consider   nominees   proposed  by  the  Bank's
shareholders in accordance  with the provisions  contained in the Bank's bylaws.
The  Board of  Directors  and  senior  management  of the Bank will  consider  a
candidate's  qualifications,  including the individual's background,  skills and
abilities,  and whether such characteristics are consistent with and fulfill the
needs of the  Board at that  time.  Based on this  assessment  and the  input of
senior management, the Board will determine whether to recommend a candidate for
election to the Board of Directors.  When evaluating a candidate for nomination,
the Board does not assign  specific  weight to any one  factor.  Pursuant to the
bylaws,  any  shareholder  may  nominate a person for  election  to the Board of
Directors at any meeting of  shareholders  called for the election of directors,
provided  that the  nomination is received by the Chairman of the Board not less
than  (30) or more  than  sixty  (60)  days  prior  to any  such  meeting.  Each
nomination  submitted in this manner  shall  include the name and address of the
nominee(s) and all other information required by the bylaws. The Chairman of the
Board (or other person  presiding at the meeting) may  determine  and declare to
the  meeting  that a  nomination  not  made in  accordance  with  the  foregoing
procedures shall be disregarded.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Bart Hill, President and Chief Executive Officer of the Bank, serves as a member
of the board of directors of THE BAKERSFIELD  CALIFORNIAN.  Virginia F. (Ginger)
Moorhouse,  publisher and chairman of the board of THE BAKERSFIELD  CALIFORNIAN,
serves as a member of the Board of Directors of the Bank.

Bart Hill and Bruce Maclin are officers and employees of the Bank and are also
members of the Board of Directors. They participated in deliberations of the
Bank's board of directors concerning executive officer compensation, except in
connection with their own compensation.

EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the executive
officers  of the Bank who are not also  members of the Board of  Directors.  For
information concerning Bruce Maclin and Bart Hill, see "Nominees to the Board of
Directors."

- -------------------------  --    ------------------------------------------------------------------------------
       NAME                AGE                                 POSITION
- -------------------------  --    ------------------------------------------------------------------------------
                           
Stephen M. Annis           58    Executive Vice President, Chief Financial Officer and Corporate Secretary
- -------------------------  --    ------------------------------------------------------------------------------
John W. Ivy                60    Executive Vice President and Chief Credit Officer
- -------------------------  --    ------------------------------------------------------------------------------


STEPHEN M. ANNIS has been employed by the Bank since 1986 and  currently  serves
as the Bank's  Executive Vice President,  Chief Financial  Officer and Corporate
Secretary.  Mr.  Annis  graduated  Magna Cum Laude from  Pepperdine  University,
earning a Bachelor's  degree in  Administrative  Science and Master's  degree in
Business  Administration.  Mr. Annis also holds a California  Community  College
Instructor's Credential in Business and Industrial Management. In June 2001, Mr.
Annis was awarded the Certified Risk Professional (CRP) designation conferred by
The Bank Administration Institute.

JOHN W. IVY has been employed by the bank since 1991 and currently serves as the
Bank's  Executive Vice President and Chief Credit Officer.  Mr. Ivy received his
B.A. in Economics from University of California, Los Angeles.


                                       8


SECTION 16 COMPLIANCE

Section 16(a) of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act") requires the Bank's  directors and executive  officers and persons who own
more than 10% of a registered class of the Bank's equity securities to file with
the Federal  Deposit  Insurance  Corporation  (the  "FDIC")  initial  reports of
ownership  and reports of changes in  ownership of common stock and other equity
securities of the Bank. Such persons are required by FDIC regulations to furnish
the Bank with copies of all Section 16(a) forms they file.

To the  Bank's  knowledge,  and based  solely on a review of the  copies of such
reports furnished to the Bank and written  representations that no other reports
were required, during the fiscal year ended December 31, 2005, all Section 16(a)
filing requirements were complied with by the Bank's officers, directors and 10%
shareholders except as noted below.

Director  Bruce Maclin failed to timely file a report  required by Section 16(a)
with  respect  to one  transaction  which  was  reported  in a Form 4/A filed on
February 8, 2006 and two  transactions  which were reported in two separate Form
4s filed on May 23, 2005.

Director  Robert  Montgomery  failed to timely file a report required by Section
16(a) with  respect to one  transaction  which was reported in a Form 4 filed on
January 24, 2006.

CODE OF ETHICS

The Bank has  adopted a Code of Ethics  that  applies  to the  Bank's  executive
officer,   principal  financial  officer,   principal   accounting  officer  and
controller,  and persons performing similar functions.  The Bank will provide to
any person without charge,  upon request,  a copy of this Code of Ethics. If you
would like to receive a copy, you can notify us by sending a written request to:

San Joaquin Bank
Corporate Secretary
1301 17th Street
Bakersfield, California 93301


                                       9



ITEM 11. EXECUTIVE COMPENSATION

The following  Summary  Compensation  Table sets forth the  compensation  of the
Bank's Chairman of the Board,  Chief Executive  Officer,  and the two other most
highly  compensated  executive  officers (each a "Named Executive  Officer") for
services in all capacities to San Joaquin Bank during 2005, 2004, and 2003:



SUMMARY COMPENSATION TABLE

- -----------------------------------------------------------------------------------------------------------------------
                                                                                           LONG-TERM       ALL OTHER
                                                  ANNUAL COMPENSATION(L)                  COMPENSATION    COMPENSATION
                                                  ----------------------                  ------------    ------------
                                                                                          UNDERLYING
NAME AND PRINCIPAL POSITION                       YEAR         SALARY         BONUS(2)     OPTIONS(3)
- ----------------------------------------------------------------------------------------------------------------------
                                                                                               
Bruce Maclin (4)                                  2005       $ 279,600       $ 236,000        10,000   $      5,250
Chairman of the Board                             2004         240,000         200,000        10,000          6,009
                                                  2003         211,296         163,278        10,000          5,283
- -----------------------------------------------------------------------------------------------------------------------
Bart Hill cs)                                     2005         279,600         236,000        10,000          5,250
   President, Chief Executive Officer             2004         240,000         200,000        10,000          6,938
   and Director                                   2003         211,296         163,278        10,000          5,283
- -----------------------------------------------------------------------------------------------------------------------
Stephen M. Annis (6)                              2005         130,612          49,155         4,000          4,514
   Executive Vice President, Chief                2004         121,674          45,514         4,000          4,184
   Financial Officer and Corporate                2003         116,430          38,369         3,000          3,870
- -----------------------------------------------------------------------------------------------------------------------
John W. Ivy (7)                                   2005         130,612          49,155         4,000            657
   Executive Vice President and Chief             2004         121,674          45,514         4,000            444
   Credit Officer                                 2003         116,430          38,369         3,000            291
- -----------------------------------------------------------------------------------------------------------------------


(1)  The executive  officers  received  perquisites  in addition to their annual
     compensation  during the fiscal years ended  December  31,  2005,  2004 and
     2003.  The  amounts  disclosed  exclude   perquisites  and  other  personal
     benefits,  securities or property, which, in each of the fiscal years ended
     December 31, 2005, 2004 and 2003, aggregated less than the lower of $50,000
     or 10% of the total of annual  salary  and bonus  reported  for each  Named
     Executive Officer.

(2)  The  amounts in this  column are  bonuses  actually  paid  during the years
     shown. In January 2006, the following  bonuses relating to the prior year's
     performance  were paid:  Mr.  Maclin - $303,968,  Mr. Hill - $303,968,  Mr.
     Annis - $55,716, Mr. Ivy - $55,716.

(3)  The amounts in this column are based on options actually granted during the
     years shown.  In February  2006,  the following  options  relating to prior
     year's performance were granted:  Mr. Maclin - 9,000, Mr. Hill - 9,000, Mr.
     Annis - 3,600, Mr. Ivy - 3,600.

(4)  All other  Compensation  for Mr.  Maclin  represents  the  Bank's  matching
     contributions  of $5,250,  $6,009,  and $5,283 by the Bank under its 401(k)
     Plan for 2005, 2004 and 2003, respectively.

(5)  All  other  compensation  for  Mr.  Hill  represents  the  Bank's  matching
     contributions  of$5,250,  $6,938,  and $5,283, by the Bank under its 401(k)
     Plan for 2005, 2004 and 2003, respectively.

(6)  All  other  compensation  for Mr.  Annis  represents  the  Bank's  matching
     contributions of $4,514,  $4,184,  and $3,870, by the Bank under its 401(k)
     Plan for 2005, 2004 and 2003, respectively.

(7)  All  other   compensation  for  Mr.  Ivy  represents  the  Bank's  matching
     contributions of $657, $444, and $291 by the Bank under its 401(k) Plan for
     2005, 2004 and 2003, respectively.


STOCK OPTIONS

OPTIONS GRANTED IN 2005

The following  table sets forth  information  regarding  options  granted to the
Named Executive Officers during 2005. The total number of shares issuable during


                                       10


2005,  assuming full vesting pursuant to options granted to the Bank's employees
(not including 7,000 shares underlying options granted to non-employee directors
during  2005) was 52,350.  All options  granted to Bank  employees  in 2005 were
Incentive  Stock  Options,  except  that  certain  options  granted to the Named
Executive  Officers  exceeded the $100,000  limit  established by IRS regulation
ss.1.422-4.  As such, the excess options granted to the Named Executive Officers
must be treated as  non-statutory  options.  The exercisable  price per share of
options  granted  represents one hundred percent (100%) of the fair market value
of the underlying shares of the Bank's common stock on the date the options were
granted,  as  determined  by the  Bank's  Board of  Directors,  except  that the
exercise  price per share for options  granted to Mr.  Maclin in 2005 was set at
one hundred ten percent (110%) of the fair market value of the underlying shares
of the Bank's common stock on the date the options were granted as determined by
the Bank's Board of Directors.

The  options  expire  ten  years  from the date of  grant,  subject  to  earlier
termination in certain events related to termination of employment, however, the
options  granted to Mr.  Maclin in 2005  expire five (5) years from the date the
options were granted.

In accordance  with the rules of the  Securities  and Exchange  Commission,  the
table sets forth the hypothetical gains or "option spreads" that would exist for
the options at the end of their respective  ten-year or five-year  terms.  These
gains are based on assumed rates of compounded  share price  appreciation  of 5%
and 10% from the dates the options were  granted to the end of their  respective
option terms.  These gains do not represent the Bank's estimate or projection of
the future price of the Bank's  common stock.  Actual  gains,  if any, on option
exercises depend upon the future performance of the Bank's common stock.



- ---------------------------------------------------------------------------------------------------------------------------
                                         Options Granted in 2005
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                              Potential Realizable
                                                                                                 Value at Assumed
                                                                                              Annual Rate of Stock
                                                                                              Price Appreciation for
                                          Individual Grants                                        Option Term
                    ---------------------------------------------------------------------   -------------------------------
                                             Percent of
                    Number of Securities   Total Options     Exercise or
                     Underlying Options      Granted to      Base Price    Expiration
        Name              Granted(1)        Employees        per share     Date               5%           10%
- ----------------------------------------------------------------------------------------------------------------------------
                                                                                       
Bruce Maclin(2)            10,000            19.10%            $28.87       2/15/2010        $46,324     $134,059

- ----------------------------------------------------------------------------------------------------------------------------
Bart Hill(')               10,000            19.10%            $26.25       2/15/2015       $165,085     $418,357
- ----------------------------------------------------------------------------------------------------------------------------
Stephen M. Annis(3)         4,000             7.64%            $26.25       2/15/2015        $66,034     $167,343
- ----------------------------------------------------------------------------------------------------------------------------
John W. IVY (3)             4,000             7.64%            $26.25       2/15/2015        $66,034     $167,343
- ----------------------------------------------------------------------------------------------------------------------------



(1)  All  options  granted in 2005 are 100% vested and  exercisable,  subject to
     continuous employment with the Bank.

(2)  Options  granted  are  priced  at  110% of the  fair  market  value  of the
     underlying  shares of the Bank's  common stock on the date the options were
     granted. The term of these options is five (5) years.

(3)  Options  granted  are  priced  at  100% of the  fair  market  value  of the
     underlying  shares of the Bank's  common stock on the date the options were
     granted. The term of these options is ten (10) years.


TOTAL OPTIONS EXERCISED IN 2005 AND YEAR-END OPTION VALUES

The following table sets forth information  related to outstanding stock options
of the Named Executive Officers as of December 31, 2005 and provides information
for stock options exercised in 2005. The value of the unexercised "in-the-money"
options is based on the fair market  value as of December  31,  2005,  minus the
exercise price, multiplied by the remaining options.

                                       11





- -----------------------------------------------------------------------------------------------------------------------
                                       Total Options Exercised in 2005 and Year-End Option Values
- -----------------------------------------------------------------------------------------------------------------------
                                                        Number of Securities
                                                      Underlying Unexercised
                                                       Options at December 31,    Value of Unexercised In-the-Money
                                                              2005                     Options at December
                                                      -----------------------      ------------------------------------
                        Shares
                       Acquired on     Value
Name                   Exercise         Realized   Exercisable    Unexercisable   Exercisable     Unexercisable
- -----------------------------------------------------------------------------------------------------------------------
                                                                                       
Bruce Mactin           8,250          $ 184,553       88,250         -            $   1,747,179       $   -
Bart Hill              8,250          $ 184,759       88,250         -            $   1,813,529       $   -
Stephen M. Annis       3,300          $  73,409       28,200         -            $     564,697       $   -
John W. Ivy                -          $      -        21,900         -            $     395,320       $   -
- -----------------------------------------------------------------------------------------------------------------------


(1)  Based upon a fair market  value of $33.75.  Fair market value is based upon
     the average of the closing bid and ask price of the Bank's  common stock on
     December 31, 2005.

STOCK OPTION PLANS

The Bank has two stock option  plans  pursuant to which common stock of the Bank
may be purchased. The Bank adopted the plans to promote the long-term success of
the Bank and to create  shareholder  value by (i)  encouraging  key personnel to
focus on critical long-range objectives, (ii) increasing the ability of the Bank
to attract and retain key personnel and (iii) linking key personnel  directly to
shareholder interests through increased stock ownership.

1989 STOCK OPTION PLAN

On May 1, 1989, the Board of Directors adopted and approved the San Joaquin Bank
Stock  Option  Plan  dated  May 1,  1989 (the  "1989  Plan").  The 1989 Plan was
approved by the  shareholders  on April 18, 1989. The 1989 Plan terminated as of
the  close  of  business  on May  1,  1999  and no  options  have  been  granted
thereafter. The 1989 Plan is administered by the Board of Directors.

All  full-time,  salaried  officers and employees of the Bank and its subsidiary
corporations ("Employees"), Employee Directors and Non-Employee Directors of the
Bank and its  subsidiary  corporations  were eligible to participate in the 1989
Plan.  Employees and Employee Directors were eligible to receive incentive stock
options  ("ISOs") and NSOs while  Non-Employee  Directors  were only eligible to
receive NSOs.  However, no person was eligible for a grant of options if, at the
time of grant,  such person  owned shares of stock of more than 10% of the total
combined  voting  power  of all  classes  of  stock  of the  Bank  or any of its
subsidiaries.  Moreover,  all grants of ISOs were  required  to comply  with the
requirements  of Section 422 of the Internal  Revenue  Code of 1986,  as amended
(the "Code").  The 1989 Plan required the purchase price of the stock subject to
each option to not be less than 100% of the fair  market  value of such stock at
the time the options were granted.

A total of 463,000 shares of the Bank's common stock were  originally  available
for grant  under  the 1989  Plan.  As of April  25,  2006,  there  were  options
outstanding under the 1989 Plan to purchase an aggregate of 89,650 shares of the
Bank's common stock at exercise prices ranging from $8.08 to $15.00 per share or
a weighted average exercise price per share of $11.58.

1999 STOCK INCENTIVE PLAN

On February  20,  1999,  the Board of  Directors  adopted and  approved  the San
Joaquin  Bank 1999 Stock  Incentive  Plan (the "1999  Plan").  The 1999 Plan was
approved by shareholders  on May 25, 1999 and became  effective on June 1, 1999.
The 1999 Plan  terminates on May 31, 2009. The 1999 Plan is  administered by the
Board of Directors.  Subject to the terms of the 1999 Plan, the Board determines
the  number  of  options  in the  award  as well as the  vesting  and all  other
conditions.

The  following  persons are  eligible to  participate  in the 1999 Plan:  (a) an
employee of the Bank, the Bank's parent company,  subsidiary or affiliate, (b) a
consultant or adviser who provides services to the Bank, its parent,  subsidiary
or  affiliate  as  a  independent   contractor,   or  (c)  directors  (including
non-employee  directors) of the Bank (collectively "Key Employees").  Subject to

                                       12


limitations  under  Section  422(c)(5) of the Code,  only Key  Employees who are
common-law employees of the Bank, its parent company, or subsidiary are eligible
for grants of ISOs under the 1999 Plan.

The 1999 Plan provides for awards in the form of options, which may contain ISOs
under Section 422 of the Code or which may be NSOs under Section 83 of the Code.
The 1999 Plan  provides  that ISOs may not be  granted at less than 100% of fair
market value of the Bank's  common stock on the date of the grant.  In the event
that the Optionee  possesses  more than ten percent (10%) of the total  combined
voting  power of all  classes of stock of the Bank on the date the  options  are
granted,  then the exercisable  price per share of ISOs granted must be not less
than one hundred ten percent  (110%) of the fair market value of the  underlying
shares of the  Bank's  common  stock on the date the  options  were  granted  as
determined by the Bank's Board of Directors,  and the options must  terminate on
the fifth anniversary of the grant date or 30 days after the termination of such
Optionee's  service,  except that in the case of  termination  of service due to
death or disability, options will expire the earlier of: (a) six months from the
date of termination,  or (b) the fifth  anniversary of the grant date. For NSOs,
the exercise  price may vary in accordance  with a  predetermined  formula while
such  options are  outstanding;  provided,  however,  to the extent  required by
applicable  law, the exercise  price may not be less than 85% of the fair market
value of the common stock on the date of grant.

Under the 1999 Plan, the following  special rights are afforded to Directors who
are not employees of the Bank, its parent or a subsidiary ("Outside Director"):

     (a)  Each  eligible  Outside  Director  automatically  is granted an NSO to
          purchase  1,000 shares of the Bank's common stock upon the  conclusion
          of  each  regular  annual  meeting  of the  Bank's  shareholders.  The
          exercise  price of such  options  must equal  100% of the fair  market
          value of the common stock on the grant date. All such options vest and
          become  exercisable  at the  rate  of  20%  upon  each  one  (1)  year
          anniversary of the grant date. All such options terminate on the tenth
          anniversary of the grant date or 90 days after the termination of such
          Outside Director's service for any reason.

     (b)  An Outside  Director  may elect to  receive  his/her  annual  retainer
          payments and meeting  fees from the Bank that would  otherwise be paid
          in cash in the form of cash, NSOs, or a combination of both.

As of April 25, 2006,  for Outside  Directors,  there were  options  outstanding
under the 1999 plan to  purchase  an  aggregate  of 38,300  shares of the Bank's
common  stock at an exercise  price  ranging from $8.25 to $35.00 per share or a
weighted average exercise price per share of $17.59.

A total of 600,000  shares of the Bank's common stock were  initially  available
for grant under the 1999 Plan. If an option granted under the 1999 Plan expires,
is cancelled,  forfeited or terminates without having been fully exercised,  the
unpurchased  shares which were subject to that option again become available for
the grant of additional options under the 1999 Plan. As of April 25, 2006, there
were options outstanding under the 1999 Plan to purchase an aggregate of 352,415
shares of the Bank's  common  stock at  exercise  prices  ranging  from $8.25 to
$37.40 per share or a weighted average exercise price per share of $18.51.


EXECUTIVE SALARY CONTINUATION AGREEMENTS

On October 3, 1996, the Bank entered into certain Executive Salary  Continuation
Agreements which were amended and restated as of May 15, 2000 and as of June 13,
2003 (each, a "Continuation Agreement") with Bruce Maclin, Bart Hill, Stephen M.
Annis and John W. Ivy (each a "Recipient").  The Continuation Agreements for Mr.
Maclin and Mr. Hill were also amended and  restated as of June 18,  2004.  Under
the Continuation  Agreements,  the Bank agreed to pay key executives  additional
benefits in the future in return for satisfactory  performance by the executive.
The benefits  under the  Continuation  Agreements  were designed to be recovered
through the use of life insurance policies purchased by the Bank with respect to
each Recipient.

Under each of the four Continuation Agreements, the following apply:

     (a)  If the  Recipient  is  continuously  employed  by the Bank  until  his
          retirement at age 65  ("Retirement"),  the Recipient would be entitled
          to receive 50% of his or her highest annual  compensation during their
          employment, on an annual basis for life.

                                       13


     (b)  If the Recipient  elects to retire after age 60 but prior to attaining
          age 65  ("Early  Retirement"),  the  annual  payments  are  reduced by
          determining  the  discounted  value of the annual  benefit  based on a
          capitalization  rate of 5% for the period of time between the selected
          Early Retirement date and the Retirement date.

     (c)  If the  Recipient  dies  before or after his or her  Retirement  date,
          payment  of  the  annual  benefit  will  be  paid  to  the  decedent's
          designated beneficiary as follows:

          (i)  with  respect  to Mr.  Maclin  and Mr.  Hill,  100% of the annual
               benefit,  as described in the  Continuation  Agreement,  shall be
               paid to the Surviving Spouse or Beneficiary,  as the case may be,
               until the later of (a) the death of the  Surviving  Spouse or (b)
               the  expiration  of  twelve  (12)  years  from  the   Recipient's
               Retirement date;

          (ii) with  respect to Mr. Annis and Mr. Ivy,  sixty-five  (65%) of the
               annual benefit, as described in the Continuation Agreement, shall
               be paid to the Surviving  Spouse or Beneficiary,  as the case may
               be, until the later of (a) the death of the  Surviving  Spouse or
               (b) the  expiration  of  five  (5)  years  from  the  Recipient's
               Retirement date.

     (d)  If the Recipient becomes disabled while actively employed prior to his
          retirement,  he will continue to be treated  during the  disability as
          being gainfully  employed and will be entitled to receive for life the
          applicable  percentage of annual  benefits set forth in the respective
          Continuation Agreements.

     (e)  Subject to the Bank's right to terminate the  Recipient's  employment,
          with or without cause, (as more particularly  described in Section 2.1
          of the  Continuation  Agreement),  if the  Recipient's  employment  is
          terminated  prior to the Early  Retirement  date for any reason  other
          than  disability  or Sale of Business  (as  defined in and  applicable
          under  Mssrs.  Maclin's  and  Hill's  Continuation  Agreements),   the
          Recipient  is  entitled  to be paid an  applicable  percentage  of the
          annual  benefit for life,  as determined  by the  applicable  years of
          service at the time of Recipient's termination of employment.

Mr. Maclin's and Mr. Hill's Continuation Agreements have an additional provision
describing the treatment of their annual benefit upon: (i) merger, consolidation
or  reorganization  of the Bank,  (ii)  sale of more than 50% of the  beneficial
ownership of the Bank's voting  shares,  (iii) transfer or sale of more than 50%
of the total market value of the Bank's  assets or (iv) turnover of greater than
50% of the Bank's Board of  Directors  (collectively,  the "Sale of  Business").
Upon the Sale of Business,  the Continuation  Agreements require the Bank to pay
Mr.  Maclin and Mr. Hill,  in lieu of all benefits  otherwise  payable under the
agreement, a lump sum payment determined by calculating the present value of the
annual  benefit  payment based on a 5%  capitalization  rate;  such amount being
reduced  if at the  time of Sale of  Business  annual  benefit  payments  to the
Recipient have already begun.

The  Continuation  Agreements  with Mr.  Maclin  and Mr.  Hill  also  contain  a
"gross-up"  clause which  provides that in the event that  following a change of
control of the Bank, the payments due under the  Continuation  Agreement  become
subject to an excise tax under Internal Revenue Code Sections 2806 and 4999, the
Bank shall make an  additional  payment to Mr.  Maclin and Mr. Hill in an amount
necessary  to pay the  excise  tax as well as any  income  taxes  imposed on the
additional  payment,  any excise tax imposed on the  additional  payment and any
interest  or  penalties  imposed  with  respect  to  the  taxes  imposed  on the
additional payment or excise taxes.

The  Continuation  Agreements  with Mr.  Maclin  and Mr.  Hill  also  contain  a
provision relating to the payment of medical benefits.  Under the provision, the
Bank is required  to provide the  Recipients  and their  spouses  with access to
coverage  for  medical,  dental and vision  benefits  under any such option then
offered by the Bank to it's then similarly  situated  currently active employees
under the Bank's group health plan, or subject to other limitations set forth in
the Continuation  Agreement under individual policies. The Bank will pay 100% of
the cost of the premium,  or in the case of a self funded plan, 100% of the cost
of coverage,  for the selected  coverage for the duration of the lifetime of the
Recipient.

The Board of Directors  has approved a resolution  limiting the annual  benefits
payable under the Continuation Agreements to Stephen M. Annis and John W. Ivy to
$90,000,  respectively.  In  January  2005,  the Board of  Directors  approved a
resolution   limiting  the  annual  benefits   payable  under  the  Continuation
Agreements to Bruce Maclin and Bart Hill to $300,000, respectively.


                                       14


As of December 31, 2005, 2004, and 2003, approximately  $3,637,426,  $2,491,735,
and $1,645,716,  respectively, were accrued in conjunction with the Continuation
Agreements.

To fund the Continuation Agreements with Mssrs. Maclin, Hill, Annis and Ivy (the
"Insureds"), the Bank purchased Bank Owned Life Insurance policies (the "BOLI").
The  BOLI  are  designed  to  mitigate  the  Bank's  costs  associated  with the
Continuation   Agreements  by  taking   advantage  of  favorable  tax  treatment
associated with the anticipated appreciation in the cash surrender values of the
BOLI.  The Bank is the sole  beneficiary  of all of the  BOLI,  with none of the
death proceeds shared with the Insureds.

The Bank is at all times  entitled to an amount  equal to the BOLI's cash value,
less any  policy  loans  and  unpaid  interest  or cash  withdrawals  previously
incurred by the Bank at the direction of the Bank and any  applicable  surrender
charges.   The  aggregate  cash  surrender  values  of  the  BOLI   approximated
$10,178,823, $9,871,732, and $9,435,840 as of December 31, 2005, 2004, and 2003,
respectively.


CHANGE IN CONTROL AGREEMENTS

In January  1999,  the Bank entered into  certain  Change in Control  Agreements
("CCA")  with Bruce  Maclin and Bart Hill  ("Employees"),  which were amended in
June 2001 and April 2003. Such  agreements are sometimes  referred to as "Golden
Parachutes"  and are designed to avoid the loss of key employees in the event of
speculation  about possible  changes of control.  It is generally  believed that
such protection allows executives to remain focused on the business of a company
even if hostile  actions are brought  against the company.  The Bank knows of no
plans by any person or entity to attempt a hostile takeover.

Under the terms of each CCA,  upon a change of  control  and  subject to certain
limitations,  the Employee is entitled to severance  payments equal to three (3)
times the Employee's  annual rate of base  compensation plus three (3) times the
highest  annual bonus awarded to the Employee by the Bank during the prior three
years.  The CCAs also contain a "Gross Up Payment"  clause  which would,  in the
event the  severance  payment  becomes  subject to an excise tax under  Internal
Revenue Code Sections 2806 and 4999,  the Bank would be required to increase the
payment to the amount  necessary  to pay the  Employee  the same amount as if no
excise tax were applicable.  In addition,  the CCAs contain a provision pursuant
to which the Bank  will  contribute  to an  irrevocable  grantor  trust the then
present value of the  Employee's  fully vested  benefit  under their  respective
Executive  Salary  Continuation  Agreements.   Upon  Employee's  termination  of
employment,  the  Employee  will receive a lump sum cash  distribution  from the
trust equal to the amount  determined in accordance with his or her Continuation
Agreement.

The CCA defines a "change of control" to mean:

(a)  dissolution or liquidation of the Bank;
(b)  a reorganization, merger or consolidation of the Bank where the Bank is not
     the surviving entity;
(c)  any sale, lease,  exchange or other transfer of all or substantially all of
     the Bank's assets;
(d)  any merger or  consolidation  in which the  holders  of the  Bank's  voting
     shares before the merger or consolidation  will not hold 50% or more of the
     voting  shares of the surviving  entity;  or
(e)  a change of 50% or more in the  members  of the Bank's  Board of  Directors
     within a 12-month  period,  unless the election or  nomination  of each new
     director was approved by 75% of the directors  then still in the office who
     were in office at the beginning of the 12-month period.

If December 31, 2005 were used as the applicable  change of control date, Mssrs.
Maclin and Hill would each be  entitled  to a  severance  payment of  $1,750,704
pursuant to their respective CCAs.

In June 2001,  the Bank  entered into CCAs with Stephen M. Annis and John W. Ivy
which were  amended in April 2003 and which are  substantially  similar with the
CCAs for Mssrs. Maclin and Hill. Under the terms of their CCAs, however,  Mssrs.
Annis and Ivy are entitled to severance payments equal to one and a half (1 1/2)
times their annual rate of base  compensation  plus one and a half (1 1/2) times
their  highest  annual bonus  awarded to them by the Bank during the prior three
years. The CCAs for Mssrs.  Annis and Ivy also do not contain "Gross Up Payment"
provisions.  Moreover,  Mssrs.  Annis' and Ivy's CCAs do not include  provisions
providing for a lump sum payment relating to their Continuation Agreements to be
paid upon a change in  control.  Finally,  Mssrs.  Annis'  and Ivy's CCAs do not
include a provision which provides for the continued  participation in the group

                                       15


insurance plans  maintained by the Bank,  including life,  disability and health
insurance  programs,  for a period of thirty-six  (36) months  commencing upon a
termination of employment arising from a change of control.

If December 31, 2005 were used as the applicable  change of control date, Mssrs.
Annis and Ivy would each be entitled to a severance payment of $279,492 pursuant
to their respective CCAs.


SAN JOAQUIN BANK 401(K) PLAN

The Bank has in place a  contributory  retirement  plan known as the San Joaquin
Bank 401(k) Plan (the "401(k)  Plan") for all employees age 21 and older with at
least 12 months of service,  which is designed to be tax deferred in  accordance
with the provisions of Section  401(k) of the Internal  Revenue Code. The 401(k)
Plan  provides  that an employee  may elect to enroll on January 1 and July 1 of
any plan year,  provided  that the  employee  has  attained  age 21 and has been
employed by the Bank for at least 12 months.  For each plan year,  an employee's
elective  deferrals may not exceed a specific  dollar  amount  determined by the
IRS;  such  amount  being  $14,000  in  2005.  In  2005,   additional   catch-up
contributions  of up to $4,000  annually were allowed for individuals age 50 and
over.

To encourage its employees to elect to make salary reduction contributions,  the
Bank has  elected to match  such  contributions  to the extent of fifty  percent
(50%) of  contributions  on the first five percent (5%) of the employee's pay (a
maximum of 2.5% of the employee's compensation).  At its meeting of December 15,
1998, the Board of Directors amended the 401(k) Plan to permit the Board, at its
discretion,  to make additional matching  contributions (in excess of the 50% of
5% of compensation  referred to above) to eligible  non-officer  employees.  The
Bank's matching  contributions  to the 401(k) Plan in 2005,  2004, and 2003 were
$133,340  $122,184,  and  $114,600,  respectively.  The 2005  figure  included a
discretionary   special   contribution  of  $49,347   allocated  to  non-officer
employees.

COMPENSATION OF NON-EMPLOYEE DIRECTORS

During 2005, each non-employee director of the Bank received direct remuneration
from the Bank in the form of Board meeting fees as follows:  (a) $1,300 for each
Board meeting  attended  (regular Board meetings were not held during the months
of July and August,  2005,  therefore,  each  non-employee  director of the Bank
received a retainer in the amount of $1,300 in lieu of any other  Board  meeting
fees for each of those  two  months);  (b)  $250 for  attendance  at each  Audit
Committee  meeting  ($10,000  annual  retainer plus $450 for  attendance at each
meeting by the Chairman of the Audit Committee); (c) $225 for attendance at each
Investment  Committee  meeting;  (d) $450 for  attendance at each Loan Committee
meeting;  (e) $225 for attendance at each  Asset/Liability  Management Committee
meeting;  (f) $250 for attendance at each Credit Review Committee  meeting;  (g)
$225 for attendance at each Technology  Committee  meeting.  The Chairman of the
Board, Bruce Maclin,  and the President and Chief Executive Officer,  Bart Hill,
are  compensated  as  employees  of the Bank and did not receive any  directors'
fees.  All outside  directors  are  reimbursed  for their  expenses  incurred in
attending  Board and committee  meetings.  Additionally,  each eligible  outside
director  automatically  is granted a  non-statutory  option ("NSO") to purchase
1,000  shares of the Bank's  common  stock upon the  conclusion  of each regular
annual  meeting of the Bank's  shareholders  as further  explained in the "Stock
Option Plans" section herein.

DEFERRED FEE AGREEMENT

In October,  1996, to encourage  non-employee directors to remain members of the
Bank's Board of Directors,  the Board  authorized the Bank to enter into certain
deferred fee  agreements  pursuant to which a director  could elect to defer the
directors'  total fees (including  salary and bonus) (the "Fees") payable by the
Bank to the Director.  Payment of the deferred Fees and accrued  interest occurs
upon  retirement,  disability,  change of control of the Bank,  determination of
hardship, or death.

On  October  9, 1996,  the Bank  entered  into a  Deferred  Fee  Agreement  (the
"Agreement")  with Louis J. Barbich to defer One Hundred  Percent  (100%) of his
Fees.  Between  October 9, 1996 and March 31, 2006, a total of $194,000 has been
deferred  pursuant to the Agreement,  including  deferral of $35,000 in 2005. No
other Directors have entered into a deferred fee agreement with the Bank.

                                       16


          REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION(1)

EXECUTIVE COMPENSATION PHILOSOPHY

The Board of Directors acted as San Joaquin Bank's (the "Company")  compensation
committee  during  fiscal  2005.  In January  2006,  the Board formed a separate
Compensation Committee. The Committee is responsible for evaluating compensation
levels  and  compensation  programs  for all  Company  officers  and for  making
decisions regarding appropriate compensation awards.

The executive compensation program of the Company is designed to attract, retain
and  motivate  executive  officers  capable of leading  the  Company to meet its
business  objectives.  The Board's philosophy is for the Company to use policies
and  programs  which  align the  interests  of the  officers  with  those of the
shareholders and to provide  compensation  programs that create incentives based
on the success of the Company.  While the components of  compensation  described
below  are  discussed  separately,   the  Board  takes  into  account  the  full
compensation package provided by the Company to its executive officers.

EXECUTIVE COMPENSATION COMPONENTS

BASE SALARY.  Recommendations  for base salaries for executive officers are made
at levels believed by the Board to be sufficient to attract and retain qualified
executive  officers based upon the requirements and resources of the Company and
the market salary levels for  comparable  positions in the banking  industry.  A
change in base salary of an executive  officer is based on an  evaluation of the
performance of the executive,  prevailing market practices,  and the performance
and financial condition of the Company as a whole.

INCENTIVE   BONUS.  The  Board  believes  that  a  portion  of  the  total  cash
compensation for executive  officers should be based on the Company's success in
meeting its performance objectives relative to the individual contributions made
by the officer.  The approach creates a direct incentive for executive  officers
to achieve  desired  short-term  corporate goals that also further the long-term
objectives  of the  Company,  and places a portion of each  executive  officer's
annual compensation at risk.

STOCK OPTIONS.  The Board  believes that periodic  grants of stock options are a
key component of the Company's executive compensation program. Stock options are
awarded by the Board of Directors to executive officers based on the executive's
responsibilities and his or her actual historical  contributions and anticipated
future  contribution to the attainment of the Company's  strategic goals.  These
awards are designed to retain executive officers and to motivate them to enhance
stockholder value by aligning the financial interests of executive officers with
those of stockholders.

RECRUITMENT  AND RETENTION.  It is philosophy of the Board to recruit  qualified
officers and then to retain them for  continuing  service from year to year,  so
that the Company will receive the benefits  from  management  stability and from
more consistent year-to-year planning and execution of strategies.

CHAIRMAN AND CEO COMPENSATION In establishing  the compensation  package for the
Chairman of the Board (who is an executive officer) and the  President/CEO,  the
Board pursued the objectives  discussed above and considered  additional factors
relating to the performance of the Chairman and President/CEO.  Mr. Maclin's and
Mr. Hill's salary,  bonus, and stock option grants related to the achievement of
corporate goals and individual management goals.  Corporate goals include, among
others,  asset  growth,  loan  growth  and  quality,  profitability  objectives,
improved efficiency measures, and improving service quality.

Individual  goals include  satisfactory  results from  regulatory  examinations,
satisfactory improvement in operational efficiency,  and satisfactory compliance
with internal control  procedures.  The Board believes that Mr. Maclin's and Mr.
Hill's  compensation  is in  line  with  the  Company's  compensation  strategy,
considering their individual performance and the success of the Company.

INTERNAL  REVENUE CODE SECTION 162 (m).The  Board also  considers  the potential
impact of  Section  162 (m) of the  Internal  Revenue  Code of 1986,  as amended
("Section 162 (m)").  Section 162 (m) disallows a tax deduction for any publicly
held corporation for individual compensation exceeding $1 million in any taxable
year for executive  officers other than compensation  that is  performance-based
under a plan that is approved by the  shareholders  of the  corporation and that
meets certain other technical  requirements.  Based on these  requirements,  the
Board  believes that Section 162 (m) will not prevent the Company from receiving


                                       17


a tax deduction for any of the  compensation  levels paid to executive  officers
during  2005.  At the  present  time,  we believe our annual  executive  officer
compensation  does not exceed $1 million under applicable  Internal Revenue Code
rules.  If we conclude that  compensation  of any executive  officer should ever
approach or exceed the $1 million level, the Board may permit  compensation that
isn't deductible under Section 162 (m).

                             Bruce Maclin, Chairman

   Donald S. Andrews          Melvin D. Atkinson              Louis J. Barbich

   Elvin G. Berchtold           Rogers Brandon                 Jerry Chicca

       Bart Hill             Robert B. Montgomery            Virginia Moorhouse


ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The  following  table  provides  information  as of December  31, 2005 about the
Bank's  common stock that may be issued upon the  exercise of options  under the
Bank's 1989 Stock Option Plan or 1999 Stock Incentive Plan that were approved by
our  shareholders  or that may be issued upon the  exercise  of options  granted
outside of these equity compensation plans.


                                                                      Number of Securities
                                                                       Remaining Available
     Number of Securities                                              for Future Issuance
     to be Issued upon              Weighted-average                      under Equity
        Exercise of                 Exercise Price of                  Compensation Plans
     Outstanding Options,           Outstanding Options,               (Excluding Securities
     Warrants and Rights            Warrants and Rights                Reflected in Column
        (#)(a)                           ($)(b)                            (a)) (#)(c)
- ------------------------------------------------------------------------------------------
Plan Category _(#)(a)
- ------------------------------------------------------------------------------------------
                                                                       
Equity compensation plans                                                       240,535

   Approved by shareholders             436,666             $14.09

Equity compensation plans not

   Approved by shareholders                   -                  -
- ------------------------------------------------------------------------------------------
    Total                                436,666              $14.09            240,535
- ------------------------------------------------------------------------------------------


1)   Represents  options  granted  under the 1989 Stock  Option Plan to purchase
     130,916  shares of the Bank's  common stock and options  granted  under the
     1999 Stock  Incentive Plan to purchase  305,750 shares of the Bank's common
     stock.
2)   Represents  240,535  shares  reserved  for  issuance  under the 1999  Stock
     Incentive Plan.

                                      18



SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The  Corporation  does not know of any person or group that  beneficially  owned
more than 5% of its common stock on April 25, 2006, except as disclosed below.




   --------------------------------------------------------------------------------------------------
                                                  NUMBER OF SHARES OF COMMON
    NAME AND ADDRESS OF BENEFICIAL OWNER(a)        STOCK BENEFICIALLY OWNED       PERCENT OF CLASS
    -------------------------------------------------------------------------------------------------
                                                                               
    Bruce Maclin                                      515,359 (n)                    14.83%
    Edward C. Green                                   268,591                         7.73%
    Bart Hill                                         194,002                         5.58%
   --------------------------------------------------------------------------------------------------


(a)  The  address  of  Bruce  Maclin  and  Bart  Hill  is  1301 -  17th  Street,
     Bakersfield,  CA 93301.  The address of Mr.  Green is 1901  Mineral  Court,
     Bakersfield, CA 93308.

(b)  See footnote 9 on page 20 herein.

(c)  Includes 238,689 shares held by The Green Living Trust that Edward C. Green
     is deemed to beneficially own as co-trustee of the Green Living Trust. Mrs.
     Green is also a co-trustee of the Green Living Trust.  Also includes  3,960
     shares  held by  Dorothy  S.  Green,  Mr.  Green's  wife,  as her  separate
     property.  Mr.  Green  disclaims  beneficial  ownership of the 3,960 shares
     owned by Mrs. Green.  Based solely upon a review of Mr. Green's most recent
     Schedule 13G/A filing dated as of December 31, 2005.

(d)  See footnote 7 on page 20 herein.

SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT

For the purposes of the  disclosure  of  ownership  of shares by  directors  and
management,  shares  are  considered  to be  "beneficially"  owned if a  person,
directly or indirectly,  has or shares the power to vote or direct the voting of
the shares,  the power to dispose of or direct the disposition of the shares, or
the right to acquire beneficial  ownership of shares within 60 days of April 25,
2006.

The following  table shows the number of common shares and the percentage of the
common  shares  beneficially  owned by each of the  nominees for election to the
office of director (all of whom are current  directors),  by the Chairman of the
Board,  by the Chief  Executive  Officer,  and by the Bank's two other executive
officers during 2005, and by all director nominees and executive officers of the
Corporation as a group as of April 25, 2006:



                                                               NUMBER OF SHARES       PERCENTAGE OF SHARES
    NAME AND ADDRESS OF                                        BENEFICIAL OWNER**     BENEFICIALLY OWNED
    ------------------------------------------------------------------------------------------------------
                                                                                   
    Donald S. Andrews (1)                                               2,125

    Stephen M. Annis (2)                                               69,873              2.01%

    Melvin D. Atkinson                                                  2,000

    Louis J. Barbich (3)                                               24,839

    Elvin G. Berchtold (4)                                            144,153              4.15%

    CityRogers placeCityBrandon (5)                                    53,304              1.53%

    Jerry Chicca (6)                                                    6,308

    Bart Hill (7)                                                     194,002              5.58%

    John W. Ivy (8)                                                    46,671              1.34%

    Bruce Maclin (9)                                                  515,359             14.83%

    Robert B. Montgomery (10)                                          38,590              1.11%

    Virginia F. (Ginger) Moorhouse7,400

    All director nominees and Named Executive Officers as a group   1,104,624             31.79%
  ---------------------------------------------------------------------------------------------------



 *    Indicates less than 1%
**   The address of all persons  listed is 1301 - 17th Street,  Bakersfield,  CA
     93301

(1)  Includes 2,000 shares underlying options that are currently  exercisable or
     exercisable within 60 days of April 25, 2006.

                                       19


(2)  Includes 44,973 shares held by The Annis Family Trust that Stephen M. Annis
     is deemed to  beneficially  own as a co-trustee  of the Annis Family Trust.
     Nancy  Annis,  Mr.  Annis' wife,  is also a co-trustee  of The Annis Family
     Trust.  Also,  includes 24,900 shares underlying options that are currently
     exercisable or exercisable within 60 days of April 25, 2006.

(3)  Includes  16,839 shares held by the Louis J. Barbich,  CPA,  Inc.,  Pension
     Trust that Louis J. Barbich is deemed to  beneficially  own as a co-trustee
     of the Louis J. Barbich,  CPA, Inc.,  Pension Trust.  Sheryl  Barbich,  Mr.
     Barbich's  wife, is also a co-trustee of the Louis J. Barbich,  CPA,  Inc.,
     Pension  Trust.  Also,  includes 8,000 shares  underlying  options that are
     currently exercisable or exercisable within 60 days of April 25, 2006.

(4)  Includes (i) 75,307 shares held by The Berchtold Family Trust that Elvin G.
     Berchtold is deemed to  beneficially  own as a co-trustee  of The Berchtold
     Family Trust. Ida E. Berchtold,  Mr. Berchtold's wife, is also a co-trustee
     of The Berchtold  Family Trust,  (ii) 7,836 shares held by Ida E. Berchtold
     in an individual retirement account,  (iii) 28,170 shares held by Berchtold
     Bros., a trust that handles  investments for Mr. Berchtold's  children,  of
     which Mr. Berchtold and his wife are co-trustees and (iv) 3,248 shares held
     by The Wilheminia  Westlund  Berchtold Trust, which Mr. Berchtold is deemed
     to beneficially  own as a co-trustee of The Wilheminia  Westlund  Berchtold
     Trust.  Ida E.  Berchtold is also a co-trustee of The  Wilheminia  Westlund
     Berchtold Trust. Mr. Berchtold disclaims beneficial ownership of the 28,170
     shares held by Berchtold  Bros.  Also,  includes  8,000  shares  underlying
     options that are currently  exercisable  or  exercisable  within 60 days of
     April 25, 2006.

(5)  Includes  50,304 shares held by The Rogers & Esther R. Brandon Family Trust
     that Rogers  Brandon is deemed to  beneficially  own as a co-trustee of The
     Rogers & Esther R. Brandon Family Trust.  Esther R. Brandon,  Mr. Brandon's
     wife, is also a co-trustee of The Rogers & Esther R. Brandon  Family Trust.
     Also,   includes  3,000  shares  underlying   options  that  are  currently
     exercisable or exercisable within 60 days of April 25, 2006.

(6)  Includes 200 shares  underlying  options that are currently  exercisable or
     exercisable within 60 days of April 25, 2006.

(7)  Includes  114,002  shares  held  jointly  by Bart  Hill,  President,  Chief
     Executive  Officer and a Director of the Bank,  and his wife,  Napier Hill.
     Also  includes  80,000  shares   underlying   options  that  are  currently
     exercisable or exercisable within 60 days of April 25, 2006.

(8)  Includes 21,900 shares underlying options that are currently exercisable or
     exercisable within 60 days of April 25, 2006.

(9)  Includes  435,359  shares  held by the Bruce and Laurie  Maclin  Trust that
     Bruce  Maclin is deemed to  beneficially  own as  co-trustee  of the trust.
     Laurie  Maclin,  Mr.  Maclin's  wife,  is also  co-trustee of the Bruce and
     Laurie Maclin Trust.  Also includes 80,000 shares  underlying  options that
     are currently exercisable or exercisable within 60 days of April 25, 2006.

(10) Includes  30,590 shares held by The Montgomery  Family Trust that Robert B.
     Montgomery,  a Director  of the Bank,  is deemed to  beneficially  own as a
     co-trustee  of The  Montgomery  Family  Trust.  Ruth  Ann  Montgomery,  Mr.
     Montgomery's  wife,  is also a co-trustee of The  Montgomery  Family Trust.
     Also,   includes  8,000  shares  underlying   options  that  are  currently
     exercisable or exercisable within 60 days of April 25, 2006.

(11) Includes 5,300 shares held by The Virginia F. Moorhouse Trust that Virginia
     F.  (Ginger)  Moorhouse  is deemed to  beneficially  own as  trustee of The
     Virginia F. Moorhouse  Trust,  and 100 shares held by her husband,  John P.
     Moorhouse,  Jr. Also,  includes  2,000 shares  underlying  options that are
     currently exercisable or exercisable within 60 days of April 25, 2006.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain of the  directors,  executive  officers  and their  associates  have had
banking  transactions  with San Joaquin Bank in the ordinary course of business.
All outstanding loans and commitments included in such transactions were made on
substantially the same terms, including interest rates and collateral,  as those
prevailing at the time for comparable  transactions with other persons,  did not
involve  more than a normal risk of  collectibility,  and did not present  other
favorable features.

In 2005,  the  largest  aggregate  extensions  of  credit to all  directors  and
executive  officers  as a group was  $7,965,000,  or 21.3% of the  Bank's  total
equity capital based on the Bank's equity capital at that time.



ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

AUDIT FEES

The aggregate fees billed to the Bank by Brown Armstrong Paulden McCown Starbuck
& Keeter  Accountancy  Corporation with respect to services performed for fiscal
2005 and 2004 are as follows:










                                          2005         2004
                                           ----        ----

    Audit fees(1)                     $   47,426    $  43,240

    Audit related fees(2)                 21,734       12,835

    Tax fees(3)                           14,835       15,530

    All other fees(4)                      3,486        3,873
                                      ----------    ---------
                                      $   87,480    $  75,478
                                      ==========    =========

(1)  Audit fees  consisted  of fees  billed by Brown  Armstrong  Paulden  McCown
     Starbuck  &  Keeter  Accountancy   Corporation  for  professional  services
     rendered  for the audit of the  Bank's  consolidated  financial  statements
     included in the Annual  Report on Form 10-K and for audits of  subsidiaries
     in fiscal 2005 and 2004.

(2)  Audit related fees  consisted of aggregate  fees billed by Brown  Armstrong
     Paulden McCown Starbuck & Keeter  Accountancy  Corporation for professional
     services for assurance and related services that are reasonably  related to
     the performance of the audit or review of the Bank's  financial  statements
     and not reported  under the heading  "Audit Fees" above for fiscal 2005 and
     2004.

(3)  Tax fees consisted  principally of fees billed by Brown  Armstrong  Paulden
     McCown Starbuck & Keeter Accountancy Corporation for assistance relating to
     tax compliance and reporting, and preparation of tax returns in fiscal 2005
     and 2004.

(4)  All other  fees  consisted  of  aggregate  fees  billed by Brown  Armstrong
     Paulden  McCown  Starbuck & Keeter  Accountancy  Corporation  for review of
     general accounting  procedures,  research related to stock option plans and
     review of regulatory  reporting,  including  quarterly  press  releases and
     Forms 10-Q for fiscal 2005 and 2004.

The Audit Committee's policy is to pre-approve all audit, audit-related, and tax
services and fees by the Bank's independent auditors and approve all other audit
services  and  fees.  The  Audit  Committee  pre-approved  all  audit  services,
audit-related  services  and  tax  services  performed  for the  Bank  by  Brown
Armstrong Paulden McCown Starbuck & Keeter Accountancy  Corporation and approved
all other audit  services and fees during fiscal 2005.  The audit  committee has
approved all fees submitted by Brown Armstrong  Paulden McCown Starbuck & Keeter
Accountancy Corporation during 2005 and 2004.

The Audit Committee  considered whether the provision of the services other than
the audit services is compatible with maintaining Brown Armstrong Paulden McCown
Starbuck & Keeter Accountancy Corporation's independence.

                                       21



                                     PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The  following  documents  are filed as part of this  Annual  Report on Form
10-K:

1.   FINANCIAL  STATEMENTS.  See  index  to  financial  statements  on Page  40.
     (Incorporated  by  reference  from  Item 8 of Part  II of the  Registrant's
     Annual Report on Form 10-K filed on March 28, 2006)

2.   Financial  Statement  Schedules.   All  financial  statement  schedules  as
     required  by Item 8 and Item 15(d) of Form 10-K have been  omitted  because
     the information  requested is either not applicable or has been included in
     the consolidated financial statements or notes thereto.

3.   Exhibits.  The  exhibits  listed  under  Item  15(b)  hereof  are  filed or
     furnished  with, or  incorporated  by reference into, this Annual Report on
     Form 10-K.

(b)  Exhibits.  The  following  exhibits are filed or furnished as a part of, or
incorporated by reference into, this report on Form 10-K:

EXHIBIT   DESCRIPTION OF EXHIBIT
- -------   ----------------------
NUMBER
- ------

3.1       Articles of  Incorporation  of the  Registrant  dated January 3, 1980.
          (Incorporated   by   reference   from   Exhibit  3.1  filed  with  the
          Registrant's  registration  statement  on Form 10 filed  on April  30,
          2003)

3.1(a)    First Amendment to Articles of  Incorporation  of the Registrant dated
          April 30, 1982.  (Incorporated  by reference from Exhibit 3.1(a) filed
          with the Registrant's registration statement on Form 10 filed on April
          30, 2003)

3.1(b)    Second  Amendment to Articles of Incorporation of the Registrant dated
          May 24, 1989.  (Incorporated  by reference  from Exhibit  3.1(b) filed
          with the Registrant's registration statement on Form 10 filed on April
          30, 2003)

3.1(c)    Third Amendment to Articles of  Incorporation  of the Registrant dated
          March 28, 1997  (incorporated  by reference  from Exhibit 3.1(c) filed
          with the Registrant's registration statement on Form 10 filed on April
          30, 2003)

3.1(d)    Fourth  Amendment to Articles of Incorporation of the Registrant dated
          May 1, 1998. (Incorporated by reference from Exhibit 3.1(d) filed with
          the Registrant's  registration statement on Form 10 filed on April 30,
          2003)

3.1(e)    Fifth Amendment to Articles of  Incorporation  of the Registrant dated
          July 16, 1999.  (Incorporated  by reference  from Exhibit 3.1(e) filed
          with the Registrant's registration statement on Form 10 filed on April
          30, 2003)

3.2       Bylaws of the  Registrant  dated  January  3, 1980.  (Incorporated  by
          reference  from  exhibit  3.2  filed  with  Registrant's  registration
          statement on Form 10 filed on April, 30, 2003)

3.2(a)    First  Amendment  of Bylaws of the  Registrant  dated  July 28,  1989.
          (Incorporated   by  reference  from  Exhibit  3.2(a)  filed  with  the
          Registrant's  registration  statement  on Form 10 filed  on April  31,
          2003)

                                       22




EXHIBIT                      DESCRIPTION OF EXHIBIT
- -------                      ----------------------
NUMBER
- ------

3.2(b)    Second  Amendment of Bylaws of the Registrant  dated January 16, 1990.
          (Incorporated   by  reference  from  Exhibit  3.2(b)  filed  with  the
          Registrant's  registration  statement  on Form 10 filed  on April  31,
          2003)

3.2(c)    Third  Amendment  of Bylaws  of the  Registrant  dated  May 10,  1995.
          (Incorporated   by  reference  from  Exhibit  3.2(c)  filed  with  the
          Registrant's  registration  statement  on Form 10 filed  on April  31,
          2003)

3.2(d)    Fourth  Amendment of Bylaws of the Registrant dated February 22, 1999.
          (Incorporated   by  reference  from  Exhibit  3.2(d)  filed  with  the
          Registrant's  registration  statement  on Form 10 filed  on April  31,
          2003)

3.2(e)    Fifth  Amendment  of Bylaws of the  Registrant  dated  June 18,  2002.
          (Incorporated   by  reference  from  Exhibit  3.2(e)  filed  with  the
          Registrant's  registration  statement  on Form 10 filed  on April  31,
          2003)

4.1       Specimen Common Stock Certificate of the Registrant.  (Incorporated by
          reference from Exhibit 4.1 filed with the  Registrant's  Annual Report
          on Form 10-K filed on March 28, 2006)

10.1*     Amended  and  Restated  1989  Stock  Option  Plan  of the  Registrant.
          (Incorporated   by   reference   from  Exhibit  10.1  filed  with  the
          Registrant's  registration  Statement  on Form 10 filed  on April  30,
          2003)

10.2*     1999  Stock  Incentive  Plan  of  the  Registrant.   (Incorporated  by
          reference from Exhibit 10.2 filed with the  Registrant's  registration
          Statement on Form 10 filed on April 30, 2003)

10.3*     Form of  Incentive  Stock  Option  Agreement  pursuant  to 1999  Stock
          Incentive  Plan of the  Registrant.  (Incorporated  by reference  from
          Exhibit 10 filed with Registrant's Form 8-K filed on March 15, 2005)

10.4*     Amended and Restated  Executive  Salary  Continuation  Agreement dated
          June 18, 2004 between the Registrant  and Bruce Maclin.  (Incorporated
          by  reference  from Exhibit  10.4 filed with the  Registrant's  Annual
          Report on Form 10-K filed on March 25, 2005)

10.5*     Amended and Restated  Executive  Salary  Continuation  Agreement dated
          June 18, 2004 between the Registrant and Bart Hill.  (Incorporated  by
          reference from Exhibit 10.5 filed with the Registrant's  Annual Report
          on Form 10-K filed on March 25, 2005)

10.6*     Amended and Restated  Executive  Salary  Continuation  Agreement dated
          June 13, 2003 between the Registrant and Stephen Annis.  (Incorporated
          by  reference  from Exhibit  10.5 filed with the  Registrant's  Annual
          Report on Form 10-K filed on March 29, 2004)

10.7*     Amended and Restated  Executive  Salary  Continuation  Agreement dated
          June 13, 2003 between the Registrant and John W. Ivy. (Incorporated by
          reference from Exhibit 10.6 filed with the Registrant's  Annual Report
          on Form 10-K filed on March 29, 2004)

10.8*     Change in  Control  Agreement  dated  January  28,  1999  between  the
          Registrant and Bruce Maclin.  (Incorporated  by reference from Exhibit
          10.7 filed with the  Registrant's  registration  statement  on Form 10
          Filed on April 30, 2003)

10.8(a)*  First  Amendment  to Change in  Control  Agreement  dated June 7, 2001
          between the  Registrant and Bruce Maclin.  (Incorporated  by reference
          from  Exhibit  10.7(a)  filed  with  the   Registrant's   registration
          statement on Form 10 Filed on April 30, 2003)


                                       23




EXHIBIT                      DESCRIPTION OF EXHIBIT
- -------                      ----------------------
NUMBER
- ------


10.8(b)*  Second  Amendment to Change in Control  Agreement dated April 30, 2003
          between the  Registrant and Bruce Maclin.  (Incorporated  by reference
          from Exhibit 10.7(b) filed with the Registrant's Annual Report on Form
          10-K filed on March 29, 2004)

10.9*     Change in  Control  Agreement  dated  January  28,  1999  between  the
          Registrant and Bart Hill. (Incorporated by reference from Exhibit 10.8
          filed with the Registrant's registration statement on Form 10 Filed on
          April 30, 2003)

10.9(a)*  First  Amendment  to Change in  Control  Agreement  dated June 7, 2001
          between the Registrant and Bart Hill.  (Incorporated by reference from
          Exhibit 10.8(a) filed with the Registrant's  registration statement on
          Form 10 Filed on April 30, 2003)

10.9(b)*  Second  Amendment to Change in Control  Agreement dated April 30, 2003
          between the Registrant and Bart Hill.  (Incorporated by reference from
          Exhibit 10.8(b) filed with the Registrant's Annual Report on Form 10-K
          filed on March 29, 2004)

10.10*    Change  in  Control  Agreement  dated  January  7,  2001  between  the
          Registrant and Stephen Annis.  (Incorporated by reference from Exhibit
          10.8 filed with the  Registrant's  registration  statement  on Form 10
          Filed on April 30, 2003)

10.10(a)* First  Amendment to Change in Control  Agreement  dated April 30, 2003
          between the Registrant and Stephen Annis.  (Incorporated  by reference
          from Exhibit 10.9(a) filed with the Registrant's Annual Report on Form
          10-K filed on March 29, 2004)

10.11*    Change  in  Control  Agreement  dated  January  7,  2001  between  the
          Registrant  and John W. Ivy.  (Incorporated  by reference from Exhibit
          10.8 filed with the  Registrant's  registration  statement  on Form 10
          Filed on April 30, 2003)

10.11(a)* First  Amendment to Change in Control  Agreement  dated April 30, 2003
          between the  Registrant  and John W. Ivy.  (Incorporated  by reference
          from Exhibit  10.10(a)  filed with the  Registrant's  Annual Report on
          Form 10-K filed on March 29, 2004)

10.12*    Deferred Fee Agreement  dated  October 9, 1996 between the  Registrant
          and Louis Barbich. (Incorporated by reference from Exhibit 10.11 filed
          with the Registrant's registration statement on Form 10 filed on April
          30, 2003)

10.13     Agreement   dated  October  22,  2005  between  the   Registrant   and
          Continental Stock Transfer and Trust Company regarding the appointment
          of  Continental  Stock Tranfer and Trust  Company as the  Registrant's
          transfer  agent.  (Incorporated  by reference from Exhibit 10.13 filed
          with the  Registrant's  Annual  Report on Form 10-K filed on March 28,
          2006)

10.14*    Resolution of the Board of Directors  increasing the applicable  limit
          on annual  benefits  payable to Bruce Maclin and Bart Hill pursuant to
          their Amended and Restated  Executive Salary  Continuation  Agreements
          dated June 18, 2004.  (Incorporated  by reference  from Exhibit  10.14
          filed with the Registrant's  Annual Report on Form 10-K filed on March
          25, 2005)

10.15     Statement relating to the payment of club dues for Executive Officers.
          (Incorporated   by  reference   from  Exhibit  10.15  filed  with  the
          Registrant's Annual Report on Form 10-K filed on March 25, 2005)

21.1      List of  Registrant's  Subsidiaries.  (Incorporated  by reference from
          Exhibit 21.1 filed with Registrant's registration statement on Form 10
          filed on April 30, 2003)

24.1      Power of Attorney (included on signature page).

                                       24


EXHIBIT                      DESCRIPTION OF EXHIBIT
- -------                      ----------------------
NUMBER
- ------

31.1      Certification of Chief Executive  Officer pursuant to Rule 13a - 14(a)
          (17CFR  240.13a-14(a))  and Rule  15d-14(a),  as adopted  pursuant  to
          Section 302 of the Sarbanes-Oxley Act of 2002.

31.2      Certification of Chief Financial  Officer pursuant to Rule 13a - 14(a)
          (17CFR  240.13a-14(a))  and Rule  15d-14(a),  as adopted  pursuant  to
          Section 302 of the Sarbanes-Oxley Act of 2002.

32.1      Certification of Chief Executive  Officer and Chief Financial  Officer
          pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002.

99.1      Amended and Restated Audit Committee Charter dated March 21, 2006.


- --------------
* Management contract, compensatory plan, or arrangement.


                                       25



SIGNATURES

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

April 20, 2006                                         SAN JOAQUIN BANK

                                                       By: /S/ BART HILL
                                                       Chief Executive Officer,
                                                       ------------------------
                                                       President and Director



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

    SIGNATURE                      TITLE                              DATE
    ---------                      -----                              ----
 /S/ BRUCE MACLIN          Chairman of the Board                 April 20, 2006
 ----------------
   Bruce Maclin

  /S/ BART HILL        Chief Executive Officer, President and
                          Director (Principal Executive          April 20, 2006
  -------------
    Bart Hill                                        Officer)





EXHIBIT 31.1

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bart Hill, certify that:

1.   I have reviewed this annual report on Form 10-K/A of San Joaquin Bank;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the Registrant as of, and for, the periods presented in this report;

4.   The  Registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

          (a) Designed such disclosure  controls and procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          Registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

          (b)  Evaluated  the  effectiveness  of  the  Registrant's   disclosure
          controls and procedures  and presented in this report our  conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the  end of the  period  covered  by  this  report  based  on  such
          evaluation; and

          (c) Disclosed in this report any change in the  Registrant's  internal
          control over financial reporting that occurred during the Registrant's
          most recent fiscal quarter (the Registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  Registrant's  internal
          control over financial reporting.

5.   The Registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the Registrant's auditors and the audit committee of the Registrant's board
     of directors (or persons performing the equivalent functions):

          (a) All significant deficiencies and material weaknesses in the design
          or operation of internal  controls over financial  reporting which are
          reasonably  likely to  adversely  affect the  Registrant's  ability to
          record, process, summarize and report financial information; and

          (b) Any fraud,  whether or not material,  that involves  management or
          other  employees  who  have a  significant  role  in the  Registrant's
          internal control over financial reporting.

Date: April 20, 2006



/S/ BART HILL
- -------------
Bart Hill
Chief Executive Officer





EXHIBIT 31.2

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen M. Annis, certify that:

1.   I have reviewed this annual report on Form 10-K/A of San Joaquin Bank;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the Registrant as of, and for, the periods presented in this report;

4.   The  Registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

          (a) Designed such disclosure  controls and procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          Registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

          (b)  Evaluated  the  effectiveness  of  the  Registrant's   disclosure
          controls and procedures  and presented in this report our  conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the  end of the  period  covered  by  this  report  based  on  such
          evaluation; and

          (c) Disclosed in this report any change in the  Registrant's  internal
          control over financial reporting that occurred during the Registrant's
          most recent fiscal quarter (the Registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  Registrant's  internal
          control over financial reporting.

5.   The Registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the Registrant's auditors and the audit committee of the Registrant's board
     of directors (or persons performing the equivalent functions):

          (a) All significant deficiencies and material weaknesses in the design
          or operation of internal  control over financial  reporting  which are
          reasonably  likely to  adversely  affect the  Registrant's  ability to
          record, process, summarize and report financial information; and

          (b) Any fraud,  whether or not material,  that involves  management or
          other  employees  who  have a  significant  role  in the  Registrant's
          internal control over financial reporting.

Date:  April 20, 2006



/S/ STEPHEN M. ANNIS
- --------------------
Stephen M. Annis
Chief Financial Officer





EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of San Joaquin Bank (the "Company") on Form
10-K/A for the year ended  December 31, 2005, as filed with the Federal  Deposit
Insurance  Corporation,  each of the  undersigned,  in the capacities and on the
date indicated below, hereby certifies,  pursuant to 18 U.S.C.  Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The report fully  complies  with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934;

     (2)  The  information  contained  in the  report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.




/S/ BART HILL
- -------------
Bart Hill
Chief Executive Officer
(Principal Executive Officer)
April 20, 2006





/S/ STEPHEN M. ANNIS
- --------------------
Stephen M. Annis
Chief Financial Officer
(Principal Financial and Accounting Officer)
April 20, 2006






EXHIBIT 99.1

                                SAN JOAQUIN BANK
                             AUDIT COMMITTEE CHARTER
         AMENDED AND RESTATED BY THE BOARD OF DIRECTORS: MARCH 21, 2006


STATEMENT OF POLICY

The Audit Committee (the "Committee")  shall provide  assistance to the Board of
Directors in overseeing the financial reporting process, the systems of internal
accounting and financial  controls,  the  performance  and  independence  of the
external  and  internal  auditors,  and  the  annual  independent  audit  of the
Corporation's financial statement.

The primary  responsibility  of the  Committee  is to oversee the  Corporation's
financial  reporting  process on behalf of the Board of Directors and report the
results of their activities to the Board of Directors. It is not the duty of the
Committee  to plan or  conduct  audits,  to  determine  that  the  Corporation's
financial  statements  are  complete and  accurate  and are in  accordance  with
generally  accepted  accounting  principles or to assure  compliance  with laws.
These are the  responsibilities  of  management,  the  internal  auditor and the
external auditor. In adopting this Charter, the Board of Directors  acknowledges
that the  Committee  members are not  employees of the  Corporation  and are not
providing  any expert or special  assurance  as to the  Corporation's  financial
statements or any professional  certification as to the external  auditor's work
or auditing  standards.  Each member of the Committee is entitled to rely on the
integrity of those persons and organizations  within and outside the Corporation
that provide  information to the Committee and the accuracy and  completeness of
the financial and other information provided to the Committee by such persons or
organizations absent actual knowledge to the contrary.


MEMBERSHIP AND PROCEDURES

COMMITTEE AUTHORITY

The Committee shall be directly  responsible for the  compensation and oversight
of the work of the external auditor or internal auditor (including resolution of
disagreements  between  management and the external or internal auditor) for the
purpose of  preparing  the  Corporation's  financial  statements.  The  external
auditor and the internal  auditor shall report  directly to the  Committee.  The
Committee  may  request  any  officer  or  employee  of the  Corporation  or the
Corporation's outside counsel,  internal auditor or external auditor to attend a
meeting of the Committee or to meet with any members of, or consultants  to, the
Committee.  The Committee shall have the resources and authority  appropriate to
discharge its responsibilities, including the authority to engage, at the Bank's
expense,  outside auditors for special audits,  reviews and other procedures and
to retain outside or special counsel and other experts or  consultants,  without
prior permission of the Bank's Board of Directors or its management.

MEMBERSHIP AND APPOINTMENT

The  Committee  shall  comprise  not fewer  than  three  members of the Board of
Directors,  as shall be  appointed  from time to time by the Board of  Directors
based on recommendations from the Chairman of the Board of Directors.

CHAIRPERSON

A chairperson  of the Committee (the  "Chairperson")  shall be designated by the
Board of Directors.  The Chairperson has the authority to prepare and/or approve
an agenda in advance of any meeting.

QUALIFICATIONS

Each member of the Committee  shall meet the  independence  requirements  of the
NASDAQ  and all  pertinent  FDIC  rules and  regulations  with  respect to audit
committee members. The Board of Directors shall endeavor to appoint at least one
member to the Committee who is an audit committee  "financial expert" as defined
by the SEC. At least annually,  the Board of Directors  shall determine  whether
all existing and potential  Committee  members are  independent of management of
the Bank.



MEETINGS AND  EVALUATIONS

The Committee  shall meet at least four times  annually,  or more  frequently as
circumstances  dictate.  From  time to time,  to the  extent  the  Committee  so
determines, it may make recommendations to the Board of Directors for changes or
modifications to the Audit Committee Charter.

Internal Audit Function

For purposes of this Committee  Charter,  the terms "internal  audit," "internal
auditor" and "internal audit function" may refer to an individual or individuals
who are employed by the Corporation in the capacity of Internal  Auditor(s),  or
if the Corporation's Board of Directors or the Committee elects to outsource the
internal audit function,  these terms may refer to, as appropriate,  an outside,
independent audit firm that provides internal audit services.


RESPONSIBILITIES AND PROCESSES

The  following  shall be the principal  recurring  processes of the Committee in
carrying out its  oversight  functions.  The  processes are set forth below as a
guide with the understanding  that the Committee may alter or supplement them as
appropriate under the circumstances to the extent permitted by applicable law or
listing standard.

     1.   The   Committee   shall   approve  the  fees  and  other   significant
          compensation to be paid to the external auditor.

     2.   In  connection  with the approval of the external  auditor's  fees and
          other compensation,  the Committee shall consider whether the external
          auditor's performance of any non-audit services is compatible with the
          external auditor's independence.

     3.   Annually,  the Committee shall recommend to the Board of Directors the
          selection  of  the   Corporation's   external   auditor,   subject  to
          shareholder  ratification  of the selection,  if such  ratification is
          required or sought. Additionally, the Committee should:

          (a)  discuss  with the external  auditor its internal  quality-control
               procedures  and any  material  issues  raised by the most  recent
               internal  quality  control  review or peer review of the external
               auditor  or any  inquiry  or  investigation  by  governmental  or
               professional  authorities,   within  the  preceding  five  years,
               respecting  one or more  independent  audits  carried  out by the
               external  auditor and the steps taken to deal with those  issues;
               and

          (b)  ensure  that  the  external  auditor  submits  annually  a formal
               written  statement  delineating  all  relationships  between  the
               external   auditor  and  the   Corporation.   The   Committee  is
               responsible for engaging in a dialogue with the external  auditor
               with respect to such disclosed  relationships that may impact the
               objectivity  and   independence  of  the  external   auditor  and
               recommend that the Board of Directors take appropriate  action to
               satisfy itself of the external auditor's independence.

     4.   The  Committee  shall  discuss with the external  auditor and internal
          auditor  the  overall  scope  and plans  for  their  respective  audit
          examinations including staffing,  locations,  reliance upon management
          and general audit approach.

     5.   The Committee shall discuss with management,  the internal auditor and
          the  external  auditor the  integrity of the  Corporation's  financial
          reporting   processes   and  controls   including   the  adequacy  and
          effectiveness  of the accounting and financial  records and system for
          monitoring and managing  business risk and legal compliance  programs.
          Further,  the  Committee  shall  meet  separately  with  the  internal
          auditors  and  the  external  auditor,  with  and  without  management
          present, to discuss the results of their examinations.

     6.   The Committee shall review and discuss with  management,  the internal
          auditor and the external auditor the  Corporation's  interim financial
          results to be included in the  Corporation's  quarterly  reports filed
          with  the  Federal  Deposit  Insurance  Corporation,  and the  matters
          required to be discussed by  Statement  on Auditing  Standards  No. 61
          (Communications  with  Audit  Committees),  as it may be  modified  or
          supplemented ("SAS No. 61")..

     7.   In connection with regulatory examinations, the Committee shall review
          and evaluate the examination  results relating to financial  reporting
          and when it determines it is appropriate,  make recommendations to the
          Board  of  Directors   regarding  the   financial   reporting  of  the
          Corporation  in  any  area   criticized  by  state  and  federal  bank
          regulatory agencies.

     8.   The Committee shall review with  management,  the internal auditor and
          the external  auditor the  financial  statements to be included in the
          Corporation's  Form 10-K (or the annual report if distributed prior to
          filing of Form  10-K),  as well as the  auditor's  judgment  about the
          quality,  not  just  acceptability,  of the  Corporation's  accounting
          principles  as applied in its  financial  reporting.  The review shall



          also include a discussion of the  reasonableness  of the judgments and
          estimates made in the preparation of the financial statements that may
          be viewed as critical,  as well as the clarity of financial  statement
          disclosures.  In addition,  the Committee shall discuss the results of
          the annual audit and any other matters  required to be communicated to
          the  Committee  by  the  external  auditor  under  generally  accepted
          auditing standards,  including the matters required to be discussed by
          SAS No. 61.

     9.   Based on its review and discussions of items 3(b) and 8, the Committee
          shall  recommend  to the  Board of  Directors  whether  the  financial
          statements  should be included  in the Annual  Report on Form 10-K (or
          the annual report to shareholders  if distributed  prior to the filing
          of Form 10-K).

     10.  The Committee  shall review  disclosures  made to the Committee by the
          Corporation's  management during their  certification  process for the
          Corporation's   Form  10-K  and  Form  10-Q   about  any   significant
          deficiencies  in the  design or  operation  of  internal  controls  or
          material  weaknesses  therein and any fraud  involving  management  or
          other  employees  who  have a  significant  role in the  Corporation's
          internal controls.

     11.  The Committee,  as a whole, or through the  Chairperson,  shall review
          the  impact  on  the  financial   statements  of  significant  events,
          transactions  or changes in accounting  principles  or estimates  that
          potentially  affect  the  quality  of  the  financial  reporting  with
          management, the internal auditor and the external auditor prior to the
          filing of the  Corporation's  Reports on Form 10-Q or 10-K, or as soon
          as  practicable  if the  communications  cannot  be made  prior to its
          filings.

     12.  The Committee shall discuss the results of the audit with the external
          auditor  prior to  release  of the  year-end  earnings  and  generally
          discuss  earnings press releases as well as financial  information and
          earnings guidance provided to financial analysts and rating agencies.

     14.  The  Committee   shall  review  the   performance,   appointment   and
          replacement of the internal auditor (and any outside firms selected by
          the Committee to support the internal audit  function).  Additionally,
          the Committee shall review changes in plan, activities, organizational
          structure and  qualifications  of the internal  audit firm, as needed,
          and  consider  significant  reports  prepared  by the  internal  audit
          function  together with  management's  response and follow-up to these
          reports.

     15.  The Committee shall establish procedures for:

          (a)  The receipt, retention, investigation and treatment of complaints
               received  by  the  Corporation  regarding  accounting,   internal
               accounting   controls  or  auditing   matters   (including  those
               regarding  the   circumvention  or  attempted   circumvention  of
               internal accounting controls or that would otherwise constitute a
               violation of the Corporation's accounting policies);

          (b)  The  confidential,  anonymous  submission  by  the  Corporation's
               employees of concerns regarding accounting or auditing matters or
               reports of retaliation  against employees who make allegations or
               reports  related  to  accounting,  ethical  conduct  or  legal or
               regulatory matters; and

          (c)  Review and approval of all related party transactions required to
               be  disclosed  by  Item  404  of  Regulation  S-K  for  potential
               conflicts of interest except for those related party transactions
               which have been  reviewed  and  approved  by another  independent
               committee of the Board.

In the  discretion of the  Committee,  responsibilities  of the Audit  Committee
created by the  procedures  in this item may be delegated to the Chairman of the
Committee  except  with  respect to approval of related  party  transactions  in
subsection (c) above.


REPORTS

     1.   The  Committee  shall prepare or cause the  preparation  of the report
          required  by the  rules  of the  Securities  Exchange  Commission  for
          inclusion in the Corporation's annual proxy statement.

     2.   The  Committee  shall  maintain  minutes of its meetings and regularly
          report its activities to the Board of Directors.


AMENDMENT

This Charter and any provision contained herein may be amended or repealed by a
majority of the Board of Directors.

EX-99

                                                                    Exhibit 99.4
`
                      FEDERAL DEPOSIT INSURANCE CORPORATION
                   550 17th Street NW, Washington, D.C. 20429

                                    FORM 10-Q

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

      For the quarterly period ended March 31, 2006
                                     --------------

                               or

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

             For the transition period from __________ to __________

                         FDIC Certificate Number: 23266
                                                  -----

                                SAN JOAQUIN BANK
                                ----------------
             (Exact name of registrant as specified in its charter)

               CALIFORNIA                              95-3426405
               ----------                              ----------
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)

   1301 - 17th Street, Bakersfield, California            93301
   -------------------------------------------            -----
   (Address of principal executive offices)             (Zip Code)



                                 (661) 281-0300
                                 --------------
              (Registrant's telephone number, including area code)


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

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer |_|   Accelerated filer |_|   Non-accelerated filer |X|

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).                                  Yes |_| No |X|

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:

    No par value Common Stock: 3,474,212 shares outstanding at April 25, 2006



                                SAN JOAQUIN BANK

                                    FORM 10-Q

                      FOR THE QUARTER ENDED MARCH 31, 2006

                                      INDEX

                                                                            PAGE
                                                                            ----

PART I     FINANCIAL INFORMATION
ITEM 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
           Condensed Consolidated Balance Sheets
            March 31, 2006 and December 31, 2005.......................      1
           Condensed Consolidated Statements of Income
             Three month ended March 31, 2006 and 2005.................      2
           Condensed Consolidated Statements of Cash Flows
             Three month periods ended March 31, 2006 and 2005.........      3
           Notes to Unaudited Condensed Consolidated Financial Statements    4
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS.......................      7
ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .     22
ITEM 4.    CONTROLS AND PROCEDURES.....................................     24

PART II    OTHER INFORMATION
ITEM 1.    LEGAL PROCEEDINGS...........................................     25
ITEM 1A.   RISK                                                   FACTORS   25
ITEM 2.    UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS .     25
ITEM 3.    DEFAULTS UPON SENIOR SECURITIES ............................     25
ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ........     25
ITEM 5.    OTHER INFORMATION...........................................     25
ITEM 6.    EXHIBITS ...................................................     26



This quarterly report on Form 10-Q contains forward-looking statements about San
Joaquin Bank for which it claims the  protection  of the safe harbor  provisions
contained in the Private  Securities  Litigation  Reform Act of 1995,  including
statements  with regard to  descriptions  of our plans or objectives  for future
operations,  products or services,  and forecasts of our  revenues,  earnings or
other  measures  of  economic  performance.  Forward-looking  statements  can be
identified by the fact that they do not relate strictly to historical or current
facts. They often include the words "believe," "expect," "anticipate," "intend,"
"plan,"  "estimate," or words of similar meaning, or future or conditional verbs
such as "will," "would," "should," "could," or "may."

Forward-looking   statements,   by  their  nature,  are  subject  to  risks  and
uncertainties.  A number of factors  -- many of which are beyond our  control --
could cause actual  conditions,  events or results to differ  significantly from
those described in the  forward-looking  statements and reported  results should
not be considered an  indication of our future  performance.  Some of these risk
factors include, among others, certain credit, market, operational and liquidity
risks  associated  with our  business  and  operations,  changes in business and
economic  conditions  in  California  and  nationally,  rising  interest  rates,
potential acts of terrorism  (which are beyond our control),  volatility of rate
sensitive deposits and assets,  value of real estate collateral securing many of
our loans, accounting estimates and judgments,  compliance costs associated with
the company's internal control structure and procedures for financial reporting.
These risk factors are not exhaustive and additional  factors that could have an
adverse  effect on our business and  financial  performance  are set forth under
"Risk Factors" and elsewhere in this  quarterly  report and in our annual report
on Form 10-K for the year ended December 31, 2005.

Forward-looking  statements  speak only as of the date they are made.  We do not
undertake  to update  forward-looking  statements  to reflect  circumstances  or
events  that  occur  after the date  forward-looking  statements  are  made.  In
addition,  past operating results are not necessarily  indicative of the results
to be expected for future periods.

                                       i


                         PART I - FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

SAN JOAQUIN BANK AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS


                                              March 31, 2006   December 31, 2005
 ------------------------------------------------------------------------------
                                                 (unaudited)        (audited)
  ASSETS

Cash and due from banks                     $     56,914,000    $    24,355,000
Interest-bearing deposits in banks                 2,551,000            390,000
Federal funds sold                                         -          1,700,000
                                            ----------------    ---------------
        Total cash and cash equivalents           59,465,000         26,445,000

Investment securities:
  Held to maturity                               148,825,000        167,636,000
  Available for sale                               7,008,000          2,428,000
                                            ----------------    ---------------
        Total Investment Securities              155,833,000        170,064,000

Loans, net of unearned income                    439,814,000        407,400,000
Allowance for loan losses                          7,319,000          7,003,000
                                            ----------------    ---------------
        Net Loans                                432,495,000        400,397,000

Premises and equipment                             7,800,000          7,677,000

Investment in real estate                            693,000            710,000

Interest receivable and other assets              21,704,000         21,721,000
                                            ----------------    ---------------
TOTAL ASSETS                                $    677,990,000    $   627,014,000
                                            ================    ===============
- --------------------------------------------------------------------------------
LIABILITIES

Deposits:
  Noninterest-bearing demand deposits       $    183,037,000    $   186,266,000
  NOW                                             24,876,000         25,163,000
  Money market                                   286,833,000        237,415,000
  Savings                                        100,952,000         99,604,000
  Time deposits and IRAs of $100,000 or more      21,125,000         20,209,000
  Other time deposits and IRAs                     6,793,000          6,876,000
                                            ----------------    ---------------
     Total Deposits                              623,616,000        575,533,000

Accrued interest payable and other
  liabilities                                      6,663,000          5,394,000
Long-term debt and other borrowings                6,795,000          6,797,000
                                            ----------------    ---------------
        Total Liabilities                        637,074,000        587,724,000
                                            ----------------    ---------------

SHAREHOLDERS' EQUITY

Common stock, no par value - 10,000,000
  shares authorized; 3,474,212 and
  3,435,896 issued and outstanding
  at March 31, 2006 and December 31,
  2005, respectively                              10,221,000          9,970,000
Additional paid-in capital                            26,000                  -
Retained earnings                                 30,817,000         29,445,000
Accumulated other comprehensive income
 (loss)                                             (148,000)          (125,000)
                                            ----------------    ---------------
        Total Shareholders' Equity                40,916,000         39,290,000
                                            ----------------    ---------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $    677,990,000    $   627,014,000
                                            ================    ===============
 ------------------------------------------------------------------------------

See Notes to Unaudited Condensed Consolidated Financial Statements

                                       1


SAN JOAQUIN BANK AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

                                                  Three Months Ended March 31
                                                 -------------------------------
                                                     2006             2005
- --------------------------------------------------------------------------------
INTEREST INCOME
  Loans (including fees)                         $  8,537,000     $  5,807,000
  Investment securities                             1,622,000          879,000
  Fed funds sold and other interest-bearing
    balances                                          277,000          156,000
                                                 ------------     --------------
       Total Interest Income                       10,436,000        6,842,000
                                                 ------------     --------------

INTEREST EXPENSE
  Deposits                                          3,321,000        1,379,000
  Long term debt and other borrowings                 116,000          110,000
                                                 ------------     --------------
       Total Interest Expense                       3,437,000        1,489,000
                                                 ------------     --------------

Net Interest Income                                 6,999,000        5,353,000
Provision for loan losses                             230,000          300,000
                                                 ------------     --------------

Net Interest Income After Loan Loss Provision       6,769,000        5,053,000
                                                 ------------     --------------

NONINTEREST INCOME
  Service charges and fees on deposits                196,000          212,000
  Other service charges and fees                      292,000          315,000
  Net gain on sale of fixed assets                      4,000                -
  Other                                               164,000          148,000
                                                 ------------     --------------
       Total Noninterest Income                       656,000          675,000
                                                 ------------     --------------

NONINTEREST EXPENSE
  Salaries and employee benefits                    2,277,000        1,953,000
  Occupancy                                           216,000          189,000
  Furniture and equipment                             246,000          375,000
  Other                                               864,000          774,000
                                                 ------------     --------------
       Total Noninterest Expense                    3,603,000        3,291,000
                                                 ------------     --------------

Income Before Taxes                                 3,822,000        2,437,000
Income Taxes                                        1,616,000        1,036,000
                                                 ------------     --------------
NET INCOME                                       $  2,206,000     $  1,401,000
                                                 ============     ==============
Basic Earnings per Share                         $       0.64     $       0.41
                                                 ============     ==============
Diluted Earnings per Share                       $       0.60     $       0.38
                                                 ============     ==============

See Notes to Unaudited Condensed Consolidated Financial Statements

                                       2


SAN JOAQUIN BANK AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

                                                  Three Months Ended March 31
                                                 -----------------------------
                                                      2006            2005
- -------------------------------------------------------------------------------
Cash Flows From Operating Activities:
  Net Income                                     $  2,206,000     $  1,401,000
  Adjustments to reconcile net income
    to net cash provided by operating
    activities:
       Provision for possible loan losses             230,000          300,000
       Depreciation and amortization                  213,000          331,000
       Share-based compensation expense                26,000                -
       Gain on sale of assets                          (4,000)               -
       Deferred income taxes                          121,000          115,000
       Amortization of investment securities'
         premiums and discounts                         3,000           39,000
       Increase in interest receivable and other
         assets                                       (95,000)      (1,297,000)
       Increase in accrued interest payable and
         other liabilities                          1,269,000         (405,000)
                                                 ------------     ------------
             Total adjustments                      1,763,000         (917,000)
                                                 ------------     ------------
               Net Cash Provided by Operating
                 Activities                         3,969,000          484,000
                                                 ------------     ------------

Cash Flows From Investing Activities:
       Proceeds from maturing and called
         investment securities                     25,096,000       15,305,000
       Purchases of investment securities         (10,900,000)     (34,997,000)
       Net increase in loans made to customers    (32,328,000)      16,156,000
       Net additions to premises and equipment       (315,000)        (158,000)
                                                 ------------     ------------
               Net Cash Applied to Investing
                 Activities                       (18,447,000)      (3,694,000)
                                                  ------------     ------------

Cash Flows From Financing Activities:
       Net increase in demand deposits and
         savings accounts                          47,250,000       26,619,000
       Net increase (decrease) in certificates
         of deposit                                   833,000        1,925,000
       Payments on long term debt and other
         borrowings                                    (2,000)          (2,000)
       Net increase (decrease) in fed funds
         purchased and securities sold under
         agreements to repurchase                           -       (2,376,000)
       Cash dividends paid                           (834,000)        (755,000)
       Proceeds from issuance of common stock         251,000          151,000
                                                 ------------     ------------
               Net Cash Provided by Financing
                 Activities                        47,498,000       25,562,000
                                                 ------------     ------------

Net Increase (Decrease) in Cash and Cash
  Equivalents                                      33,020,000       22,352,000
Cash and cash equivalents, at beginning of
  period                                           26,445,000       24,409,000
                                                 ------------     ------------

Cash and Cash Equivalents, at End of Period      $ 59,465,000     $ 46,761,000
                                                 ============     ============

Supplemental disclosures of cash flow information
   Cash paid during the period for:
       Interest on deposits                      $  3,306,000     $  1,378,000
                                                 ============     ============
       Income taxes                              $          -     $     19,000
                                                 ============     ============

See Notes to Unaudited Condensed Consolidated Financial Statements

                                       3


                         SAN JOAQUIN BANK AND SUBSIDIARY
                    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                        as of March 31, 2006 (Unaudited)


NOTE 1. BASIS FOR PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  statements  and pursuant to the rules and  regulations of the Federal
Deposit  Insurance  Corporation.  In the opinion of  Management,  the  unaudited
condensed consolidated financial statements contain all adjustments  (consisting
of only normal  recurring  adjustments)  necessary to present fairly San Joaquin
Bank's (the "Company's")  consolidated  financial position at March 31, 2006 and
December 31, 2005,  the results of operations  for the three month periods ended
March 31, 2006 and 2005,  and cash flows for the three month periods ended March
31, 2006 and 2005.

Certain  disclosures  normally presented in the notes to the annual consolidated
financial statements prepared in accordance with accounting principles generally
accepted  in the  United  States of America  have been  omitted.  These  interim
consolidated  condensed financial  statements should be read in conjunction with
the audited consolidated financial statements and notes thereto as well as other
information  included in the  Company's  annual report on Form 10-K for the year
ended  December 31, 2005.  The results of operations for the three month periods
ended March 31, 2006 and 2005 may not necessarily be indicative of the operating
results for the full year.

In preparing such  financial  statements in connection  with certain  accounting
policies,  Management is required to make estimates and assumptions  that affect
the reported  amounts of assets and  liabilities,  and revenues and expenses and
disclosure of contingent  assets and  liabilities.  Material  estimates that are
particularly  susceptible to significant  changes in the near term relate to the
allowance for loan losses.

Cash  dividend - The Board of  Directors  declared a cash  dividend of $0.24 per
share, which was payable to shareholders of record as of February 27, 2006.

There are 10,000,000  shares of common stock,  no par value,  authorized.  There
were 3,474,212 and 3,435,896 shares issued and outstanding at March 31, 2006 and
December  31, 2005,  respectively.  The Company  also has  5,000,000  authorized
shares of preferred stock, with 0 shares outstanding.

Certain prior period  amounts have been  reclassified  to conform to the current
year presentation.


NOTE 2. STOCK COMPENSATION

Prior to January 1, 2006, the Company accounted for its stock-based awards using
the intrinsic value method in accordance with Accounting Principles Bulletin No.
25, Accounting for Stock Issued to Employees,  and its related  interpretations.
No compensation  expense was recognized in the financial statements for employee
stock arrangements, as the Company's stock option plans provide for the issuance
of options at a price of no less than the fair  market  value at the date of the
grant.  Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting
for  Stock-Based  Compensation,  requires the disclosure of pro forma net income
and  earnings  per share,  had the  Company  adopted  the fair  value  method of
accounting for stock-based  compensation.  Under SFAS No. 123, the fair value of
stock-based  awards to employees is calculated through the use of option pricing
models,  even though such models were  developed  to estimate  the fair value of
freely tradable, fully transferable options without vesting restrictions,  which
significantly  differs from the Company's stock option awards. These models also
require  subjective  assumptions,  including  future stock price  volatility and
expected  time to exercise,  which greatly  affect the  calculated  values.  The
Company's  calculations were made using the  Black-Scholes  option pricing model
with the following assumptions:  approximate expected volatility of 29.02%, risk
free interest rate of 4.34%, and expected life of 7.78 years for options granted
in the period ended March 31, 2005.

                                       4


A summary of the pro forma  effects to  reported  net  income and  earnings  per
share, as if the Company had elected to recognize compensation cost based on the
fair value of the options  granted at grant date as  prescribed by SFAS No. 123,
for the three months ended March 31, 2005:

                                                      Three Months
                                                         Ended
                                                     March 31, 2005
                                                     --------------

Net Income, as reported                                  $1,401,000

Add: Stock-based employee compensation
   expense included in reported net income
   net of related tax effects                                     -

Deduct: Total stock-based employee
   compensation expense determined under
   fair value method for all awards, net
   of related tax effects                                   (43,000)
                                                     --------------

Pro Forma Net Income                                 $    1,358,000
                                                     ==============

Earnings per Share:
   Basic -- as reported                              $         0.41
   Basic -- pro forma                                $         0.40

   Diluted -- as reported                            $         0.38
   Diluted -- pro forma                              $         0.37


SFAS No. 123 was revised in December 2004 (SFAS 123R) to require that, effective
for periods  beginning  after June 15,  2005,  the Company  begin using the fair
market value method for valuing and accounting  for stock options.  On April 14,
2005,  the Securities  and Exchange  Commission  announced the adoption of a new
rule which delayed the implementation date for the new requirements until 2006.

Effective  December  31,  2005,  the  Board of  Directors  of the Bank  voted to
accelerate the vesting of all unvested  options to acquire the Company's  common
stock that were  outstanding at that date (the  "Acceleration"),  except that no
options to non-employee directors were affected by the Acceleration.  A total of
158,870 shares subject to option were impacted by the Acceleration.  As a result
of the acceleration,  and based upon estimated Black-Scholes value calculations,
the Company  will not be  required  to  recognize  pretax  compensation  expense
related  to  the  accelerated  options  of  approximately   $833,000.   Had  the
Acceleration not occurred,  the Company would have had to recognize this expense
over the next five years when the Company became subject to the  requirements of
SFAS No.  123R,  "Share-Based  Payment,"  on January 1, 2006.  Under  applicable
accounting  guidance,  the  company  did not  record  a  charge  related  to the
Acceleration.  As a result of the  acceleration,  certain options granted to the
Company's  Chairman of the Board, Bruce Maclin,  Chief Executive  Officer,  Bart
Hill,  and two other  highest  paid  executive  officers  (together  the  "Named
Executive  Officers")  exceeded the $100,000 limit established by IRS regulation
ss.1.422-4.  As such, the excess options granted to the Named Executive Officers
must be treated as non-statutory  options. All other terms and conditions of the
accelerated options remained unchanged as a result of the Acceleration.

Effective January 1, 2006, the Company adopted the new requirements of SFAS 123R
on a prospective  basis.  As a result of the  implementation,  net income before
taxes was  approximately  $26,000 lower than if it had continued to be accounted
for as share-based compensation under Opinion 25.


NOTE 3. COMMITMENTS AND CONTINGENCIES

In the normal course of business,  there are outstanding  various commitments to
extend  credit which are not reflected in the  financial  statements,  including

                                       5


loan commitments of approximately  $202,055,000 and standby letters of credit of
approximately  $6,838,000, at March 31, 2006. However, all such commitments will
not necessarily culminate in actual extensions of credit by the Company.

Approximately  $102,374,000  of loan  commitments  outstanding at March 31, 2006
related to real estate  construction  loans that are expected to fund within the
next twelve  months.  The remaining  commitments  primarily  relate to revolving
lines of credit or other  real  estate or  commercial  loans,  and many of these
commitments  are expected to expire  without  being drawn upon.  Therefore,  the
total commitments do not necessarily  represent future cash  requirements.  Each
potential  borrower and the necessary  collateral are evaluated on an individual
basis.  Collateral varies, but may include real property, bank deposits, debt or
equity securities or business assets.

Stand-by letters of credit are commitments  written to guarantee the performance
of a customer to another party.  These guarantees are issued primarily  relating
to purchases of inventory by commercial  customers and are typically  short-term
in nature. Credit risk is similar to that involved in extending loan commitments
to customers and accordingly,  evaluation and collateral requirements similar to
those  for  loan  commitments  are  used.  Virtually  all such  commitments  are
collateralized.


NOTE 4. EARNINGS PER SHARE

Basic  earnings  per share is computed by  dividing  net income by the  weighted
average common shares  outstanding  for the period.  Diluted  earnings per share
reflects the potential  dilution that could occur if options or other  contracts
to issue common stock were exercised and converted into common stock.

There was no difference in the numerator used in the calculation of basic
earnings per share and diluted earnings per share. The denominator used in the
calculation of basic earnings per share and diluted earnings per share for each
of the three month periods ended March 31 is reconciled as follows:

 ---------------------------------------------------------------------
                                          Three Months Ended March 31
                                             2006          2005
 ---------------------------------------------------------------------
 Basic Earnings per Share:
    Net Income                             $2,206,000       $1,401,000
    Weighted average common shares
      outstanding                           3,464,000        3,422,000
 ---------------------------------------------------------------------
      Basic Earnings per Share                  $0.64            $0.41
 ---------------------------------------------------------------------
 Diluted Earnings per Share:
    Net Income                             $2,206,000       $1,401,000
    Weighted average common shares
      outstanding                           3,464,000        3,422,000
    Dilutive effect of outstanding
      options                                 239,000          222,000
 ---------------------------------------------------------------------
    Weighted average common shares
      outstanding - Diluted                 3,703,000        3,644,000
 ---------------------------------------------------------------------
      Diluted Earnings per Share                $0.60            $0.38
 ---------------------------------------------------------------------

NOTE 5. COMPREHENSIVE INCOME

                                           Three Months Ended March 31
                                              2006            2005
- ----------------------------------------------------------------------

 Net Income                                $2,206,000       $1,401,000
 Other comprehensive income-net
   unrealized holding (loss),
   net of taxes                               (23,000)         (15,000)
- ----------------------------------------------------------------------
 Total comprehensive income                $2,183,000       $1,386,000
- ----------------------------------------------------------------------

                                       6


The  Company  has  adopted  SFAS  No.  130,  "Reporting  Comprehensive  Income."
Comprehensive  income  is  equal  to  net  income  plus  the  change  in  "other
comprehensive  income," as defined by SFAS No. 130. This statement  requires the
Company to report income and (loss) from non-owner sources.  The only components
of other  comprehensive  income  currently  applicable to the Company is the net
unrealized  gain or loss on interest rate cap  contracts and the net  unrealized
gain or loss on available for sale investment securities. FASB Statement No. 130
requires that an entity:  (a) classify  items of other  comprehensive  income by
their nature in a financial statement, and (b) report the accumulated balance of
other comprehensive income separately from common stock and retained earnings in
the equity section of the balance sheet.


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

The  following  discussion  should  be read in  conjunction  with our  Unaudited
Condensed   Consolidated   Financial  Statements  and  notes  thereto  appearing
elsewhere in this quarterly report on Form 10-Q.


This quarterly report on Form 10-Q contains forward-looking statements about San
Joaquin Bank for which it claims the  protection  of the safe harbor  provisions
contained in the Private  Securities  Litigation  Reform Act of 1995,  including
statements  with regard to  descriptions  of our plans or objectives  for future
operations,  products or services,  and forecasts of our  revenues,  earnings or
other  measures  of  economic  performance.  Forward-looking  statements  can be
identified by the fact that they do not relate strictly to historical or current
facts. They often include the words "believe," "expect," "anticipate," "intend,"
"plan,"  "estimate," or words of similar meaning, or future or conditional verbs
such as "will," "would," "should," "could," or "may."


Forward-looking   statements,   by  their  nature,  are  subject  to  risks  and
uncertainties.  A number of factors  -- many of which are beyond our  control --
could cause actual  conditions,  events or results to differ  significantly from
those described in the  forward-looking  statements and reported  results should
not be considered an  indication of our future  performance.  Some of these risk
factors include, among others, certain credit, market, operational and liquidity
risks  associated  with our  business  and  operations,  changes in business and
economic  conditions  in  California  and  nationally,  rising  interest  rates,
potential acts of terrorism  (which are beyond our control),  volatility of rate
sensitive deposits and assets,  value of real estate collateral securing many of
our loans, accounting estimates and judgments,  compliance costs associated with
the company's internal control structure and procedures for financial reporting.
These risk factors are not exhaustive and additional  factors that could have an
adverse  effect on our business and  financial  performance  are set forth under
"Risk Factors" and elsewhere in this  quarterly  report and in our annual report
on Form 10-K for the year ended December 31, 2005.


Forward-looking  statements  speak only as of the date they are made.  We do not
undertake  to update  forward-looking  statements  to reflect  circumstances  or
events  that  occur  after the date  forward-looking  statements  are  made.  In
addition,  past operating results are not necessarily  indicative of the results
to be expected for future periods.


RECENT EVENTS

On April 25,  2006,  the  Board  authorized  Chairman  of the  Board,  the Chief
Executive  Officer and President or any Executive  Vice President of the Company
to take any and all actions necessary to form a Bank Holding Company (the "BHC")
and enter into an  Agreement  and Plan of  Reorganization  (the  "Reorganization
Agreement")  and an  Agreement  of Merger  (the  "Merger  Agreement")  where the
Company   would   become   a   wholly   owned   subsidiary   of  the  BHC   (the
"Reorganization").   San  Joaquin  Bancorp,   a  California   corporation,   was
incorporated on May 4, 2006.

On May 9, 2006, the Company, San Joaquin Bancorp, and San Joaquin Reorganization
Corp. (the  "Reorganization  Corp."),  a wholly owned  subsidiary of San Joaquin
Bancorp,  entered  into the  Reorganization  Agreement  where the Company  would
become a wholly owned subsidiary of San Joaquin Bancorp.

Under the terms of the Reorganization  Agreement and Merger Agreement  (together
the  "Agreements"),  at the Effective Time, the  Reorganization  Corp.  shall be
merged with and into the Bank,  the  separate  existence  of the  Reorganization

                                       7


Corp. will cease,  and the Bank will continue as the surviving  corporation (the
"Merger"). The Bank shall thereafter be a subsidiary of the San Joaquin Bancorp,
and operations shall continue under the name "San Joaquin Bank."

In accordance with the terms of the Agreements, upon consummation of the Merger,
each share of common stock of the Bank issued and outstanding  immediately prior
to the Effective Time shall, by virtue of the Merger,  be deemed to be exchanged
for and converted into one share of fully paid and nonassessable common stock of
the  Holding  Company.  In  addition,   San  Joaquin  Bancorp  will  assume  all
outstanding  stock options of the Bank exercisable into common stock of the Bank
upon consummation of the Merger. Each such stock option will be exercisable into
one share of San Joaquin Bancorp upon closing of the Merger.  The Reorganization
and Merger will result in a change in control of the Bank.

Consummation  of the  transactions  contemplated by the Agreements is subject to
approval by the Bank's  shareholders  at its annual meeting on June 20, 2006 and
applicable  regulatory  authorities.  Management  anticipates  that,  subject to
receipt of all required  consents and approvals,  the Merger and  Reorganization
will be effected during the second or third quarter of 2006.

CRITICAL ACCOUNTING POLICIES

GENERAL

Our financial  statements are prepared in accordance with accounting  principles
generally  accepted  in the United  States of America  ("GAAP").  The  financial
information  contained  within  our  statements  is,  to a  significant  extent,
financial  information  that is based on  measures of the  financial  effects of
transactions  and events that have  already  occurred.  We use  historical  loss
factors as one factor,  among other factors,  in  determining  the inherent loss
that  may  be  present  in  our  loan  portfolio.  Actual  losses  could  differ
significantly from the historical and other factors that we use. Other estimates
that we use are related to the expected useful lives of our depreciable  assets.
In addition,  GAAP itself may change from one  previously  acceptable  method to
another method.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is an estimate of the losses that may be sustained
in our  loan  portfolio.  The  allowance  is based on two  basic  principles  of
accounting:  (1) SFAS No. 5, "Accounting for Contingencies," which requires that
losses be accrued  when they are probable of occurring  and  estimable,  and (2)
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," which requires
that losses be accrued based on the differences between the value of collateral,
present  value of  future  cash  flows or  values  that  are  observable  in the
secondary market and the loan balance.

Our allowance for loan losses has three basic components: the formula allowance,
the specific allowance and the unallocated  allowance.  Each of these components
is determined based upon estimates that can and do change when the actual events
occur.  The formula  allowance uses historical  losses as an indicator of future
losses and,  as a result,  could  differ  from the loss  incurred in the future.
However,  since this history is updated  with the most recent loss  information,
Management  believes the errors that might  otherwise  occur are mitigated.  The
specific  allowance  uses  various  techniques  to arrive at an  estimate of the
expected loss.  Historical loss  information and fair market value of collateral
are used to  estimate  those  losses.  The use of  these  values  is  inherently
subjective  and our actual  losses could be greater or less than the  estimates.
The  unallocated  allowance  addresses  losses that are  attributable to various
factors including  economic events,  industry or geographic sectors whose impact
on the portfolio  are believed to be probable,  but have yet to be recognized in
either the formula or specific allowances. For further information regarding our
allowance for loan losses,  see "Allowance for Loan Losses"  discussion later in
this item.

STOCK BASED AWARDS

Prior to January 1, 2006,  we  accounted  for our stock based  awards  using the
intrinsic value method in accordance with  Accounting  Principles  Board ("APB")
Opinion No. 25 and related  interpretations.  All option  grants under our stock
option  plans to date  provide for the issuance of options at a price of no less
than the fair market value at the date of the grant,  therefore, no compensation
expense was recognized in the financial  statements.  Effective January 1, 2006,
the Company adopted the new  requirements  of SFAS 123R on a prospective  basis.
See Note 2, "Stock Compensation," in Notes to Condensed  Consolidated  Financial
Statements.

                                       8


OVERVIEW

We commenced  operations as a California  state-chartered  bank in December 1980
and are the oldest independent community bank headquartered in Bakersfield, Kern
County,  California.  San Joaquin Bank has four banking  offices in Kern County,
California. The Rosedale Branch located at 3800 Riverlakes Drive is owned by the
Company,  as are the Stockdale Branch located at 4600 California  Avenue and the
Administrative  Center  located  at 1000  Truxtun  Avenue,  all in  Bakersfield,
California.  The Main Office at addressStreet1301 17th Street,  CityBakersfield,
and the Delano Branch at CityStreet1613 Inyo Street, CityDelano, are both leased
facilities.

At March 31, 2006, we had total consolidated assets of $677,990,000 (an increase
of 8.13% compared to year-end 2005), total consolidated deposits of $623,616,000
(an  increase of 8.35% over  year-end  2005),  total  consolidated  net loans of
$432,495,000  (an increase of 8.02% compared to year-end 2005), and consolidated
shareholders'  equity of $40,916,000  (an increase of 4.14% compared to year-end
2005).

We reported  quarterly net income of  $2,206,000  for the first quarter of 2006.
Net income increased  $805,000,  or 57.46%,  over the $1,401,000 reported in the
first  quarter  of 2005.  Diluted  earnings  per share  were $0.60 for the first
quarter of 2006 and $0.38 for the first  quarter of 2005.  For the first quarter
of 2006,  the  annualized  return on average equity (ROAE) and return on average
assets  (ROAA)  were 21.90% and 1.36%,  respectively,  as compared to 16.44% and
1.08%,  respectively,  for the same period in 2005.  During the first quarter of
2006, we have experienced steady growth in loans and deposits while, at the same
time,  we have  continued to maintain  control over our overhead and other fixed
expenses,  which has resulted in our continued  earnings  growth.  Our growth in
deposits  stems  from  continued  local   advertising  and  business   promotion
activities.  There have been no special  promotions or other  deposit  campaigns
utilized during the first three months of 2006 to attract new deposits, nor have
we relied upon brokered deposits of any kind.

We ended the first quarter of 2006 with a Tier 1 leverage ratio of 6.30%, a Tier
1 risk-based  capital ratio of 7.78%,  and a total  risk-based  capital ratio of
10.18%. At the end of the first quarter of 2005, these ratios were 6.59%,  8.70%
and 11.48%,  respectively.  We met all the  criteria  under  current  regulatory
guidelines for a "well capitalized" bank as of March 31, 2006.

                                       9


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

                                   Three Months Ended March 31
                                  -----------------------------

                                      2006              2005        % Change
                                  ------------     ------------     ---------

Interest Income                   $ 10,436,000     $  6,842,000        52.53%
Interest Expense                     3,437,000        1,489,000       130.83%
                                  ------------     ------------     ---------

Net Interest Income                  6,999,000        5,353,000        30.75%
Provision for Loan Losses              230,000          300,000       -23.33%
                                  ------------     ------------     ---------

Net interest income after
  provision for loan losses          6,769,000        5,053,000        33.96%
Noninterest Income                     656,000          675,000        -2.81%
Noninterest Expense                  3,603,000        3,291,000         9.48%
                                  ------------     ------------     ---------

Income Before Taxes                  3,822,000        2,437,000       56.83%
Provision For Income Taxes           1,616,000        1,036,000       55.98%
                                  ------------     ------------     ---------
Net Income                        $  2,206,000     $  1,401,000        57.46%
                                  ============     ============     =========

                                       10


                               NET INTEREST INCOME

Net  interest  income,  the  difference  between  interest  earned  on loans and
investments and interest paid on deposits and other borrowings, is the principal
component of our earnings.  The  following  two tables  provide a summary of the
components of net interest  income and the changes within the components for the
periods  indicated.  The first  table  sets  forth a summary  of the  changes in
interest income and interest expense from changes in average asset and liability
balances  (volume) and changes in average  interest rates (rate) for the periods
indicated.



                                                 Three Months Ended March 31
(DOLLARS IN THOUSANDS)                        2006                         2005
                                  ----------------------------- ----------------------------
                                    Avg                  Avg       Avg               Avg
                                  Balance    Interest   Yield    Balance  Interest  Yield
                                  ---------  --------  -------- ----------------------------
                                                                   
ASSETS
Earning assets:
  Loans (1)(2)(3)                 $ 415,077  $  8,537   8.34%   $  312,523  $ 5,807   7.54%
  Taxable investments               155,570     1,599   4.17%      123,467      869   2.85%
  Tax-exempt investments              2,550        23   3.66%          997       10   4.07%
  Fed funds sold and other
    interest-bearing balances        25,286       277   4.44%       25,989      156   2.43%
                                  ----------------------------- ----------------------------

Total earning assets                598,483    10,436   7.07%      462,976    6,842   5.99%
                                  ----------------------------- ----------------------------

Cash & due from banks                28,904                         26,152
Other assets                         28,946                         34,219
                                  ---------                     ----------

Total Assets                      $ 656,333                     $  523,347
                                  =========                     ==========

LIABILITIES
Interest-bearing liabilities:
  NOW & money market              $ 282,661  $  2,374   3.41%   $  188,543      802   1.73%
  Savings                           100,599       739   2.98%       94,941      475   2.03%
  Time deposits                      27,594       208   3.06%       22,284      102   1.86%
  Other borrowings                    6,974       116   6.75%       12,272      110   3.64%
                                  ----------------------------- ----------------------------
Total interest-bearing
  liabilities                       417,828     3,437   3.34%      318,040    1,489   1.90%
                                  ----------------------------- ----------------------------
Noninterest-bearing deposits        186,628                        156,286
Other liabilities                     4,430                          9,349
                                  ---------                     ----------
Total Liabilities                   608,886                        483,675

SHAREHOLDERS' EQUITY
Shareholders' equity                 40,301                         33,921
                                  ---------                     ----------

Total Liabilities and
  Shareholders' Equity            $ 649,187                     $  517,596
                                  =========                     ==========

Net Interest Income and Net
  Interest Margin (4)                        $  6,999   4.74%               $ 5,353   4.69%
                                             ==================           ==================

1)   Loan interest  income  includes fee income of $511,000 and $431,000 for the three months
     ended March 31, 2006 and 2005, respectively.
2)   Includes  average  deferred loan fees of $1,440,000  and $1,057,000 for the three months
     ended March 31, 2006 and 2005, respectively.
3)   The average  balance of  nonaccrual  loans is not  significant  as a percentage of total
     loans and, as such, has been included in net loans
4)   Net interest  margin is computed by dividing net  interest  income by the total  average
     earning assets.

                                              11


    VOLUME RATE ANALYSIS (UNAUDITED)
    ----------------------------------------------------------------------------
                                                 Three Months Ended March 31
    (dollars in thousands)                            2006 over 2005
    ----------------------------------------------------------------------------
                                               Volume      Rate      Net Change
    ----------------------------------------------------------------------------
    Interest-earning assets:

    Net Loans (1)(2)                           1,906        824           2,730
    Taxable Investment Securities                226        504             730
    Tax-exempt Investment Securities (3)          16         (3)             13
    Federal Funds Sold                            (4)       125             121
    ----------------------------------------------------------------------------
    Total                                      2,144      1,450           3,594
    ----------------------------------------------------------------------------
    Interest-Bearing Liabilities

    NOW and Money Market Accounts                400      1,172           1,572
    Savings Deposits                              28        236             264
    Time Deposits                                 24         82             106
    Other Borrowings                             (47)        53               6
    ----------------------------------------------------------------------------
    Total                                        405      1,543           1,948
    ----------------------------------------------------------------------------
    Interest Differential                      1,739        (93)          1,646
    ============================================================================

1)    Loan interest  income includes fee income of $511,000 and $431,000 for the
      three months ended March 31, 2006 and 2005, respectively.
2)    The average balance of nonaccrual loans is not significant as a percentage
      of total loans and, as such, has been included in net loans.
3)    The amount of tax-exempt securities that we hold is minimal and the amount
      derived from these  securities is not  significant,  therefore  there have
      been no adjustments made to reflect interest earned on these securities on
      a tax-equivalent  basis.  The effective  statutory tax rate was 42.28% and
      42.51%  for the  three  month  period  ended  March  31,  2006  and  2005,
      respectively.

Net interest  income,  before  provision for loan loss,  was  $6,999,000 for the
quarter ended March 31, 2006 compared to $5,353,000  for the quarter ended March
31, 2005, an increase of $1,646,000, or 30.75%.


INTEREST INCOME - FIRST QUARTER 2006 COMPARED TO 2005

Total  interest  income for the quarter  ended  March 31,  2006 was  $10,436,000
compared to  $6,842,000  for the quarter  ended March 31,  2005,  an increase of
$3,594,000  or 52.53%.  Changes in interest  income are the result of changes in
the average  balances  and changes in average  yields on earning  assets.  Major
components of earning assets include loans, taxable investment  securities,  and
federal  funds  sold and other  interest-bearing  balances.  Year-over-year,  we
experienced  changes in average balances and average yields on these balances as
follows:

During the first quarter of 2006,  average net loans were $415,077,000  compared
to $312,523,000  during the first quarter of 2005, an increase of  $102,554,000,
or 32.81%.  This  increased  volume of loans resulted in an increase in interest
earned on average  loans of  $1,906,000  during the three months ended March 31,
2006,  compared to the three months ended March 31, 2005.  During this same time
period, the average yield earned on average loans increased from 7.54% to 8.34%.
This 80 basis  point  increase  in average  yield  resulted  in an  increase  of
$824,000 in interest  earned on average  net loans  during the first  quarter of
2006  compared to the first  quarter of 2005.  The net result was an increase of
$2,730,000  in interest  earned on average net loans during the first quarter of
2006 compared with the same period of 2005.

Average  taxable  investment  securities  during the first  quarter of 2006 were
$155,570,000  compared  to  $123,467,000  during  the same  period  of 2005,  an
increase  of  $32,103,000,  or 26.00%.  This  increased  volume  resulted  in an
increase in interest earned on average taxable securities of $226,000 during the

                                       12


first  quarter of 2006  compared to the first  quarter of 2005.  During the same
period,  average  yield earned on average  taxable  securities  increased by 132
basis points, resulting in an increase of $504,000 in interest earned on average
taxable securities during the first quarter of 2006, compared to the same period
of 2005.  The net result was an  increase  of  $730,000  in  interest  earned on
average  taxable  securities  during the first quarter of 2006,  compared to the
first quarter of 2005.

The average  balance of federal funds sold and other  interest-bearing  balances
during the first quarter of 2006 was $25,286,000, compared to $25,989,000 during
the same period of 2005, a decrease of $703,000,  or 2.70%. The decreased volume
of  federal  funds  sold and other  interest-bearing  balances  during the first
quarter of 2006  resulted in a decrease  of $4,000 in  interest  earned on these
balances as compared to the first quarter of 2005.  The average yield on federal
funds  sold and other  interest-bearing  balances  increased  201  basis  points
between the first quarter of 2005 and the first quarter of 2006,  which resulted
in an increase in interest earned on these balances of $125,000 during this same
time  period.  These two  factors  resulted  in a net  increase  of  $121,000 in
interest  earned  on  average  federal  funds  sold and  other  interest-bearing
balances during the first quarter of 2006 compared to the same period of 2005.

INTEREST EXPENSE - FIRST QUARTER 2006 COMPARED TO 2005

Total Interest expense for the first quarter of 2006 was $3,437,000  compared to
$1,489,000 for the first quarter of 2005, an increase of $1,948,000, or 130.83%.
Changes in interest  expense  are the result of changes in the average  balances
and  changes  in  average  rates  paid on  interest-bearing  liabilities.  Major
components  of  interest-bearing   liabilities  include  NOW  and  money  market
accounts, savings deposits, time deposits, and other borrowings. Year-over-year,
we experienced  changes in average balances and average yields on these balances
as follows:

The average balance of NOW and money market accounts increased from $188,543,000
during the first  quarter of 2005 to  $282,661,000  during the first  quarter of
2006, an increase of $94,118,000,  or 49.92%.  This increased volume of deposits
resulted in an increase in interest expense of $400,000 during the first quarter
of 2006  compared  to the first  quarter  of 2005,  while  the 168  basis  point
increase in interest  rates during the same period  caused  interest  expense to
increase by  $1,172,000.  The net result was an increase in interest  expense on
average NOW and money market accounts of $1,572,000  during the first quarter of
2006, compared to the first quarter of 2005.

Average  savings  deposits  increased  during  the  first  quarter  of  2006  to
$100,599,000,  compared  to  $94,941,000  during the first  quarter of 2005,  an
increase of $5,658,000,  or 5.96%.  Because of this increase in average  savings
deposits,  interest expense  increased $28,000 during the first quarter of 2006,
compared to the first  quarter of 2005.  Interest  rates during this same period
increased by 95 basis  points,  resulting in an increase in interest  expense of
$236,000 in the first  quarter of 2006,  compared to the first  quarter of 2005.
The net  result was an  increase  of  $264,000  in  interest  expense on average
savings  deposits  during the first  quarter of 2006 versus the first quarter of
2005.

Average time deposits during the first quarter of 2006 increased to $27,594,000,
compared  to  $22,284,000  during the first  quarter  of 2005,  an  increase  of
$5,310,000,  or 23.83%.  This increase in average time deposits  caused interest
expense to  increase  by $24,000 in the first  quarter of 2006  compared  to the
first  quarter of 2005,  and the 120 basis point  increase in interest  rates on
average time deposits caused interest expense to increase by $82,000 during this
same time  period.  These two factors  resulted in the net  increase in interest
expense  on average  time  deposits  of  $106,000  in the first  quarter of 2006
compared to the first quarter of 2005.

Average  other  borrowings,  consisting  primarily of a $6,000,000  subordinated
note,  decreased  during the first  quarter of 2006 to  $6,974,000  compared  to
$12,272,000  during the first  quarter of 2005,  a decrease  of  $5,298,000,  or
43.17%.  This decrease in volume was the result of a decrease in securities sold
under  agreements  to  repurchase  and caused  interest  expense to  decrease by
$47,000 during the first quarter of 2006, compared to the first quarter of 2005,
while a 311 basis  point  increase  in  interest  rates  paid on  average  other
borrowings  caused  interest  expense to  increase  by $53,000  during this same
year-over-year time period. The net result was an increase of $6,000 in interest
expense on other  borrowings  during the first  quarter of 2006  compared to the
first quarter of 2005.

NET INTEREST MARGIN

The net  interest  margin for the first  quarter of 2006 was 4.74%  compared  to
4.69% for the first  quarter of 2005.  In the current  rising rate  environment,
Management  believes the net interest  margin  should  remain  stable due to the
rising  rate  environment  in which our  variable  rate  assets are  expected to

                                       13


reprice  more  quickly  than the  interest-bearing  liabilities.  Although,  the
current competitive rate environment could exert pressure on net interest margin
resulting  in a flat to slightly  declining  margin for the  remainder  of 2006.
Conversely,  in a declining rate  environment  the net interest  margin would be
expected to decline.

PROVISION FOR LOAN LOSSES

We made a  $230,000  addition  to the  allowance  for loan  losses  in the first
quarter of 2006  compared to an  addition  of  $300,000 in the first  quarter of
2005.  The provision for loan losses is based upon in-depth  analysis,  in which
Management considers many factors, including the rate of loan growth, changes in
the level of past due,  nonperforming and classified assets,  changing portfolio
mix, overall credit loss experience,  recommendations of regulatory authorities,
and prevailing local and national economic  conditions to establish the required
level  of the  allowance  for  loan  losses.  Based  upon  information  known to
Management at the date of this report,  Management believes that these additions
to the total allowance for loan losses allow the Company to maintain an adequate
reserve to absorb losses inherent in the loan portfolio. The total allowance for
loan losses was $7,319,000 at March 31, 2006, compared to $7,003,000 at December
31, 2005,  an increase of $316,000,  or 4.51%.  The ratios of the  allowance for
loan losses to nonperforming and restructured  loans were 1,527.97% at March 31,
2006 and 963.27% at  December  31,  2005.  The ratio of the  allowance  for loan
losses to total  loans was 1.66% at March  31,  2006 and 1.72% at  December  31,
2005.  For further  information  regarding our  allowance  for loan losses,  see
"Allowance for Loan Losses" discussion later in this item.

NONINTEREST INCOME

Noninterest income consists primarily of service charges on deposit accounts and
fees for  miscellaneous  services.  Noninterest  income totaled  $656,000 in the
first quarter of 2006, which was a decrease of $19,000,  or 2.81%, over $675,000
in the first  quarter of 2005.  Service  charges and fees on deposits  decreased
$16,000 during the three months ended March 31, 2006 compared to the same period
of 2005. The decrease in service  charges and fees on deposits was the result of
customers  maintaining  higher  balances in their  accounts  thereby  offsetting
service  charges and fees that would be charged  against those  accounts.  Other
service  charges  and fees were down  $23,000  in the first  quarter  of 2006 as
compared  to the first  quarter  of 2005.  Other  noninterest  income  increased
$16,000 during the first quarter of 2006 compared to the first quarter of 2005.

NONINTEREST EXPENSE

As  compared  to the  first  quarter  of  2005,  noninterest  expense  increased
$312,000,  or 9.48%,  to a total of  $3,603,000  in the first  quarter  of 2006.
Salary and employee benefits  increased  $324,000,  or 16.59%,  during the first
quarter of 2006 as compared to the first quarter of 2005. The increase in salary
and  employee  benefits  was due  primarily  to  normal  salary  increases,  and
increases  in group  medical  insurance  premiums as compared to the prior year.
Salary and employee  benefits  expense  also  includes  additional  compensation
expense from granting of stock options of $26,000 under SFAS 123R. Occupancy and
fixed asset expense  decreased by $102,000,  or 18.09%,  to $462,000  during the
first quarter of 2006 compared to the first quarter of 2005. This change was due
primarily to in depreciation expense on equipment.  Other expenses for the first
quarter of 2006  totaled  $864,000,  which was an increase of $90,000,  or 9.48%
compared  to the first  quarter  of 2005.  The  increases  in other  noninterest
expense were  primarily due to increases in advertising  and marketing  expense,
increases in legal  expense,  and increases in audits and  examinations  expense
associated with increased regulatory requirements.  The efficiency ratio for the
three month periods  ended March 31, 2006 was 47.07%  compared to 54.60% for the
same period in the prior year  demonstrating  improvement  in overall  operating
efficiency.

PROVISION FOR INCOME TAXES

We  recorded  income tax  expense  of  $1,616,000  in the first  quarter of 2006
compared to $1,036,000  in the first  quarter of 2005.  The provision for income
taxes increased primarily due to increased profitability in the first quarter of
2006 as compared to the same period in the prior year.  The  effective  tax rate
for the three month periods ended March 31, 2006 and 2005 was 42.28% and 42.51%.

SECURITIES

At March 31, 2006,  held-to-maturity securities had a fair value of $145,466,000
with  an   amortized   cost   basis  of   $148,825,000.   At  March  31,   2006,

                                       14


available-for-sale  securities had a market value of $7,008,000. On an amortized
cost basis, the held-to-maturity investment portfolio decreased $18,811,000 from
the  December  31,  2005  balance of  $167,636,000,  a decrease  of 11.22%.  The
decrease in the portfolio  was  primarily  due to the maturity of U.S.  Treasury
securities  which decreased  $14,041,000.  During the first quarter of 2006, the
bank   reclassified  all  of  its  investments  in  municipal   securities  from
held-to-maturity  to available for sale. At March 31, 2006, these securities had
an  amortized  cost  basis of  $4,660,000  and a fair value of  $4,618,000.  The
unrealized  pretax  loss on  held-to-maturity  securities  at March 31, 2006 was
$3,359,000,  as  compared to a loss of  $2,677,000  at December  31,  2005.  The
decreases  in the market  value of the  investment  portfolio  was caused by the
general  increase in short-term  interest  rates.  As a general rule, the market
price of fixed rate  investment  securities will decline as interest rates rise,
which is precisely what happened.  Inasmuch as these  investment  securities are
classified as held-to-maturity, we expect to hold all such securities until they
reach their  respective  maturity  dates and,  therefore,  we do not  anticipate
recognizing  any  losses on these  securities.  The  unrealized  pretax  loss on
available-for-sale securities at March 31, 2006 was $152,000.

LOANS

The ending balance for net loans at March 31, 2006 was  $432,495,000,  which was
an increase of  $32,098,000,  or 8.02%,  from the  year-end  2005 balance and an
increase  of  $128,842,000,   or  42.43%,  from  the  March  31,  2005  balance.
Year-over-year,  significant changes in our loan portfolio were as follows: real
estate loans have increased from  $235,530,000 at March 31, 2005 to $379,718,000
at March 31, 2006 (61.22%);  commercial loans have decreased from $57,834,000 at
March 31, 2005 to $48,209,000 at March 31, 2006 (16.64%);  and, loans to finance
agricultural  production  have decreased  from  $14,613,000 at March 31, 2005 to
$11,756,000  at March 31, 2006 (19.55%).  Since  year-end 2005, the  significant
changes in the bank's  loan  portfolio  are as follows:  real estate  loans have
increased from  $333,121,000  at December 31, 2005 to  $379,718,000 at March 31,
2006 (13.99%);  commercial loans have decreased from $55,895,000 at December 31,
2005  to  $48,209,000  at  March  31,  2006  (13.75%);  and,  loans  to  finance
agricultural  production have decreased from $18,211,000 at December 31, 2005 to
$11,756,000 at March 31, 2006 (35.45%). Management believes and current economic
projections considered indicate that loan demand for Kern County and the greater
Bakersfield area will remain fairly constant through 2006.

CREDIT RISK

We assess and manage  credit risk on an ongoing  basis  through a formal  credit
review program,  internal monitoring and formal lending policies. We believe our
ability to  identify  and assess  risk and  return  characteristics  of our loan
portfolio are critical for profitability and growth. We emphasize credit quality
in  the  loan  approval  process,   active  credit  administration  and  regular
monitoring.  With this in mind, we have designed and implemented a comprehensive
loan review and grading  system that  functions to monitor and assess the credit
risk inherent in the loan portfolio.

Ultimately,  the credit  quality of our loans may be  influenced  by  underlying
trends in the national and local economic and business  cycles.  Our business is
mostly  concentrated  in Kern  County,  California.  Our economy is  diversified
between agriculture, oil, light industry, and warehousing and distribution. As a
result,  we lend  money  to  individuals  and  companies  dependent  upon  these
industries.

We have significant  extensions of credit and commitments to extend credit which
are secured by real estate,  totaling  approximately  $482,092,000  at March 31,
2006.  Although we believe this real estate  concentration  has no more than the
normal risk of collectibility,  a substantial decline in the economy in general,
a decline in real estate values in our primary market area in  particular,  or a
substantial  increase  in  interest  rates  could have an adverse  impact on the
collectibility of these loans. The ultimate recovery of these loans is generally
dependent upon the successful operation, sale or refinancing of the real estate.
We monitor the  effects of current  and  expected  market  conditions  and other
factors on the collectibility of real estate loans. When, in our judgment, these
loans are impaired,  an appropriate  provision for losses is recorded.  The more
significant  assumptions we consider involve estimates of the following:  lease,
absorption  and sale rates;  real estate  values and rates of return;  operating
expenses;  inflation;  and  sufficiency  of collateral  independent  of the real
estate including,  in most instances,  personal guarantees.  Notwithstanding the
foregoing,  abnormally high rates of impairment due to general or local economic
conditions   could  adversely   affect  our  future  prospects  and  results  of
operations.

In  extending  credit  and  commitments  to  borrowers,   we  generally  require
collateral  and/or  guarantees  as  security.  The  repayment  of such  loans is
expected  to come  from cash flow and from  proceeds  from the sale of  selected


                                       15


assets of the borrowers.  Our  requirement for collateral  and/or  guarantees is
determined  on a  case-by-case  basis in connection  with our  evaluation of the
creditworthiness  of the  borrower.  Collateral  held  varies  but  may  include
accounts receivable, inventory, property, plant and equipment,  income-producing
properties,  residences  and other real  property.  We secure our  collateral by
perfecting  our  interest  in  business  assets,  obtaining  deeds of trust,  or
outright  possession  among other means.  Loan losses from lending  transactions
related to real estate and agriculture compare favorably with our loan losses on
our loan portfolio as a whole.

We believe that our lending  policies and  underwriting  standards  will tend to
mitigate  losses in an economic  downturn;  however,  there is no assurance that
losses  will  not  occur  under  such  circumstances.   Our  loan  policies  and
underwriting  standards  include,  but are not  limited  to, the  following:  1)
maintaining  a  thorough   understanding   of  our  service  area  and  limiting
investments  outside of this area, 2) maintaining an understanding of borrowers'
knowledge  and  capacity  in their  fields of  expertise,  3) basing real estate
construction  loan approval not only on  salability of the project,  but also on
the borrowers'  capacity to support the project financially in the event it does
not sell  within  the  originally  projected  time  period,  and 4)  maintaining
conforming  and  prudent  loan  to  value  and  loan  to cost  ratios  based  on
independent  outside  appraisals  and  ongoing  inspection  and  analysis of our
construction  lending activities.  In addition,  we strive to diversify the risk
inherent in the construction portfolio by avoiding  concentrations to individual
borrowers and on any one project.

NONACCRUAL, PAST DUE, RESTRUCTURED LOANS AND OTHER REAL ESTATE OWNED (OREO)

We generally place loans on nonaccrual  status when they become 90 days past due
as to principal or interest,  unless the loan is well secured and in the process
of  collection.  When a loan is placed on  nonaccrual  status,  the  accrued and
unpaid interest receivable is reversed and the loan is accounted for on the cash
or cost  recovery  method  thereafter,  until  qualifying  for return to accrual
status.  Generally, a loan may be returned to accrual status when all delinquent
interest and principal  become current in accordance  with the terms of the loan
agreement and remaining principal is considered  collectible or when the loan is
both well secured and in the process of  collection.  Loans or portions  thereof
are charged off when, in our opinion, collection appears unlikely. The following
table  sets  forth  nonaccrual  loans,  loans past due 90 days or more and still
accruing,  restructured  loans  performing in compliance with modified terms and
OREO at March 31, 2006 and December 31, 2005:

                                       16


NONACCRUAL, PAST DUE, RESTRUCTURED LOANS, AND OTHER REAL ESTATE OWNED (OREO)

(DATA IN THOUSANDS, EXCEPT PERCENTAGES)         March 31,     December 31,
                                                  2006           2005
                                                ---------     -----------

Past due 90 days or more and still accruing:
   Commercial                                   $      4       $      -
   Real estate                                         -              -
   Consumer and other                                 11              -

Nonaccrual:
   Commercial                                         32              -
   Real estate                                       395            727
   Consumer and other                                 37              -
Restructured (in compliance with
  modified terms)                                      -              -
                                                --------       --------
Total nonperforming and restructured loans           479            727

Other real estate owned                              693            710
                                                --------       --------

Total nonperforming and restructured assets     $  1,172       $  1,437
                                                ========       ========

Allowance for loan losses as a percentage of
  nonperforming and restructured loans          1527.97%        963.27%

Nonperforming and restructured loans to total
  loans                                            0.11%          0.18%

Allowance for loan losses to nonperforming and
  restructured assets                            624.49%        487.33%

Nonperforming and restructured assets to total
  assets                                           0.17%          0.23%


At March 31, 2006, there were nonperforming and restructured loans which totaled
$479,000, compared to $727,000 at December 31, 2005, a decrease of $248,000. The
decrease was due to an decrease in nonaccrual loans. During the first quarter of
2006, we continued to closely monitor and actively pursue the collection of all
loans classified as nonperforming. At March 31, 2006, nonperforming and
restructured loans were .11% of total loans, compared to .18% at December 31,
2005. The ratio of nonperforming and restructured assets to total assets was
..17% at March 31, 2006 compared to .23% at December 31, 2005.

Under generally accepted  accounting  principles,  a loan is considered impaired
when,  based on current  information  and events,  it is probable that we may be
unable to collect all amounts due according to the contractual terms of the loan
agreement.  Impaired  loans are measured  based on the present value of expected
future cash flows,  discounted  at the loan's  effective  interest rate or, as a
practical expedient,  at the loan's observable market price or the fair value of
the collateral if the loan is collateral-dependent.  Under some circumstances, a
loan  which  is  deemed  impaired  may  still  perform  in  accordance  with its
contractual terms.  Loans that are considered  impaired are generally not placed
on nonaccrual status unless the loan becomes 90 days or more past due.

At March 31, 2006 and  December 31, 2005,  there was no recorded  investment  in
loans that were  considered  impaired  under SFAS No. 114.  Other than  impaired
loans and  classified  loans  (discussed  below),  we are not aware of any other
potential problem loans which were accruing and current at March 31, 2006, where
serious  doubt  exists as to the  ability  of the  borrower  to comply  with the
present  repayment terms. In this report,  the terms "impaired" and "classified"
will not  necessarily be used to describe the same loans.  "Impaired"  loans are
those loans that meet the  definition  outlined  in SFAS No.  114.  "Classified"
loans generally refer to those loans that have a credit risk rating of 6 through
8, as further discussed in the following section.

Generally it is the Bank's policy that when a loan is  nonaccrual,  payments are
applied  against  the  principal  balance  of the loan  until  such time as full
collection of the principal  balance is expected.  The amount of gross  interest
income that would have been recorded for nonaccrual loans, if all such loans had
been current in accordance  with their original  terms,  was $38,000,  including
those related to interest owed from prior years.

                                       17


Total cash payments received during the three months ended March 31, 2006, which
were applied against the book balance of nonaccrual loans outstanding at March
31, 2006, totaled approximately $340,000.

CLASSIFIED LOANS

We have  established a system of evaluation of all loans in our loan  portfolio.
Based upon the evaluation  performed,  each loan is assigned a risk rating. This
risk rating system  quantifies the risk we believe we have assumed when entering
into a credit transaction. The system rates the strength of the borrower and the
facility or  transaction,  which  provides a tool for risk  management and early
problem loan recognition.

For each new credit  approval,  credit  review,  credit  extension or renewal or
modification of existing facilities,  the approving officers assign risk ratings
utilizing an eight point rating scale.  The risk ratings are a measure of credit
risk based on the historical,  current and anticipated financial characteristics
of the  borrower in the current  risk  environment.  We assign risk ratings on a
scale of 1 to 8, with 1 being the highest  quality rating and 8 being the lowest
quality rating. Loans rated an 8 are charged off.

The primary  accountability  for risk rating management resides with the account
officer.  The Credit Review  Department is  responsible  for confirming the risk
rating  after  reviewing  all the credit  factors  independently  of the account
officer. The rating assigned to a credit is the one determined to be appropriate
by the Credit Review Department.

The loans we consider "classified" are those that have a credit risk rating of 6
through 8. These are the loans and other credit  facilities  that we consider to
be of the greatest risk to us and, therefore,  they receive the highest level of
attention by our account officers and senior credit management officers.

A loan that is classified may be either a "performing" or "nonperforming"  loan.
A performing loan is one wherein the borrower is making all payments as required
by the loan agreements.  A nonperforming loan is one wherein the borrower is not
paying as agreed and/or is not meeting specific other  performance  requirements
that were agreed to in the loan documentation.

The  following  table  summarizes  the Bank's  classified  loans for the periods
indicated:

                      March 31, 2006        December 31, 2005
                      --------------        -----------------
                               (dollars in thousands)

Classified Loans     $       4,082           $        4,676
OREO                           693                      710
                     -------------           --------------
Total                $       4,775           $        5,386
                     =============           ==============

At March 31,  2006,  there were  $4,082,000  in  classified  loans  compared  to
$4,676,000 in classified loans at December 31, 2005, a decrease of $594,000,  or
12.70%.  The amount of  classified  loans  includes the portion of certain loans
that are guaranteed by the Small Business Administration.  These amounts were $0
and $196,000 at March 31, 2006 and December 31, 2005,  respectively.  Management
does not  expect to incur a loss on these  amounts  that are  guaranteed  by the
Small Business Administration.

The loans and other credit facilities considered classified are also allocated a
specific  amount in the allowance for loan losses,  as further  explained in the
"Allowance for Loan Losses" section herein.

ALLOWANCE FOR LOAN LOSSES

We maintain an allowance for loan losses to absorb  losses  inherent in the loan
portfolio.  The  allowance is based on our regular  assessments  of the probable
losses inherent in the loan portfolio and to a lesser extent, unused commitments
to provide  financing.  Determining the adequacy of the allowance is a matter of
judgment,  which reflects  consideration of all significant  factors that affect
the  collectibility  of the portfolio as of the evaluation date. Our methodology

                                       18


for  measuring  the  appropriate  level of the  allowance  relies on several key
elements,   which  include  the  formula  allowance,   specific  allowances  for
identified problem loans and the unallocated reserve. The unallocated  allowance
contains  amounts that are based on our evaluation of existing  conditions  that
are not  directly  measured in the  determination  of the  formula and  specific
allowances.

The formula  allowance is  calculated  by applying  loss factors to  outstanding
loans and certain  unused  commitments,  in each case based on the internal risk
grade of such loans and  commitments.  Changes in risk grades of both performing
and nonperforming loans affect the amount of the formula allowance. Loss factors
are  based on our  historical  loss  experience  and may be  adjusted  for other
factors that, in our judgment,  affect the collectibility of the portfolio as of
the  evaluation  date. At March 31, 2006,  the formula  allowance was $4,296,000
compared  to  $3,866,000  at  December  31,  2005.  The  increase in the formula
allowance  was  primarily  a  result  of  increases  in the  balances  of  loans
outstanding.

In addition to the formula  allowance  calculated by the application of the loss
factors  to the  standard  loan  categories,  specific  allowances  may  also be
calculated.   Quarterly,   all   significant   classified   loans  are  analyzed
individually  based on the source and adequacy of repayment and specific type of
collateral,  and an  assessment  is made of the adequacy of the formula  reserve
relative to the individual  loan. A specific  allocation  either higher or lower
than    the    formula    reserve    will   be    calculated    based   on   the
higher/lower-than-normal probability of loss and the adequacy of the collateral.
At March 31, 2006, the specific  allowance was  $1,281,000 on a classified  loan
base  of  $4,082,000  compared  to  a  specific  allowance  of  $1,412,000  on a
classified loan base of $4,676,000 at December 31, 2005.

At March 31, 2006 and December  31, 2005 there was  $1,742,000  and  $1,724,000,
respectively,  in the  allowance  for loan losses that was  unallocated.  In the
opinion of Management, and based upon an evaluation of potential losses inherent
in the loan  portfolio,  it is  necessary  to  establish  unallocated  allowance
amounts  above the amounts  allocated  using the formula and specific  allowance
methods,  based upon our  evaluation  of the  following  factors:

    o  The current national and local economic and business  conditions,  trends
       and  developments,  including  the condition of various  market  segments
       within our lending area;

    o  Changes  in  lending  policies  and  procedures,  including  underwriting
       standards and collection, charge-off, and recovery practices;

    o  Changes  in the  nature,  mix,  concentrations  and  volume  of the  loan
       portfolio;

    o  The  effect  of  other  external  factors  such as legal  and  regulatory
       requirements  on the level of  estimated  credit  losses  in our  current
       portfolio.

There can be no assurance that the adverse impact of any of these  conditions on
us will not be in excess of the combined allowance for loan losses as determined
by us at March 31, 2006 and set forth in the preceding paragraph.

The  allowance  for loan losses  totaled  $7,319,000  or 1.66% of total loans at
March 31, 2006,  compared to  $7,003,000 or 1.71% of total loans at December 31,
2005. At these dates, the allowance represented  1,527.97%,  963.27% and 153.76%
of nonperforming and restructured loans, respectively.

It is our policy to maintain the allowance for loan losses at a level considered
adequate  for  risks  inherent  in the  loan  portfolio.  Based  on  information
currently  available to Management,  including economic factors,  overall credit
quality,  historical delinquency and history of actual charge-offs,  as of March
31, 2006, we believe that the allowance for loan losses is adequate. However, no
prediction of the ultimate  level of  additional  provisions to our allowance or
loans charged off in future years can be made with any certainty.

The following table summarizes activity in the allowance for loan losses for the
periods indicated:

                                       19


                                             Three Months Ended March 31
                                               2006               2005
                                          ----------------------------------
Beginning Balance                         $  7,003,000       $  5,487,000

Provision charged to expense                   230,000            300,000
Loans charged off                               (4,000)                 -
Recoveries                                      90,000             70,000
                                          ----------------------------------
   Ending Balance                         $  7,319,000      $   5,857,000
                                          ==================================
Ending Loan Portfolio                      441,379,000        310,672,000

Allowance for loss as a percentage of
ending loan portfolio                             1.66%             1.89%


LIQUIDITY

Liquidity  management  refers to our  ability  to  maintain  cash flows that are
adequate  to fund  our  operations  on an  ongoing  basis  and to meet  our debt
obligations  and other  commitments on a timely and cost effective  basis.  Both
assets and  liabilities  contribute  to our  liquidity  position.  Federal funds
lines, short-term investments and securities,  and loan repayments contribute to
liquidity,  along  with  deposit  increases,  while  loan  funding  and  deposit
withdrawals  decrease  liquidity.  We assess the likelihood of projected funding
requirements by reviewing  historical  funding patterns,  current and forecasted
economic conditions and individual  customer funding needs.  Commitments to fund
loans  and  outstanding  standby  letters  of credit  at March  31,  2006,  were
approximately  $202,055,000  and  $6,838,000,  respectively.  Such loans  relate
primarily to revolving lines of credit and other  commercial  loans, and to real
estate construction loans.

Our sources of liquidity consist of overnight funds sold to correspondent banks,
unpledged marketable loans and investments,  and salable SBA loans. At March 31,
2006,  consolidated liquid assets totaled $174,568,000 or 25.75% of total assets
as compared to $150,422,000 or 23.99% of total  consolidated  assets at December
31, 2005. In addition to liquid assets,  we maintain  short-term lines of credit
with correspondent banks. At March 31, 2006, we had $15,000,000  available under
these credit lines.  Additionally,  we have borrowing  capacity with the Federal
Home Loan Bank of San Francisco in the amount of $17,735,000. At March 31, 2006,
$0 was  outstanding  under these credit lines. We serve primarily a business and
professional  customer  base and, as such,  our deposit base is  susceptible  to
economic fluctuations. Accordingly, we strive to maintain a balanced position of
liquid assets to volatile and cyclical deposits.

CAPITAL RESOURCES

Our total  shareholders'  equity was $40,916,000 at March 31, 2006,  compared to
$39,290,000  at December  31, 2005,  an increase of  $1,626,000,  or 4.14%.  The
change is the result of the first quarters' earnings,  issuance of capital stock
due to the exercise of stock options, the increase in other comprehensive income
or loss, and the payout of a cash dividend to shareholders in February, 2006.

We  are  subject  to  regulations   issued  by  the  Federal  Deposit  Insurance
Corporation  ("FDIC"),  which require  maintenance of certain levels of capital.
Under the regulations, capital requirements are based upon the composition of an
institution's  asset base and the risk  factors  assigned to those  assets.  The
guidelines  characterize  an  institution's  capital  as being  "Tier 1" capital
(defined to be  principally  shareholders'  equity less  intangible  assets) and
"Tier 2" capital  (defined to be  principally  the  allowance  for loan  losses,
limited to one and one-fourth  percent of gross risk weighted  assets,  and term
subordinated  debt,  subject to certain  limits).  The guidelines  require us to
maintain  specific levels of risk-based  capital in order to be considered "well
capitalized"  under the prompt  corrective  action  provisions of the applicable
banking regulations.

The  following  table shows our actual  capital  amounts and ratios at March 31,
2006 and December 31, 2005,  as well as the minimum  capital  ratios for capital
adequacy and well capitalized classifications under the regulatory framework:

                                       20



                                                                                             To Be Categorized
                                                                                             Well Capitalized
                                                                     For Capital          Under Prompt Corrective
                                            Actual                Adequacy Purposes          Action Provisions
                                   -----------------------      ---------------------     -----------------------
                                       Amount       Ratio          Amount       Ratio        Amount       Ratio
- -----------------------------------------------------------------------------------------------------------------
As of March 31, 2006
- -----------------------------------------------------------------------------------------------------------------
                                                                                        
Total risk-based capital ratio     $ 53,447,000     10.18%      $ 42,002,000    8.00%     $ 52,502,000    10.00%
Tier 1 risk-based capital ratio      40,873,000      7.78%        21,014,000    4.00%       31,522,000     6.00%
Tier 1 leverage ratio                40,873,000      6.30%        25,951,000    4.00%       32,439,000     5.00%

As of December 31, 2005
- -----------------------------------------------------------------------------------------------------------------
Total risk-based capital ratio     $ 51,510,000     10.51%      $ 39,208,000    8.00%     $ 49,010,000    10.00%
Tier 1 risk-based capital ratio      39,372,000      8.03%        19,612,000    4.00%       29,419,000     6.00%
Tier 1 leverage ratio                39,372,000      6.44%        24,455,000    4.00%       30,568,000     5.00%


We meet the  "well  capitalized"  ratio  measures  at both  March  31,  2006 and
December 31, 2005.

On April 5, 2004,  the Bank issued a Six Million  Dollar  ($6,000,000)  Floating
Rate Subordinated Note (the  "Subordinated  Note") in a private  placement.  The
Subordinated Note, which was issued pursuant to a Purchase Agreement dated April
5, 2004 by and between the Company and NBC Capital Markets Group,  Inc., matures
in 2019. The Company may redeem the Subordinated Note, at par, on or after April
23, 2009, subject to compliance with California and federal banking regulations.
The Subordinated Note resets quarterly and bears interest at a rate equal to the
three-month  LIBOR  index  plus a margin of 2.70%.  The  Subordinated  Note is a
capital  security that qualifies as Tier 2 capital  pursuant to capital adequacy
guidelines promulgated by the Federal Deposit Insurance Corporation.

OFF-BALANCE SHEET ITEMS

We have certain ongoing commitments under operating leases. These commitments do
not significantly  impact operating  results.  As of March 31, 2006 and December
31,  2005,  commitments  to extend  credit and  letters of credit  were the only
financial  instruments with off-balance sheet risk, except for the interest rate
cap contracts and interest rate swap agreements described herein.

DERIVATIVES

The use of derivatives  allows the bank to meet the needs of its customers while
reducing the interest rate risk associated with certain transactions.  Currently
the bank uses  interest  rate cap  contracts,  which are cash flow  hedges,  and
interest rate swap agreements, which are fair value hedges, to limit exposure to
changes in interest  rates.  The Board has  approved a hedging  policy,  and the
Asset  Liability  Committee  is  responsible  for  ensuring  that  the  Board is
knowledgeable about general hedging theory, usage and accounting; and that based
upon this understanding,  approves all hedging transactions. The derivatives are
carried at fair value and are included in other assets or other  liabilities  in
the  consolidated  balance sheet if they have a positive or negative fair value,
respectively.

CASH FLOW HEDGES

We entered into two interest  rate cap contracts  with a third party,  to manage
the risk that  changes  in  interest  rates will  affect the amount of  interest
expense of our deposits.  The interest rate cap contracts  qualify as derivative
financial  instruments.  Under an interest rate cap contract, we agree to pay an
initial  fixed amount at the beginning of the contract in exchange for quarterly
payments from the third party when the three-month  LIBOR rate exceeds a certain
fixed level.

At March 31, 2006, we had interest rate cap  contracts on  $14,000,000  notional
amount of  indebtedness.  Interest rate cap contracts  with notional  amounts of
$7,000,000  and  $7,000,000  have cap rates of 6.50%,  and 6.00%,  respectively.
Notional  amount of  $14,000,000  outstanding  contracts  will mature on June 2,
2008. The net gain or loss on the ineffective portion of these interest rate cap
contracts  was not  material for the year ended  December  31, 2005,  or for the
three months ended March 31, 2006.

                                       21


The interest rate cap contracts are considered to be a hedge against  changes in
the amount of future cash flows  associated  with our  interest  expense for our
deposits.  Accordingly,  the interest  rate cap  contracts  are recorded at fair
value in our  consolidated  balance  sheet and the related  unrealized  gains or
losses on these contracts are recorded in shareholders' equity as a component of
other comprehensive  income. These deferred gains and losses are amortized as an
adjustment  to  interest  expense  over the same  period  in which  the  related
interest  payments  being  hedged are  recognized  in  income.  Over the next 12
months,  the bank  expects  to  amortize  $61,000 of the  unrealized  loss as an
adjustment  to  interest  expense.  However,  to the  extent  that  any of these
contracts are not considered to be perfectly  effective in offsetting the change
in the value of the interest  payments  being hedged,  any changes in fair value
relating  to  the  ineffective   portion  of  these  contracts  are  immediately
recognized in income.

FAIR VALUE HEDGES

The bank entered into five interest rate swap  agreements with a third party, to
hedge against  changes in fair value of certain fixed rate loans.  The bank uses
this a means  to offer  fixed  rate  loans to  customers,  while  maintaining  a
variable rate income that that better suits the bank's needs.  Under an interest
rate swap  agreement,  the bank agrees to pay a fixed rate to the counter  party
while receiving a floating rate based on the 1-month LIBOR.

As of March 31,  2006,  we had  interest  rate  swap  agreements  on  $6,617,000
notional amount of indebtedness.  At March 31, 2006, the fair value of the swaps
was an unrealized loss of $56,000.  The  corresponding  fair value adjustment is
included on the balance sheet with the hedged items. The net gain or loss on the
ineffective  portion of these interest rate swap agreements was not material for
the three months ended March 31, 2006.

The interest rate swap  agreements are considered to be a hedge against  changes
in the fair value of certain fixed rate loans. The interest rate swap agreements
are fair value hedges that qualify as  derivative  financial  instruments  under
SFAS No. 133 and are accounted for under the short-cut method. Accordingly,  the
hedges are  recorded  at fair value the  balance  sheet and any  changes in fair
value of the swap is recognized currently in earnings and the offsetting gain or
loss  on the  hedged  assets  attributable  to the  hedged  risk  is  recognized
currently in earnings.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The goal for  managing  our assets and  liabilities  is to maximize  shareholder
value and earnings  while  maintaining  a high  quality  balance  sheet  without
exposing  ourselves to undue  interest  rate risk.  Our Board of  Directors  has
overall  responsibility for our interest rate risk management policies.  We have
an Asset/Liability  Management  Committee (ALCO), which establishes and monitors
guidelines to control the  sensitivity of earnings to changes in interest rates.
The company does not engage in trading  activities to manage interest rate risk,
however,  the Board of Directors has approved,  and the Company  currently uses,
derivatives to manage  interest rate risk.  These  derivatives  are discussed in
Item 7  under  the  caption  "Off-Balance  Sheet  Items"  and in  note 11 to the
consolidated  financial  statements.  Interest rate risk is the most significant
market risks  affecting the Bank.  Management does not believe the Company faces
other  significant  market  risks  such  as  foreign  currency  exchange  risks,
commodity risks, or equity price risks.

ASSET AND LIABILITY MANAGEMENT

Activities involved in asset/liability management include but are not limited to
lending,  accepting and placing  deposits,  investing in securities  and issuing
debt.   Interest  rate  risk  is  the  primary  market  risk   associated   with
asset/liability  management.  Sensitivity  of earnings to interest  rate changes
arises when yields on assets change in a different time period or in a different
amount from that of interest  costs on  liabilities.  To mitigate  interest rate
risk, the structure of the balance sheet is managed with the goal that movements
of interest  rates on assets and  liabilities  are  correlated and contribute to
earnings  even in  periods  of  volatile  interest  rates.  The  asset/liability
management  policy  sets  limits on the  acceptable  amount of  variance  in net
income, net interest income and market value of equity.

The market values of assets or  liabilities  on which the interest rate is fixed
will increase or decrease with changes in market  interest rates. If San Joaquin
Bank invests funds in a fixed rate  long-term  security and then interest  rates
rise, the security is worth less than a comparable  security just issued because
of the lower yield on the original  fixed rate  security.  If the lower yielding

                                       22


security  had to be sold,  San  Joaquin  Bank  would have to  recognize  a loss.
Correspondingly,  if  interest  rates  decline  after a fixed rate  security  is
purchased,  its value  increases.  Therefore,  while the value of the fixed rate
investment  changes  regardless  of which  direction  interest  rates move,  the
adverse  exposure to "market  risk" is primarily due to rising  interest  rates.
This  exposure is  lessened  by managing  the amount of fixed rate assets and by
keeping  maturities  relatively short.  However,  this strategy must be balanced
against the need for adequate  interest income because variable rate and shorter
fixed rate  securities  generally earn less interest than longer term fixed rate
securities.

There  is  market  risk  relating  to San  Joaquin  Bank's  fixed  rate  or term
liabilities  as well as its assets.  For  liabilities,  the adverse  exposure to
market risk is to lower rates  because San Joaquin Bank must continue to pay the
higher rate until the end of the term.

Simulation  of earnings is the primary tool used to measure the  sensitivity  of
earnings to interest rate changes.  Using computer modeling  techniques,  we are
able to estimate the potential impact of changing interest rates on earnings.  A
balance sheet forecast is prepared  using inputs of actual loan,  securities and
interest bearing liabilities (i.e.,  deposits and other borrowings) positions as
the beginning  base. The forecast  balance sheet is processed  against  multiple
interest rate scenarios.  The scenarios  include a 100, 200, and 300 basis point
rising rate  forecast,  a flat rate forecast and a 100, 200, and 300 basis point
falling rate forecast which take place within a one year time frame.  The latest
simulation  forecast  using  December 31, 2005 balances and measuring  against a
flat rate  environment,  calculated  that in a one-year  horizon an  increase in
interest  rates of 100 basis  points  would  result in an  increase  of $576,000
(1.79%) in net interest  income.  Conversely,  a 100 basis point  decrease would
result in a decrease  of  $376,000  (1.17%) in net  interest  income.  The basic
structure  of the  balance  sheet has not  changed  significantly  from the last
simulation run.

The  simulations of earnings do not  incorporate  any  management  actions which
might moderate the negative consequences of interest rate deviations. Therefore,
in Management's  view,  they do not reflect likely actual results,  but serve as
conservative  estimates of interest rate risk.  Our risk profile has not changed
materially from that at year-end 2005.

San  Joaquin  Bank has  adequate  capital  to  absorb  any  potential  losses as
described  above as a result of a decrease  in interest  rates.  Periods of more
than one year are not  estimated  because it is believed that steps can be taken
to mitigate the adverse effects of such interest rate changes.

REPRICING RISK

One  component,  among  others,  of interest rate risk arises from the fact that
when interest  rates  change,  the changes do not occur equally for the rates of
interest  earned and paid because of  differences  in  contractual  terms of the
assets and  liabilities  held.  San Joaquin Bank has a large portion of its loan
portfolio tied to the prime interest rate. If the prime rate is lowered  because
of general market conditions,  e.g., other money-center banks are lowering their
lending  rates,  these loans will be  repriced.  If San Joaquin Bank were at the
same time to have a large  portion  of its  deposits  in  long-term  fixed  rate
certificates, net interest income would decrease immediately. Interest earned on
loans would decline while  interest  expense would remain at higher levels for a
period of time because of the higher rate still being paid on deposits.

A decrease in net interest income could also occur with rising interest rates if
San Joaquin Bank had a large portfolio of fixed rate loans and securities funded
by deposit  accounts  on which the rate is  steadily  rising.  This  exposure to
"repricing   risk"  is  managed  by  matching  the   maturities   and  repricing
opportunities of assets and  liabilities.  This is done by varying the terms and
conditions  of the products that are offered to depositors  and  borrowers.  For
example,  if many depositors want longer-term  certificates while most borrowers
are requesting loans with floating  interest rates, San Joaquin Bank will adjust
the interest rates on the certificates and loans to try to match up demand.  San
Joaquin Bank can then partially fill in mismatches by purchasing securities with
the appropriate maturity or repricing characteristics.

BASIS RISK

Another component of interest rate risk arises from the fact that interest rates
rarely change in a parallel or equal manner.  The interest rates associated with
the various assets and liabilities  differ in how often they change,  the extent
to which  they  change,  and  whether  they  change  sooner or later  than other

                                       23


interest  rates.  For example,  while the  repricing  of a specific  asset and a
specific  liability  may fall in the same period of a gap report,  the  interest
rate on the asset may rise 100 basis  points,  while market  conditions  dictate
that the liability  increases only 50 basis points.  While evenly matched in the
gap  report,  San Joaquin  Bank would  experience  an  increase in net  interest
income. This exposure to "basis risk" is the type of interest risk least able to
be managed, but is also the least dramatic. Avoiding concentration in only a few
types of assets or liabilities  is the best insurance that the average  interest
received and paid will move in tandem,  because the wider  diversification means
that many different rates, each with their own volatility characteristics,  will
come into play.  San Joaquin Bank has made an effort to minimize  concentrations
in certain types of assets and liabilities.


ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The term  "disclosure  controls  and  procedures"  refers  to the  controls  and
procedures of a company that are designed to ensure that information required to
be  disclosed  by a company in the reports  that it files under Rule 13a - 14 of
the  Securities  Exchange  Act of 1934,  as  amended,  (the  "Exchange  Act") is
recorded, processed, summarized and reported within required time periods. As of
March 31, 2006 (the "Evaluation  Date"),  we carried out an evaluation under the
supervision and with the  participation of our Chief Executive Officer and Chief
Financial  Officer  of  the   effectiveness  of  our  disclosure   controls  and
procedures.  Based on that  evaluation,  our Chief  Executive  Officer and Chief
Financial  Officer have concluded that, as of the Evaluation Date, such controls
and  procedures  were  effective in ensuring that required  information  will be
disclosed on a timely basis.

CHANGES IN INTERNAL CONTROLS

The  evaluation  did not  identify  any  change  in our  internal  control  over
financial  reporting that occurred  during the quarter ended March 31, 2006 that
has  materially  affected,  or is reasonably  likely to materially  affect,  our
internal control over financial reporting.

                                       24


                           PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

There  are no  material  pending  legal  proceedings  to  which  the Bank or any
subsidiary is a party or of which any of their  property is subject,  other than
ordinary  routine  litigation  incidental  to the  business  of the  Bank or any
subsidiary.  None of the ordinary  routine  litigation  in which the Bank or any
subsidiary  is involved is expected to have a material  adverse  impact upon the
financial position or results of operations of the Bank or any subsidiary.


ITEM 1A. RISK FACTORS

The risk factors  included in the Bank's Annual Report on Form 10-K for the year
ended  December  31, 2005 have not  materially  changed  other than as set forth
below.  The  information  set forth below should be red in conjunction  with the
risk factors disclosed in that Form 10-K.

OUR  PROPOSAL  TO  CONSUMMATE  A  BANK  HOLDING   COMPANY   REORGANIZATION,   IF
CONSUMMATED,  WOULD CAUSE US TO BECOME A WHOLLY-OWNED  SUBSIDIARY OF SAN JOAQUIN
BANCORP

We have entered into an Agreement and Plan of  Reorganization  dated May 9, 2006
with San Joaquin Bancorp, which is a holding company that is currently inactive.
Consummation of the bank holding company  reorganization  is subject to approval
from  shareholders  at the  2006  Annual  Meeting  of  Shareholders,  regulatory
approvals from the Commissioner of the Department of Financial Institutions, the
FDIC,  the Federal  Reserve,  and other  provisions in the Agreement and Plan of
Reorganization. Assuming consummation of that reorganization, all holders of our
common  stock will  automatically  have their  shares  converted  into shares of
common stock of San Joaquin Bancorp, a California corporation,  on a one for one
basis. It is expected the  reorganization  will be consummated  during 2006, but
there can be no assurance that the reorganization will be consummated.

In  addition  to the other  information  set forth  here and  elsewhere  in this
report, you should carefully consider the factors discussed in Part I, "ITEM 1A.
Risk Factors" in our Annual Report on Form 10-K for the year ended  December 31,
2005, which could materially affect our business,  financial condition or future
results.  The risks described in our Annual Report on Form 10-K are not the only
risks facing our Company. Additional risks and uncertainties not currently known
to us or that we  currently  deem to be  immaterial  also may  arise  or  become
material in the future and materially  adversely affect our business,  financial
condition and/or operating results.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None


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

None


ITEM 5. OTHER INFORMATION

(a) None

                                       25


(b) None


ITEM 6. EXHIBITS

3.2     Amended and Restated Bylaws of the Registrant Dated April 25, 2006.
31.1    Certification of Chief Executive Officer pursuant to Securities Exchange
        Act Rule 13a - 14(a)/ 15d-14(a).
31.2    Certification of Chief Financial Officer pursuant to Securities Exchange
        Act Rule 13a - 14(a)/ 15d-14(a).
32.1    Certification  of Chief Executive  Officer and Chief  Financial  Officer
        pursuant to 18 U.S.C.  1350,  as adopted  pursuant to Section 906 of the
        Sarbanes-Oxley Act of 2002.

                                       26


SIGNATURES

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

May 12, 2006                        SAN JOAQUIN BANK
                                    (Registrant)



                                    By:/s/ Stephen M. Annis
                                       -----------------------------------
                                          Stephen M. Annis
                                          Executive Vice President &
                                          Chief Financial Officer
                                          (Principal Financial and Accounting
                                           Officer)

                                       27


EXHIBIT 31.1

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bart Hill, certify that:

1. I have reviewed this quarterly report for the period ending March 31, 2006 on
   Form 10-Q of San Joaquin Bank;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
   statement of a material  fact or omit to state a material  fact  necessary to
   make the  statements  made,  in light of the  circumstances  under which such
   statements  were made, not  misleading  with respect to the period covered by
   this report;

3. Based  on  my  knowledge,  the  financial  statements,  and  other  financial
   information included in this quarterly report, fairly present in all material
   respects the financial condition, results of operations and cash flows of the
   registrant as of, and for, the periods presented in this report;

4. The  registrant's  other  certifying  officer(s)  and I are  responsible  for
   establishing and maintaining  disclosure  controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed  such  disclosure  controls  and  procedures,  or caused  such
         disclosure   controls  and   procedures   to  be  designed   under  our
         supervision,  to  ensure  that  material  information  relating  to the
         registrant,  including its consolidated subsidiaries,  is made known to
         us by others within those entities,  particularly  during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures  and  presented  in this  report our  conclusions  about the
         effectiveness of the disclosure controls and procedures,  as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed  in this  report  any  change  in the  registrant's  internal
         control over financial  reporting that occurred during the registrant's
         most recent fiscal quarter (the  registrant's  fourth fiscal quarter in
         the case of an  annual  report)  that has  materially  affected,  or is
         reasonably  likely to  materially  affect,  the  registrant's  internal
         control over financial reporting.

5. The registrant's other certifying  officer(s) and I have disclosed,  based on
   our most recent evaluation of internal control over financial  reporting,  to
   the registrant's  auditors and the audit committee of the registrant's  board
   of directors (or persons performing the equivalent functions):

     (a) All significant  deficiencies and material  weaknesses in the design or
         operation  of internal  controls  over  financial  reporting  which are
         reasonably  likely to  adversely  affect  the  registrant's  ability to
         record, process, summarize and report financial information; and

     (b) Any fraud,  whether or not material,  that involves management or other
         employees  who have a  significant  role in the  registrant's  internal
         control over financial reporting.

Date: May 12, 2006



/s/ Bart Hill
- -----------------------
Bart Hill
Chief Executive Officer



EXHIBIT 31.2

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen M. Annis, certify that:

1. I have reviewed this quarterly report for the period ending March 31, 2006 on
   Form 10-Q of San Joaquin Bank;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
   statement of a material  fact or omit to state a material  fact  necessary to
   make the  statements  made,  in light of the  circumstances  under which such
   statements  were made, not  misleading  with respect to the period covered by
   this report;

3. Based  on  my  knowledge,  the  financial  statements,  and  other  financial
   information included in this report,  fairly present in all material respects
   the  financial  condition,  results  of  operations  and  cash  flows  of the
   registrant as of, and for, the periods presented in this report;

4. The  registrant's  other  certifying  officer(s)  and I are  responsible  for
   establishing and maintaining  disclosure  controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed  such  disclosure  controls  and  procedures,  or caused  such
         disclosure   controls  and   procedures   to  be  designed   under  our
         supervision,  to  ensure  that  material  information  relating  to the
         registrant,  including its consolidated subsidiaries,  is made known to
         us by others within those entities,  particularly  during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures  and  presented  in this  report our  conclusions  about the
         effectiveness of the disclosure controls and procedures,  as of the end
         of the period covered by this report based on such evaluation; and

(c)     Disclosed in this report any change in the registrant's internal control
        over financial reporting that occurred during the registrant's most
        recent fiscal quarter (the registrant's fourth fiscal quarter in the
        case of an annual report) that has materially affected, or is reasonably
        likely to materially affect, the registrant's internal control over
        financial reporting.

5. The registrant's other certifying  officer(s) and I have disclosed,  based on
   our most recent evaluation of internal control over financial  reporting,  to
   the registrant's  auditors and the audit committee of the registrant's  board
   of directors (or persons performing the equivalent functions):

     (a) All significant  deficiencies and material  weaknesses in the design or
         operation  of  internal  control  over  financial  reporting  which are
         reasonably  likely to  adversely  affect  the  registrant's  ability to
         record, process, summarize and report financial information; and

     (b) Any fraud,  whether or not material,  that involves management or other
         employees  who have a  significant  role in the  registrant's  internal
         control over financial reporting.

Date: May 12, 2006



/s/ Stephen M. Annis
- ----------------------------------
Stephen M. Annis
Chief Financial Officer




EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection  with the quarterly  report of San Joaquin Bank (the "Company") on
Form 10-Q for the  quarter  ended  March 31,  2006,  as filed  with the  Federal
Deposit Insurance Corporation, each of the undersigned, in the capacities and on
the date indicated below, hereby certifies,  pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The report fully  complies  with the  requirements  of Section 13(a) or
         15(d) of the Securities Exchange Act of 1934;

     (2) The  information  contained  in  the  report  fairly  presents,  in all
         material respects, the financial condition and results of operations of
         the Company.




/s/ Bart Hill
- -----------------------------------
Bart Hill
Chief Executive Officer
(Principal Executive Officer)
May 12, 2006



/s/ Stephen M. Annis
- -----------------------------------
Stephen M. Annis
Chief Financial Officer
(Principal Financial and Accounting Officer)
May 12, 2006

EX-99

                                                                    Exhibit 99.5



================================================================================

                      FEDERAL DEPOSIT INSURANCE CORPORATION
                             Washington, D.C. 20429

                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                          Date of report: July 31, 2006

                        (Date of earliest event reported)

                                SAN JOAQUIN BANK
             (Exact name of registrant as specified in its charter

CALIFORNIA                      23266                          95-3426405
 (State of              (FDIC Certificate Number)             (IRS Employer
incorporation)                                               Identification No.)
                               1301 - 17TH STREET
                          BAKERSFIELD, CALIFORNIA 93301
          (Address of principal executive offices, including zip code)

                                 (661) 281 -0300
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
          (Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
    230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
    240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
    Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
    Act (17 CFR 240.13e-4(c))

================================================================================

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



ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.

On May 9, 2006, San Joaquin Bank, a California state chartered bank (the
"Bank"), San Joaquin Bancorp, a California corporation ("Bancorp") and San
Joaquin Reorganization Corp., a California corporation and wholly- owned
subsidiary of Bancorp ("Reorganization Corp."), entered into an Agreement and
Plan of Reorganization pursuant to which the Bank would reorganize into a bank
holding company form through a merger transaction (the "Merger") in which
Reorganization Corp. would be merged with and into the Bank, with the Bank being
the surviving corporation. Upon consummation of the Merger, the Bank would
become a wholly-owned subsidiary of Bancorp.

At the Bank's Annual Meeting of Shareholders on June 20, 2006, the Merger was
approved by the affirmative vote of a majority of the outstanding shares of the
Bank's common stock. In addition, the Bank and Bancorp received all approvals to
the consummation of the Merger and the reorganization into bank holding company
form from all applicable regulatory authorities.

On July 31, 2006, an Agreement of Merger was filed with the Secretary of State
of the State of California, and the Merger became effective as of the close of
business on July 31, 2006. As a result of the Merger, the Bank has become a
wholly-owned subsidiary of Bancorp. Each shareholder of the Bank received one
share of Bancorp common stock in exchange for each share of Bank common stock
held by such shareholder. The securities issued in connection with the Merger
were issued in reliance upon an exemption from registration with the Securities
Exchange Commission as provided by Section 3(a)(12) of the Securities Act of
1933, as amended, and similar provisions under applicable state law which
provide exemptions from the securities registration or qualification provisions.
In addition, Bancorp assumed all outstanding stock options of the Bank
exercisable into shares of Bank common stock upon consummation of the Merger.
Such stock options continue to have, and be subject to, the same terms and
conditions of such stock options immediately prior to the consummation of the
Merger, except that such options are now exercisable into securities of Bancorp.

The Bank will continue to do business under the name of San Joaquin Bank. The
directors and officers of the Bank following the Merger are the same directors
and officers of the Bank as prior to the Merger.

Attached as Exhibit 99.1 and incorporated herein by reference is a copy of the
press release dated August 1, 2006, with respect to the consummation of the
Merger.

A copy of the Agreement and Plan of Reorganization and Form of Agreement of
Merger were attached as Exhibits 2.2(a) and 2.2(b), respectively, to the Bank's
Current Report on Form 8-K filed with the FDIC on May 9, 2006.

The foregoing description is not a description of all of the material terms of
the Merger. Investors should read the documents that are incorporated by
reference in this Current Report on Form 8-K for a more complete understanding
of the reorganization.

ITEM 5.01  CHANGES IN CONTROL OF REGISTRANT.

The Merger resulted in a change in control of the Bank and its stockholders. The
information with respect to the Merger set forth in Item 2.01 above is
incorporated by reference into this Item 5.01.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(a)      Not applicable.
(b)      Not applicable.
(c)      The following exhibits are included with this Report:
           Exhibit 99.1    Press Release dated August 1, 2006.


This current report on Form 8-K contains forward-looking statements about San
Joaquin Bank for which it claims the protection of the safe harbor provisions
contained in the Private Securities Litigation Reform Act of 1995, including
statements with regard to descriptions of our plans or objectives for future
operations, products or services, and forecasts of our revenues, earnings or
other measures of economic performance. Forward-looking statements can be

                                       1


identified by the fact that they do not relate strictly to historical or current
facts. They often include the words "believe," "expect," "anticipate," "intend,"
"plan," "estimate," or words of similar meaning, or future or conditional verbs
such as "will," "would," "should," "could," or "may."

Forward-looking statements, by their nature, are subject to risks and
uncertainties. A number of factors -- many of which are beyond our control --
could cause actual conditions, events or results to differ significantly from
those described in the forward-looking statements and reported results should
not be considered an indication of our future performance. Some of these risk
factors include, among others, certain credit, market, operational and liquidity
risks associated with our business and operations, changes in business and
economic conditions in California and nationally, rising interest rates,
potential acts of terrorism (which are beyond our control), volatility of rate
sensitive deposits and assets, value of real estate collateral securing many of
our loans, accounting estimates and judgments, compliance costs associated with
the company's internal control structure and procedures for financial reporting.
These risk factors are not exhaustive and additional factors that could have an
adverse effect on our business and financial performance are set forth under
"Risk Factors" and elsewhere in our annual report on Form 10-K for the year
ended December 31, 2005.


Forward-looking statements speak only as of the date they are made. We do not
undertake to update forward-looking statements to reflect circumstances or
events that occur after the date forward-looking statements are made. In
addition, past operating results are not necessarily indicative of the results
to be expected for future periods.

                                       2


                                    SIGNATURE

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



                                                 SAN JOAQUIN BANK


                                                 By: /s/ Stephen M. Annis

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

                                                 Stephen M. Annis
                                                 Executive Vice-President &
                                                 Chief Financial Officer

Date: August 1, 2006


                                       3

EX-99

                                                                    Exhibit 99.7

                      SAN JOAQUIN BANCORP STOCK OPTION PLAN
                                   MAY 1, 1989
                          (Amended September 26, 1989)
                            (Amended March 22, 1994)
                             (Amended July 19, 1994)
                             (Amended May 20, 1997)
                             (Amended July 31, 2006)

      1.    Purpose.
            -------

      The purpose of the San Joaquin Bancorp Stock Option Plan (the "Plan") is
to strengthen San Joaquin Bank (the "Bank"), and those corporations which are or
hereafter become subsidiary corporations of the Bank, by providing to
participating employees and directors added incentive for high levels of
performance and for unusual efforts to increase the earnings of the Bank and its
subsidiary corporations. The Plan seeks to accomplish these purposes and results
by providing a means whereby such employees and directors may purchase shares of
the common stock of San Joaquin Bancorp pursuant to options granted under the
Plan.

      Effective July 31, 2006, San Joaquin Bancorp has assumed sponsorship of
the Plan for the purpose of administering any and all outstanding option awards
under the Plan on a prospective basis.

      2.    Administration.
            --------------

      This Plan shall be administered by the Board of Directors of San Joaquin
Bancorp (the "Board of Directors"). Any action of the Board of Directors with
respect to administration of the Plan shall be taken pursuant to a majority
vote, or to the unanimous written consent, of its members.

      Subject to the express provisions of the Plan, the Board of Directors
shall have the authority to construe and interpret the Plan and to define the
terms used therein, to prescribe, amend, and rescind rules and regulations
relating to administration of the Plan, to determine the duration and purposes
of leaves of absence which may be granted to participants without constituting a
termination of their employment for purposes of the Plan, and to make all other
determinations necessary or advisable for administration of the Plan.
Determinations of the Board of Directors on matters referred to in this
paragraph shall be final and conclusive.

      3.    Participation.
            -------------

      All full-time, salaried officers and employees of the Bank and its
subsidiary corporations (the "Employees") and all members of the Board of
Directors of the Bank or a subsidiary corporation of the Bank (the "Directors")
shall be eligible for selection to participate in the Plan. Employees of the
Bank (including Directors who are Employees) will be granted "Incentive Stock
Options." Directors of the Bank or of a subsidiary corporation, who are not
Employees of the Bank or of a subsidiary corporation (the "Non-Employee
Directors"), will be granted Non-Qualified Options under the Plan. Subject to
the express provisions of the Plan, the Board of Directors shall select
individuals from the eligible class to whom stock option agreements shall be
granted and shall determine the terms and provisions of the respective stock



                                                                    Exhibit 99.7

option agreements (which need not be identical), the times at which such options
shall be granted, and the number of shares subject to each option. An individual
who has been granted an option may, if otherwise eligible, be granted additional
options if the Board of Directors shall so determine.

      (a)   Except as otherwise provided in the Plan, each option shall be
exercisable on each of the first, second, third, fourth and fifth anniversary
dates after the date of the grant as to twenty percent (20%) of the shares
subject to the grant.

      (b)   Subject to earlier termination as provided elsewhere in the Plan,
each option, and all rights or obligations thereunder, by its terms shall expire
not less than five (5) years nor more than ten (10) years from the date the
option was granted.

      (c)   Options granted to Non-Employee Directors shall not exceed in any
calendar year an option to buy more than five hundred (500) shares of San
Joaquin Bancorp's stock.


      4.    Stock Subject to the Plan.
            -------------------------

      Subject to adjustment as provided in paragraph "13" hereof, the stock to
be offered under the Plan shall be shares of the San Joaquin Bancorp's
authorized but unissued common stock (hereafter called "stock"), and the
aggregate amount of stock to be delivered upon exercise of all options granted
under the Plan shall not exceed 463,000 shares. All shares of stock reserved for
issuance under the Plan are available for grants of Incentive Stock Options. If
any option shall expire for any reason without having been exercised in full,
the unpurchased shares subject thereto shall again be available for purposes of
the Plan.

      To the extent required by Section 260.140.45 of Title 10 of the California
Code of Regulations, the total number of shares of stock issuable upon exercise
of all outstanding options granted under this Plan or under any other
outstanding options or warrants issued by San Joaquin Bancorp and the total
number of shares of stock provided for under any stock bonus or similar plan of
San Joaquin Bancorp shall not exceed the applicable percentage as calculated in
accordance with the conditions and exclusions of Section 260.140.45 of Title 10
of the California Code of Regulations, based on the securities of San Joaquin
Bancorp that are outstanding at the time the calculation is made.


       5.   Option Price.
            ------------

      The purchase price of stock subject to each option shall be determined by
the Board of Directors, but shall not be less than one hundred percent (100%) of
the fair market value of such stock at the time such option is granted. The fair
market value of such stock shall be determined in accordance with any reasonable
valuation method, including the valuation methods described in Treasury
Regulation Section 20.2031-2. The purchase price of any shares purchased shall
be paid in full in cash at the time of each purchase.

       6.   Option Period.
            -------------

      Each option and all rights or obligations thereunder shall expire on such



                                                                    Exhibit 99.7

date as the Board of Directors may determine, but not later than ten (10) years
from the date of grant, and shall be subject to earlier termination as provided
elsewhere in the Plan.

       7.   Continuation of Employment.
            --------------------------

      Nothing contained in the Plan (or in any stock option agreement) shall
obligate the Bank, San Joaquin Bancorp or any subsidiary corporation to employ
any option holder ("optionee") for any period, or interfere in any way with the
right of the Bank, San Joaquin Bancorp or any subsidiary corporation to reduce
optionee's compensation or assure any optionee of remaining on the Bank's, San
Joaquin Bancorp's or any subsidiary corporation's Board of Directors.

       8.   Exercise of Options.
            -------------------

      Each option shall be exercisable in such installments, which need not be
equal, and upon such contingencies as the Board of Directors shall determine. No
option or installment thereof shall be exercisable except in respect of whole
shares, and fractional share interests shall be disregarded except that they may
be accumulated. In any given installment period, if an optionee does not
purchase all the shares which the optionee is entitled to purchase in such
installment period or a fractional share interest remains, the optionee's right
to purchase the remaining shares or fractional shares shall continue until
expiration of such option.

      Not less than ten (10) shares may be purchased at one time unless the
number purchased is the total number which may be purchased under the option.

       9.   Nontransferability of Options.
            -----------------------------

      Each option shall, by its terms, be nontransferable by the optionee other
than by will or the laws of descent and distribution, and during the optionee's
lifetime shall be exercisable only by the optionee.

       10.  Cessation of Employment.
            -----------------------

      Except as provided in paragraphs "6" and "11" hereof, if an optionee who
is an Employee ceases to be employed by the Bank or a subsidiary corporation (or
in the case of a Non-Employee Director, such person ceases to be a Director of
the Bank or a subsidiary corporation), for any reason other than his or her
death or disability, the optionee's option shall expire not later than thirty
(30) days thereafter. During the thirty-day period, such option shall be
exercisable only as to those installments, if any, which accrued as of the date
on which the optionee ceased to be employed by the Bank or such subsidiary
corporation or ceased to be a Director of the Bank or subsidiary corporation. In
the event of the termination of the employment of an Employee of the Bank or
subsidiary corporation who shall remain on the Board of Directors of the Bank or
a subsidiary corporation, such person's option shall continue in force in the
same manner as options for other Directors, even as to shares in excess of those
which could originally have been issued to a Non-Employee Director, but any new
options granted to such person shall comply with the limits on options granted
to Directors.



                                                                    Exhibit 99.7

       11.  Termination of Employment for Cause.
            -----------------------------------

      If an optionee's employment by the Bank or a subsidiary corporation is
terminated for cause (or in the case of a Non-Employee Director, such optionee
is removed as a Director for cause), his or her option shall expire immediately.
However, the Board of Directors may, in its sole discretion, within thirty (30)
days of such termination, reinstate the option by giving written notice of such
reinstatement to the optionee at his or her last known address. In the event of
such reinstatement, the optionee may exercise the option only to such extent,
for such time, and upon such terms and conditions, as if he or she had ceased to
be employed by the Bank or such subsidiary corporation (or ceased to be a
Director, as the case may be), upon the date of such termination for a reason
other than cause or death. Termination for cause shall include termination for
malfeasance or gross malfeasance or gross misfeasance in the performance of
duties or conviction of illegal activity in connection therewith or any
significant conduct detrimental to the interests of the Bank or a subsidiary
corporation; and in any event, the determination of the Board of Directors with
respect thereto shall be final and conclusive.

       12.  Death or Disability of Optionee.
            -------------------------------

      Except as provided in paragraph "6" hereof, if any optionee dies or
becomes disabled while employed by the Bank or a subsidiary corporation (or
while acting as a Director), or during the thirty-day period referred to in
paragraph "10"hereof, his or her option shall expire one (1) year after the date
of such death or disability. After such death but before such expiration, the
persons to whom the optionee rights under the option shall have passed by will
or by the applicable laws of descent and distribution shall have the right TO
exercise such option to the extent that installments, if any, had accrued as of
the date on which the optionee ceased to be employed by the Bank or such
subsidiary corporation (or ceased to be a Director).

       13.  Adjustments Upon Changes in Capitalization.
            ------------------------------------------

      If the outstanding shares of the stock of San Joaquin Bancorp are
increased, decreased, changed into, or exchanged for a different number or kind
of shares or securities of San Joaquin Bancorp, without receipt of consideration
by San Joaquin Bancorp, through reorganization, merger, recapitalization,
reclassification, stock split-up, stock dividend, stock consolidation, or
otherwise, an appropriate and proportionate adjustment shall be made in the
number and kind of shares as to which options may be granted. A corresponding
adjustment changing the number or kind of shares and the exercise price per
share allocated to unexercised options, or portions thereof, which shall have
been granted prior to any such change shall be made. Any such adjustment,
however, in an outstanding option, shall be made without change in the total
price applicable to the unexercised portion of the option, but with a
corresponding adjustment in the price for each share subject to the option.
Adjustments under this paragraph shall be made by the Board of Directors, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final and conclusive. No fractional shares of stock shall be issued
under the Plan on account of any such adjustment.

       14.  Terminating Events.
            ------------------

      Not less than thirty (30) days prior to dissolution or liquidation of the
Bank, or a reorganization, merger, or consolidation of the Bank with one or more



                                                                    Exhibit 99.7

corporations, as a result of which the Bank will not be the surviving
corporation, or a sale of substantially all the assets and property of the Bank
to another person, or in the event of any other transaction involving the Bank
where there is a change in ownership of at least twenty-five percent (25%),
except as may result from a transfer of shares to another corporation in
exchange for at least eighty percent (80%) control of that corporation (a
"Terminating Event"),the Board of Directors shall notify each optionee of the
pendency of the Terminating Event. Upon delivery of said notice, any option
granted prior to the Terminating Event shall be, notwithstanding the provisions
of paragraph "8"hereof, exercisable in full and not only as to those shares with
respect to which installments, if any, have then accrued, subject, however, to
earlier expiration or termination as provided elsewhere in the Plan. Upon the
date thirty (30) days after delivery of said notice, any option or portion
thereof not exercised shall terminate; and upon the happening of the Terminating
Event the Plan shall terminate, unless provision be made in connection with the
Terminating Event for assumption of options theretofore granted, or substitution
for such options of new options covering stock of a successor employer
corporation, or a parent or subsidiary corporation thereof, solely at the option
of such successor corporation or parent or subsidiary corporation, with
appropriate adjustments as to number and kind of shares and prices.

       15.  Amendment and Termination by Board of Directors.
            -----------------------------------------------

      The Board of Directors may at any time suspend, amend, or terminate the
Plan and may, with the consent of the optionee, make such modification of the
terms and conditions of his or her option as it shall deem advisable; provided
that, except as permitted under the provisions of paragraph "13" hereof, any
amendment or modification which would:

      (a)   increase the maximum number of shares which may be purchased
pursuant to options granted under the Plan, either in the aggregate or by an
individual;

       (b)  change the minimum option price;

       (c)  increase the maximum term of options provided for herein; or

      (d)   permit options to be granted to anyone other than a full-time,
salaried officer or employee of the Bank or a subsidiary corporation, or a
Director of the Bank or a subsidiary corporation;

shall be deemed adopted and shall be effective on the date specified by action
of the Board of Directors, subject to approval thereof by shareholders of San
Joaquin Bancorp holding not less than a majority of the voting power of San
Joaquin Bancorp voting in person or by proxy at a duly held stockholders'
meeting, and subject to approval thereof of a majority of the "disinterested"
shareholders voting in person or by proxy at a duly held stockholders' meeting
at which a quorum of "disinterested" shareholders is present or represented by
proxy. Shareholder approval may be made retroactive.

      The Board of Directors may grant to an optionee, if he or she is otherwise
eligible, additional options or, with the consent of the optionee, may grant a
new option in lieu of an outstanding option for a number of shares, at a
purchase price and for a term which is greater or less than that of the earlier
option, subject to the limitations of paragraphs "5" and "6" hereof.



                                                                    Exhibit 99.7

      No option may be granted during any suspension of the Plan or after the
Plan's termination. Amendment, suspension, or termination of the Plan shall not,
without the consent of the optionee, alter or impair any rights or obligations
under any option theretofore granted, except as provided in paragraph "13"
hereof.

       16.  Time of Granting Options.
            ------------------------

      The time an option is granted, sometimes referred to as the date of grant,
shall be the day of the action of the Board of Directors; provided that, if
appropriate resolutions of the Board of Directors indicate that an option is to
be granted as of a future date, the time such option is granted shall be such
future date. If action by the Board of Directors is taken by unanimous written
consent of its members, the action of the Board of Directors shall be deemed to
be at the time the last Board member signs the consent.

       17.  Privileges of Stock Ownership; Securities Law Compliance; Notice of
            Sale.
            --------------------------------------------------------------------

      No optionee shall be entitled to the privileges of stock ownership as to
any shares of stock not actually issued and delivered. No shares shall be
purchased upon the exercise of any option unless and until any then applicable
requirements of any regulatory agencies having jurisdiction, and of any
exchanges upon which stock of San Joaquin Bancorp may be listed, shall have been
fully complied with. San Joaquin Bancorp will diligently endeavor to comply with
all applicable securities laws before any options are granted under the Plan and
before any stock is issued pursuant to options. The optionee shall give San
Joaquin Bancorp notice of any sale or other disposition of any such shares not
more than five (5) days after such sale or disposition.

       18.  Effective Date of the Plan.
            --------------------------

      The Plan shall be deemed adopted as of the date first shown herein and
shall be effective immediately, subject to approval hereof by shareholders of
the Bank holding not less than a majority of the voting power of the Bank voting
in person or by proxy at a duly held stockholder's meeting, and subject to
approval hereof by a majority of the "disinterested" shareholders voting in
person or by proxy at a duly held stockholders' meeting at which a quorum of
"disinterested" shareholders is present or represented by proxy.

      19.   Termination.
            -----------

      The Plan terminated at the close of business on May 1, 1999, and no
options shall be granted under the Plan thereafter, but such termination shall
not affect any option theretofore granted.

      20.   Option Agreement.
            ----------------

      Each option shall be evidenced by a written stock option agreement, and
shall contain each of the provisions and agreements herein specifically required
to be contained therein, and such other terms and conditions as are deemed
desirable and are not inconsistent with the Plan.



                                                                    Exhibit 99.7

      21.   Exculpation and Indemnification.
            -------------------------------

      San Joaquin Bancorp shall indemnify members of the Board of Directors, and
of the Bank's board of directors, in any action brought against any such member
or members to the maximum extent permitted by the applicable law.

      22.   Incentive and Non-Qualified Options.
            -----------------------------------

      Notwithstanding anything to the contrary herein set forth, the following
provisions shall be applicable to this Plan:

      (a)   All full-time, salaried officers and employees of the Bank and its
subsidiary corporations, Employee Directors and Non-Employee Directors of the
Bank and its subsidiary corporations are eligible to participate in the Plan,
and Employees and Employee Directors are eligible to receive Incentive and
Non-Qualified Options. Non-Employee Directors are only eligible to receive
Non-Qualified Options. However, no person shall be eligible for a grant of
options if, at the time of grant, such person owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
San Joaquin Bancorp or any of its subsidiaries. Incentive stock options may be
issued provided the aggregate fair market value (determined at the time the
incentive stock option is granted) of the stock with respect to which incentive
stock options are exercisable for the first time by the optionee during any
calendar year (under all incentive stock option plans of the Bank) shall not
exceed One Hundred Thousand Dollars ($100,000.00). Should it be determined that
any incentive stock option granted pursuant to the Plan exceeds such maximum,
such incentive stock option shall be considered to be a non-qualified option and
not to qualify for treatment as an incentive stock option under Section 422 of
the Internal Revenue Code of 1986, as amended, to the extent, but only to the
extent, of such excess.

       (b)  All options must be granted within ten (10) years from the date such
Plan was originally adopted by the Board of Directors of the Bank or approved by
the shareholders of the Bank, whichever is earlier;

       (c)  No option granted pursuant to the Plan is exercisable after the
expiration of ten (10) years from the date such option is granted;

       (d)  All options granted prior to March 22, 1994 are intended to be
Incentive Options. All options granted on or after March 22, 1994 shall be
clearly labeled "Incentive Options" or "Non-Incentive Options".

      (e)   In no event shall the option price under any option be less than the
fair market value of the stock at the time the option is granted;

      (f)   Such options are not transferable by any individual, otherwise than
by will or by the laws of descent and distribution, and are exercisable during
the lifetime of the optionee, and only by the optionee;

      (g)   No option shall be granted to an Employee or Director at a time when
the Employee or Director possesses more than ten percent (10%) of the total



                                                                    Exhibit 99.7

combined voting power of all classes of stock of the Bank;

      (h)   The aggregate fair market value (determined as of the time the
options are granted) of the stock for which any Employee or Director may be
granted options in any calendar year shall not exceed One Hundred Thousand
Dollars ($100,000.00) plus any unused limit carryover to such year; and

      (i)   In the case of all options granted as "Incentive Options," the
provisions of this paragraph and of all other provisions of the Plan shall be
interpreted in a manner consistent with the provisions of Section 422 of the
Internal Revenue Code of 1986, as amended, in order that such options shall
constitute Incentive Stock Options as defined in that Section and the
regulations thereunder. San Joaquin Bancorp shall keep accurate records of the
numbers of Incentive Options and Non-Qualified Options issued under this Plan
and at any time outstanding under the Plan.

EX-99

                               SAN JOAQUIN BANCORP
                            1999 STOCK INCENTIVE PLAN





                                                                    Exhibit 99.8

                  SAN JOAQUIN BANCORP 1999 STOCK INCENTIVE PLAN


ARTICLE 1   .  INTRODUCTION
               ------------

      The name of the Plan is the "San Joaquin Bancorp 1999 Stock Incentive
Plan," and the Plan hereby amends and restates the San Joaquin Bank 1999 Stock
Incentive Plan in its entirety.

      The purpose of the Plan is to promote the long-term success of the Company
and the creation of shareholder value by (a) encouraging Key Employees to focus
on critical long-range objectives, (b) encouraging the attraction and retention
of Key Employees with exceptional qualifications and (c) linking Key Employees
directly to shareholder interests through increased stock ownership. The Plan
seeks to achieve this purpose by providing for Awards in the form of Options
(which may constitute incentive stock options or nonstatutory stock options) and
Restricted Shares.

      The Plan shall be governed by, and construed in accordance with, the laws
of the State of California (except their choice-of-law provisions).

ARTICLE 2   .  ADMINISTRATION
               --------------

      2.1 COMMITTEE COMPOSITION. The Plan shall be administered by a Committee
appointed by the Board; if the Board does not appoint a Committee, the Board
shall act as the Committee. The Committee shall consist of two or more directors
of the Company who shall satisfy the requirements of Rule 16b-3 (or its
successor) under the Exchange Act with respect to the grant of Awards to persons
who are officers or directors under Section 16 of the Exchange Act. The Board
may also appoint one or more separate committees of the Board, each composed of
one or more directors of the Company who need not qualify under Rule 16b-3, who
may administer the Plan with respect to Key Employees who are not considered
officers or directors under Section 16 of the Exchange Act, may grant Awards
under the Plan to such Key Employees and may determine all terms of such Awards.

      2.2 COMMITTEE RESPONSIBILITIES. The Committee shall:
          --------------------------

          (a)    select the Key Employees who are to receive Awards under the
      Plan;

          (b)    determine the type, number, vesting requirements and other
      features and conditions of such Awards;

          (c)

                 interpret the Plan; and

          (d)    make all other decisions relating to the operation of the Plan.

      The Committee may adopt such rules or guidelines as it deems appropriate
to implement the Plan. The Committee's determinations under the Plan shall be
final and binding on all persons.



                                                                    Exhibit 99.8

ARTICLE 3   .  SHARES AVAILABLE FOR GRANTS
               ---------------------------

      3.1 BASIC LIMITATION. Common Shares issued pursuant to the Plan shall be
authorized but unissued shares or treasury shares of the Company. The aggregate
number of Common Shares reserved under the Plan for award as Options and
Restricted Shares shall be limited to 600,000 Common Shares, and all such Common
Shares are available for award as ISOs. The limitation of this Section 3.1 shall
be subject to adjustment pursuant to Article 9.

      To the extent required by Section 260.140.45 of Title 10 of the California
Code of Regulations, the total number of Common Shares issuable upon exercise of
all outstanding Options and awards of Restricted Shares granted under the Plan
or under any other outstanding options or warrants issued by the Company and the
total number of Common Shares provided for under any stock bonus or similar plan
of the Company shall not exceed the applicable percentage as calculated in
accordance with the conditions and exclusions of Section 260.140.45 of Title 10
of the California Code of Regulations, based on the securities of the Company
that are outstanding at the time the calculation is made.

      3.2 ADDITIONAL SHARES. If Options are forfeited or if Options terminate
for any other reason before being exercised, then such Options shall again
become available for Awards under the Plan. If Restricted Shares are forfeited
before any dividends have been paid with respect to such Restricted Shares, then
such Restricted Shares shall again become available for Awards under the Plan.

ARTICLE 4   .  ELIGIBILITY
               -----------

      4.1 GENERAL RULES. Only Key Employees (including, without limitation,
independent contractors who are not members of the Board) shall be eligible for
designation as Participants by the Committee.

      4.2 INCENTIVE STOCK OPTIONS. Only Key Employees who are common-law
employees of the Company, a Parent or a Subsidiary shall be eligible for the
grant of ISOs. In addition, a Key Employee who owns more than ten percent (10%)
of the total combined voting power of all classes of outstanding stock of the
Company or any of its Parents or Subsidiaries shall not be eligible for the
grant of an ISO unless the requirements set forth in Section 422(c)(5) of the
Code are satisfied.

      4.3 LIMITS ON OPTIONS. Subject to adjustment under Article 9, no Key
Employee shall receive Options to purchase Common Shares during any calendar
year covering in excess of 25,000 Common Shares; provided, however, a newly
hired Key Employee may receive Options to purchase up to 50,000 Common Shares
during the portion of the calendar year remaining after his or her date of hire.

ARTICLE 5   .  OPTIONS
               -------

      5.1 STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms of the Plan and may be

                                       2


                                                                    Exhibit 99.8

subject to any other terms that are not inconsistent with the Plan. The Stock
Option Agreement shall specify whether the Option is an ISO or an NSO. The
provisions of the various Stock Option Agreements entered into under the Plan
need not be identical. A Stock Option Agreement may provide that new Options
will be granted automatically to the Optionee when he or she exercises the prior
Options.

      5.2 NUMBER OF SHARES. Each Stock Option Agreement shall specify the number
of Common Shares subject to the Option and shall provide for the adjustment of
such number in accordance with Article 9.

      5.3 EXERCISE PRICE. Each Stock Option Agreement shall specify the Exercise
Price; provided that the Exercise Price under an ISO shall in no event be less
than one-hundred percent (100%) of the Fair Market Value of a Common Share on
the date of grant. To the extent required by applicable law, the Exercise Price
will not be less than 85% of the Fair Market Value of a Common Share on the date
of grant, provided, however, the Exercise Price will not be less than 110% of
the Fair Market Value of a Common Share on the date of grant if the Option is
awarded to a Key Employee who owns more than ten percent (10%) of the total
combined voting power of all classes of outstanding stock of the Company or any
of its Parents or Subsidiaries.

      5.4 EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify the
date when all or any installment of the Option is to become exercisable. To the
extent required by applicable law, Options shall vest at least as rapidly as 20%
annually over a five-year period. The Stock Option Agreement shall also specify
the term of the Option; provided that the term of an ISO, and to the extent
required by applicable law a NSO, shall in no event exceed ten (10) years from
the date of grant. To the extent required by applicable law, Options shall be
exercisable for a minimum period of six months following termination of
employment due to death or disability and 30 days following termination of
employment for all other reasons. A Stock Option Agreement may provide for
accelerated exercisability in the event of the Optionee's death, disability or
retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionee's service. NSOs may
also be awarded in combination with Restricted Shares, and such an Award may
provide that the NSOs will not be exercisable unless the related Restricted
Shares are forfeited.

      5.5 EFFECT OF CHANGE IN CONTROL. Subject to the terms of any employment or
other agreement, the Committee may determine, at the time of granting an Option
or thereafter, that such Option shall become fully exercisable as to all Common
Shares subject to such Option in the event that a Change in Control occurs with
respect to the Company. If the Committee finds that there is a reasonable
possibility that, within the succeeding six months, a Change in Control will
occur with respect to the Company, then the Committee at its sole discretion may
determine that any or all outstanding Options shall become fully exercisable as
to all Common Shares subject to such Options.

      5.6 MODIFICATION OR ASSUMPTION OF OPTIONS. Within the limitations of the
Plan, the Committee may modify, extend or assume outstanding options or may
accept the cancellation of outstanding options (whether granted by the Company
or by another issuer) in return for the grant of new options for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Option shall, without the


                                       3


consent of the Optionee, alter or impair his or her rights or obligations under
such Option.

ARTICLE 6   .  PAYMENT FOR OPTION SHARES
               -------------------------

      6.1    GENERAL RULE. The entire Exercise Price of Common Shares issued
upon exercise of Options shall be payable in cash at the time when such Common
Shares are purchased, except as follows:

             (a) In the case of an ISO granted under the Plan, payment shall be
      made only pursuant to the express provisions of the applicable Stock
      Option Agreement. The Stock Option Agreement may specify that payment may
      be made in any form(s) described in this Article 6.

             (b) In the case of an NSO, the Committee may at any time accept
      payment in any form(s) described in this Article 6.

      6.2 SURRENDER OF STOCK. To the extent that this Section 6.2 is applicable,
payment for all or any part of the Exercise Price may be made with Common Shares
which have already been owned by the Optionee for such duration as shall be
specified by the Committee. Such Common Shares shall be valued at their Fair
Market Value on the date when the new Common Shares are purchased under the
Plan.

      6.3 EXERCISE/SALE. To the extent that this Section 6.3 is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to a securities broker approved by the Company to sell
Common Shares and to deliver all or part of the sales proceeds to the Company in
payment of all or part of the Exercise Price and any withholding taxes.

      6.4 OTHER FORMS OF PAYMENT. To the extent that this Section 6.4 is
applicable, payment may be made in my other form that is consistent with
applicable laws, regulations and rules.

ARTICLE 7     RESTRICTED SHARES
              -----------------

      7.1 TIME, AMOUNT AND FORM OF AWARDS. Awards under the Plan may be granted
in the form of Restricted Shares. Restricted Shares may also be awarded in
combination with NSOs, and such an Award may provide that the Restricted Shares
will be forfeited in the event that the related NSOs are exercised.

      7.2 PAYMENT FOR AWARDS. No cash consideration shall be required of the
recipients of Awards under this Article 7.

      7.3 VESTING CONDITIONS. Each Award of Restricted Shares shall become
vested, in full or in installments, upon satisfaction of the conditions
specified in the Stock Award Agreement. A Stock Award Agreement may provide for
accelerated vesting in the event of the Participant's death, disability or
retirement or other events. The Committee may determine, at the time of making
an Award or thereafter, that such Award shall become fully vested in the event
that a Change in Control occurs with respect to the Company.


                                       4



ARTICLE 8   .  VOTING AND DIVIDEND RIGHTS

      The holders of Restricted Shares awarded under the Plan shall have the
same voting, dividend and other rights as the Company's other shareholders. A
Stock Award Agreement, however, may require that the holders of Restricted
Shares invest any cash dividends received in additional Restricted Shares. Such
additional Restricted Shares shall be subject to the same conditions and
restrictions as the Award with respect to which the dividends were paid. Such
additional Restricted Shares shall not reduce the number of Common Shares
available under Article 3.



ARTICLE 9   .  PROTECTION AGAINST DILUTION
               ---------------------------

      9.1 ADJUSTMENTS. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend payable in a form other than Common Shares in an amount that has a
material effect on the price of Common Shares, a combination or consolidation of
the outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization, a spin-off or a similar occurrence,
the Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of:

             (a) the number of Options and Restricted Shares available for
      future Awards under Article 3, and Sections 4.3 and 16.2;

             (b) the number of Common Shares covered by each outstanding Option;
      or

             (c) the Exercise Price under each outstanding Option.

Except as provided in this Article 9, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.

      9.2 REORGANIZATIONS. In the event that the Company is a party to a merger
or other reorganization, outstanding Awards shall be subject to the agreement of
merger or reorganization. Such agreement may provide, without limitation, for
the assumption of outstanding Awards by the surviving corporation or its parent,
for their continuation by the Company (if the Company is a surviving
corporation), for accelerated vesting and accelerated expiration, or for
settlement in cash.

ARTICLE 10  .  AWARDS UNDER OTHER PLANS
               ------------------------

      The Company may grant awards under other plans or programs. Such awards
may be settled in the form of Common Shares issued under this Plan. Such Common
Shares shall be treated for all purposes as issued under the Plan and, when
issued, shall reduce the number of Common Shares available under Article 3.

                                       5




ARTICLE 11  .  LIMITATION ON RIGHTS
               --------------------

      11.1 RETENTION RIGHTS. Neither the Plan nor any Award granted under the
Plan shall be deemed to give any individual a right to remain an employee,
consultant or director of the Company, a Parent, a Subsidiary or an Affiliate.
The Company and its Parents and Subsidiaries reserve the right to terminate the
service of any employee, consultant or director at any time, and for any reason,
subject to applicable laws, the Company's certificate of incorporation and
by-laws and a written employment agreement (if any).

      11.2 SHAREHOLDERS' RIGHTS. A Participant shall have no dividend rights,
voting rights or other rights as a shareholder with respect to any Common Shares
covered by his or her Award prior to the issuance of a stock certificate for
such Common Shares. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date when such certificate is
issued, except as expressly provided in Articles 7, 8, and 9.

      11.3 REGULATORY REQUIREMENTS. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Award prior to the satisfaction of all legal requirements relating to the
issuance of such Common Shares, to their registration, qualification or listing
or to an exemption from registration, qualification or listing.

ARTICLE 12  .  LIMITATION ON PAYMENTS
               ----------------------

      12.1 BASIC RULE. Subject to any employment or other agreement, any
provision of the Plan to the contrary notwithstanding, in the event that the
independent auditors most recently selected by the Board (the "Auditors")
determine that any payment or transfer by the Company to or for the benefit of a
Participant, whether paid or payable (or transferred or transferable) pursuant
to the terms of this Plan or otherwise (a "Payment"),would be nondeductible by
the Company for federal income tax purposes because of the provisions concerning
"excess parachute payments" in Section 280G of the Code, then the aggregate
present value of all Payments shall be reduced (but not below zero) to the
Reduced Amount; provided that the Committee, at the time of making an Award
under this Plan or at any time thereafter, may specify in writing that such
Award shall not be so reduced and shall not be subject to this Article 12. For
purposes of this Article 12, the "Reduced Amount" shall be the amount, expressed
as a present value, which maximizes the aggregate present value of the Payments
without causing any Payment to be nondeductible by the Company because of
Section 280G of the Code.

      12.2 REDUCTION OF PAYMENTS. If the Auditors determine that any Payment
would be nondeductible by the Company because of Section 280G of the Code, then
the Company shall promptly give the Participant notice to that effect and a copy
of the detailed calculation thereof and of the Reduced Amount, and the
Participant may then elect, in his or her sole discretion, which and how much of
the Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise the Company in writing of his or her election within ten (10) days of
receipt of notice. If no such election is made by the Participant within such
ten (10)-day period, then the Company may elect which and how much of the
Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall

                                       6


notify the Participant promptly of such election. For purposes of this Article
12, present value shall be determined in accordance with Section 280G(d)(4) of
the Code. All determinations made by the Auditors under this Article 12 shall be
binding upon the Company and the Participant and shall be made within sixty (60)
days of the date when a Payment becomes payable or transferable. As promptly as
practicable following such determination and the elections hereunder, the
Company shall pay or transfer to or for the benefit of the Participant such
amounts as are then due to him or her under the Plan and shall promptly pay or
transfer to or for the benefit of the Participant in the future such amounts as
become due to him or her under the Plan.

      12.3 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of Section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company which should not have been made (an "Overpayment") or that
additional Payments which will not have been made by the Company could have been
made (an "Underpayment"), consistent in each case with the calculation of the
Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Participant which the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company, together with interest at the applicable federal rate provided in
Section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Participant to the Company if and to the extent that such payment
would not reduce the amount which is subject to taxation under Section 4999 of
the Code. In the event that the Auditors determine that an Underpayment has
occurred, such Underpayment shall promptly be paid or transferred by the Company
to or for the benefit of the Participant, together with interest at the
applicable federal rate provided in Section 7872(f)(2) of the Code.

      12.4 RELATED CORPORATIONS. For purposes of this Article 12, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with Section 280G(d)(5) of the Code.

ARTICLE 13  .  WITHHOLDING TAXES
               -----------------

      13.1 GENERAL. To the extent required by applicable federal, state, local
or foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.

      13.2 SHARE WITHHOLDING. The Committee may permit a Participant to satisfy
all or part of his or her withholding or income tax obligations by having the
Company withhold all or a portion of any Common Shares that otherwise would be
issued to him or her or by surrendering all or a portion of any Common Shares
that he or she previously acquired. Such Common Shares shall be valued at their
Fair Market Value on the date when taxes otherwise would be withheld in cash.
Any payment of taxes by assigning Common Shares to the Company may be subject to

                                       7


restrictions, including any restrictions required by rules of the Securities and
Exchange Commission.

ARTICLE 14  .  ASSIGNMENT OR TRANSFER OF AWARDS
               --------------------------------

      14.1 GENERAL. Except as provided in Article 13, or in a Stock Option
Agreement, or as required by applicable law, an Award granted under the Plan
shall not be anticipated, assigned, attached, garnished, optioned, transferred
or made subject to any creditor's process, whether voluntarily, involuntary or
by operation of law. An Option may be exercised during the lifetime of the
Optionee only by him or her or by his or her guardian or legal representative.
Any act in violation of this Article 14 shall be void. However, this Article 14
shall not preclude a Participant from designating a beneficiary (in the form and
manner prescribed by the Committee) who will receive any outstanding Awards in
the event of the Participant's death, nor shall it preclude a transfer of Awards
by will or by the laws of descent and distribution. Any beneficiary designation
which does not comply with the terms of the Plan or the procedures adopted by
the Committee shall not be enforceable.

      14.2 TRUSTS. Neither this Article 14 nor any other provision of the Plan
shall preclude a Participant from transferring or assigning Restricted Shares to
(a) the trustee of a trust that is revocable by such Participant alone, both at
the time of the transfer or assignment and at all times thereafter prior to such
Participant's death, or (b) the trustee of any other trust to the extent
approved in advance by the Committee in writing. A transfer or assignment of
Restricted Shares from such trustee to any person other than such Participant
shall be permitted only to the extent approved in advance by the Committee in
writing, and Restricted Shares held by such trustee shall be subject to all of
the conditions and restrictions set forth in the Plan and in the applicable
Stock Award Agreement, as if such trustee were a party to such agreement.

ARTICLE 15  .  FUTURE OF THE PLAN
               ------------------

      15.1 TERM OF THE PLAN. The Plan (formerly named the San Joaquin Bank 1999
Stock Incentive Plan) was originally effective June 1, 1999, and is hereby
amended and restated as of July 31, 2006, subject to approval by the Company's
shareholders. The Plan shall terminate on May 31, 2009, unless otherwise
terminated earlier under Section 15.2.

      15.2 AMENDMENT OR TERMINATION. The Board may, at any time and for any
reason, amend or terminate the Plan. An amendment of the Plan shall be subject
to the approval of the Company's shareholders only to the extent required by
applicable laws, regulations or rules. No Awards shall be granted under the Plan
after the termination thereof. Except with respect to the application of Article
9, the termination of the Plan, or any amendment thereof, shall not alter or
impair any outstanding Award previously granted under the Plan.

ARTICLE 16  .  PAYMENT OF DIRECTOR'S FEES IN SECURITIES
               ----------------------------------------

      16.1 EFFECTIVE DATE. The provisions set forth in Section 16.2 shall be
effective as of the effective date of this Plan; the provisions set forth in
Section 16.3 shall not be effective unless and until the Board has determined to
implement such provision.

                                       8


      16.2 GRANT OF OPTIONS TO OUTSIDE DIRECTORS. Outside Directors shall also
be eligible to receive Options as described in this Section 16.2.

             (a)   Each eligible Outside Director shall automatically be granted
      an NSO to purchase 1,000 Common Shares (subject to adjustment under
      Article 9) upon the conclusion of each regular annual meeting of the
      Company's shareholders. All such NSOs shall vest and become exercisable at
      the rate of twenty percent (20%) upon each one (1) year anniversary of the
      date the Option is granted to the Outside Director.

             (b)   The Exercise Price under all NSOs granted to an Outside
      Director under this Section 16.2 shall be equal to one hundred percent
      (100%) of the Fair Market Value of a Common Share on the date of grant,
      payable in one of the forms described in Article 6; provided, however, the
      Exercise Price of an NSO granted to an Outside Director under this Section
      16.2 shall not be less than 110% of the Fair Market Value of a Common
      Share on the date of grant if the Outside Director owns more than ten
      percent (10%) of the total combined voting power of all classes of
      outstanding stock of the Company or any of its Parents or Subsidiaries.

             (c)   All NSOs granted to an Outside Director under this Section
      16.2 shall terminate on the earlier of:

(i)   The 10th anniversary of the date of grant; or
(ii)  The date ninety (90) days after the termination of such Outside Director's
            service for any reason.

      16.3 ELECTIONS TO RECEIVE NSOS. In addition to the provisions of Section
16.2, an Outside Director may elect to receive his or her annual retainer
payments and meeting fees from the Company that would otherwise be paid in cash
in the form of cash, NSOs, or a combination thereof. Such NSOs shall be issued
under the Plan. An election under this Section 16.3 shall be filed with the
Company on the prescribed form and subject to such Filing deadlines and election
procedures as shall be established by the Committee. The number of NSOs to be
granted to Outside Directors in lieu of annual retainers and meeting fees that
would otherwise be paid in cash shall be calculated in a manner determined by
the Board. The terns of such NSOs shall also be determined by the Board.

ARTICLE 17  .  DEFINITIONS
               -----------

      17.1 "AFFILIATE" means any entity other than a Subsidiary, if the Company
and/or one or more Subsidiaries own not less than 50% of such entity.

      17.2 "AWARD" means any award of an Option or Restricted Shares under the
Plan.

      17.3 "BOARD" means the Company's Board of Directors, as constituted from
time to time.

      17.4 "CHANGE IN CONTROL" means the occurrence of any "person"(as defined
in Section 13(d) of the Exchange Act), other than the Company, its Parent or

                                       9


Subsidiary or employee benefit plan or trust maintained by the Company, its
Parent or Subsidiary, becoming the "beneficial owner" (as defined in Rule 13d-3
of the Exchange Act), directly or indirectly, of more than 50% of the Common
Shares of the Company outstanding at such time, without the prior approval of
the Board.

      17.5 "CODE" means the Internal Revenue Code of 1986, as amended.

      17.6 "COMMITTEE" means a committee of the Board, as described in Article
2.

      17.7 "COMMON SHARE" means one share of the common stock of the Company.

      17.8 "COMPANY" means San Joaquin Bancorp, a California corporation.

      17.9 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

      17.10 "EXERCISE PRICE" in the case of an Option, means the amount for
which one Common Share may be purchased upon exercise of such Option, as
specified in the applicable Stock Option Agreement.

      17.11 "FAIR MARKET VALUE" means the market price of Common Shares,
determined by the Committee as follows:

             (a) If the Common Shares were traded over-the-counter on the date
      in question but were not classified as a national market issue, then the
      Fair Market Value shall be equal to the mean between the last reported
      representative bid and asked prices quoted by the NASDAQ system for such
      date;

             (b) If the Common Shares were traded over-the-counter on the date
      in question and were classified as a national market issue, then the Fair
      Market Value shall be equal to the last transaction price quoted by the
      NASDAQ system for such date;

             (c) If the Common Shares were traded on a stock exchange on the
      date in question, then the Fair Market Value shall be equal to the closing
      price reported by the applicable composite transactions report for such
      date; and

             (d) If none of the foregoing provisions is applicable, then the
      Fair Market Value shall be determined by the Committee in good faith on
      such basis as it deems appropriate.

      Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in the Western Edition of The Wall Street
Journal. Such determination shall be conclusive and binding on all persons.

      17.12 "ISO" means an incentive stock option described in Section 422(b) of
the Code.

      17.13 "KEY EMPLOYEE" means (a) a common-law employee of the Company, a
Parent, a Subsidiary or an Affiliate; (b) a consultant or adviser who provides

                                       10


services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor; or (c) a director (including a non-employee director) of
the Company, a Parent, a Subsidiary or an Affiliate.

      17.14 "NSO" means an option that is not an ISO.

      17.15 "OPTION" means an ISO or NSO granted under the Plan and entitling
the holder to purchase Common Shares.

      17.16 "OPTIONEE" means an individual or estate who holds an Option.

      17.17 "OUTSIDE DIRECTOR" shall mean a member of the Board who is not a
common-law employee of the Company, a Parent or a Subsidiary.

      17.18 "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a
Parent on a date after the adoption of the Plan shall be considered a Parent
commencing as of such date.

      17.19 "PARTICIPANT" means an individual or estate who holds an Award.

      17.20 "PLAN" means this San Joaquin Bancorp 1999 Stock Incentive Plan
(formerly named the San Joaquin Bank 1999 Stock Incentive Plan), as it may be
amended from time to time.

      17.21 "RESTRICTED SHARE" means a Common Share awarded pursuant to Article
7 of the Plan.

      17.22 "SHARE" means one share of the common stock of the Company.

      17.23 "STOCK AWARD AGREEMENT" means an agreement between the Company and a
Participant which contains the terms, conditions and restrictions pertaining to
Restricted Shares.

      17.24 "STOCK OPTION AGREEMENT" means an agreement between the Company and
an Optionee which contains the terms, conditions and restrictions pertaining to
an Option.

      17.25 "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain17.26 . A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.

ARTICLE 18  .  EXECUTION
               ---------

      To record the adoption of the Plan by the Board, the Company has caused
its duly authorized officer to affix the corporate name and seal hereto.

                                       11




                                    SAN JOAQUIN BANCORP



                                    By:
                                       ---------------------------

                                    Name:
                                         -------------------------

                                    Title:
                                          ------------------------


                                       12

EX-99

                                                                    Exhibit 99.9


                               SAN JOAQUIN BANCORP
                        INCENTIVE STOCK OPTION AGREEMENT

     THIS AGREEMENT is dated the ______ day of ________________, ______, by and
between San Joaquin Bancorp, a California corporation (the "Company"), and
___________ ("Optionee").

     WHEREAS, pursuant to the San Joaquin Bancorp 1999 Stock Incentive Plan (the
"Plan"), the Company wishes to grant to Optionee an option to purchase shares of
the common stock of the Company, upon the terms and conditions provided herein;
and

     WHEREAS, all capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to such terms in the Plan.

     NOW, THEREFORE, it is hereby agreed:

     1. Grant of Option. Subject to the terms and conditions set forth in the
Plan and this Agreement, the Company hereby grants to Optionee an option to
purchase all or any part of _______________ Common Shares (the "Option") for the
purchase price of $_________ per Share (the "Exercise Price").

     2. Exercisability. The Option shall become exercisable with respect to the
Shares underlying the Option, as follows:

20% of the Shares on ____________      20% of the Shares on ______________
20% of the Shares on ____________      20% of the Shares on ______________
20% of the Shares on ____________

         The Option shall remain exercisable until the date that is ten (10)
years from the date of this Agreement, unless the Option has otherwise expired
or terminated earlier in accordance with the provisions hereof; provided,
however, if the Optionee possesses more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, or of any Parent
or Subsidiary, on the date of this Agreement, then the Option shall remain
exercisable until the date that is five (5) years from the date of this
Agreement, unless the Option has otherwise expired or terminated earlier in
accordance with the provisions hereof. Shares as to which the Option becomes
exercisable pursuant to the foregoing provision may be purchased at any time
prior to expiration of the Option. Notwithstanding the preceding provisions of
this paragraph, upon receipt of notice from the Board of the pendency of
dissolution or liquidation of the Company, or a reorganization, merger, or
consolidation of the Company with one or more corporations as a result of which
the Company will not be the surviving corporation, or sale of substantially all
the assets and property of the Company to another person, or in the event of any
other transaction involving the Company where there is a change in ownership of
the Company of at least twenty-five percent (25%), except as may result from a
transfer of shares to another corporation in exchange for at least eighty
percent (80%) control of that corporation (a "Terminating Event"), the Option
shall be exercisable in full and not only as to those shares with respect to
which installments, if any, have then accrued. Upon the date specified in said



notice, the Option or any portion hereof not exercised shall terminate, unless
provision is made in connection with the Terminating Event for assumption of the
Option or for substitution of the Option with new options covering stock of a
successor employer corporation, or a parent or subsidiary corporation thereof,
with appropriate adjustments as to number and kind of shares and prices.

     3. EXERCISE OF OPTION. The Option may be exercised by ten (10) days'
written notice delivered to the Company (in the form prescribed by the
Committee), stating the number of Shares with respect to which the Option is
being exercised, together with cash in the amount of the Exercise Price for such
Shares. Not less than ten (10) Shares may be purchased at any one time unless
the number purchased is the total number which may be purchased under the
Option. Upon exercise, Optionee shall make appropriate arrangements and shall be
responsible for the withholding of any federal and state taxes then due. In lieu
of cash, Optionee may surrender to the Company a number of Shares, owned by
Optionee for more than six (6) months at the time of surrender, having the same
aggregate Fair Market Value as the aggregate Exercise Price for the number of
Shares with respect to which the Option is being exercised.

     4. CESSATION OF EMPLOYMENT. If Optionee shall cease to be employed by the
Company, or any Parent, Subsidiary or Affiliate, for any reason other than
Optionee's death or disability, the Option shall expire thirty (30) days
thereafter, or on the expiration date specified in Section 2 hereof, whichever
is earlier. Before such expiration, Optionee shall have the right to exercise
the Option as to those Shares with respect to which installments, if any, had
accrued under Section 2 hereof. Notwithstanding the foregoing, any transfer of
Optionee's employment between or among the Company, or any Parent, Subsidiary or
Affiliate, will not be deemed a termination of employment for purposes of this
Section 4.

     5. NONTRANSFERABILITY; DEATH OR DISABILITY OF OPTIONEE. The Option shall
not be transferable, except by will or by the laws of descent and distribution,
and shall be exercisable by Optionee only during his or her lifetime. If
Optionee shall cease to be employed by the Company, or any Parent, Subsidiary or
Affiliate, due to Optionee's death or disability, or if Optionee dies or becomes
disabled during the thirty-day period referred to in Section 4 hereof, the
Option shall expire six (6) months after the date of Optionee's death or
disability, or on the expiration date specified in Section 2 hereof, whichever
is earlier. After Optionee's death but before such expiration, the persons to
whom Optionee's rights under the Option shall have passed, by will or by the
applicable laws of descent and distribution, shall have the right to exercise
the Option as to those Shares for which installments had accrued under Section 2
hereof as of the date of Optionee's death.

     6. EMPLOYMENT. This Agreement shall not obligate the Company, or any
Parent, Subsidiary or Affiliate, to employ Optionee for any period, nor shall it
interfere in any way with the right of the Company, or any Parent, Subsidiary or
Affiliate, to reduce Optionee's compensation.

     7. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights as a
stockholder with respect to the Common Shares subject to the Option until the
date of issuance of stock certificates to Optionee. Except as provided in
Section 9 of the Plan, no adjustment will be made for dividends or other rights

                                       2


for which the record date is prior to the date such stock certificates are
issued.

     8. MODIFICATION AND TERMINATION. The rights of Optionee are subject to
modification and termination in certain events as provided under the terms of
the Plan.

     9. NOTIFICATION OF SALE. Optionee agrees that Optionee, or any person
acquiring Shares upon exercise of the Option, will notify the Company not more
than five (5) days after any sale or disposition of such Shares.

     10. INCENTIVE STOCK OPTION. The Option is intended to qualify as an ISO
under Section 422 of the Code, and will be interpreted consistent with that
intent to the extent possible under applicable law.

     11. LIMITATION ON PAYMENTS. Optionee hereby acknowledges and agrees to the
terms and conditions of Article 12 of the Plan.

     12. RECEIPT OF PLAN. Optionee acknowledges that Optionee has received a
complete copy of the Plan, and fully understands its terms and conditions.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

SAN JOAQUIN BANCORP


By:                                  ________________________________
   ---------------------             [NAME OF OPTIONEE]

Name:                                Address:       _______________________
                                                    _______________________
Title:                                              _______________________
      ------------------


                                       3

EX-99

                                                                   Exhibit 99.10


                               SAN JOAQUIN BANCORP
                      NON-QUALIFIED STOCK OPTION AGREEMENT

     THIS AGREEMENT is dated the ______ day of ________________, ______, by and
between San Joaquin Bancorp, a California corporation (the "Company"), and
___________ ("Optionee").

     WHEREAS, pursuant to the San Joaquin Bancorp 1999 Stock Incentive Plan (the
"Plan"), the Company wishes to grant to Optionee an option to purchase shares of
the common stock of the Company, upon the terms and conditions provided herein;
and

     WHEREAS, all capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to such terms in the Plan.

     NOW, THEREFORE, it is hereby agreed:

     1. GRANT OF OPTION. Subject to the terms and conditions set forth in the
Plan and this Agreement, the Company hereby grants to Optionee an option to
purchase all or any part of _______________ Common Shares (the "Option") for the
purchase price of $_________ per Share (the "Exercise Price").

     2. EXERCISABILITY. The Option shall become exercisable with respect to the
Shares underlying the Option, as follows:

20% of the Shares on ____________      20% of the Shares on ______________
20% of the Shares on ____________      20% of the Shares on ______________
20% of the Shares on ____________

     The Option shall remain exercisable until the date that is ten (10) years
from the date of this Agreement, unless the Option has otherwise expired or
terminated earlier in accordance with the provisions hereof. Shares as to which
the Option becomes exercisable pursuant to the foregoing provision may be
purchased at any time prior to expiration of the Option. Notwithstanding the
preceding provisions of this paragraph, upon receipt of notice from the Board of
the pendency of dissolution or liquidation of the Company, or a reorganization,
merger, or consolidation of the Company with one or more corporations as a
result of which the Company will not be the surviving corporation, or sale of
substantially all the assets and property of the Company to another person, or
in the event of any other transaction involving the Company where there is a
change in ownership of the Company of at least twenty-five percent (25%), except
as may result from a transfer of shares to another corporation in exchange for
at least eighty percent (80%) control of that corporation (a "Terminating
Event"), the Option shall be exercisable in full and not only as to those shares
with respect to which installments, if any, have then accrued. Upon the date
specified in said notice, the Option or any portion hereof not exercised shall
terminate, unless provision is made in connection with the Terminating Event for
assumption of the Option or for substitution of the Option with new options
covering stock of a successor employer corporation, or a parent or subsidiary
corporation thereof, with appropriate adjustments as to number and kind of
shares and prices.



     3. EXERCISE OF OPTION. The Option may be exercised by ten (10) days'
written notice delivered to the Company (in the form prescribed by the
Committee), stating the number of Shares with respect to which the Option is
being exercised, together with cash in the amount of the Exercise Price for such
Shares. Not less than ten (10) Shares may be purchased at any one time unless
the number purchased is the total number which may be purchased under the
Option. Upon exercise, Optionee shall make appropriate arrangements and shall be
responsible for the withholding of any federal and state taxes then due. In lieu
of cash, Optionee may surrender to the Company a number of Shares, owned by
Optionee for more than six (6) months at the time of surrender, having the same
aggregate Fair Market Value as the aggregate Exercise Price for the number of
Shares with respect to which the Option is being exercised.

     4. CESSATION OF EMPLOYMENT OR SERVICE. If Optionee shall cease to be
employed by, or provide services to, the Company, or any Parent, Subsidiary or
Affiliate, for any reason other than Optionee's death or disability, the Option
shall expire thirty (30) days thereafter, or on the expiration date specified in
Section 2 hereof, whichever is earlier. Before such expiration, Optionee shall
have the right to exercise the Option as to those Shares with respect to which
installments, if any, had accrued under Section 2 hereof. Notwithstanding the
foregoing, any transfer of Optionee's employment or service between or among the
Company, or any Parent, Subsidiary or Affiliate, will not be deemed a
termination of employment or service for purposes of this Section 4.

     5. NONTRANSFERABILITY; DEATH OR DISABILITY OF OPTIONEE. The Option shall
not be transferable, except by will or by the laws of descent and distribution,
and shall be exercisable by Optionee only during his or her lifetime. If
Optionee shall cease to be employed by, or provide services to, the Company, or
any Parent, Subsidiary or Affiliate, due to Optionee's death or disability, or
if Optionee dies or becomes disabled during the thirty-day period referred to in
Section 4 hereof, the Option shall expire six (6) months after the date of
Optionee's death or disability, or on the expiration date specified in Section 2
hereof, whichever is earlier. After Optionee's death but before such expiration,
the persons to whom Optionee's rights under the Option shall have passed, by
will or by the applicable laws of descent and distribution, shall have the right
to exercise the Option as to those Shares for which installments had accrued
under Section 2 hereof as of the date of Optionee's death.

     6. EMPLOYMENT OR SERVICE. This Agreement shall not obligate the Company, or
any Parent, Subsidiary or Affiliate, to employ, or retain the services of, any
Optionee for any period, nor shall it interfere in any way with the right of the
Company, or any Parent, Subsidiary or Affiliate, to reduce Optionee's
compensation.

     7. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights as a
stockholder with respect to the Common Shares subject to the Option until the
date of issuance of stock certificates to Optionee. Except as provided in
Section 9 of the Plan, no adjustment will be made for dividends or other rights
for which the record date is prior to the date such stock certificates are
issued.

     8. MODIFICATION AND TERMINATION. The rights of Optionee are subject to
modification and termination in certain events as provided under the terms of
the Plan.



     9. NOTIFICATION OF SALE. Optionee agrees that Optionee, or any person
acquiring Shares upon exercise of the Option, will notify the Company not more
than five (5) days after any sale or disposition of such Shares.

     10. NON-QUALIFIED STOCK OPTION. The Option is not intended to qualify for
treatment as an ISO under Section 422 of the Code for any purposes.

     11. LIMITATION ON PAYMENTS. Optionee hereby acknowledges and agrees to the
terms and conditions of Article 12 of the Plan.

     12. RECEIPT OF PLAN. Optionee acknowledges that Optionee has received a
complete copy of the Plan, and fully understands its terms and conditions.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

SAN JOAQUIN BANCORP


By: ________________________________         ________________________________
                                                [NAME OF OPTIONEE]
Name:  ____________________________
                                              Address:  _______________________
Title: ____________________________                     _______________________
                                                        _______________________

EX-99

                                                                   Exhibit 99.11


                              AMENDED AND RESTATED
                    EXECUTIVE SALARY CONTINUATION AGREEMENT

         THIS  AGREEMENT is made and entered into this 18th day of June 2004, by
and between SAN JOAQUIN  BANK,  a  corporation  organized  under the laws of the
State of  California  (hereinafter  referred  to as the  "Employer"),  and BRUCE
MACLIN, an individual residing in the State of California  (hereinafter referred
to as the  ("Executive").  This Agreement is an amendment and  restatement of an
agreement  between the parties  that was  originally  entered into on October 3,
1996, and was most recently amended and restated on June 3, 2003.

                                    RECITALS
                                    --------

         WHEREAS, the Executive is an employee of the Employer and is serving as
the Chairman of its Board of Directors.

         WHEREAS, the Executive's experience and knowledge of the affairs of the
Employer and the banking industry are extensive and valuable;

         WHEREAS,  it is deemed to be in the best  interests  of the Employer to
provide the Executive with certain salary  continuation  benefits,  on the terms
and conditions set forth herein,  in order to reasonably induce the Executive to
remain in the Employer's employment; and

         WHEREAS,  the Executive and the Employer wish to specify in writing the
terms and conditions upon which this additional  compensatory  incentive will be
provided to the Executive,  or to the Executive's designated  beneficiaries,  as
the case may be;

         NOW, THEREFORE, in consideration of the services to be performed in the
future,  as well as the mutual  promises and  covenants  contained  herein,  the
Executive and the Employer agree as follows:

                                   AGREEMENT
                                   ---------

    1.   Terms and Definitions.
         ---------------------

         1.1 ADMINISTRATOR. The Employer shall be the "Administrator" and solely
for Purposes of ERISA,  the  "fiduciary" of this Agreement  where a fiduciary is
required by ERISA.

         1.2 ANNUAL  BENEFIT.  The term  "Annual  Benefit"  shall mean an annual
amount of $ 220,000,  which represents fifty percent (50%) of Executive's  total
compensation as of June 15, 2004 of $ 440,000 determined by adding annual salary
of $ 240,000 to the bonus of $ 200,000  awarded to Executive in January of 2004.
In any year that Executive's total compensation  (current salary plus bonus paid
in such year)  increases,  the annual  benefit  shall be  increased to an amount
equal to fifty percent (50%) of such total  compensation.  No decrease in Annual
Benefit  shall be made in any year when  Executive's  total  compensation  shall
decrease,  whether by reason of a decrease in regular  payroll  payments or by a
decrease in or  elimination of bonus that  Employer's  Board of Directors may by



resolution  duly passed and  communicated  in writing to  Executive,  freeze the
Annual  Benefit  at a given  dollar  amount  but may not  decrease  a level once
established.  Once the payment of the Annual Benefit has  commenced,  the Annual
Benefit  shall be  increased  annually by at least the  increase in the Consumer
Price Index  ("CPI"} for the  preceding  calendar  year,  up to a maximum of two
percent (2%); provided, however, such maximum shall be increased up to the total
dollar amount that all past  aggregate  CPI increases to the Annual  Benefit are
less than the dollar amount of all potential aggregate  increases  determined as
if the CPI had actually  been two percent (2%) in all such past years.  Thus, if
in a year the Annual  Benefit could have  increased by $3,500 but only increased
by $2,000 because actual CPI was less than 2%, the $ 1,500  difference  shall be
used in the future to increase the Annual Benefit when CPl is greater than 2%.

         1.3 APPLICABLE PERCENTAGE.  The term "Applicable Percentage" shall mean
that percentage  listed on Schedule "A," attached  hereto,  which is adjacent to
the number of complete  years (with a "year" being the  performance  of personal
services  for or on behalf of the  Employer as an  employee  for a period of 365
days) which have elapsed  starting  from  Effective  Date of this  Agreement and
ending on the date the  Executive's  employment  terminates for purposes of this
Agreement.  In the event that Executive's employment with Employer is terminated
other th an by reason  of death,  Disability  or  Retirement  on the part of the
Executive,  Executive  shall be deemed for purposes of determining the number of
complete  years to have  completed  a year of  service in its  entirety  for any
partial year of service after the last  anniversary  date of the Effective  Date
during which the Executive's employment is terminated, provided that in no event
shall  Executive  be deemed to have  completed a year of service for any partial
year if the partial  year  occurs  prior to the first  anniversary  date of this
Agreement.  For purposes of this Agreement,  employment shall include service on
the Employer's Board of Directors regardless of whether Executive continues as a
common law employee of the Employer.

         1.4 BENEFICIARY.  The term  "beneficiary"  or "designated  beneficiary"
shall mean the person or persons whom the Executive  shall  designate in a valid
Beneficiary  Designation,  a copy of which is attached hereto as Exhibit "B," to
receive any Joint and  Survivor  Annuity  payments to be made after the death of
the Executive and the Spouse. A Beneficiary  Designation  shall be valid only if
it is in the form attached  hereto and made a part hereof and is received by the
Administrator prior to the Executive's death.

         1.5 Code. The term "Code" shall mean the Internal Revenue Code of 1986,
as amended (the "Code") .

         1.6 Disability/Disabled. The term "Disability" or "Disabled" shall mean
a physical  or mental  impairment  which is of such  permanence  and degree that
Executive is unable because of such  impairment to perform any gainful  activity
for the  Employer  for which the  Executive  is suited by virtue of  experience,
training or education.  A finding of Disability shall be supported by any one or
more of the following;

         (a) Written certification from a physician that is licensed to practice
medicine in the state in which the physician  treated the  Executive  indicating
that  the  Executive  has a  physical  or  mental  impairment  which  is of such
permanence and degree that the Executive is unable because of such impairment to

                                       2


perform any gainful  activity  for the  Employer  for which the  Participant  is
suited by virtue of experience, training or education; or

         (b) Written  notification from the principal long term disability  plan
offered by the Employer covering the Executive ("LTD Plant") indicating that the
Executive  has  been   determined  by  the  LTD  Plan  to  meet  the  disability
requirements  necessary to obtain long term  disability  benefits  under the LTD
Plan; or

         (c) Written  notification from the Social Security  Administration that
the Executive has been  determined to have been disabled under Title II or Title
XVI of the Social Security Act.

         Notwithstanding  the  foregoing,  in no event  shall the  Executive  be
treated as Disabled and thereby entitled to benefits under this Agreement if the
Executive is performing  services in any capacity for a "competitor," as defined
in Section 3.6.

         1.7 EARLY  RETIREMENT  DATE.  The term Early Retirement  Date means the
Retirement  (as defined  below) of the  Executive  on a date which  occurs after
Executive has attained age sixty (60).

         1.8 EFFECTIVE DATE. The term "Effective  Date" shall mean the date upon
which the Executive  Salary  Continuation  Plan was  originally  approved by the
Board of Directors of Employer, to wit, October 3, 1996.

         1.9 ERISA. The term "ERISA" shall mean the Employee  Retirement  Income
Security Act of 1974, as amended.

         1.10 JOINT AND SURVIVOR ANNUITY.  The term "Joint and Survivor Annuity"
shall  mean a stream  of  payments,  each  one of which is equal to one  hundred
percent  (100%) of the Annual  Benefit,  that is paid on an annual  basis over a
period  of time that  continues  until the later of (i) the death of the last to
die of the  Executive or the Spouse or (ii) the  expiration of twelve (12) years
from the Executive's  Retirement Date. The payment of one hundred percent (100%)
of the  Annual  Benefit in the form of the Joint and  Survivor  Annuity is based
upon the assumption that such payments would begin on the Executive's Retirement
Date and the life expectancies of the Executive and the Spouse on the Retirement
Date. Accordingly, if payments of the Annual Benefit are to begin on a date that
is earlier or later than the  Executive's  Retirement  Date,  the Annual Benefit
will be  actuarially  adjusted  to  reflect  the  increased  or  decreased  life
expectancies,  respectively,  over which the Annual  Benefit is to be paid.  For
purposes of making such actuarial adjustments, life expectancy shall be computed
using the expected  return  multiples in Table V of section 1.72-9 of the United
States Federal Treasury  Regulations and a  capitalization  rate of five percent
(5%).

         1.11 PLAN YEAR. The term "Plan Year" shall mean the calendar year.

         1.12 RETIREMENT.  The term "Retirement" or "Retires" shall refer to the
date (on or after the  Retirement  Date or Early  Retirement  Date) or which the
Executive  gives  notice of his intent to retire and  substantially  reduces the
scope of his employment with the Employer.

                                       3


         1.13  RETIREMENT DATE.  Retirement  Date means the  date the  Executive
reaches age sixty-five (65).

         1.14 SALE OF BUSINESS. The term "Sale of Business" shall means any (ii)
merger,  consolidation  or  reorganization  of the  Employer  in  which  (a) the
Employer does not survive or (b) the Employer  survives with a resulting  change
in beneficial ownership of the Employer of more than 50% of the voting shares of
the  Employer,  (ii) sale of more than 50% of the  beneficial  ownership  of the
voting  shares  of the  Employer  to any  person or group or  persons  acting in
concert,  (iii)  transfer or sale of more than 50% of the total  market value of
the assets of Employer as reflected in the most recent  published  balance sheet
of the Employer, or (iv) turnover of greater than 50% of the Employer's Board of
Directors  during  any  consecutive  twenty-four  month  period,  excluding  for
purposes of both the  numerator  and  denominator,  directors  who  terminate by
reasons of death or disability.  The creation of the bank holding company, to be
named  San  Joaquin  Bancorp.,  a  California  corporation,  and the  subsequent
acquisition  of San  Joaquin  Bank,  a  California  corporation,  by San Joaquin
Bankcorp.  does not constitute a "Sale of Business" under this Section 1.14. For
purposes of this Section 1.14 only, the term  "Employer"  shall mean San Joaquin
Bank and/or San Joaquin Bancorp.

         1.15 SPOUSE.  The term  "Spouse"  shall mean LAURIE  MACLIN, who is the
person legally married to the Executive on the date of this Agreement.

    2.   Scope, Purpose and Effect.
         -------------------------

         2.1  CONTRACT OF  EMPLOYMENT.  Although  this  Agreement is intended to
provide the Executive  with an  additional  incentive to remain in the employ of
the  Employer,  this  Agreement  shall not be deemed to constitute a contract of
employment  between the Executive  and the Employer,  nor shall any provision of
this  Agreement  restrict or expand the right of the Employer to  terminate  the
Executive's  employment.  This Agreement shall have no impact or effect upon any
separate  written  Employment  Agreement  which the  Executive may have with the
Employer,  it being the  parties'  intention  and  agreement  that  unless  this
Agreement  is  specifically  referenced  in said  Employment  Agreement  (or any
modification thereto), this Agreement (and the Employer's obligations hereunder)
shall stand  separate and apart and shall have no effect  upon,  nor be affected
by, the terms and provisions of said Employment Agreement.

         2.2 FRINGE BENEFIT. The benefits provided by this Agreement are granted
by the Employer as a fringe  benefit to the  Executive and are not a part of any
salary reduction plan or any arrangement deferring a bonus or a salary increase.
The Executive has no option to take any current payments or bonus in lieu of the
benefits provided by this Agreement.  The benefits provided under this Agreement
are in lieu of any benefits that otherwise  would be provided to Executive under
that  certain Life  Insurance  Endorsement  Method  Split Dollar Plan  Agreement
between  the  Employer  and the  Executive,  which  the  parties  agree  will be
cancelled and thereunder be of no further force and effect.

         2.3 TAX EFFECT OF PAYMENTS.

         (a)  GROSS-UP  PAYMENT.  In the  event that it is  determined  that any
payment or  distribution of any type to or for the benefit of the Executive made
by the Employer, by any of its affiliates,  by any person who acquires ownership
or effective  control of the Employer or ownership of a  substantial  portion of

                                       4


the  Employer's  assets  (within  the  meaning of section  280G of the  Internal
Revenue Code of 1986, as amended, and the regulations thereunder (the "Code") or
by any  affiliate of such  person,  whether  paid or payable or  distributed  or
distributable  pursuant to the terms of this  Agreement or otherwise (the "Total
Payments"),  would be subject to the excise tax  imposed by section  4999 of the
Code or any interest or  penalties  with respect to such excise tax (such excise
tax,  together with any such interest or penalties are collectively  referred to
as the  "Excise  Tax"),  then the  Executive  shall be  entitled  to  receive an
additional  payment  (a  "Gross-Up  Payment")  in an amount  that shall fund the
payment by the Executive of any Excise Tax on the Total  Payments as well as all
income  taxes  imposed on the  Gross-Up  Payment,  any Excise Tax imposed on the
Gross-Up Payment and any interest or penalties  imposed with respect to taxes on
the Gross-Up Payment or any Excise Tax.

         (b)  DETERMINATION BY AUDITORS. All mathematical determinations and all
determinations  of whether any of the Total  Payments are  "parachute  payments"
(within  the meaning of section  280G of the Code) that are  required to be made
under this  Section  2.3,  including  all  determinations  of whether a Gross-Up
Payment is  required,  of the  amount of such  Gross-Up  Payment  and of amounts
relevant  to the  last  sentence  of  this  Section  2.3,  shall  be made by the
independent  auditors retained by the Employer most recently prior to the change
of  control  (the  "Auditors"),  who  shall  provide  their  determination  (the
"Determination"),  together with detailed supporting  calculations regarding the
amount of any  Gross-Up  Payment  and any  other  relevant  matters  both to the
Employer and to the Executive  within seven (7) business days of the Executive's
termination  date,  if  applicable,  on such earlier time as is requested by the
Employer or by the Executive (if the Executive  reasonably  believes that any of
the Total Payments may be subject to the Excise Tax). If the Auditors  determine
that no Excise Tax is payable by the  Executive,  it shall furnish the Executive
with a written statement that such Auditors have concluded that no Excise Tax is
payable  (including the reasons therefor) and that the Executive has substantial
authority  not to report any Excise Tax on the  Executive's  federal  income tax
return.  If a Gross-Up Payment is determined to be payable,  it shall be paid to
the Executive within five (5) business days after the Determination is delivered
to the Employer or the  Executive.  Any  determination  by the Auditors shall be
binding upon the Employer and the Executive, absent manifest error.

         (c)  UNDERPAYMENTS AND OVERPAYMENTS.  As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Auditors hereunder, it is possible that Gross-Up Payments not made by the
Employer should have been made  ("Underpayments") or that Gross-Up Payments will
have been made by the Employer which should not have been made ("Overpayments").
In either event, the Auditors shall determine the amount of the Underpayments or
Overpayment  that has occurred.  In the case of an  Underpayment,  the amount of
such  Underpayment  shall promptly be paid by the Employer to or for the benefit
of the Executive.  In the case of an  Overpayment,  the Executive  shall, at the
direction  and  expense  of the  Employer,  take  such  steps as are  reasonably
necessary  (including  the filing of returns  and  claims  for  refund),  follow
reasonable  instructions  from, and procedures  established by, the Employer and
otherwise  reasonably  cooperate with the Employer to correct such  overpayment;
provided,  however,  that (i) the  Executive  shall in no event be  obligated to
return to the Employer an amount  greater than the net after-tax  portion of the
Overpayment  that the  Executive  has retained or has recovered as a refund from
the applicable taxing authorities,  and (ii) this provision shall be interpreted
in a manner consistent with the intent of this Section 2.3, which is to make the
Executive  whole, on an after tax basis,  for the application the Excise Tax, it
being  understood  that the  correction  of an  Overpayment  may  result  in the

                                       5


Executive's  repaying  to  the  Employer  an  amount  which  is  less  than  the
Overpayment.

    3.   Payments of Annual Benefit.
         --------------------------

         3.1 PAYMENTS AT OR AFTER  RETIREMENT.  If the Executive shall remain in
the continuous  employment of the Employer until his Retirement Date, the Annual
Benefit,  as defined above,  shall be paid in the form of the Joint and Survivor
Annuity.  Each year the Annual Benefit will be paid in twelve (12) equal monthly
payments  on the first day of each month  during  the-year,  beginning  with the
month following the Retirement Date. If the Executive continues employment after
his Retirement Date, payment of his Annual Benefit shall commence on the date of
his actual  Retirement and such Annual Benefit shall be actuarially  adjusted in
accordance  with  Section  1.10 to reflect  the  postponement  of payment of the
Annual Benefit.

         3.2  PAYMENTS IN THE EVENT OF DEATH.  If the  Executive  dies before he
actually Retires, the Executive's Annual Benefit shall be reduced by determining
the  discounted  value of the Annual Benefit based on a  capitalization  rate of
five  percent  (5%) for the  period  of time,  if any,  by which the date of the
Executive's  death is earlier than the Executive's  normal  Retirement Date. The
Applicable Percentage shall be one hundred percent (100%) and annual payments of
100% of the Annual Benefit,  as adjusted herein,  shall be made to the Spouse or
Beneficiary,  as the case may be, until the later of (i) the death of the Spouse
or (ii) the  expiration  of twelve  (12) years from the  Executive's  Retirement
Date,  with  each  installment  to be  paid  on the  first  day of  each  month,
commencing  with the month  following the Executive's  death.  Each  installment
shall consist of one-twelfth  (1/12) of the Applicable  Percentage of the Annual
Benefit, as actuarially adjusted in accordance with Section 1.10.

         3.3  PAYMENTS  IN THE EVENT OF  DISABILITY.  If the  Executive  becomes
Disabled while  actively  employed by the Employer at any time after the date of
this Agreement but prior to Retirement, the Executive shall: (i) for purposes of
this Section 3.3 only continue to be treated during such period of Disability as
being gainfully  employed by the Employer with an annual  compensation  equal to
his annual compensation at the time of Disability, increased by two percent (2%)
each year thereafter,  provided,  however,  the Executive shall not by virtue of
this provision actually be paid salary by the Employer and shall not be credited
with  additional  years of service  during the  Executive's  Disability  for the
purpose of determining  the Annual Benefit ; and (ii) be entitled to be paid the
Applicable Percentage,  of the Annual Benefit, as set forth on Schedule "A," for
life, with each  installment to be paid on the first day of each month beginning
with the month  following  the month in which the Executive  attains  sixty-five
(65) years of age. If Executive ceases to receive Disability  benefits under the
Executive's  principal  Disability  insurance policy and does not, at such time,
return to, and  thereafter  fulfill the  responsibilities  associated  with, the
employment  position held with the Employer prior to becoming Disabled by reason
of such Disability continuing, then Executive shall receive for life payments of
the Applicable  Percentage of the annual  Benefit,  as  actuarially  adjusted in
accordance  with  Section  1.10j.  Notwithstanding  anything to the contrary set
forth in this Section 3.3, if the Executive is eligible for Early  Retirement at
the time Executive becomes Disabled,  the Executive may elect, by giving written
notice to the Employer,  to take Early Retirement  benefits under Section 3.6 in
lieu of Disability benefits under this Section 3.3.

                                       6


         3.4 PAYMENTS IN THE EVENT EMPLOYMENT IS TERMINATED BY REASON OTHER THAN
DISABILITY,  SALE OF BUSINESS,  EARLY RETIREMENT OR RETIREMENT.  As indicated in
Section 2.1 above, the Employer  reserves the right to terminate the Executive's
employment with or without cause but subject to any written employment agreement
which may then  exist in the  event  that the  employment  of the  Executive  is
terminated  prior to the Early  Retirement  Date for any  reason  other  than by
reason of Disability or Sale of Business,  the Executive shall be entitled to be
paid the  Applicable  Percentage  of the Annual  Benefit,  as  determined by the
applicable  years of  service  at the  time of the  Executive's  termination  of
employment  with the  Employer.  The method for paying such amount  shall be the
Joint and Survivor Annuity, with each installment to be paid on the first day of
each month,  beginning with the month following the month in which the Executive
attains sixty-five (65) years of age.

         3.5 SALE OF  BUSINESS.  In the event there is a Sale of  Business,  the
Executive  shall be  entitled  to be  paid,  in lieu of all  benefits  otherwise
payable under this  Agreement,  a lump sum determined by calculating the present
value of the payment of the Annual Benefit specified in Section 1.2 for the life
of Executive and his Spouse based on a capitalization rate of five percent (5%),
provided,  however,  if at  the  time  of a Sale  of  Business  payments  to the
Executive have already begun due to Retirement,  Early  Retirement or Disability
of the Executive,  the lump sum payment shall be the Annual Benefit (reduced, if
applicable,  by the Applicable Percentage determined in accordance with Schedule
"A")  times the  number  of years (or  fraction  thereof)  remaining  to be paid
reduced to present  value based on a  capitalization  rate of five percent (5%).
Discounting  to determine  present  value refers to a discount to determine  the
present  value of a stream of payments for the  remaining  years of  Executive's
life and that of his Spouse  (actuarially  projected) but shall not (in the case
of an Executive who has not  presently  begun to receive  payments)  reflect any
discount  for the period of time  starting  with the Sale of Business and ending
with the  Executive's  Retirement  Date.  For purposes of this Section 3.5, life
expectancy  shall be computed using the expected return  multiples in Table V of
section 1.72-9 of the United States Federal Treasury Regulations.

         3.6 PAYMENTS IN THE EVENT THE EXECUTIVE ELECTS EARLY RETIREMENT. If the
Executive  shall remain in the  continuous  employment of the Employee until his
Early  Retirement  Date and shall then Retire,  the  Executive's  Annual Benefit
shall be reduced by determining the discounted value of the Annual Benefit based
on a capitalization rate of five percent (5%) for the period of time between the
elected Early  Retirement Date and the Executive's  normal  Retirement Date. The
Applicable  Percentage  shall be 100%  and the  method  for  paying  the  Annual
Benefit, as adjusted herein, shall be the Joint and Survivor Annuity,  with each
installment  to be paid on the first day of each month,  following  the month of
the Executive's Early Retirement . Each installment shall consist of one-twelfth
(1/12)  of  the  Applicable   Percentage  on  the  reduced  Annual  Benefit,  as
actuarially  adjusted in  accordance  with Section  1.10.  Prior to the date the
Executive  reaches age  sixty-five  (65),  no payments  shall be made under this
Section 3.6 during any period in which the Executive is performing  services for
a competitor of the Employer.  Such payments shall be forfeited and shall not be
used  to  actuarially   increase  the  Early  Retirement  payments  which  shall
recommence  upon the earlier of the date the  Executive  reaches age  sixty-five
(65) or ceases to work for such competitor. The term "competitor" shall refer to
a  business  entity  conducting  a  business  competitive  to one  conducted  by
Employer, but only if the Executive is providing services in a California county
where Employer conducts business.

                                       7


    4.   Executive Retiree Medical Benefits.
         ----------------------------------

         4.1  ELIGIBILITY.  The Executive and/or the Spouse shall be entitled to
receive the retiree medical benefits described in this Section 4 (the "Executive
Retiree Medical Benefits") if one or more of the following requirements are met:

             (a) The Executive becomes entitled to payment of all or any portion
of the Annual Benefit due to termination of the Executive's employment by reason
of Disability, Sale of Business, Early Retirement, or Retirement.

             (b) The  Executive  while  employed  by the  Employer  is no longer
eligible for coverage for the medical, dental and vision benefits offered by the
Employer to its then similarly  situated  currently  active  employees under its
group  health plan  because the number of hours per week that the  Executive  is
employed by the Employer has fallen below the minimum  number of hours  required
in order to be eligible for coverage  for  medical,  dental and vision  benefits
under the Employer's group health plan;

             (c) The  Executive is no longer  eligible for coverage for medical,
dental and/or vision benefits because the Employer no longer offers group health
plan coverage to its employees; or

             (d) The Spouse becomes entitled to payment of all or any portion of
the Annual Benefit in accordance with Section 3.2 of this Agreement.

         4.2 EXECUTIVE RETIREE MEDICAL  BENEFITS.  Subject to the provisions set
forth below,  if the foregoing  eligibility  requirements  are met, the Employer
will  provide  the  Executive  and/or the Spouse  with  access to  coverage  for
medical,  dental and vision  benefits  under any such option then offered by the
Employer to its then similarly  situated  currently  active  employees under the
Employer's group health plan, or subject to the limitations set forth in Section
4.6 under  individual  policies.  The Employer  will pay 100% of the cost of the
premium, or in the case of a self-funded plan, 100% of the cost of coverage, for
the selected coverage for the duration of the lifetime of the Executive.

         4.3 DURATION OF PROVISION OF COVERAGE.

         (a)  GENERAL.  Subject  to  the  provisions  set  forth  below,  if the
foregoing  eligibility  requirements  are met, both the Executive and the Spouse
shall be entitled to receive Executive Retiree Medical Benefits for the duration
of other Executive's lifetime.

         (b) Death of  Executive.  Subject to the provision set forth in Section
4.3(c) below,  in the event of the  Executive's  death prior to the death of the
Spouse and following  the  commencement  of the  provision of Executive  Retiree
Medical  Benefits to the Executive and the Spouse,  the Spouse shall be entitled
to continue to receive  Executive  Retiree Medical  Benefits for the duration of
the Spouse's  lifetime.  If the Spouse becomes entitled to payment of all or any
portion of the Annual Benefit in accordance  with Section 3.2 of this Agreement,
then the Spouse shall be entitled to receive  Executive Retiree Medical Benefits
for the duration of the Spouse's lifetime.

                                       8


         (c)  EFFECT OF DIVORCE; NEW SPOUSE. In the event that the Executive and
the Spouse  divorce  prior to the  commencement  of the  provision  of Executive
Retiree  Medical  Benefits to the Executive,  the Spouse will not be eligible to
receive  Executive  Retiree  Medical  Benefits and shall instead be eligible for
COBRA continuation  coverage in accordance with the provisions of the Employer's
group  health plan,  if  applicable.  If the  Executive  and the Spouse  divorce
following  the  commencement  of the  provision  of  Executive  Retiree  Medical
Benefits to the Executive and/or Spouse,  then the Spouse shall cease to receive
Executive   Retiree   MedicalBenefits   and  shall  become  eligible  for  COBRA
continuation  coverage in accordance with the provisions of the Employer's group
health plan, if applicable. If following a divorce from the Spouse the Executive
acquires a new spouse,  the Employer may elect in its sole discretion to provide
Executive Retiree Medical Benefits to the new spouse.  However,  the Employer is
under no obligation to provide  Executive  Retiree  Medical  Benefits to the new
spouse.

         4.4  COMPLIANCE  WITH EMPLOYER  POLICIES AND PROGRAMS.  The  Employer's
obligation to provide Executive Retiree Medical Benefits to the Executive and/or
Spouse  under  this  Agreement  is  subject  to the  Executive  and/or  Spouse's
compliance with any applicable  requirements as set forth in the medical, dental
and /or vision  benefit  programs  for which the  Executive  and/or  Spouse have
selected  coverage,  as then in effect.  The provisions of the Executive Retiree
Medical  Benefits  options  are set forth in detail  in  coverage  certificates,
insurance policies, and plan descriptions, as then in effect, the terms of which
are incorporated  herein. If the Executive and/or Spouse fail to comply with any
such  applicable  requirements,  then  notwithstanding  anything to the contrary
herein,  the Employer will have no obligation to commence or continue to provide
access to coverage  for medical,  dental and vision  benefits or payment for any
portion  of the  premium  or cost of such  bene  fits for the  Executive  and/or
Spouse,  or any  benefit or payment in lieu of such  benefits  to the  Executive
and/or Spouse.  Notwithstanding the foregoing,  the limitation of the Employer's
obligation to provide Executive Retiree Medical Benefits to the Executive and/or
Spouse as set forth in this  Section  4.4 shall not apply  with  respect  to the
Executive's  and /or  Spouse's  failure to comply with any  initial  eligibility
requirements as set forth in the medical,  dental and/or vision benefit programs
for which the Executive and/or Spouse have selected coverage.

         4.5  LIMITATION OF EMPLOYER'S  OBLIGATION  TO PROVIDE  RETIREE  MEDICAL
BENEFITS.  Notwithstanding  anything to the contrary  herein,  the Employer will
have no  obligation  to commence or continue to provide  access to coverage  for
medical, dental and vision benefits under the Employer's group medical insurance
policies or, if applicable, a self funded group medical benefit plan, or payment
for any  portion of the  premium or cost of benefits  for the  Executive  and/or
Spouse to the extent  that the  Employer  is unable to cover one or both of such
individuals under its group medical insurance policies or the Employer no longer
has group insurance  policies or a self funded group medical  benefits plan that
covers similarly situated currently active employees.

         4.6  PROVISION OF COVERAGE  UNDER  INDIVIDUAL  POLICIES.  To the extent
Section 4.5 applies,  the Employer  shall seek to provide access to coverage for
medical,  dental and/or vision benefits under individual  insurance policies for
the Executive and/or Spouse.  The Employer shall pay the entire premium for such
individual  insurance  policies  if the  cost of an  individual  policy  for the
Executive  and/or the Spouse does not exceed three times the cost of coverage of
a similarly  situated  currently active  employee's  policy under the Employer's
group medical  insurance policy as most recently in effect (the "Maximum Covered
Premium"). If  the cost of an individual  policy for  the  Executive and/or  the

                                       9


Spouse exceeds the Maximum  Covered  Premium at any time, then the Executive may
elect to pay the cost of coverage that exceeds the Maximum  Covered Premium (and
the Employer  will pay the cost of coverage up to the Maximum  Covered  Premium)
(and thereby obtain coverage under an individual policy for the Executive and/or
the Spouse. If the Executive and/or Spouse fail to pay required monthly premiums
or elect to  discontinue  coverage  for the  Executive  and/or the  Spouse,  the
Executive and/or Spouse may not recommence  coverage in the future.  If the cost
of individual  policy  coverage would exceed the Maximum Covered Premium and the
Executive  does not  elect  to pay for the cost of  coverage  that  exceeds  the
Maximum  Covered  Premium,  then  Employer  will have no  obligation  to provide
Executive Retiree Medical Benefits to the Executive and/or Spouse or any benefit
or payment in lieu of such benefits to the Executive and/or Spouse. However, the
Employer may elect to provide such benefits to the Executive  and/or Spouse,  in
the Employer's sole discretion.

         4.7 EXECUTIVE  RETIREE  MEDICAL  BENEFITS ARE  SECONDARY.  All benefits
payable to or on behalf of the  Executive  and/or Spouse under the terms of this
Agreement are secondary to all other medical  benefits that the Executive and/or
Spouse  re-eligible to receive from any other source,  including but not limited
to Medicare.

         4.8  NON-COMPLETE.  The  Executive  and Spouse  will not be eligible to
receive  Executive  Retiree Medical Benefits if the Executive is employed by any
other financial  institution  following retirement from San Joaquin Bank, unless
San  Joaquin  Bank  elects,  in its sole  discretion,  to waive this  condition,
"Employment"  in this context  includes all forms of employment,  both full time
and  part  time,  as well as any form of  consulting,  whether  paid or  unpaid.
"Financial  institution" means any for profit or non-profit  business enterprise
that  provides  services  that are the  same as or are  similar  to any  service
provided by San Joaquin  Bank.  Executive  Retiree  Medical  Benefits  cannot be
reinstated  once the  Executive  and Spouse  have become  ineligible  to receive
Executive Retiree Medical Benefits due to the Executive's  employment by another
financial  institution,  unless San Joaquin Bank elects, in its sole discretion,
to waive this condition.

    5. RABBI  TRUST.  The Employer  shall  establish a grantor  trust  (commonly
referred to as a "rabbi trust") and  contribute  assets to such trust to provide
for the payment of the amounts which may become  payable to the  Executive,  the
Executive's  spouse  or the  Executive's  beneficiaries  under the terms of this
Agreement.  The Executive  shall not have any  ownership  interest in the assets
held in such  trust.  The assets of such trust  shall only be  available  to the
Employer in the event of bankruptcy or insolvency of the Employer, in which case
the benefits shall be available to the Employer's general creditors.

    6. TAX  TREATMENT.  The  Employer's  obligation  to pay benefits  under this
Agreement  is not  contingent  on  the  tax  treatment  of  any  such  benefits,
regardless  of  whether  there is a change  in the law with  respect  to the tax
treatment of such benefit after the Effective Date of this Agreement.

    7. CLAIMS PROCEDURE. The claims procedure applicable to a claim for benefits
under this Agreement is as set forth on Addendum A, attached hereto.

    8.  STATUS  OF  AN  UNSECURED  GENERAL  CREDITOR.  Notwithstanding  anything
contained  herein to the contrary:  (i) neither the Executive,  the  Executive's
spouse nor the Executive's beneficiary shall have any legal or equitable rights,
interests or  claims in  or to  any specific property or assets of the Employer,

                                       10


(ii) except as expressly  provided  for herein,  none of the  Employer's  assets
shall be held in or under  any  trust  for the  benefit  of the  Executive,  the
Executive's spouse or the Executive's beneficiary or held in any way as security
for the  fulfillment of the  obligations  of the Employer under this  Agreement,
(iii) all of the Employer's assets shall be and remain the general unpledged and
unrestricted assets of the Employer;  (iv) the Employer's  obligation under this
Agreement shall be that of an unfunded and unsecured  promise by the Employer to
pay money in the future;  and (v) the Executive,  the Executive's spouse and the
Executive's beneficiary shall be unsecured general creditors with respect to any
benefits which may be payable under the terms of this Agreement.

    9.   COVENANT NOT TO INTERFERE.  The Executive agrees not to take any action
which  prevents the Employer from  collecting the proceeds of any life insurance
policy or annuity  which the  Employer or the trust  described  in Section 5 may
happen to own at the time of the  Executive' s Retirement  or death and of which
the Employer is the designated beneficiary.

    10.  MISCELLANEOUS.

         10.1  OPPORTUNITY TO CONSULT WITH  INDEPENDENT  COUNSEL.  The Executive
acknowledges  that  he  has  been  afforded  the  opportunity  to  consult  with
independent  counsel of his choosing  regarding both the benefits granted to him
under the terms of this Agreement and the terms and conditions  which may affect
the Executive's right to these benefits. The Executive further acknowledges that
he has read, understands and consents to all of the terms and conditions of this
Agreement,  and that he enters into this Agreement with a full  understanding of
its terms and conditions.

         10.2 LARCENY CONVICTION. In the event that the Executive duly convicted
by a court of competent jurisdiction of a felony charge of robbing or embezzling
from the Employer  whereby the Employer suffers loss, then upon such conviction,
the Employer is not obligated to make any payments provided by this Agreement or
any further payments,  if payments have already begun.  This Section 10.2 is not
intended to put the  Executive's  receipt of payments in jeopardy  for  business
decisions made during the ordinary course of employment.

         10.3  ATTORNEY'S  FEES. In the event of any  arbitration  or litigation
concerning any controversy, claim or dispute between the parties hereto, arising
out of or relating to this Agreement or the breach hereof, or the interpretation
hereof,  the prevailing party shall be entitled to recover from the losing party
reasonable expenses,  attorneys' fees and costs incurred in connection therewith
or in the  enforcement or collection of any judgment or award rendered  therein.
The "prevailing party" means the party determined by the arbitrator(s) or court,
as the case may be, to have most  nearly  prevailed,  even if such party did not
prevail in all  matters,  not  necessarily  the one in whose favor a judgment is
rendered.

         10.4  NOTICE.  Any notice required or permitted of either the Executive
or the Employer under this Agreement shall be deemed to have been duly given, if
by personal  delivery,  upon the date  received  by the party or its  authorized
representative,  if  by  facsimile,  upon  transmission  to a  telephone  number
previously  provided  by the  party  to whom the  facsimile  is  transmitted  as
reflected  in the  records  of the party  transmitting  the  facsimile  and upon
reasonable  confirmation of such transmission;  and if by mail, on the third day
after  mailing via U.S.  first  class mail,  registered  or  certified,  postage
prepaid and return  receipt requested, and addressed to the party at the address

                                       11


given  below for the  receipt  of  notices,  or such  changed  address as may be
requested in writing by a party.

        If to the Employer:             Bruce Maclin
                                        Chairman of the Board
                                        San Joaquin Bank
                                        Post Office Box 9129
                                        Bakersfield, CA 93389


        If to the Executive             Bruce Maclin
                                        218 Vista VerdeWay
                                        Bakersfield, CA 93309


         10.5 ASSIGNMENT. Neither the Executive, the Executive's spouse, nor any
other  beneficiary  under  this  Agreement  shall  have  any  power  or right to
transfer, assign,  hypothecate,  modify or otherwise encumber any part or all of
the amounts  payable  hereunder,  nor,  prior to payment in accordance  with the
terms of this  Agreement,  shall any portion of such  amounts be: (i) subject to
seizure by any creditor of any such  beneficiary,  by a proceeding  at law or in
equity for the payment of any debts, judgments,  alimony or separate maintenance
obligations which may be owned by the Executive,  the Executive's spouse, or any
designated beneficiary; or (ii) transferable by operation of law in the event of
bankruptcy,  insolvency or otherwise.  Any such attempted assignment or transfer
shall be void  and  shall  terminate  this  Agreement,  and the  Employer  shall
thereupon have no further liability hereunder.

         10.6 BINDING  EFFECT/MERGER OF REORGANIZATION.  This Agreement shall be
binding upon and inure to the benefit of the  Executive and the Employer and, as
applicable,  their  respective  heirs,  beneficiaries,   legal  representatives,
agents,  successors  and assigns.  Accordingly,  the Employer shall not merge or
consolidate   into  or  with  another   corporation,   or   reorganize  or  sell
substantially all of its assets to another corporation,  firm or person,  unless
and until such  succeeding or continuing  corporation,  firm or person agrees to
assume and discharge the obligations of the Employer under this Agreement.  Upon
the  occurrence of such event,  the term  "Employer"  as used in this  Agreement
shall be deemed to refer to such surviving or successor firm, person,  entity or
corporation.

         10.7  NONWAIVER.  The failure of either party to enforce at any time or
for any  period  of time  any one or more of the  terms  or  conditions  of this
Agreement  shall  not be a waiver of such  term(s)  or  condition(s)  or of that
party's  right  thereafter  to enforce each and every term and condition of this
Agreement.

         10.8 PARTIAL INVALIDITY. If any term, provision,  covenant or condition
of this Agreement is determined by an arbitrator or a court, as the case may be,
to be invalid,  void, or unenforceable,  such determination shall not render any
other term, provision, covenant or condition invalid, void or unenforceable, and
the Agreement shall remain in full force and effect notwithstanding such partial
invalidity.

                                       12


         10.9 ENTIRE  AGREEMENT.  This  Agreement  supersedes  any and all other
agreements,  either oral or in writing,  between the parties with respect to the
subject  matter of this  Agreement  other  than that  certain  Change in Control
Agreement  between the parties and contains all of the covenants and  agreements
between  the  parties  with  respect  thereto.  Each  party  to  this  Agreement
acknowledges that no other representations, inducements, promises or agreements,
oral or  otherwise,  have been made by any party,  or anyone acting on behalf of
any  party,  which  are not set  forth  herein,  and  that no  other  agreement,
statement or promise not contained in this  Agreement  shall be valid or binding
on either party.

         10.10  MODIFICATIONS.  Any  modification  of this  Agreement  shall  be
effective  only if it is in writing  and  signed by each  party or such  party's
authorized representative.

         10.11 PARAGRAPH HEADING.  The paragraph headings used in this Agreement
are included  solely for the  convenience of the parties and shall not affect or
be used in connection with the interpretation of this Agreement.

         10.12 GOVERNING LAW. The laws of the State of California, except to the
extent preempted by any federal laws of the United States and, where applicable,
the rules and regulations of: (i) the California  Superintendent  of Banks; (ii)
the Board of Governors of the Federal Reserve System;  (iii) the Federal Deposit
Insurance  Corporation;  or (iv) any other  regulatory  agency  or  governmental
authority  having  jurisdiction  over the  Employer,  shall govern the validity,
interpretation, construction and effect of this Agreement.

    IN WITNESS  WHEREOF,  the  Employer and the  Executive  have  executed  this
Agreement  on  the  date  first  written  above  in  the  City  of  Bakersfield,
California.

EMPLOYER:                               EXECUTIVE:

SAN JOAQUIN BANK


By:  /s/ Bart Hill                         /s/ Bruce Maclin
   --------------------------------      --------------------------------
    Bart Hill, President                  Bruce Maclin


By:  /s/ Stephen Annis
   --------------------------------
    Stephen Annis, CFOCashier

                                       13


                                  SCHEDULE "A"

NUMBER OF COMPLETE YEARS WHICH
HAVE ELAPSED SINCE INCEPTION OF


             THE PLAN                        APPLICABLE PERCENTAGE
             --------                        ---------------------

                 1.......................................10%
                 2.......................................20%
                 3.......................................30%
                 4.......................................40%
                 5.......................................50%
                 6.......................................60%
                 7.......................................70%
                 8.......................................80%
                 9.......................................90%
                 10.....................................100%

                                       14


                                   EXHIBIT B
                                   ---------


                         SALARY CONTINUATION AGREEMENT

                            BENEFICIARY DESIGNATION


I designate the following as beneficiary of any death benefits under the
Salary Continuation Agreement:

Primary:
         --------------------------------------------------------------------

Contingent:
            -----------------------------------------------------------------

Note: To name a trust as benericiary, please provide the name of trustee and the
      EXACT date of the trust agreement.

I understand  that I may change these  beneficiary  designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically  revoked if the beneficiary  predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.


Signature
          ---------------------------------------------------


Date
     --------------------------------------


Accepted by the Company this __ day of ________________, 199__.


By
   --------------------------------------------------

Title
      -------------------------------------------

EX-99

                                                                   Exhibit 99.12

                              AMENDED AND RESTATED
                     EXECUTIVE SALARY CONTINUATION AGREEMENT
                     ---------------------------------------

        THIS AGREEMENT is made and entered into this 18th day of June,  2004, by
and between SAN JOAQUIN  BANK,  a  corporation  organized  under the laws of the
State of California (hereinafter referred to as the "Employer"),  and BART HILL,
an individual  residing in the State of California  (hereinafter  referred to as
the  ("Executive").  This  Agreement  is  an  amendment  and  restatement  of an
agreement  between the parties  that was  originally  entered into on October 3,
1996, and was most recently amended and restated on June 3, 2003.

                                    RECITALS
                                    --------

        WHEREAS,  the Executive is an employee of the Employer and is serving as
the Chairman of its Board of Directors.

        WHEREAS, the Executive's  experience and knowledge of the affairs of the
Employer and the banking industry are extensive and valuable;

        WHEREAS,  it is deemed to be in the best  interests  of the  Employer to
provide the Executive with certain salary  continuation  benefits,  on the terms
and conditions set forth herein,  in order to reasonably induce the Executive to
remain in the Employer's employment; and

        WHEREAS,  the  Executive and the Employer wish to specify in writing the
terms and conditions upon which this additional  compensatory  incentive will be
provided to the Executive,  or to the Executive's designated  beneficiaries,  as
the case may be;

        NOW, THEREFORE,  in consideration of the services to be performed in the
future,  as well as the mutual  promises and  covenants  contained  herein,  the
Executive and the Employer agree as follows:

                                    AGREEMENT
                                    ---------

        1.   Terms and Definitions.
             ---------------------

             1.1   ADMINISTRATOR.  The Employer shall be the "Administrator" and
solely  for  Purposes  of  ERISA,  the  "fiduciary"  of this  Agreement  where a
fiduciary is required by ERISA.

             1.2   ANNUAL  BENEFIT.  The  term  "Annual  Benefit"  shall mean an
annual amount of $ 220000,  which  represents fifty percent (50%) of Executive's
total compensation as of June 15, 2004, of S 440,000 determined by adding annual
salary of $ 240,000 to the bonus of $200,000  awarded to Executive in January of
2004. In any year that Executive's total compensation (current salary plus bonus
paid in such year) increases, the annual benefit shall be increased to an amount
equal to fifty percent (50%) of such total  compensation.  No decrease in Annual
Benefit  shall be made in any year when  Executive's  total  compensation  shall
decrease,  whether by reason of a decrease in regular  payroll  payments or by a
decrease in or  elimination of bonus that  Employer's  Board of Directors may by
resolution  duly passed and  communicated in  writing to  Executive,  freeze the



Annual  Benefit  at a given  dollar  amount  but may not  decrease  a level once
established.  Once the payment of the Annual Benefit has  commenced,  the Annual
Benefit  shall be  increased  annually by at least the  increase in the Consumer
Price Index  ("CPI") for the  preceding  calendar  year,  up to a maximum of two
percent (2%); provided, however, such maximum shall be increased up to the total
dollar amount that all past  aggregate  CPI increases to the Annual  Benefit are
less than the dollar amount of all potential aggregate  increases  determined as
if the CPI had actually  been two percent (2%) in all such past years.  Thus, if
in a year the Annual  Benefit could have  increased by $3,500 but only increased
by $2,000  because actual CPI was less than 2%, the $1,500  difference  shall be
used in the future to increase the Annual Benefit when CPI is greater than 2%.

             1.3   APPLICABLE PERCENTAGE. The term "Applicable Percentage" shall
mean that percentage listed on Schedule "A," attached hereto,  which is adjacent
to the number of complete years (with a "year" being the performance of personal
services  for or on behalf of the  Employer as an  employee  for a period of 365
days) which have elapsed  starting  from  Effective  Date of this  Agreement and
ending on the date the  Executive's  employment  terminates for purposes of this
Agreement.  In the event that Executive's employment with Employer is terminated
other  than by reason  of death,  Disability  or  Retirement  on the part of the
Executive,  Executive  shall be deemed for purposes of determining the number of
complete  years to have  completed  a year of  service in its  entirety  for any
partial year of service after the last  anniversary  date of the Effective  Date
during which the Executive's employment is terminated, provided that in no event
shall  Executive  be deemed to have  completed a year of service for any partial
year if the partial  year  occurs  prior to the first  anniversary  date of this
Agreement.  For purposes of this Agreement,  employment shall include service on
the Employer's Board of Directors regardless of whether Executive continues as a
common law employee of the Employer.

             1.4   BENEFICIARY.   The   term   "beneficiary"    or   "designated
beneficiary" shall mean the person or persons whom the Executive shall designate
in a valid  Beneficiary  Designation,  a copy of which  is  attached  hereto  as
Exhibit "B," to receive any Joint and Survivor Annuity payments to be made after
the death of the Executive and the Spouse.  A Beneficiary  Designation  shall be
valid only if it is in the form  attached  hereto and made a part  hereof and is
received by the Administrator prior to the Executive's death.

             1.5   CODE. The term "Code" shall mean the Internal Revenue Code of
1986, as amended (the "Code").

             1.6   DISABILITY/DISABLED.  The  term  "Disability"  or  "Disabled"
shall mean a  physical  or mental  impairment  which is of such  permanence  and
degree  that  Executive  is unable  because of such  impairment  to perform  any
gainful activity for the Employer for which the Executive is suited by virtue of
experience, training or education. A finding of Disability shall be supported by
any one or more of the following;

             (a)   Written  certification  from a physician  that is licensed to
practice  medicine in the state in which the  physician  treated  the  Executive
indicating  that the Executive has a physical or mental  impairment  which is of
such  permanence  and  degree  that the  Executive  is  unable  because  of such

                                       2


impairment  to perform  any  gainful  activity  for the  Employer  for which the
Participant is suited by virtue of experience, training or education; or

             (b)   Written  notification from the principal long term disability
plan offered by the Employer  covering the Executive  ("LTD  Plant")  indicating
that the  Executive has been  determined by the LTD Plan to meet the  disability
requirements  necessary to obtain long term  disability  benefits  under the LTD
Plan; or

             (c)   Written notification from the Social Security  Administration
that the Executive has been  determined to have been disabled  under Title II or
Title XVI of the Social Security Act.

        Notwithstanding  the  foregoing,  in no event  shall  the  Executive  be
treated as Disabled and thereby entitled to benefits under this Agreement if the
Executive is performing  services in any capacity for a "competitor," as defined
in Section 3.6.

             1.7   Early  Retirement  Date. The term Early Retirement Date means
the  Retirement (as defined below) of the Executive on a date which occurs after
Executive has attained age sixty (60).

             1.8   Effective Date. The term "Effective Date" shall mean the date
upon which the Executive Salary Continuation Plan was originally approved by the
Board of Directors of Employer, to wit, October 3, 1996.

             1.9   ERISA.  The term "ERISA"  shall mean the Employee  Retirement
Income Security Act of 1974, as amended.

             1.10  Joint  and  Survivor  Annuity.  The term "Joint and  Survivor
Annuity"  shall  mean a stream  of  payments,  each one of which is equal to one
hundred  percent (100%) of the Annual  Benefit,  that is paid on an annual basis
over a period  of time  that  continues  until the later of (i) the death of the
last to die of the Executive or the Spouse or (ii) the expiration of twelve (12)
years from the Executive's  Retirement  Date. The payment of one hundred percent
(100%) of the Annual  Benefit in the form of the Joint and  Survivor  Annuity is
based upon the  assumption  that such  payments  would begin on the  Executive's
Retirement Date and the life expectancies of the Executive and the Spouse on the
Retirement Date. Accordingly,  if payments of the Annual Benefit are to begin on
a date that is earlier or later than the Executive's Retirement Date, the Annual
Benefit will be actuarially  adjusted to reflect the increased or decreased life
expectancies,  respectively,  over which the Annual  Benefit is to be paid.  For
purposes  of  making  such  actuarial  adjustments,  life  expectancy  shall  be
computed.  using the expected  return  multiples in Table V of section 1.72-9 of
the United States Federal Treasury Regulations and a capitalization rate of five
percent (5%).

             1.11  PLAN YEAR. The term "Plan Year" shall mean the calendar year.

             1.12  RETIREMENT.  The  term  "Retirement" or "Retires" shall refer
to the date (on or after the Retirement Date or Early  Retirement Date) or which
the Executive gives notice of his intent to retire and substantially reduces the
scope of his employment with the Employer.

                                       3


             1.13  RETIREMENT DATE. Retirement Date means the date the Executive
reaches age sixty-five (65).

             1.14  SALE OF BUSINESS.  The  term "Sale of  Business"  shall means
any (ii) merger,  consolidation or  reorganization  of the Employer in which (a)
the  Employer  does not survive or (b) the  Employer  survives  with a resulting
change in  beneficial  ownership  of the Employer of more than 50% of the voting
shares of the Employer,  (ii) sale of more than 50% of the beneficial  ownership
of the voting shares of the Employer to any person or group or persons acting in
concert,  (iii) transfer or sale of more than 50o1a of the total market value of
the assets of Employer as reflected in the most recent  published  balance sheet
of the Employer,  or (iv) turnover of greater than 501/o of the Employer's Board
of Directors  during any  consecutive  twenty-four  month period,  excluding for
purposes of both the  numerator  and  denominator,  directors  who  terminate by
reasons of death or disability.  The creation of the bank holding company, to be
named  San  Joaquin  Bancorp-,  a  California  corporation,  and the  subsequent
acquisition  of San  Joaquin  Bank,  a  California  corporation,  by San Joaquin
Bankcorp.  does not constitute a "Sale of Business" under this Section 1.14. For
purposes of this Section 1.14 only, the term  "Employer"  shall mean San Joaquin
Bank and/or San Joaquin Bancorp.

             1.15  Spouse.  The term "Spouse" shall mean Napier Hill, who is the
person legally married to the Executive on the date of this Agreement.

        2.   Scope, Purpose and Effect.
             -------------------------

             2.1   CONTRACT OF  EMPLOYMENT.  Although this Agreement is intended
to provide the Executive with an additional incentive to remain in the employ of
the  Employer,  this  Agreement  shall not be deemed to constitute a contract of
employment  between the Executive  and the Employer,  nor shall any provision of
this  Agreement  restrict or expand the right of the Employer to  terminate  the
Executive's  employment.  This Agreement shall have no impact or effect upon any
separate  written  Employment  Agreement  which the  Executive may have with the
Employer,  it being the  parties'  intention  and  agreement  that  unless  this
Agreement  is  specifically  referenced  in said  Employment  Agreement  (or any
modification thereto), this Agreement (and the Employer's obligations hereunder)
shall stand  separate and apart and shall have no effect  upon,  nor be affected
by, the terms and provisions of said Employment Agreement.

             2.2   FRINGE BENEFIT.  The benefits  provided by this Agreement are
granted by the Employer as a fringe  benefit to the Executive and are not a part
of any salary  reduction plan or any  arrangement  deferring a bonus or a salary
increase.  The Executive has no option to take any current  payments or bonus in
lieu of the benefits  provided by this  Agreement.  The benefits  provided under
this Agreement are in lieu of any benefits that  otherwise  would be provided to
Executive under that certain Life Insurance Endorsement Method Split Dollar Plan
Agreement  between the Employer and the Executive,  which the parties agree will
be cancelled and thereunder be of no further force and effect.

             2.3   Tax Effect of Payments.
                   ----------------------

             (a)   GROSS-UP PAYMENT. In the event that it is determined that any
payment or  distribution of any type to or for the benefit of the Executive made
by the Employer, by any of its affiliates,  by any person who acquires ownership
or effective  control of the Employer or ownership of a  substantial  portion of

                                       4


the  Employer's  assets  (within  the  meaning of section  280G of the  internal
Revenue Code of 1986, as amended, and the regulations thereunder (the "Code") or
by any  affiliate of such  person,  whether  paid or payable or  distributed  or
distributable  pursuant to the terms of this  Agreement or otherwise (the "Total
Payments"),  would be subject to the excise tax  imposed by section  4999 of the
Code or any interest or  penalties  with respect to such excise tax (such excise
tax,  together with any such interest or penalties are collectively  referred to
as the  "Excise  Tax"),  then the  Executive  shall be  entitled  to  receive an
additional  payment  (a  "Gross-Up  Payment")  in an amount  that shall fund the
payment by the Executive of any Excise Tax on the Total  Payments as well as all
income  taxes  imposed on the  Gross-Up  Payment,  any Excise Tax imposed on the
Gross-Up Payment and any interest or penalties  imposed with respect to taxes on
the Gross-Up Payment or any Excise Tax.

             (b)   DETERMINATION  BY AUDITORS.  All mathematical  determinations
and all  determinations  of whether  any of the Total  Payments  are  "parachute
payments"  (within the meaning of section 280G of the Code) that are required to
be made  under this  Section  2.3,  including  all  determinations  of whether a
Gross-Up  Payment is  required,  of the amount of such  Gross-Up  Payment and of
amounts  relevant to the last sentence of this Section 2.3, shall be made by the
independent  auditors retained by the Employer most recently prior to the change
of  control  (the  "Auditors"),  who  shall  provide  their  determination  (the
"Determination"),  together with detailed supporting  calculations regarding the
amount of any  Gross-Up  Payment  and any  other  relevant  matters  both to the
Employer and to the Executive  within seven (7) business days of the Executive's
termination  date,  if  applicable,  on such earlier time as is requested by the
Employer or by the Executive (if the Executive  reasonably  believes that any of
the Total Payments may be subject to the Excise Tax). If the Auditors  determine
that no Excise Tax is payable by the  Executive,  it shall furnish the Executive
with a written statement that such Auditors have concluded that no Excise Tax is
payable  (including the reasons therefor) and that the Executive has substantial
authority  not to report any Excise Tax on the  Executive's  federal  income tax
return.  If a Gross-Up Payment is determined to be payable,  it shall be paid to
the Executive within five (5) business days after the Determination is delivered
to the Employer or the  Executive.  Any  determination  by the Auditors shall be
binding upon the Employer and the Executive, absent manifest error.

             (c)   UNDERPAYMENTS AND OVERPAYMENTS. As a result of uncertainty in
the  application  of  section  4999  of the  Code  at the  time  of the  initial
determination by the Auditors  hereunder,  it is possible that Gross-Up Payments
not made by the Employer should have been made ("Underpayments' or that Gross-Up
Payments  will have been made by the  Employer  which  should not have been made
("Overpayments").  In either event,  the Auditors shall  determine the amount of
the  Underpayments  or  Overpayment  that  has  occurred.  In  the  case  of  an
Underpayment,  the amount of such  Underpayment  shall  promptly  be paid by the
Employer to or for the benefit of the Executive.  In the case of an Overpayment,
the Executive  shall,  at the  direction and expense of the Employer,  take such
steps as are  reasonably  necessary  (including the filing of returns and claims
for refund), follow reasonable instructions from, and procedures established by,
the Employer and  otherwise  reasonably  cooperate  with the Employer to correct
such overpayment; provided,  however,  that (i) the Executive  shall in no event
be obligated to return to the Employer an amount  greater than the net after-tax
portion of the Overpayment that the Executive has retained or has recovered as a
refund from the applicable taxing authorities,  and (ii) this provision shall be
interpreted in a manner consistent with the intent of this Section 2.3, which is
to make the Executive  whole, on an after tax basis,  for the application of the
Excise Tax, it being understood that the correction of an Overpayment may result

                                       5


in the  Executive's  repaying to the  Employer an amount  which is less than the
Overpayment.

        3.   Payments of Annual Benefit.
             --------------------------

             3.1   PAYMENTS  AT OR  AFTER  RETIREMENT.  If the  Executive  shall
remain in the continuous  employment of the Employer until his Retirement  Date,
the Annual Benefit, as defined above, shall be paid in the form of the Joint and
Survivor Annuity. Each year the Annual Benefit will be paid in twelve (12) equal
monthly payments on the first day of each month during the year,  beginning with
the month following the Retirement Date. If the Executive  continues  employment
after his Retirement  Date,  payment of his Annual Benefit shall commence on the
date of his actual  Retirement  and such  Annual  Benefit  shall be  actuarially
adjusted in accordance with Section 1.10 to reflect the  postponement of payment
of the Annual Benefit.

             3.2   PAYMENTS IN THE EVENT OF DEATH.  If the Executive dies before
he  actually  Retires,  the  Executive's  Annual  Benefit  shall be  reduced  by
determining the discounted value of the Annual Benefit based on a capitalization
rate of five percent  (4%) for the period of time,  if any, by which the date of
the Executive's  death is earlier than the Executive's  normal  Retirement Date.
The  Applicable  Percentage  shall be one  hundred  percent  (100%)  and  annual
payments of 100% of the Annual Benefit, as adjusted herein, shall be made to the
Spouse or  Beneficiary,  as the case may be, until the later of (i) the death of
the Spouse or (ii) the  expiration  of twelve  (12)  years from the  Executive's
Retirement  Date,  with  each  installment  to be paid on the  first day of each
month,   commencing  with  the  month  following  the  Executive's  death.  Each
installment shall consist of one-twelfth (1/12) of the Applicable  Percentage of
the Annual Benefit, as actuarially adjusted in accordance with Section 1.10.

             3.3   PAYMENTS IN THE EVENT OF DISABILITY. If the Executive becomes
Disabled while  actively  employed by the Employer at any time after the date of
this Agreement but prior to Retirement, the Executive shall: (i) for purposes of
this Section 3.3 only continue to be treated during such period of Disability as
being gainfully  employed by the Employer with an annual  compensation equal to.
his annual compensation at the time of Disability, increased by two percent (2%)
each year thereafter,  provided,  however,  the Executive shall not by virtue of
this provision actually be paid salary by the Employer and shall not be credited
with  additional  years of service  during the  Executive's  Disability  for the
purpose of determining  the Annual Benefit ; and (ii) be entitled to be paid the
Applicable Percentage,  of the Annual Benefit, as set forth on Schedule "A," for
life, with each  installment to be paid on the first day of each month beginning
with the month  following  the month in which the  Executive  attains sixty five
(65) years of age. If Executive ceases to receive Disability  benefits under the
Executive's  principal  Disability  insurance policy and does not, at such time,
return to, and  thereafter  fulfill the  responsibilities  associated  with, the
employment  position held with the Employer prior to becoming Disabled by reason
of such Disability continuing, then Executive shall receive for life payments of
the Applicable  Percentage of the annual  Benefit,  as  actuarially  adjusted in
accordance  with  Section  1.10j.  Notwithstanding  anything to the contrary set
forth in this Section 3.3, if the Executive is eligible for Early  Retirement at
the time Executive becomes Disabled,  the Executive may elect, by giving written
notice to the Employer,  to take Early Retirement  benefits under Section 3.6 in
lieu of Disability benefits under this Section 3.3.

                                       6


             3.4   PAYMENTS IN  THE EVENT  EMPLOYMENT  IS  TERMINATED  BY REASON
OTHER THAN  DISABILITY,  SALE OF BUSINESS,  EARLY  RETIREMENT OR RETIREMENT.  As
indicated in Section 2.1 above, the Employer reserves the right to terminate the
Executive's  employment  with  or  without  cause  but  subject  to any  written
employment  agreement  which may then exist in the event that the  employment of
the Executive is terminated  prior to the Early  Retirement  Date for any reason
other than by reason of Disability or Sale of Business,  the Executive  shall be
entitled  to be  paid  the  Applicable  Percentage  of the  Annual  Benefit,  as
determined  by the  applicable  years of service at the time of the  Executive's
termination of employment  with the Employer.  The method for paying such amount
shall be the Joint and Survivor Annuity, with each installment to be paid on the
first day of each month,  beginning with the month  following the month in which
the Executive attains sixty-five (65) years of age.

             3.5   SALE OF  BUSINESS.  In the event there is a Sale of Business,
the Executive  shall be entitled to be paid,  in lieu of all benefits  otherwise
payable under this  Agreement,  a lump sum determined by calculating the present
value of the payment of the Annual Benefit specified in Section 1.2 for the life
of Executive and his Spouse based on a capitalization rate of five percent (5%),
provided,  however,  if at  the  time  of a Sale  of  Business  payments  to the
Executive have already begun due to Retirement,  Early  Retirement or Disability
of the Executive,  the lump sum payment shall be the Annual Benefit (reduced, if
applicable,  by the Applicable Percentage determined in accordance with Schedule
"A")  times the  number  of years (or  fraction  thereof)  remaining  to be paid
reduced to present  value based on a  capitalization  rate of five percent (5%).
Discounting  to determine  present  value refers to a discount to determine  the
present  value of a stream of payments for the  remaining  years of  Executive's
life and that of his Spouse  (actuarially  projected) but shall not (in the case
of an Executive who has not  presently  begun to receive  payments)  reflect any
discount  for the period of time  starting  with the Sale of Business and ending
with the  Executive's  Retirement  Date.  For purposes of this Section 3.5, life
expectancy  shall be computed using the expected return  multiples in Table V of
section 1.72-9 of the United States Federal Treasury Regulations.

             3.6   PAYMENTS IN THE EVENT THE EXECUTIVE ELECTS EARLY  RETIREMENT.
If the Executive shall remain in the continuous employment of the Employee until
his Early Retirement Date and shall then Retire,  the Executive's Annual Benefit
shall be reduced by determining the discounted value of the Annual Benefit based
on a capitalization rate of five percent (5%) for the period of time between the
elected Early  Retirement Date and the Executive's  normal  Retirement Date. The
Applicable  Percentage  shall be 100%  and the  method  for  paying  the  Annual
Benefit, as adjusted herein, shall be the Joint and Survivor Annuity,  with each
installment  to be paid on the first day of each month,  following  the month of
the Executive's Early Retirement.  Each installment shall consist of one-twelfth
(1/12)  of  the  Applicable   Percentage  on  the  reduced  Annual  Benefit,  as
actuarially  adjusted in  accordance  with Section  1.10.  Prior to the date the
Executive  reaches age  sixty-five  (65),  no payments  shall be made under this
Section 3.6 during any period in which the Executive is performing  services for
a competitor of the Employer.  Such payments shall be forfeited and shall not be
used  to  actuarially   increase  the  Early  Retirement  payments  which  shall
recommence  upon the earlier of the date the  Executive  reaches age  sixty-five
(65) or ceases to work for such competitor. The term "competitor" shall refer to
a  business  entity  conducting  a  business  competitive  to one  conducted  by
Employer, but only if the Executive is providing services in a California county
where Employer conducts business.

                                       7


        4.   Executive Retiree Medical Benefits.
             ----------------------------------

             4.1   ELIGIBILITY.  The   Executive  and/or  the  Spouse  shall  be
entitled to receive the retiree  medical  benefits  described  in this Section 4
(the  "Executive  Retiree  Medical  Benefits")  if one or more of the  following
requirements are met:

             (a)   The  Executive  becomes  entitled  to  payment of  all or any
portion of the Annual  Benefit due to termination of the Executive' s employment
by reason of Disability, Sale of Business, Early Retirement, or Retirement.

             (b)   The  Executive  while  employed by the  Employer is no longer
eligible for coverage for the medical, dental and vision benefits offered by the
Employer to its then similarly  situated  currently  active  employees under its
group  health plan  because the number of hours per week that the  Executive  is
employed by the Employer has fallen below the minimum  number of hours  required
in order to be eligible for coverage  for  medical,  dental and vision  benefits
under the Employer's group health plan;

             (c)   The Executive is no longer eligible for coverage for medical,
dental and/or vision benefits because the Employer no longer offers group health
plan coverage to its employees; or

             (d)   The spouse becomes  entitled to payment of all or any portion
of the Annual Benefit in accordance with Section 3.2 of this Agreement.

             4.2   EXECUTIVE RETIREE MEDICAL BENEFITS. Subject to the provisions
set forth below, if the foregoing eligibility requirements are met, the Employer
will  provide  the  Executive  and/or the Spouse  with  access to  coverage  for
medical,  dental and vision  benefits  under any such option then offered by the
Employer to its then similarly  situated  currently  active  employees under the
Employer's group health plan, or subject to the limitations set forth in Section
4.6 under  individual  policies.  The Employer  will pay 100% of the cost of the
premium, or in the case of a self-funded plan, 100% of the cost of coverage, for
the selected coverage for the duration of the lifetime of the Executive.

             4.3   DURATION OF PROVISION OF COVERAGE.

             (a)   GENERAL.  Subject to the provisions  set forth below,  if the
foregoing  eligibility  requirements  are met, both the Executive and the Spouse
shall be entitled to receive Executive Retiree Medical Benefits for the duration
of other Executive's lifetime.

             (b)   DEATH OF  EXECUTIVE.  Subject to the  provision  set forth in
Section 4.3(c) below, in the event of the  Executive's  death prior to the death
of the Spouse and  following  the  commencement  of the  provision  of Executive
Retiree  Medical  Benefits to the Executive and the Spouse,  the Spouse shall be
entitled to continue  to receive  Executive  Retiree  Medical  Benefits  for the
duration of the Spouse's lifetime.  If the Spouse becomes entitled to payment of
all or any portion of the Annual Benefit in accordance  with Section 3.2 of this
Agreement,  then the  Spouse  shall be  entitled  to receive  Executive  Retiree
Medical Benefits for the duration of the Spouse's lifetime.

                                       8


             (c)   EFFECT  OF  DIVORCE;  NEW  SPOUSE.  In  the  event  that  the
Executive and the Spouse divorce prior to the  commencement  of the provision of
Executive  Retiree  Medical  Benefits to the  Executive,  the Spouse will not be
eligible to receive  Executive  Retiree  Medical  Benefits and shall  instead be
eligible for COBRA  continuation  coverage in accordance  with the provisions of
the Employer's group health plan, if applicable. If the Executive and the Spouse
divorce following the commencement of the provision of Executive Retiree Medical
Benefits to the Executive and/or Spouse,  then the Spouse shall cease to receive
Executive   Retiree  Medical  Benefits  and  shall  become  eligible  for  COBRA
continuation  coverage in accordance with the provisions of the Employer's group
health plan, if applicable. If following a divorce from the Spouse the Executive
acquires a new spouse,  the Employer may elect in its sole discretion to provide
Executive Retiree Medical Benefits to the new spouse.  However,  the Employer is
under no obligation to provide  Executive  Retiree  Medical  Benefits to the new
spouse.

             4.4   COMPLIANCE   WITH  EMPLOYER   POLICIES  AND   PROGRAMS.   The
Employer's  obligation  to provide  Executive  Retiree  Medical  Benefits to the
Executive  and/or Spouse under this Agreement is subject to the Executive and/or
Spouse's  compliance  with  any  applicable  requirements  as set  forth  in the
medical,  dental and/or vision benefit  programs for which the Executive  and/or
Spouse  have  selected  coverage,  as  then in  effect.  The  provisions  of the
Executive  Retiree Medical  Benefits options are set forth in detail in coverage
certificates,  insurance policies, and plan descriptions, as then in effect, the
terms of which are incorporated  herein.  If the Executive and/or Spouse fail to
comply with any such applicable  requirements,  then notwithstanding anything to
the  contrary  herein,  the  Employer  will have no  obligation  to  commence or
continue to provide access to coverage for medical,  dental and vision  benefits
or payment  for any  portion of the  premium  or cost of such  benefits  for the
Executive  and/or Spouse,  or any benefit or payment in lieu of such benefits to
the Executive and/or Spouse.  Notwithstanding  the foregoing,  the limitation of
the Employer's  obligation to provide  Executive Retiree Medical Benefits to the
Executive  and/or  Spouse as set forth in this  Section 4.4 shall not apply with
respect to the Executive's  and/or  Spouse's  failure to comply with any initial
eligibility  requirements  as set  forth in the  medical; dental  and/or  vision
benefit programs for which the Executive and/or Spouse have selected coverage.

             4.5   LIMITATION   OF  EMPLOYER'S  OBLIGATION  TO  PROVIDE  RETIREE
MEDICAL BENEFITS.  Notwithstanding anything to the contrary herein, the Employer
will have no  obligation  to commence or continue to provide  access to coverage
for medical,  dental and vision  benefits  under the  Employer's  group  medical
insurance policies or, if applicable,  a self funded group medical benefit plan,
or payment for any portion of the premium or cost of benefits for the  Executive
and/or  Spouse to the extent that the Employer is unable to cover one or both of
such individuals under its group medical  insurance  policies or the Employer no
longer has group insurance policies or a self funded group medical benefits plan
that covers similarly situated currently active employees.

             4.6   PROVISION  OF  COVERAGE  UNDER  INDIVIDUAL  POLICIES.  To the
extent  Section  4.5  applies,  the  Employer  shall seek to  provide  access to
coverage for medical,  dental and/or vision benefits under individual  insurance
policies for the  Executive  and/or  Spouse.  The Employer  shall pay the entire
premium for such  individual  insurance  policies  if the cost of an  individual
policy for the Executive and/or the Spouse does not exceed three  times the cost

                                       9


of coverage of a similarly situated currently active employee's policy under the
Employer's  group  medical  insurance  policy as most  recently  in effect  (the
"Maximum  Covered  Premium").  If the  cost  of an  individual  policy  for  the
Executive  and/or 9 the Spouse exceeds the Maximum  Covered Premium at any time,
then the  Executive  may  elect to pay the cost of  coverage  that  exceeds  the
Maximum  Covered  Premium (and the Employer  will pay the cost of coverage up to
the Maximum  Covered  Premium) (and thereby obtain  coverage under an individual
policy for the Executive and/or the Spouse.  If the Executive and/or Spouse fail
to pay  required  monthly  premiums  or elect to  discontinue  coverage  for the
Executive  and/or the Spouse,  the Executive  and/or  Spouse may not  recommence
coverage in the future.  If the cost of individual  policy coverage would exceed
the Maximum Covered Premium and the Executive does not elect to pay for the cost
of coverage that exceeds the Maximum Covered Premium, then Employer will have no
obligation to provide Executive Retiree Medical Benefits to the Executive and/or
Spouse or any  benefit  or  payment in lieu of such  benefits  to the  Executive
and/or Spouse.  However,  the Employer may elect to provide such benefits to the
Executive and/or Spouse, in the Employer's sole discretion.

             4.7   EXECUTIVE   RETIREE  MEDICAL  BENEFITS  ARE  SECONDARY.   All
benefits  payable to or on behalf of the Executive and/or Spouse under the terms
of this Agreement are secondary to all other medical benefits that the Executive
and/or  Spouse re eligible to receive from any other  source,  including but not
limited to Medicare.

             4.8   NON-COMPLETE.  The  Executive and Spouse will not be eligible
to receive  Executive  Retiree Medical  Benefits if the Executive is employed by
any other  financial  institution  following  retirement  from San Joaquin Bank,
unless San Joaquin Bank elects, in its sole discretion, to waive this condition,
"Employment"  in this context  includes all forms of employment,  both full time
and  part  time,  as well as any form of  consulting,  whether  paid or  unpaid.
"Financial  institution" means any for profit or non-profit  business enterprise
that  provides  services  that are the  same as or are  similar  to any  service
provided by San Joaquin  Bank.  Executive  Retiree  Medical  Benefits  cannot be
reinstated  once the  Executive  and Spouse  have become  ineligible  to receive
Executive Retiree Medical Benefits due to the  Executive's employment by another
financial  institution,  unless San Joaquin Bank elects, in its sole discretion,
to waive this condition.

        5.   RABBI TRUST. The Employer shall establish a grantor trust (commonly
referred to as a "rabbi trust") and  contribute  assets to such trust to provide
for the payment of the amounts which may become  payable to the  Executive,  the
Executive's  spouse  or the  Executive's  beneficiaries  under the terms of this
Agreement.  The Executive  shall not have any  ownership  interest in the assets
held in such  trust.  The assets of such trust  shall only be  available  to the
Employer in the event of bankruptcy or insolvency of the Employer, in which case
the benefits shall be available to the Employer's general creditors.

        6.   TAX TREATMENT. The Employer's obligation to pay benefits under this
Agreement  is not  contingent  on  the  tax  treatment  of  any  such  benefits,
regardless  of  whether  there is a change  in the law with  respect  to the tax
treatment of such benefit after the Effective Date of this Agreement.

        7.   CLAIMS PROCEDURE. The claims  procedure  applicable  to a claim for
benefits under this Agreement is as set forth on Addendum A, attached hereto.

        8.   STATUS OF AN UNSECURED  GENERAL  CREDITOR. Notwithstanding anything
contained  herein to the contrary:  (i) neither the Executive,  the  Executive's
spouse nor the Executive's beneficiary shall have any legal or equitable rights,
interests or claims in  or to any  specific property  or assets of the Employer,

                                       10


(ii) except as expressly  provided  for herein,  none of the  Employer's  assets
shall be held in or under  any  trust  for the  benefit  of the  Executive,  the
Executive's spouse or the Executive's beneficiary or held in any way as security
for the  fulfillment of the  obligations  of the Employer under this  Agreement,
(iii) all of the Employer's assets shall be and remain the general unpledged and
unrestricted assets of the Employer;  (iv) the Employer's  obligation under this
Agreement shall be that of an unfunded and unsecured  promise by the Employer to
pay money in the future;  and (v) the Executive,  the Executive's spouse and the
Executive's beneficiary shall be unsecured general creditors with respect to any
benefits which may be payable under the terms of this Agreement.

        9.   COVENANT NOT TO  INTERFERE.  The  Executive  agrees not to take any
action  which  prevents the Employer  from  collecting  the proceeds of any life
insurance policy or annuity which the Employer or the trust described in Section
5 may happen to own at the time of the  Executive's  Retirement  or death and of
which the Employer is the designated beneficiary.

        10.  MISCELLANEOUS.

             10.1  OPPORTUNITY  TO  CONSULT  WITH  INDEPENDENT   COUNSEL.    The
Executive acknowledges that he has been afforded the opportunity to consult with
independent  counsel of his choosing  regarding both the benefits granted to him
under the terms of this Agreement and the terms and conditions  which may affect
the Executive's right to these benefits. The Executive further acknowledges that
he has read, understands and consents to all of the terms and conditions of this
Agreement,  and that he enters into this Agreement with a full  understanding of
its terms and conditions.

             10.2  LARCENY  CONVICTION.  In  the event that the  Executive  duly
convicted by a court of competent  jurisdiction of a felony charge of robbing or
embezzling from the Employer  whereby the Employer  suffers loss, then upon such
conviction,  the Employer is not obligated to make any payments provided by this
Agreement or any further payments,  if payments have already begun. This Section
10.2 is not intended to put the Executive's  receipt of payments in jeopardy for
business decisions made during the ordinary course of employment.

             10.3  ATTORNEY'S  FEES.  In   the  event   of  any  arbitration  or
litigation  concerning  any  controversy,  claim or dispute  between the parties
hereto,  arising out of or relating to this Agreement or the breach  hereof,  or
the  interpretation  hereof,  the prevailing  party shall be entitled to recover
from the losing party reasonable expenses, attorneys' fees and costs incurred in
connection  therewith or in the  enforcement  or  collection  of any judgment or
award rendered therein. The "prevailing party" means the party determined by the
arbitrator(s) or court, as the case may be, to have most nearly prevailed,  even
if such party did not prevail in all matters,  not  necessarily the one in whose
favor a judgment is rendered.

             10.4  NOTICE.  Any  notice  required  or  permitted  of  either the
Executive or the Employer under this Agreement shall be deemed to have been duly
given,  if by  personal  delivery,  upon the date  received  by the party or its
authorized  representative,  if by facsimile,  upon  transmission to a telephone
number previously  provided by the party to whom the facsimile is transmitted as
reflected  in the  records  of the party  transmitting  the  facsimile  and upon
reasonable  confirmation of such transmission; and if by  mail, on the third day
after  mailing via U.S.  first  class mail,  registered  or  certified,  postage
prepaid and return receipt requested,  and addressed to the party at the address

                                       11


given  below for the  receipt  of  notices,  or such  changed  address as may be
requested in writing by a party.

If to the Employer:                        Bruce Maclin
                                           Chairman of the Board
                                           San Joaquin Bank
                                           Post Office Box 9129
                                           Bakersfield, CA 93389

If to the Executive:                       Bart Hill
                                           2231 Pine Street
                                           Bakersfield, CA 93301

             10.5  ASSIGNMENT.  Neither  the Executive,  the Executive's spouse,
nor any other  beneficiary under this Agreement shall have any power or right to
transfer, assign,  hypothecate,  modify or otherwise encumber any part or all of
the amounts  payable  hereunder,  nor,  prior to payment in accordance  with the
terms of this  Agreement,  shall any portion of such  amounts be: (i) subject to
seizure by any creditor of any such  beneficiary,  by a proceeding  at law or in
equity for the payment of any debts, judgments,  alimony or separate maintenance
obligations which may be owned by the Executive,  the Executive's spouse, or any
designated beneficiary; or (ii) transferable by operation of law in the event of
bankruptcy,  insolvency or otherwise.  Any such attempted assignment or transfer
shall be void  and  shall  terminate  this  Agreement,  and the  Employer  shall
thereupon have no further liability hereunder.

             10.6  BINDING  EFFECT/MERGER  OF  REORGANIZATION.   This  Agreement
shall be binding upon and inure to the benefit of the Executive and the Employer
and,   as   applicable,    their   respective   heirs,   beneficiaries,    legal
representatives, agents, successors and assigns. Accordingly, the Employer shall
not merge or consolidate into or with another corporation, or reorganize or sell
substantially all of its assets to another corporation,  firm or person,  unless
and until such  succeeding or continuing  corporation,  firm or person agrees to
assume and discharge the obligations of the Employer under this Agreement.  Upon
the  occurrence of such event,  the term  "Employer"  as used in this  Agreement
shall be deemed to refer to such surviving or successor firm, person,  entity or
corporation.

             10.7  NONWAIVER.  The  failure  of  either  party to enforce at any
time or for any  period  of time any one or more of the terms or  conditions  of
this Agreement  shall not be a waiver of such term(s) or condition(s) or of that
party's  right  thereafter  to enforce each and every term and condition of this
Agreement.

             10.8  PARTIAL  INVALIDITY.  If  any  term,  provision,  covenant or
condition of this  Agreement is determined  by an arbitrator or a court,  as the
case may be, to be invalid, void, or unenforceable, such determination shall not
render  any other  term,  provision,  covenant  or  condition  invalid,  void or
unenforceable,  and  the  Agreement  shall  remain  in  full  force  and  effect
notwithstanding such partial invalidity.

                                       12


             10.9  ENTIRE  AGREEMENT.  This  Agreement  supersedes  any  and all
other agreements, either oral or in writing, between the parties with respect to
the subject matter of this  Agreement  other than that certain Change in Control
Agreement  between the parties and contains all of the covenants and  agreements
between  the  parties  with  respect  thereto.  Each  party  to  this  Agreement
acknowledges that no other representations, inducements, promises or agreements,
oral or  otherwise,  have been made by any party,  or anyone acting on behalf of
any  party,  which  are not set  forth  herein,  and  that no  other  agreement,
statement or promise not contained in this  Agreement  shall be valid or binding
on either party.

             10.10 MODIFICATIONS.  Any  modification  of this Agreement shall be
effective  only if it is in writing  and  signed by each  party or such  party's
authorized representative.

             10.11 PARAGRAPH  HEADING.  The  paragraph  headings  used  in  this
Agreement are included  solely for the  convenience of the parties and shall not
affect or be used in connection with the interpretation of this Agreement.

             10.12 GOVERNING LAW.  The  laws of the State of California,  except
to the extent  preempted  by any federal  laws of the United  States and,  where
applicable,  the rules and regulations of: (i) the California  Superintendent of
Banks;  (ii) the Board of Governors  of the Federal  Reserve  System;  (iii) the
Federal Deposit  Insurance  Corporation;  or (iv) any other regulatory agency or
governmental  authority having jurisdiction over the Employer,  shall govern the
validity, interpretation, construction and effect of this Agreement.

        IN WITNESS  WHEREOF,  the Employer and the Executive  have executed this
Agreement  on  the  date  first  written  above  in  the  City  of  Bakersfield,
California.

EMPLOYER:                                      EXECUTIVE:

SAN JOAQUIN BANK

By:  /s/ Bruce Maclin                          /s/ Bart Hill
     -----------------------------------       ---------------------------
     Bruce Maclin, Chairman of the Board       Bart Hill


By:  /s/ Stephen Annis
     -----------------------------------
     Stephen Annis, CFO Cashier

                                       13


                                  SCHEDULE "A"

NUMBER OF COMPLETE YEARS WHICH
HAVE ELAPSED SINCE INCEPTION OF

THE PLAN                                        APPLICABLE PERCENTAGE
- --------                                        ---------------------

    1....................................................10%
    2....................................................20%
    3....................................................30%
    4....................................................40%
    5....................................................50%
    6....................................................60%
    7....................................................70%
    8....................................................80%
    9....................................................90%
    10..................................................100%

                                       14


                                    EXHIBIT B
                                    ---------


                         SALARY CONTINUATION AGREEMMENT

                              BENEFMARY DESIGNATION

I designate the following as  beneficiary of any death benefits under the Salary
Continuation Agreement:

Primary:
         ---------------------------------------------------------------

Contingent:
            ------------------------------------------------------------

Note:  To name a trust as  beneficiary,  please  provide the name of the trustee
       and the exact date of the trust agreement.

I understand  that I may change these  beneficiary  designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically  revoked if the beneficiary  predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.

Signature
          -------------------------------------------------


Date
     --------------------------------


Accepted by the Company this ___day of _________, 199_.


By
   --------------------------------------------------

Title
      -----------------------------------------------

EX-99

                                                                   Exhibit 99.13


                              AMENDED AND RESTATED
                    EXECUTIVE SALARY CONTINUATION AGREEMENT
                    ---------------------------------------

     THIS AGREEMENT is made and entered into this 13th day of June, 2003, by and
between SAN JOAQUIN BANK, a corporation organized under the laws of the State of
California  (hereinafter  referred to as the "Employer"),  and STEPHEN ANNIS, an
individual  residing in the State of California (herein after referred to as the
"Executive").  This Agreement is an amendment and  restatement of an Amended and
Restated Executive Salary  Continuation  Agreement between the parties dated May
15, 2000.

                                    RECITALS
                                    --------

     WHEREAS, the Executive is an employee of the Employer and is serving as its
Chief Financial Officer;

     WHEREAS,  the  Executive's  experience  and knowledge of the affairs of the
Employer and the banking industry are extensive and valuable;

     WHEREAS,  it is  deemed  to be in the best  interests  of the  Employer  to
provide the Executive with certain salary  continuation  benefits,  on the terms
and conditions set forth herein,  in order to reasonably induce the Executive to
remain in the Employer's employment; and

     WHEREAS,  the  Executive  and the  Employer  wish to specify in writing the
terms and conditions upon which this additional  compensatory  incentive will be
provided to the Executive,  or to the Executive's designated  beneficiaries,  as
the case may be;

     NOW,  THEREFORE,  in  consideration  of the services to be performed in the
future,  as well as the mutual  promises and  covenants  contained  herein,  the
Executive and the Employer agree as follows:

                                   AGREEMENT
                                   ---------

     1.   TERMS AND DEFINITIONS.
          ---------------------

          1.1  ADMINISTRATOR.  The Employer  shall be the  "Administrator"  and,
solely for the purposes of ERISA,  the  "fiduciary"  of this  Agreement  where a
fiduciary is required by ERISA.

          1.2  ANNUAL  BENEFIT.  The term "Annual  Benefit" shall mean an annual
amount of Sixty-Three Thousand One Hundred Sixty-Three Dollars ($63,163),  which
represents fifty percent (50%) of Executive's  total  compensation as of May 15,
2000  of One  Hundred  Twenty-Six  Thousand  Three  Hundred  Twenty-Six  Dollars
($126,326) determined by adding annual salary of One Hundred Three Thousand Four
Hundred Sixty-Three Dollars ($103,463) to the bonus of Twenty-Two Thousand Eight
Hundred  Sixty-Three Dollars ($22,863) awarded to Executive in February of 2000.
In any year from and after May 15,  2000  that  Executive's  total  compensation
(current  salary  plus bonus paid in such year)  increases,  the annual  benefit
shall be  increased  to an amount  equal to fifty  percent  (50%) of such  total
compensation.  No  decrease  in  Annual  Benefit  shall be made in any year when
Executive's total compensation  shall decrease,  whether by reason of a decrease



in regular payroll  payments or by a decrease in or elimination of bonus, or if,
as of December 31, 2008,  actual  compensation is less than that deemed pursuant
to the foregoing.  Employer's  Board of Directors may by resolution  duly passed
and  communicated in writing to Executive,  freeze the Annual Benefit at a given
dollar amount but may not decrease a level once established. Once the payment of
the Annual Benefit has commenced, the Annual Benefit shall be increased annually
commencing in 2001 by at least the increase in the Consumer  Price Index ("CPI")
for the preceding calendar year, up to a maximum of two percent (2%);  provided,
however,  such maximum shall be increased up to the total dollar amount that all
past  aggregate  CPI  increases  to the Annual  Benefit are less than the dollar
amount  of all  potential  aggregate  increases  determined  as if the  CPI  had
actually  been two percent (2%) in all such past years.  Thus,  if in a year the
Annual  Benefit  could have  increased  by $3,500 but only  increased  by $2,000
because actual CPI was less than 2%, the $1,500  difference shall be used in the
future to increase the Annual Benefit when CPI is greater than 2%.

          1.3  APPLICABLE PERCENTAGE.  The term  "Applicable  Percentage"  shall
mean that percentage listed on Schedule "A," attached hereto,  which is adjacent
to the number of complete years (with a "year" being the performance of personal
services  for or on behalf of the  Employer as an  employee  for a period of 365
days) which have elapsed  starting from the Effective Date of this Agreement and
ending on the date the  Executive's  employment  terminates for purposes of this
Agreement.  In the event that Executive's employment with Employer is terminated
other  than by reason  of death,  Disability  or  Retirement  on the part of the
Executive,  Executive  shall be deemed for purposes of determining the number of
complete  years to have  completed  a year of  service in its  entirety  for any
partial year of service after the last  anniversary  date of the Effective  Date
during which the Executive's employment is terminated, provided that in no event
shall  Executive  be deemed to have  completed a year of service for any partial
year if the partial  year  occurs  prior to the first  anniversary  date of this
Agreement.  For purposes of this Agreement,  employment shall include service on
the Employer's Board of Directors regardless of whether Executive continues as a
common law employee of the Employer.

          1.4  BENEFICIARY.  The term "beneficiary" or "designated  beneficiary"
shall mean the person or persons whom the Executive  shall  designate in a valid
Beneficiary  Designation,  a copy of which is attached hereto as Exhibit "B," to
receive any Joint and  Survivor  Annuity  payments to be made after the death of
the Executive and the Surviving Spouse. A Beneficiary Designation shall be valid
only if it is in the form attached hereto and made a part hereof and is received
by the Administrator prior to the Executive's death.

          1.5  CODE.  The  term "Code" shall mean  the Internal  Revenue Code of
1986, as amended (the "Code").

          1.6  DISABILITY/DISABLED.  The  term  "Disability" or "Disabled" shall
have the same  meaning  given such term in the  principal  disability  insurance
policy covering the Executive, which is incorporated herein by reference. In the
event  the  Executive  is  not  covered  by a  disability  policy  containing  a
definition of "Disability"  or "Disabled,"  these terms shall mean an illness or
incapacity  which,  having  continued  for a period of one hundred  eighty (180)
consecutive  days,  prevents  the  Executive  from  adequately   performing  the
Executive's   regular  employment  duties.  The  determination  of  whether  the
Executive  is Disabled  shall be made by an  independent  physician  selected by
mutual  agreement of the parties.  In no event shall the Executive be treated as

                                       2


Disabled  if  the  Executive  is  performing  services  in  any  capacity  for a
"competitor," as defined in section 3.5.

          1.7  EARLY RETIREMENT DATE. The term Early  Retirement  Date means the
Retirement  (as defined  below) of the  Executive  on a date which  occurs after
Executive has attained age sixty (60).

          1.8  EFFECTIVE DATE.  The term  "Effective  Date"  shall mean the date
upon which the Executive Salary Continuation Plan was originally approved by the
Board of Directors of Employer, to wit, October 3, 1996.

          1.9  ERISA. The term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.

          1.10 JOINT AND SURVIVOR ANNUITY. The term "Joint and Survivor Annuity"
shall  mean a stream  of  payments,  each  one of which is equal to one  hundred
percent  (100%)  of the  Annual  Benefit  for  the  life  of the  Executive  and
sixty-five  percent  (65%) of the Annual  Benefit for the life of the  Surviving
Spouse,  that is paid on an annual  basis  over a period of time that  continues
until the death of the last to die of the  Executive  or the  Surviving  Spouse;
PROVIDED,  HOWEVER,  that if the  Executive  and the  Surviving  Spouse both die
before  expiration  of five (5) years  after the  Executive's  Retirement  Date,
payments of sixty-five  percent (65%) of the Annual  Benefit will be made to the
Beneficiary until the date that is five (5) years after the Retirement Date. The
payment of the herein described percentages of the Annual Benefit in the form of
the Joint and Survivor  Annuity is based upon the assumption  that such payments
would begin on the Executive's  Retirement Date and the life expectancies of the
Executive and the  Surviving  Spouse on the  Retirement  Date.  Accordingly,  if
payments  of the Annual  Benefit are to begin on a date that is earlier or later
than the  Executive's  Retirement  Date,  the Annual Benefit will be actuarially
adjusted to reflect the increased or decreased life expectancies,  respectively,
over  which the  Annual  Benefit  is to be paid.  For  purposes  of making  such
actuarial  adjustments,  life  expectancy  shall be computed  using the expected
return  multiples  in Table V of  Section  1.72-9 of the United  States  Federal
Treasury Regulations and a capitalization rate of five percent (5%).

          1.11 PLAN YEAR. The term "Plan Year" shall mean the calendar year.

          1.12 RETIREMENT. The term "Retirement" or "Retires" shall refer to the
date (on or after the  Retirement  Date or Early  Retirement  Date) on which the
Executive  gives  notice of his intent to retire and  substantially  reduces the
scope of his employment with the Employer.

          1.13 RETIREMENT DATE.  Retirement  Date  means  the date the Executive
reaches age sixty-five (65).

          1.14 SURVIVING SPOUSE. The term "Surviving Spouse"  shall  mean  Nancy
Annis,  who is the person  legally  married to the Executive on the date of this
Agreement.

                                       3


     2.   SCOPE, PURPOSE AND EFFECT.
          -------------------------

          2.1  CONTRACT OF EMPLOYMENT.  Although  this  Agreement is intended to
provide the Executive  with an  additional  incentive to remain in the employ of
the  Employer,  this  Agreement  shall not be deemed to constitute a contract of
employment  between the Executive  and the Employer,  nor shall any provision of
this  Agreement  restrict or expand the right of the Employer to  terminate  the
Executive's  employment.  This Agreement shall have no impact or effect upon any
separate  written  Employment  Agreement  which the  Executive may have with the
Employer,  it being the  parties'  intention  and  agreement  that  unless  this
Agreement  is  specifically  referenced  in said  Employment  Agreement  (or any
modification thereto), this Agreement (and the Employer's obligations hereunder)
shall stand  separate and apart and shall have no effect  upon,  nor be affected
by, the terms and provisions of said Employment Agreement.

          2.2  FRINGE BENEFIT.  The  benefits  provided  by  this  Agreement are
granted by the Employer as a fringe  benefit to the Executive and are not a part
of any salary  reduction plan or any  arrangement  deferring a bonus or a salary
increase.  The Executive has no option to take any current  payments or bonus in
lieu of the benefits  provided by this  Agreement.  The benefits  provided under
this Agreement are in lieu of any benefits that  otherwise  would be provided to
Executive under that certain Life Insurance Endorsement Method Split Dollar Plan
Agreement  between the Employer and the Executive,  which the parties agree will
be cancelled and thereafter be of no further force and effect.

     3.   Payments of Annual Benefit.
          --------------------------

          3.1  PAYMENTS AT OR AFTER RETIREMENT. If the Executive shall remain in
the continuous  employment of the Employer until his Retirement Date, the Annual
Benefit,  as defined above,  shall be paid in the form of the Joint and Survivor
Annuity.  Each year the Annual Benefit will be paid in twelve (12) equal monthly
payments  on the first day of each  month  during the year,  beginning  with the
month following the Retirement Date. If the Executive continues employment alter
his Retirement Date, payment of his Annual Benefit shall commence on the date of
his actual  Retirement and such Annual Benefit shall be actuarially  adjusted in
accordance  with  section  1.10 to reflect  the  postponement  of payment of the
Annual Benefit.

          3.2  PAYMENTS IN THE EVENT OF DEATH.  If  the Executive dies before he
actually Retires, the Executive's Annual Benefit shall be reduced by determining
the  discounted  value of the Annual Benefit based on a  capitalization  rate of
five  percent  (5%) for the  period  of time,  if any,  by which the date of the
Executive's  death is earlier than the Executive's  normal  Retirement Date. The
Applicable Percentage shall be one hundred percent (100%) and annual payments of
sixty-five  percent (65%) of the Annual Benefit,  as adjusted  herein,  shall be
made to the Surviving Spouse or Beneficiary, as the case may be, until the later
of the death of the  Surviving  Spouse or the  expiration of five (5) years from
the Executive's  Retirement  Date, with each installment to be paid on the first
day of each month,  commencing with the month  following the Executive's  death.
Each  installment  shall  consist  of  one-twelfth   (1/12)  of  the  Applicable
Percentage of sixty-five  percent (65%) of the Annual  Benefit,  as  actuarially
adjusted in accordance with section 1.10.

                                       4


          3.3  PAYMENTS IN THE EVENT OF  DISABILITY.  If  the Executive  becomes
Disabled while  actively  employed by the Employer at any time after the date of
this Agreement but prior to Retirement, the Executive shall: (i) for purposes of
this section 3.3 only continue to be treated during such period of Disability as
being gainfully  employed by the Employer with an annual  compensation  equal to
his annual compensation at the time of Disability, increased by two percent (2%)
each year  thereafter;  PROVIDED HOWEVER,  the Executive shall not, by virtue of
this provision actually be paid salary by the Employer and shall not be credited
with  additional  years of service  during the  Executive's  Disability  for the
purpose of determining the Annual  Benefit;  and (ii) be entitled to be paid the
Applicable Percentage,  of the Annual Benefit, as set forth on Schedule "A," for
life, with each  installment to be paid on the first day of each month beginning
with the month  following  the month in which the Executive  attains  sixty-five
(65) years of age. If Executive ceases to receive Disability  benefits under the
Executive's  principal  Disability  insurance policy and does not, at such time,
return to, and  thereafter  fulfill the  responsibilities  associated  with, the
employment  position held with the Employer prior to becoming Disabled by reason
of such Disability continuing, then Executive shall receive for life payments of
the Applicable  Percentage of the Annual  Benefit,  as  actuarially  adjusted in
accordance with section 1.10. Notwithstanding anything to the contrary set forth
in this section 3.3, if the  Executive is eligible for Early  Retirement  at the
time  Executive  becomes  Disabled,  the Executive may elect,  by giving written
notice to the Employer,  to take Early Retirement  benefits under section 3.5 in
lieu of Disability benefits under this section 3.3.

          3.4  PAYMENTS IN THE EVENT EMPLOYMENT IS TERMINATED BY REASON OTHER
THAN DISABILITY, SALE OF BUSINESS, EARLY RETIREMENT OR RETIREMENT.  As indicated
in  section  2.1  above,  the  Employer  reserves  the  right to  terminate  the
Executive's  employment,  with or  without  cause  but  subject  to any  written
employment  agreement  which may then exist. In the event that the employment of
the Executive is terminated  prior to the Early  Retirement  Date for any reason
other than by reason of Disability or Sale of Business,  the Executive  shall be
entitled  to be  paid  the  Applicable  Percentage  of the  Annual  Benefit,  as
determined  by the  applicable  years of service at the time of the  Executive's
termination of employment  with the Employer.  The method for paying such amount
shall be the Joint and Survivor Annuity, with each installment to be paid on the
first day of each month,  beginning with the month  following the month in which
the Executive attains sixty-five (65) years of age.

          3.5  PAYMENTS  IN THE EVENT THE  EXECUTIVE  ELECTS  EARLY  RETIREMENT.
If the Executive shall remain in the continuous employment of the Employer until
his Early Retirement Date and shall then Retire,  the Executive's Annual Benefit
shall be reduced by determining the discounted value of the Annual Benefit based
on a capitalization rate of five percent (5%) for the period of time between the
selected Early Retirement Date and the Executive's  normal  Retirement Date. The
Applicable  Percentage  shall be 100%  and the  method  for  paying  the  Annual
Benefit, as adjusted herein, shall be the Joint and Survivor Annuity,  with each
installment  to be paid on the first day of each month,  following  the month of
the Executive's Early Retirement.  Each installment shall consist of one-twelfth
(1/12)  of  the  Applicable   Percentage  of  the  reduced  Annual  Benefit,  as
actuarially  adjusted in  accordance  with section  1.10.  Prior to the date the
Executive  reaches age  sixty-five  (65),  no payments  shall be made under this
section 3.5 during any period in which the Executive is performing  services for
a competitor of the Employer.  Such payments shall be forfeited and shall not be
used  to  actuarially   increase  the  Early  Retirement  payments  which  shall
recommence  upon the earlier of the date the  Executive  reaches age  sixty-five

                                       5


(65) or ceases to work for such competitor. The term "competitor" shall refer to
a  business  entity  conducting  a  business  competitive  to one  conducted  by
Employer,   but   only   if  the   Executive   is   providing   services   in  a
California county where Employer conducts business.

     4.   RABBI TRUST.  The Employer shall establish  a grantor trust  (commonly
referred to as a "rabbi trust") and  contribute  assets to such trust to provide
for the payment of the amounts which may become  payable to the  Executive,  the
Executive's  spouse  or the  Executive's  beneficiaries  under the terms of this
Agreement.  The Executive  shall not have any  ownership  interest in the assets
held in such  trust.  The assets of such trust  shall only be  available  to the
Employer in the event of bankruptcy or insolvency of the Employer, in which case
the benefits shall be available to the Employer's general creditors.

     5.   TAX TREATMENT.  The  Employer's  obligation to pay benefits under this
Agreement  is not  contingent  on  the  tax  treatment  of  any  such  benefits,
regardless  of  whether  there is a change  in the law with  respect  to the tax
treatment of such benefit after the Effective Date of this Agreement.

     6.   CLAIMS PROCEDURE.  The  Employer  shall  notify  the  Executive or the
Executive's beneficiary  ("Claimant") in writing, within ninety (90) days of his
or  her  written  application  for  benefits,  of  his  or  her  eligibility  or
noneligibility for benefits under the Agreement. If the Employer determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (i) the specific reason for such denial,  (2) a specific  reference to the
provisions of the Agreement on which the denial is based,  (3) a description  of
any additional information or material necessary for the claimant to perfect his
or her claim,  and a description of why it is needed,  and (4) an explanation of
the Agreement's claims review procedure and other appropriate  information as to
the steps to be taken if the beneficiary  wishes to have the claim reviewed.  If
the  Employer  determines  that  there  are  special   circumstances   requiring
additional time to make a decision, the Employer shall notify the beneficiary of
the  special  circumstances  and the date by which a decision  is expected to be
made, and may extend the time for up to an additional ninety-day period.

     7.   REVIEW PROCEDURE. If the Claimant is determined by the Employer not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different  benefits,  the Claimant  shall have the  opportunity to
have such claim  reviewed by the  Employer by filing a petition  for review with
the Employer  within sixty (60) days after  receipt of the notice  issued by the
Employer.  Said  petition  shall state the  specific  reason  which the Claimant
believes  entitle him or her to benefits  or to greater or  different  benefits.
Within  sixty  (60) days after  receipt by the  Employer  of the  petition,  the
Employer  shall afford the Claimant  (and  counsel,  if any) an  opportunity  to
present  his or her  position  to the  Employer  orally or in  writing,  and the
Claimant (or counsel)  shall have the right to review the  pertinent  documents.
The Employer  shall  notify the  Claimant of its decision in writing  within the
sixty-day period,  stating specifically the basis of its decision,  written in a
manner  calculated to be understood by the Claimant and the specific  provisions
of the Agreement on which the decision is based.  If,  because of the need for a
hearing,  the sixty-day  period is not sufficient,  the decision may be deferred
for up to another sixty-day period, at the election of the Employer,  but notice
of this deferral shall be given to the Claimant.

                                       6


     8.   STATUS OF AN  UNSECURED GENERAL CREDITOR.   Notwithstanding   anything
contained  herein to the contrary:  (i) neither the Executive,  the  Executive's
spouse nor the Executive's beneficiary shall have any legal or equitable rights,
interests  or claims in or to any specific  property or assets of the  Employer;
(ii) except as expressly  provided  for herein,  none of the  Employer's  assets
shall be held in or under  any  trust  for the  benefit  of the  Executive,  the
Executive's spouse or the Executive's beneficiary or held in any way as security
for the  fulfillment of the  obligations  of the Employer under this  Agreement;
(iii) all of the Employer's assets shall be and remain the general unpledged and
unrestricted assets of the Employer,  (iv) the Employer's  obligation under this
Agreement shall be that of an unfunded and unsecured  promise by the Employer to
pay money in the future;  and (v) the Executive,  the Executive's spouse and the
Executive's beneficiary shall be unsecured general creditors with respect to any
benefits which may be payable under the terms of this Agreement.

     9.   COVENANT NOT TO INTERFERE. The Executive agrees not to take any action
which  prevents the Employer from  collecting the proceeds of any life insurance
policy or annuity  which the  Employer or the trust  described  in section 4 may
happen to own at the time of the  Executive's  Retirement  or death and of which
the Employer is the designated beneficiary.

     10.  MISCELLANEOUS.

          10.1 OPPORTUNITY  TO CONSULT WITH  INDEPENDENT  COUNSEL. The Executive
acknowledges  that  he  has  been  afforded  the  opportunity  to  consult  with
independent  counsel of his choosing  regarding both the benefits granted to him
under the terms of this Agreement and the terms and conditions  which may affect
the Executive's right to these benefits. The Executive further acknowledges that
he has read, understands and consents to all of the terms and conditions of this
Agreement,  and that he enters into this Agreement with a full  understanding of
its terms and conditions.

          10.2 LARCENY CONVICTION.  In  the  event  that  the  Executive is duly
convicted by a court of competent  jurisdiction of a felony charge of robbing or
embezzling from the Employer  whereby the Employer  suffers loss, then upon such
conviction,  the Employer is not obligated to make any payments provided by this
Agreement or any further payments,  if payments have already begun. This section
10.2 is not intended to put the Executive's  receipt of payments in jeopardy for
business decisions made during the ordinary course of employment.

          10.3 ATTORNEYS' FEES.  In  the  event of any arbitration or litigation
concerning any controversy, claim or dispute between the parties hereto, arising
out of or relating to this Agreement or the breach hereof, or the interpretation
hereof;  the prevailing party shall be entitled to recover from the losing party
reasonable expenses,  attorneys' fees and costs incurred in connection therewith
or in the  enforcement or collection of any judgment or award rendered  therein.
The "prevailing party" means the party determined by the arbitrator(s) or court,
as the case may be, to have most  nearly  prevailed,  even if such party did not
prevail in all  matters,  not  necessarily  the one in whose favor a judgment is
rendered.

          10.4 NOTICE.  Any notice required or permitted of either the Executive
or the Employer under this Agreement shall be deemed to have been duly given, if
by personal  delivery,  upon the date  received  by the party or its  authorized
representative;  if  by  facsimile,  upon  transmission  to a  telephone  number

                                       7


previously  provided  by the  party  to whom the  facsimile  is  transmitted  as
reflected  in the  records  of the party  transmitting  the  facsimile  and upon
reasonable  confirmation of such transmission;  and if by mail, on the third day
after  mailing via U.S.  first  class mail,  registered  or  certified,  postage
prepaid and return receipt requested,  and addressed to the party at the address
given  below for the  receipt  of  notices,  or such  changed  address as may be
requested in writing by a party.

     If to the Employer:                  Bruce Maclin
                                          Chairman of the Board
                                          San Joaquin Bank
                                          Post Office Box 9129
                                          Bakersfield, CA 93389

     If to the Executive:                 Stephen Annis
                                          15824 Marty Avenue
                                          Bakersfield, CA 93312

          10.5 ASSIGNMENT.  Neither the Executive,  the Executive's  spouse, nor
any other  beneficiary  under  this  Agreement  shall have any power or right to
transfer, assign,  hypothecate,  modify or otherwise encumber any part or all of
the amounts  payable  hereunder,  nor,  prior to payment in accordance  with the
terms of this  Agreement,  shall any portion of such  amounts be: (i) subject to
seizure by any creditor of any such  beneficiary,  by a proceeding  at law or in
equity for the payment of any debts, judgments,  alimony or separate maintenance
obligations which may be owned by the Executive,  the Executive's spouse, or any
designated beneficiary; or (ii) transferable by operation of law in the event of
bankruptcy,  insolvency or otherwise.  Any such attempted assignment or transfer
shall be void  and  shall  terminate  this  Agreement,  and the  Employer  shall
thereupon have no further liability hereunder.

          10.6 BINDING EFFECT/MERGER OF REORGANIZATION.  This Agreement shall be
binding upon and inure to the benefit of the  Executive and the Employer and, as
applicable,  their  respective  heirs,  beneficiaries,   legal  representatives,
agents,  successors  and assigns.  Accordingly,  the Employer shall not merge or
consolidate   into  or  with  another   corporation,   or   reorganize  or  sell
substantially all of its assets to another corporation,  firm or person,  unless
and until such  succeeding or continuing  corporation,  firm or person agrees to
assume and discharge the obligations of the Employer under this Agreement.  Upon
the  occurrence of such event,  the term  "Employer"  as used in this  Agreement
shall be deemed to refer to such surviving or successor firm, person,  entity or
corporation.

          10.7 NONWAIVER. The failure of either  party to enforce at any time or
for any  period  of time  any one or more of the  terms  or  conditions  of this
Agreement  shall  not be a waiver of such  term(s)  or  condition(s)  or of that
party's  right  thereafter  to enforce each and every term and condition of this
Agreement.

          10.8 PARTIAL INVALIDITY. If any term, provision, covenant or condition
of this Agreement is determined by an arbitrator or a court, as the case may be,
to be invalid,  void, or unenforceable,  such determination shall not render any
other term, provision, covenant or condition invalid, void or unenforceable, and

                                       8


the Agreement shall remain in full force and effect notwithstanding such partial
invalidity.

          10.9 ENTIRE AGREEMENT.  This  Agreement  supersedes  any and all other
agreements,  either oral or in writing,  between the parties with respect to the
subject  matter  of  this  Agreement  and  contains  all  of the  covenants  and
agreements  between  the  parties  with  respect  thereto.  Each  party  to this
Agreement acknowledges that no other representations,  inducements,  promises or
agreements,  oral or otherwise, have been made by any party, or anyone acting on
behalf  of any  parry,  which  are not  set  forth  herein,  and  that no  other
agreement,  statement or promise not contained in this Agreement  shall be valid
or binding on either party.

          10.10 MODIFICATIONS.   Any  modification  of this  Agreement  shall be
effective  only if it is in writing  and  signed by each  party or such  party's
authorized representative.

          10.11 PARAGRAPH HEADING. The paragraph headings used in this Agreement
are included  solely for the  convenience of the parties and shall not affect or
be used in connection with the interpretation of this Agreement.

          10.12 GOVERNING LAW.  The  laws  of the State of California, except to
the extent  preempted  by any  federal  laws of the  United  States  and,  where
applicable,  the rules and regulations of: (i) the California  Superintendent of
Banks;  (ii) the Board of Governors  of the Federal  Reserve  System;  (iii) the
Federal Deposit  Insurance  Corporation;  or (iv) any other regulatory agency or
governmental  authority having jurisdiction over the Employer,  shall govern the
validity, interpretation, construction and effect of this Agreement.

     IN WITNESS  WHEREOF,  the Employer and the  Executive  have  executed  this
Agreement  on  the  date  first   above-written  in  the  City  of  Bakersfield,
California.

EMPLOYER:                                    EXECUTIVE:

SAN JOAQUIN BANK

By:  /s/ Bruce Maclin                      /s/ Stephen Annis
   --------------------------------      -------------------------------------
     Bruce Maclin, Chairman                Stephen Annis


By:  /s/ Bart Hill
   --------------------------------
     Bart Hill, President

                                       9


                                  SCHEDULE "A"

NUMBER OF COMPLETE YEARS WHICH
HAVE ELAPSED SINCE INCEPTION OF

      THE PLAN                                             APPLICABLE PERCENTAGE

         1..........................................................10%
         2..........................................................20%
         3..........................................................30%
         4..........................................................40%
         5..........................................................50%
         6..........................................................60%
         7..........................................................70%
         8..........................................................80%
         9..........................................................90%
         10 .......................................................100%

                                       10


                                  EXHIBIT "B"

                          BENEFICIARY DESIGNATION FORM
                            FOR AMENDED AND RESTATED
                    EXECUTIVE SALARY CONTINUATION AGREEMENT


PRIMARY BENEFICIARY:

Name                         Address                                Relationship
- ----                         -------                                ------------
Julie A. Brake               5605 Veneto St.                        Daughter
                             Bakersfield, CA  93308



SECONDARY BENEFICIARY (CONTINGENT):

Any sum payable  under the Executive  Salary  Continuation  Agreement  after the
death of my spouse and me shall be paid to the Primary Beneficiary, if he or she
survives  me,  and if no  Primary  Beneficiary  shall  survive  me,  then to the
Secondary (Contingent) Beneficiary.

EX-99

                              AMENDED AND RESTATED
                     EXECUTIVE SALARY CONTINUATION AGREEMENT
                     ---------------------------------------

     THIS  AGREEMENT is made and entered into this 11 day of June,  2003, by and
between SAN JOAQUIN BANK, a corporation organized under the laws of the State of
California  (hereinafter  referred  to as the  "Employer"),  and JOHN W. IVY, an
individual residing in the State of California  (hereinafter  referred to as the
"Executive").  This Agreement is an amendment and  restatement of an Amended and
Restated Executive Salary  Continuation  Agreement between the parties dated May
15, 2000.

                                    RECITALS
                                    --------

     WHEREAS, the Executive is an employee of the Employer and is serving as its
Senior Loan Officer;

     WHEREAS,  the  Executive's  experience  and knowledge of the of the affairs
Employer and the banking industry are extensive and valuable;

     WHEREAS,  it is  deemed  to be in the best  interests  of the  Employer  to
provide the Executive with certain salary  continuation  benefits,  on the terms
and conditions set forth herein,  in order to reasonably induce the Executive to
remain in the Employer's employment; and

     WHEREAS,  the  Executive  and the  Employer  wish to specify in writing the
terms and conditions upon which this additional  compensatory  incentive will be
provided to the Executive,  or to the Executive's designated  beneficiaries,  as
the case may be;

     NOW,  THEREFORE,  in  consideration  of the services to be performed in the
future,  as well as the mutual  promises and  covenants  contained  herein,  the
Executive and the Employer agree as follows:

                                    AGREEMENT
                                    ---------

     1. Terms and Definitions.
        ----------------------

          1.1  ADMINISTRATOR.  The Employer  shall be the  "Administrator"  and,
solely for the purposes of ERISA,  the  "fiduciary"  of this  Agreement  where a
fiduciary is required by ERISA.

          1.2 ANNUAL  BENEFIT.  The term "Annual  Benefit'  shall mean an annual
amount of Sixty-Three  Thousand One Hundred  Sixty-Three Dollars ($63,163) which
represents fifty percent (50%) of Executive's  total  compensation as of May 15,
2000  of One  Hundred  Twenty-Six  Thousand  Three  Hundred  Twenty-Six  Dollars
($126,326) determined by adding annual salary of One Hundred Three Thousand Four
Hundred Sixty-Three Dollars ($103,463) to the bonus of Twenty-Two Thousand Eight
Hundred  Sixty-Three Dollars ($22,863) awarded to Executive in February of 2000.
In any year from and after May 15,  2000  that  Executive's  total  compensation
(current  salary  plus bonus paid in such year)  increases,  the annual  benefit
shall be  increased  to an amount  equal to fifty  percent  (50%) of such  total
compensation.  No  decrease  in  Annual  Benefit  shall be made in any year when
Executive's total compensation  shall decrease,  whether by reason of a decrease



in regular payroll  payments or by a decrease in or elimination of bonus, or if,
as of December 31, 2008,  actual  compensation is less than that deemed pursuant
to the foregoing.  Employer's  Board of Directors may by resolution  duly passed
and  communicated in writing to Executive,  freeze the Annual Benefit at a given
dollar amount but may not decrease a level once established. Once the payment of
the Annual Benefit has commenced, the Annual Benefit shall be increased annually
commencing in 2001 by at least the increase in the Consumer  Price Index ("CPI")
for the preceding calendar year, up to a maximum of two percent (2%);  provided,
however,  such maximum shall be increased up to the total dollar amount that all
past  aggregate  CPI  increases  to the Annual  Benefit are less than the dollar
amount  of all  potential  aggregate  increases  determined  as if the  CPI  had
actually  been two percent (2%) in all such past years.  Thus,  if in a year the
Annual  Benefit  could have  increased  by $3,500 but only  increased  by $2,000
because actual CPI was less than 2%, the $1,500  difference shall be used in the
future to increase the Annual Benefit when CPI is greater than 2%.

          1.3 APPLICABLE PERCENTAGE. The term "Applicable Percentage" shall mean
that percentage  listed on Schedule "A," attached  hereto,  which is adjacent to
the number of complete  years (with a "year" being the  performance  of personal
services  for or on behalf of the  Employer as an  employee  for a period of 365
days) which have elapsed  starting from the Effective Date of this Agreement and
ending on the date the  Executive's  employment  terminates for purposes of this
Agreement.  In the event that Executive's employment with Employer is terminated
other  than by reason  of death,  Disability  or  Retirement  on the part of the
Executive,  Executive  shall be deemed for purposes of determining the number of
complete  years to have  completed  a year of  service in its  entirety  for any
partial year of service after the last  anniversary  date of the Effective  Date
during which the Executive's employment is terminated, provided that in no event
shall  Executive  be deemed to have  completed a year of service for any partial
year if the partial  year  occurs  prior to the first  anniversary  date of this
Agreement.  For purposes of this Agreement,  employment shall include service on
the Employer's Board of Directors regardless of whether Executive continues as a
common law employee of the Employer.

          1.4 BENEFICIARY.  The term  "beneficiary" or "designated  beneficiary"
shall mean the person or persons whom the Executive  shall  designate in a valid
Beneficiary  Designation,  a copy of which is attached hereto as Exhibit "B," to
receive any Joint and  Survivor  Annuity  payments to be made after the death of
the Executive and the Surviving Spouse. A Beneficiary Designation shall be valid
only if it is in the form attached hereto and made a part hereof and is received
by the Administrator prior to the Executive's death.

          1.5 CODE.  The term "Code"  shall mean the  Internal  Revenue  Code of
1986, as amended (the "Code").

          1.6  DISABILITY/DISABLED.  The term  "Disability" or "Disabled"  shall
have the same  meaning  given such term in the  principal  disability  insurance
policy covering the Executive, which is incorporated herein by reference. In the
event  the  Executive  is  not  covered  by a  disability  policy  containing  a
definition  of  "Disability"  or  "Disabled,"  these  shall  mean an  illness or
incapacity  which,  having  continued  for a period of one hundred  eighty (180)
consecutive  days,  prevents  the  Executive  from  adequately   performing  the
Executive's   regular  employment  duties.  The  determination  of  whether  the
Executive  is Disabled  shall be made by an  independent  physician  selected by
mutual  agreement of the parties.  In no event shall the Executive be treated as

                                       2


Disabled  if  the  Executive  is  performing  services  in  any  capacity  for a
"competitor," as defined in section 3.5.

          1.7 EARLY  RETIREMENT  DATE. The term Early  Retirement Date means the
Retirement  (as defined  below) of the  Executive  on a date which  occurs after
Executive has attained age sixty (60).

          1.8 EFFECTIVE DATE. The term "Effective Date" shall mean the date upon
which the Executive  Salary  Continuation  Plan was  originally  approved by the
Board of Directors of Employer, to wit, October 3, 1996.

          1.9 ERISA. The term "ERISA" shall mean the Employee  Retirement Income
Security Act of 1974, as amended.

          1.10 JOINT AND SURVIVOR ANNUITY. The term "Joint and Survivor Annuity"
shall  mean a stream  of  payments,  each  one of which is equal to one  hundred
percent  (1001%)  of the  Annual  Benefit  for  the  life of the  Executive  and
sixty-five  percent  (65%) of the Annual  Benefit for the life of the  Surviving
Spouse,  that is paid on an annual  basis  over a period of time that  continues
until the death of the last to die of the  Executive  or the  Surviving  Spouse;
PROVIDED,  HOWEVER,  that if the  Executive  and the  Surviving  Spouse both die
before  expiration  of five (5) years  after the  Executive's  Retirement  Date,
payments of sixty-five  percent (65%) of the Annual  Benefit will be made to the
Beneficiary until the date that is five (5) years after the Retirement Date. The
payment of the herein described percentages of the Annual Benefit in the form of
the Joint and Survivor  Annuity is based upon the assumption  that such payments
would begin on the Executive's  Retirement Date and the life expectancies of the
Executive and the  Surviving  Spouse on the  Retirement  Date.  Accordingly,  if
payments  of the Annual  Benefit are to begin on a date that is earlier or later
than the  Executive's  Retirement  Date,  the Annual Benefit will be actuarially
adjusted to reflect the increased or decreased life expectancies,  respectively,
over  which the  Annual  Benefit  is to be paid.  For  purposes  of making  such
actuarial  adjustments,  life  expectancy  shall be computed  using the expected
return  multiples  in Table V of  Section  1.72-9 of the United  States  Federal
Treasury Regulations and a capitalization rate of five percent (5%).

          1.11 PLAN YEAR. The term "Plan Year" shall mean the calendar year.

          1.12 RETIREMENT. The term "Retirement" or "Retires" shall refer to the
date (on or after the  Retirement  Date or Early  Retirement  Date) on which the
Executive  gives  notice of his intent to retire and  substantially  reduces the
scope of his employment with the Employer.

          1.13 RETIREMENT  DATE.  Retirement  Date  means the date the Executive
reaches age sixty-five (65).

          1.14 SURVIVING  SPOUSE.  The term  "Surviving  Spouse" shall mean Judy
Ivy,  who is the person  legally  married to the  Executive  on the date of this
Agreement.

                                       3


    2. Scope, Purpose and Effect.
       --------------------------

          2.1 CONTRACT OF  EMPLOYMENT.  Although  this  Agreement is intended to
provide the Executive  with an  additional  incentive to remain in the employ of
the  Employer,  this  Agreement  shall not be deemed to constitute a contract of
employment  between the Executive  and the Employer,  nor shall any provision of
this  Agreement  restrict or expand the right of the Employer to  terminate  the
Executive's  employment.  This Agreement shall have no impact or effect upon any
separate  written  Employment  Agreement  which the  Executive may have with the
Employer,  it being the  parties'  intention  and  agreement  that  unless  this
Agreement  is  specifically  referenced  in said  Employment  Agreement  (or any
modification thereto), this Agreement (and the Employer's obligations hereunder)
shall stand  separate and apart and shall have no effect  upon,  nor be affected
by, the terms and provisions of said Employment Agreement.

          2.2 FRINGE  BENEFIT.  The  benefits  provided  by this  Agreement  are
granted by the Employer as a fringe benefit to the  Executive and are not a part
of any salary  reduction plan or any  arrangement  deferring a bonus or a salary
increase.  The Executive has no option to take any current  payments or bonus in
lieu of the benefits  provided by this  Agreement.  The benefits  provided under
this Agreement are in lieu of any benefits that  otherwise  would be provided to
Executive under that certain Life Insurance Endorsement Method Split Dollar Plan
Agreement  between the Employer and the Executive,  which the parties agree will
be cancelled and thereafter be of no further force and effect.

     3. Payments of Annual Benefit.
        ---------------------------

          3.1 PAYMENTS AT OR AFTER RETIREMENT.  If the Executive shall remain in
the continuous  employment of the Employer until his Retirement Date, the Annual
Benefit,  as defined above,  shall be paid in the form of the Joint and Survivor
Annuity.  Each year the Annual Benefit will be paid in twelve (12) equal monthly
payments  on the first day of each  month  during the year,  beginning  with the
month following the Retirement Date. If the Executive continues employment after
his Retirement Date, payment of his Annual Benefit shall commence on the date of
his actual  Retirement and such Annual Benefit shall be actuarially  adjusted in
accordance  with  section  1.10 to reflect  the  postponement  of payment of the
Annual Benefit.

          3.2 PAYMENTS IN THE EVENT OF DEATH.  If the  Executive  dies before he
actually Retires, the Executive's Annual Benefit shall be reduced by determining
the  discounted  value of the Annual Benefit based on a  capitalization  rate of
five  percent  (5%) for the  period  of time,  if any,  by which the date of the
Executive's  death is earlier than the Executive's  normal  Retirement Date. The
Applicable Percentage shall be one hundred percent (100%) and annual payments of
sixty-five  percent (65%) of the Annual Benefit,  as adjusted  herein,  shall be
made to the Surviving Spouse or Beneficiary, as the case may be, until the later
of the death of the  Surviving  Spouse or the  expiration of five (5) years from
the Executive's  Retirement  Date, with each installment to be paid on the first
day of each month,  commencing with the month  following the Executive's  death.
Each  installment  shall  consist  of  one-twelfth   (1/12)  of  the  Applicable
Percentage of sixty-five  percent (65%) of the Annual  Benefit,  as  actuarially
adjusted in accordance with section 1.10.

          3.3  PAYMENTS IN THE EVENT OF  DISABILITY.  If the  Executive  becomes
disabled while  actively  employed by the Employer at any time after the date of

                                       4


this Agreement but prior to Retirement, the Executive shall: (i) for purposes of
this section 3.3 only continue to be treated during such period of Disability as
being gainfully  employed by the Employer with an annual  compensation  equal to
his annual compensation at the time of Disability, increased by two percent (2%)
each year thereafter,  provided,  however, the Executive shall not, by virtue of
this provision actually be paid salary by the Employer and shall not be credited
with  additional  years of service  during the  Executive's  Disability  for the
purpose of determining the Annual  Benefit;  and (ii) be entitled to be paid the
Applicable Percentage,  of the Annual Benefit, as set forth on Schedule "A," for
life, with each  installment to be paid on the first day of each month beginning
with the month  following  the month in which the Executive  attains  sixty-five
(65) years of age. If Executive ceases to receive Disability  benefits under the
Executive's  principal  Disability  insurance policy and does not, at such time,
return to and  thereafter  fulfill the  responsibilities  associated  with,  the
employment  position held with the Employer prior to becoming Disabled by reason
of such Disability continuing, then Executive shall receive for life payments of
the Applicable  Percentage of the Annual  Benefit,  as  actuarially  adjusted in
accordance with section 1.10. Notwithstanding anything to the contrary set forth
in this section 3.3, if the  Executive is eligible for Early  Retirement  at the
time  Executive  becomes  Disabled,  the Executive may elect,  by giving written
notice to the Employer,  to take Early Retirement  benefits under section 3.5 in
lieu of Disability benefits under this section 3.3.

          3.4 PAYMENTS IN THE EVENT  EMPLOYMENT  IS  TERMINATED  BY REASON OTHER
THAN DISABILITY,  SALE OF BUSINESS, EARLY RETIREMENT OR RETIREMENT. As indicated
in  section  2.1  above,  the  Employer  reserves  the  right to  terminate  the
Executive's  employment,  with or  without  cause  but  subject  to any  written
employment  agreement  which may then exist. In the event that the employment of
the Executive is terminated  prior to the Early  Retirement  Date for any reason
other than by reason of Disability or Sale of Business,  the Executive  shall be
entitled  to be  paid  the  Applicable  Percentage  of the  Annual  Benefit,  as
determined  by the  applicable  years of service at the time of the  Executive's
termination of employment  with the Employer.  The method for paying such amount
shall be the Joint and Survivor Annuity, with each installment to be paid on the
first day of each month,  beginning with the month  following the month in which
the Executive attains sixty-five (65) years of age.

          3.5 PAYMENTS IN THE EVENT THE EXECUTIVE  ELECTS EARLY  RETIREMENT.  If
the Executive  shall remain in the  continuous  employment of the Employer until
his Early Retirement Date and shall then Retire,  the Executive's Annual Benefit
shall be reduced by determining the discounted value of the Annual Benefit based
on a capitalization rate of five percent (5%) for the period of time between the
selected Early Retirement Date and the Executive's  normal  Retirement Date. The
Applicable  Percentage  shall be 100%  and the  method  for  paying  the  Annual
Benefit, as adjusted herein, shall be the Joint and Survivor Annuity,  with each
installment  to be paid on the first day of each month,  following  the month of
the Executive's Early Retirement. Each installment shall consist of one- twelfth
(1/12)  of  the  Applicable   Percentage  of  the  reduced  Annual  Benefit,  as
actuarially  adjusted in  accordance  with section  1.10.  Prior to the date the
Executive  reaches age  sixty-five  (65),  no payments  shall be made under this
section 3.5 during any period in which the Executive is performing  services for

                                       5


a competitor of the Employer.  Such payments shall be forfeited and shall not be
used  to  actuarially   increase  the  Early  Retirement  payments  which  shall
recommence  upon the earlier of the date the  Executive  reaches age  sixty-five
(65) or ceases to work for such competitor. The term "competitor" shall refer to
a  business  entity  conducting  a  business  competitive  to one  conducted  by
Employer,   but   only   if  the   Executive   is   providing   services   in  a
California county where Employer conducts business.

     4. RABBI TRUST.  The Employer  shall  establish a grantor  trust  (commonly
referred to as a "rabbi trust"} and  contribute  assets to such trust to provide
for the payment of the amounts which may become  payable to the  Executive,  the
Executive's  spouse  or the  Executive's  beneficiaries  under the terms of this
Agreement.  The Executive  shall not have any  ownership  interest in the assets
held in such  trust.  The assets of such trust  shall only be  available  to the
Employer in the event of bankruptcy or insolvency of the Employer, in which case
the benefits shall be available to the Employer's general creditors.

     5. TAX  TREATMENT.  The  Employer's  obligation to pay benefits  under this
Agreement  is not  contingent  on  the  tax  treatment  of  any  such  benefits,
regardless  of  whether  there is a change  in the law with  respect  to the tax
treatment of such benefit after the Effective Date of this Agreement.

     6.  CLAIMS  PROCEDURE.  The  Employer  shall  notify the  Executive  or the
Executive's beneficiary  ("Claimant") in writing, within ninety (90) days of his
or  her  written  application  for  benefits,  of  his  or  her  eligibility  or
noneligibility for benefits under the Agreement. If the Employer determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (i) the specific reason for such denial,  (2) a specific  reference to the
provisions of the Agreement on which the denial is based,  (3) a description  of
any additional information or material necessary for the claimant to perfect his
or her claim,  and a description of why it is needed,  and (4) an explanation of
the Agreement's claims review procedure and other appropriate  information as to
the steps to be taken if the beneficiary  wishes to have the claim reviewed.  If
the  Employer  determines  that  there  are  special   circumstances   requiring
additional time to make a decision, the Employer shall notify the beneficiary of
the  special  circumstances  and the date by which a decision  is expected to be
made, and may extend the time for up to an additional ninety-day period.

     7. REVIEW  PROCEDURE.  If the Claimant is determined by the Employer not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different  benefits,  the Claimant  shall have the  opportunity to
have such claim  reviewed by the  Employer by filing a petition  for review with
the Employer  within sixty (60) days after  receipt of the notice  issued by the
Employer.  Said  petition  shall state the  specific  reason  which the Claimant
believes  entitle him or her to benefits  or to greater or  different  benefits.
Within  sixty  (60) days after  receipt by the  Employer  of the  petition,  the
Employer  shall afford the Claimant  (and  counsel,  if any) an  opportunity  to
present  his or her  position  to the  Employer  orally or in  writing,  and the
Claimant (or counsel)  shall have the right to review the  pertinent  documents.
The Employer  shall  notify the  Claimant of its decision in writing  within the
sixty-day period,  stating specifically the basis of its decision,  written in a
manner  calculated to be understood by the Claimant and the specific  provisions
of the  Agreement on which the  decision is based. If, because of the need for a
hearing,  the sixty-day  period is not sufficient,  the decision may be deferred
for up to another sixty-day period, at the election of the Employer,  but notice
of this deferral shall be given to the Claimant.

                                       6


     8.  STATUS  OF AN  UNSECURED  GENERAL  CREDITOR.  Notwithstanding  anything
contained  herein to the contrary:  (i) neither the Executive,  the  Executive's
spouse nor the Executive's beneficiary shall have any legal or equitable rights,
interests  or claims in or to any specific  property or assets of the  Employer;
(ii) except as expressly  provided  for herein,  none of the  Employer's  assets
shall be held in or under  any  trust  for the  benefit  of the  Executive,  the
Executive's spouse or the Executive's beneficiary or held in any way as security
for the  fulfillment of the  obligations  of the Employer under this  Agreement;
(iii) all of the Employer's assets shall be and remain the general unpledged and
unrestricted assets of the Employer;  (iv) the Employer's  obligation under this
Agreement shall be that of an unfunded and unsecured  promise by the Employer to
pay money in the future;  and (v) the Executive,  the Executive's spouse and the
Executive's beneficiary shall be unsecured general creditors with respect to any
benefits which may be payable under the terms of this Agreement.

     9. COVENANT NOT TO INTERFERE.  The Executive  agrees not to take any action
which  prevents the Employer from  collecting the proceeds of any life insurance
policy or annuity  which the  Employer or the trust  described  in section 4 may
happen to own at the time of the  Executive's  Retirement  or death and of which
the Employer is the designated beneficiary.

     10. MISCELLANEOUS.

          10.1  OPPORTUNITY TO CONSULT WITH INDEPENDENT  COUNSEL.  The Executive
acknowledges  that  he  has  been  afforded  the  opportunity  to  consult  with
independent  counsel of his choosing  regarding both the benefits granted to him
under the terms of this Agreement and the terms and conditions  which may affect
the Executive's right to these benefits. The Executive further acknowledges that
he has read, understands and consents to all of the terms and conditions of this
Agreement,  and that he enters into this Agreement with a full  understanding of
its terms and conditions.

          10.2  LARCENY  CONVICTION.  In the event  that the  Executive  is duly
convicted by a court of competent  jurisdiction of a felony charge of robbing or
embezzling from the Employer  whereby the Employer  suffers loss, then upon such
conviction,  the Employer is not obligated to make any payments provided by this
Agreement or any further payments,  if payments have already begun. This section
10.2 is not intended to put the Executive's  receipt of payments in jeopardy for
business decisions made during the ordinary course of employment.

          10.3  ATTORNEYS'  FEES. In the event of any  arbitration or litigation
concerning any controversy, claim or dispute between the parties hereto, arising
out of or relating to this Agreement or the breach hereof, or the interpretation
hereof;  the prevailing party shall be entitled to recover from the losing party
reasonable expenses,  attorneys' fees and costs incurred in connection therewith
or in the  enforcement or collection of any judgment or award rendered  therein.
The "prevailing party" means the party determined by the arbitrator(s) or court,
as the case may be, to have most  nearly  prevailed,  even if such party did not
prevail in all  matters,  not  necessarily  the one in whose favor a judgment is
rendered.

          10.4 NOTICE.  Any notice required or permitted of either the Executive
or the Employer under this Agreement shall be deemed to have been duly given, if
by personal  delivery,  upon the date  received  by the party or its  authorized

                                       7


representative;  if  by  facsimile,  upon  transmission  to a  telephone  number
previously  provided  by the  party  to whom the  facsimile  is  transmitted  as
reflected  in the  records  of the party  transmitting  the  facsimile  and upon
reasonable  confirmation of such transmission;  and if by mail, on the third day
after  mailing via U.S.  first  class mail,  registered  or  certified,  postage
prepaid and return receipt requested,  and addressed to the party at the address
given  below for the  receipt  of  notices,  or such  changed  address as may be
requested in writing by a party.

     If to the Employer:                         Bruce Maclin
                                                 Chairman of the Board
                                                 San Joaquin Bank
                                                 Post Office Box 9129
                                                 Bakersfield, CA 93389

     If to the Executive:                        John W. Ivy
                                                 13241 Meacham Road
                                                 Bakersfield, CA 93312

          10.5 ASSIGNMENT.  Neither the Executive,  the Executive's  spouse, nor
any other  beneficiary  under  this  Agreement  shall have any power or right to
transfer, assign,  hypothecate,  modify or otherwise encumber any part or all of
the amounts  payable  hereunder,  nor,  prior to payment in accordance  with the
terms of this  Agreement,  shall any portion of such  amounts be: (i) subject to
seizure by any creditor of any such  beneficiary,  by a proceeding  at law or in
equity for the payment of any debts, judgments,  alimony or separate maintenance
obligations which may be owned by the Executive,  the Executive's spouse, or any
designated beneficiary; or (ii) transferable by operation of law in the event of
bankruptcy,  insolvency or otherwise.  Any such attempted assignment or transfer
shall be void  and  shall  terminate  this  Agreement,  and the  Employer  shall
thereupon have no further liability hereunder.

          10.6 BINDING EFFECT/MERGER OF REORGANIZATION.  This Agreement shall be
binding upon and inure to the benefit of the  Executive and the Employer and, as
applicable,  their  respective  heirs,  beneficiaries,   legal  representatives,
agents,  successors  and assigns.  Accordingly,  the Employer shall not merge or
consolidate   into  or  with  another   corporation,   or   reorganize  or  sell
substantially all of its assets to another corporation,  firm or person,  unless
and until such  succeeding or continuing  corporation,  firm or person agrees to
assume and discharge the obligations of the Employer under this Agreement.  Upon
the  occurrence of such event,  the term  "Employer"  as used in this  Agreement
shall be deemed to refer to such surviving or successor firm, person,  entity or
corporation.

          10.7 NONWAIVER.  The failure of either party to enforce at any time or
for any  period  of time  any one or more of the  terms  or  conditions  of this
Agreement  shall  not be a waiver of such  term(s)  or  condition(s)  or of that
party's  right  thereafter  to enforce each and every term and condition of this
Agreement.

          10.8 PARTIAL INVALIDITY. If any term, provision, covenant or condition
of this Agreement is determined by an arbitrator or a court, as the case may be,
to be invalid,  void, or unenforceable,  such determination shall not render any
other term, provision, covenant or condition invalid, void or unenforceable, and
the Agreement shall remain in full force and effect notwithstanding such partial
invalidity.



          10.9 ENTIRE  AGREEMENT.  This  Agreement  supersedes any and all other
agreements,  either oral or in writing,  between the parties with respect to the
subject  matter  of  this  Agreement  and  contains  all  of the  covenants  and
agreements  between  the  parties  with  respect  thereto.  Each  party  to this
Agreement acknowledges that no other representations,  inducements,  promises or
agreements,  oral or otherwise, have been made by any party, or anyone acting on
behalf  of any  party,  which  are not  set  forth  herein,  and  that no  other
agreement,  statement or promise not contained in this Agreement  shall be valid
or binding on either party.

          10.10  MODIFICATIONS.  Any  modification  of this  Agreement  shall be
effective  only if it is in writing  and  signed by each  party or such  party's
authorized representative.

          10.11 PARAGRAPH HEADING. The paragraph headings used in this Agreement
are included  solely for the  convenience of the parties and shall not affect or
be used in connection with the interpretation of this Agreement.

          10.12  GOVERNING LAW. The laws of the State of  California,  except to
the extent  preempted  by any  federal  laws of the  United  States  and,  where
applicable,  the rules and regulations of (i) the California  Superintendent  of
Banks;  (ii) the Board of Governors  of the Federal  Reserve  System;  (iii) the
Federal Deposit  Insurance  Corporation;  or (iv) any other regulatory agency or
governmental  authority having jurisdiction over the Employer,  shall govern the
validity, interpretation, construction and effect of this Agreement.

     IN WITNESS  WHEREOF,  the Employer and the  Executive  have  executed  this
Agreement  on  the  date  first   above-written  in  the  City  of  Bakersfield,
California.

EMPLOYER:                                                     EXECUTIVE:

SAN JOAQUIN BANK

By: /s/ Bruce Macklin                                      /s/ John W. Ivy
  ------------------------------------                      ---------------
  Bruce Maclin, Chairman                                       John W. Ivy

        /s/ Bart Hill
By: ---------------------------------
        Bart Hill, President

                                       9



                                  SCHEDULE "A"

NUMBER OF COMPLETE YEARS WHICH
HAVE ELAPSED SINCE INCEPTION OF


     THE PLAN                           APPLICABLE PERCENTAGE
     --------                           ---------------------

       1 .....................................  10%
       2 .....................................  20%
       3 .....................................  30%
       4.....................................   40%
       5 .....................................  50%
       b .....................................  60%
       7 .....................................  70%
       8 .....................................  80%
       9 .....................................  90%
       10 ...................................   100%


                                       10




                                   EXHIBIT "B"

                          BENEFICIARY DESIGNATION FORM
                            FOR AMENDED AND RESTATED
                     EXECUTIVE SALARY CONTINUATION AGREEMENT

PRIMARY BENEFICIARY:

Name               Address                                       Relationship
- ----               -------                                       ------------
50% James Bailey   13241 Meacham Road, Bakersfield, CA             Son
50% Jenna Ivy      13241 Meacham Road, Bakersfield, CA             Daughter




SECONDARY BENEFICIARY (CONTINGENT):





Any sum payable  under the Executive  Salary  Continuation  Agreement  after the
death of my spouse and me shall be paid to the Primary Beneficiary, if he or she
survives  me,  and if no  Primary  Beneficiary  shall  survive  me,  then to the
Secondary (Contingent) Beneficiary.

EX-99

                                                                           99.15

                          CHANGE IN CONTROL AGREEMENT


     THIS  CHANGE IN CONTROL  AGREEMENT is entered  into as of Jan. 28, 1999, by
and between BRUCE MACLIN (the "Employee") and SAN JOAQUIN BANK, (the "Bank").

     1.   CHANGE IN CONTROL.
          ------------------

          (a)  DEFINITION.  For all purposes under this  Agreement,  "Change  in
Control" shall mean the occurrence of any of the following events after the date
of this Agreement:

               (i)   the dissolution or liquidation of the Bank;

               (ii)  a reorganization,  merger or consolidation of the Bank with
          one or more  corporations  as a result  of  which  the Bank is not the
          surviving corporation;

               (iii) any sale,  lease,  exchange or other  transfer (in one or a
          series of transactions)  of all or substantially  all of the assets of
          the Bank;

               (iv)  any  merger  or  consolidation  of the  Bank in  which  the
          holders of voting stock of the Bank  immediately  before the merger or
          consolidation  will  not  own  fifty  percent  (50%)  or  more of  the
          outstanding  voting shares of the continuing or surviving  corporation
          immediately after such merger or consolidation; or

               (v)   a change of 50% or more (rounded to the next whole  person)
          in the  membership  of the  Board of  Directors  of the Bank  within a
          12-month period,  unless the election or nomination by stockholders of
          each new  director  within such period was  approved by the vote of at
          least 75%  (rounded to the next whole  person) of the  directors  then
          still in office who were in office at the  beginning  of the  12-month
          period.

          (b)  GOOD REASON. For all purposes under this Agreement, "Good Reason"
shall mean that the Employee:

               (i)   Has  incurred a  material  reduction  in his  authority  or
          responsibility as the Bank's Chairman of the Board;

               (ii)  Has incurred a reduction in his "base  compensation," bonus
          opportunity or benefits and perquisites; or

               (iii) Has been notified that his princip al place of work will be
          relocated by a distance of 50 miles or more.

                                       1


     For purposes of this Agreement,  "base  compensation" shall mean annualized
base salary as  reflected in the Bank's  payroll  records as of the date of this
Agreement and as may be subsequently adjusted upward for increases.

          (c)  SEVERANCE  PAYMENT.  The Employee  shall be entitled to receive a
severance  payment from the Bank (the  "Severance  Payment") if within the first
twenty-four  (24) month period after the  occurrence of a Change in Control [the
twenty-four (24) month  period  will be renewed if a separate  Change of Control
occurs within twenty-four (24) months of the preceding Change of Control]:

               (i)   The Employee  voluntarily  resigns his  employment for Good
          Reason;

               (ii)  The  Bank  terminates  the  Employee's  employment for  any
          reason other than Cause or Disability; or

               (iii) If, during the 30-day  period  commencing on the date which
          is 90 days after the Change in Control  the  Employee  terminates  his
          employment (with or without Good Reason).

The  Severance  Payment  shall  be made in a lump  sum not  more  than  five (5)
business days following the date of the employment  termination and shall  be in
an amount  determined under Subsection (d) below. The Severance Payment shall be
in  lieu of any  other  payments,  including payments under the Bank's severance
policy, or benefits for periods subsequent to the termination of employment.

     For all purposes under this Agreement, "Cause" shall mean :

               (i)   A willful act by the Employee which constitutes  misconduct
          or fraud and which has a material adverse effect on the Bank; or

               (ii)  Conviction  of, or a plea of "guilty" or "no contest" to, a
          felony.

No act, or failure to act, by the Employee shall be considered "willful"  unless
committed  without  good faith and without a  reasonable  belief that the act or
omission was in the Bank's best interest.

     "Disability"  shall have the same  meaning  as under the  Bank's  Long-Term
Disability Plan.

          (d)  AMOUNT. The amount of the Severance Payment shall be equal to the
sum of the following:

               (i)   3 times the Employee's annual rate of base compensation, as
          in effect on the date of the  employment  termination  (or if greater,
          the date of this Agreement); plus

               (ii)  3 times the highest annual bonus awarded to the Employee by
          the  Bank  during  the  last  three  years  prior  to the  date of the
          employment termination (regardless of when paid).

                                       2


[HANDWRITTEN NOTATION STRIKING OUT PARAGRAPH BELOW:  DELETED BY AMENDMENT #1]

     Notwithstanding  the  foregoing,   the  amount  payable  pursuant  to  this
Agreement  shall  be the  lesser  of (i) one  percent (1%) of the  Consideration
involved  in the  transaction  giving  rise to the  Change in  Control as of the
closing   of  any   applicable   transaction   or  other   event  AND  (ii)  the
amount determined utilizing the formula set forth above; provided, however, that
under no  circumstances  shall the  amount  payable  be reduced to less than the
amount determined utilizing the above formula where "2 times" is substituted for
"3 times" in Section 1(d)(i) and 1(d)(ii).  For purposes of this Agreement,  the
term "Consideration"  shall mean the total proceeds and other consideration paid
or received or to be paid or received in connection with the transaction  (which
consideration  shall be deemed to include amounts in escrow),  including without
limitation:  (A) cash; (B) notes,  securities and other  property;  (C) payments
made in installments;  (D) amounts payable under employment contracts (in excess
of ordinary compensation),  consulting agreements,  agreements not to compete or
similar arramgements  (including such payments to management) other than amounts
payable pursuant to this Agreement;  (E) earnout or contingent payments (whether
or not related to future earnings or operations); (F) any indebtedness for money
borrowed or other liability that is assumed in connection with the  transaction;
and (G) the net value of assets not sold in connection  with any  disposition of
assets.

[HANDWRITTEN NOTATION STRIKING OUT PARAGRAPH BELOW:  DELETED BY AMENDMENT #1]

     Earnout  or  contingent  payments  will be  valued  at the  closing  of the
transaction  based on the best case  financial  plan put forth by the Bank.  For
purposes of this definition,  non-cash consideration shall be valued as follows:
(A)  publicly  traded  securities  shall be valued as the average of the closing
prices (as recorded in the Wall Street  Journal) for the five trading days prior
to the closing of the transaction and (B) any other non-cash consideration shall
be valued at the fair market value  thereof as  determiend  in good faith by the
Bank. In the event of a transaction,  other than acquisition of assets, in which
less than all of the stock of the Bank is acquired,  the Consideration  shall be
calculated  pursuant  to this  paragraph  as a sale of stock in which all of the
stock of the Bank has been  acquired at a price  equal to the highest  price per
share paid for any shares  acquired  during the five  trading  days prior to the
closing of the transaction.

[HANDWRITTEN NOTATION STRIKING OUT PARAGRAPH BELOW:  DELETED BY AMENDMENT #1]

     In the event of a Change in Control  described in Section  1(a)(v) which is
not also described in Section 1(a)(i) through (iv),  "Consideration"  shall mean
the valuation of the Bank calculated by the actual number of outstanding  shares
of stock in the Bank  multiplied  by the  average  of the  closing  price of the
Bank's  stock for the  thirty  (30) trading days prior to the  date on which the
Change in Control occurs (whether or not any trades actually occurred).

          (e)  INCENTIVE PROGRAMS. If a Change in Control occurs with respect to
the Bank,  the Employee  shall become fully vested in all awards  heretofore  or
hereafter  granted to him under all stock  option,  stock  appreciation  rights,
restricted  stock,  phantom  stock or similar  plans or  agreements of the Bank,
regardless of any provisions in such plans or agreements that do not provide for
full  vesting.  (To the extent  that such plans or  agreements  provide for full
vesting on an earlier date than this Agreement,  such plans or agreements  shall
prevail.)

     On or immediately prior to a Change of Control,  the  Bank will  contribute
to an irrevocable  grantor trust the then present value of the Employee's  fully
vested benefit under the Employee Salary Continuation Agreement dated October 3,
1996, as amended April 10, 1997,  April 15, 1998, and January 28, 1999,  between
the  Employee  and the  Bank  (the  "ESC").  Upon a  termination  of  employment

                                       3


described in  Subsection  (c) above,  the Employee  will receive a lump sum cash
distribution  from the trust equal to the amount  determined in accordance  with
the ESC.

          (f)  INSURANCE  COVERAGE.  During the  thirty-six  (36)  month  period
commencing  upon a termination of employment  described in Subsection (c) above,
the  Employee  (and,  where  applicable,  his  dependents)  shall be entitled to
continue  participation  in the group  insurance  plans  maintained by the Bank,
including life, disability and health insurance programs, as if he were still an
employee of the Bank. Where  applicable,  the Employee's  salary for purposes of
such  plans  shall  be  deemed  to be equal  to his  base  compensation  used in
Subsection  (d)(i)  above.  To  the extent that the Bank finds it  impossible to
cover the Employee under its group  insurance  policies  during such  thirty-six
(36) month period, the Bank shall provide the Employee with individual  policies
which offer at least the same level of coverage  and which  impose not more than
the  same  costs  on him as if he  were  still  an  employee  of the  Bank.  The
foregoing  notwithstanding,  in the event that the Employee becomes eligible for
comparable  group  insurance  coverage in connection  with new  employment,  the
coverage  provided  by the  Bank  under  this  Subsection  (f)  shall  terminate
immediately.  Any group health continuation  coverage that the Bank is otherwise
required to offer under the Consolidated  Omnibus Budget  Reconciliation  Act of
1986  ("COBRA")  shall be  offered  when  coverage  under  this  Subsection  (f)
terminates.

          (g)  NO MITIGATION. The Employee shall not be required to mitigate the
amount of any  payment  contemplated  by this  Section 1 (whether by seeking new
employment or in any other manner).  Except as expressly  provided in Subsection
(f) above,  no such payment  shall be reduced by earnings  that the Employee may
receive from any other source.

     2.   TAX EFFECT OF PAYMENTS.
          -----------------------

          (a)  GROSS-UP  PAYMENT.  In the event that it is  determined  that any
payment or  distribution  of any type to or for the benefit of the Employee made
by the Bank, by any of its affiliates,  by any person who acquires  ownership or
effective  control  of the Bank or  ownership  of a  substantial  portion of the
Bank's assets  [within the meaning of Section 280G of the Internal  Revenue Code
of 1986,  as amended,  and the  regulations  thereunder  (the "Code")] or by any
affiliate  of  such  person,   whether  paid  or  payable  or   distributed   or
distributable  pursuant to the terms of this  Agreement or otherwise (the "Total
Payments"),  would be subject to the excise tax  imposed by Section  4999 of the
Code or any interest or  penalties  with respect to such excise tax (such excise
tax, together with any such interest or penalties,  are collectively referred to
as the  "Excise  Tax"),  then the  Employee  shall be  entitled  to  receive  an
additional  payment  (a  "Gross-Up  Payment")  in an amount  that shall fund the
payment by the  Employee of any Excise Tax on the Total  Payments as well as all
income  taxes  imposed on the  Gross-Up  Payment,  any Excise Tax imposed on the
Gross-Up Payment and any interest or penalties  imposed with respect to taxes on
the Gross-Up Payment or any Excise Tax.

          (b)  DETERMINATION BY AUDITORS.  All mathematical  determinations  and
all determinations of whether any of the Total Payments are "parachute payments"
(within  the meaning of Section  28OG of the Code) that are  required to be made
under this Section 2, including all determinations of whether a Gross-Up Payment
is required,  of the amount of such Gross-Up  Payment and of amounts relevant to
the last sentence of this Section 2, shall be made by the  independent  auditors

                                       4


retained  by the  Bank,  most  recently  prior to the  Change  of  Control  (the
"Auditors"),  who  shall  provide  their  determination  (the  "Determination"),
together  with  detailed  supporting  calculations  regarding the  amount of any
Gross-Up  Payment and any other  relevant  matters,  both to the Bank and to the
Employee within seven (7) business days of the Employee's  termination  date, if
applicable,  or such earlier time as is requested by the Bank or by the Employee
(if the  Employee  reasonably  believes  that any of the Total  Payments  may be
subject to the Excise  Tax).  If the  Auditors  determine  that no Excise Tax is
payable by the Employee,  it shall furnish the Employee with a written statement
that such Auditors have concluded  that no Excise Tax is payable  (including the
reasons therefor) and that the Employee has substantial  authority not to report
any  Excise  Tax on the  Employee's  federal  income tax return.  If a Gross- Up
Payment is  determined  to be payable,  it shall be paid to the Employee  within
five (5) business days after the  Determination  is delivered to the Bank or the
Employee.  Any  determination by the Auditors shall be binding upon the Bank and
the Employee,  absent manifest error.

          (c)  UNDERPAYMENTS AND OVERPAYMENTS. As a result of uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Auditors hereunder, it is possible that Gross-Up Payments not made by the
Bank should have been made ("Underpayments") or that Gross-Up Payments will have
been  made by the Bank  which  should  not have been made  ("Overpayments").  In
either event,  the Auditors shall  determine the amount of the  Underpayment  or
Overpayment  that has occurred.  In the case of an  Underpayment,  the amount of
such  Underpayment  shall promptly be paid by the Bank to or for the benefit  of
the  Employee.  In the  case  of an  Overpayment,  the  Employee  shall,  at the
direction and expense of the Bank, take such steps as  are reasonably  necessary
(including  the filing of returns  and claims  for  refund),  follow  reasonable
instructions  from,  and  procedures  established  by,  the Bank  and  otherwise
reasonably  cooperate  with  the Bank to correct  such  Overpayment;   provided,
however,  that (i) the Employee shall in  no event be obligated to return to the
Bank an amount greater than the net after-tax  portion of the  Overpayment  that
the  Employee  has  retained or has  recovered  as a refund from the  applicable
taxing,  authorities  and (ii) this  provision  shall be interpreted in a manner
consistent  with the intent of this  Section  2,  which is to make the  Employee
whole,  on an after-tax  basis,  for the application of the Excise Tax, it being
understood  that the correction of an  Overpayment  may result in the Employee's
repaying  to the  Bank  an  amount  which  is less  than  the  Overpayment.

     3.   SUCCESSORS.
          -----------

          (a)  BANK'S SUCCESSORS.  The Bank shall require any successor (whether
direct or  indirect  and  whether by  purchase,  lease,  merger,  consolidation,
liquidation  or otherwise) to all or  substantially  all of the Bank's  business
and/or  assets,  by an  agreement  in  substance  and form  satisfactory  to the
Employee,  to assume  this  Agreement  and to agree  expressly  to perform  this
Agreement  in the same  manner  and to the  same  extent  as the  Bank  would be
required to perform it in the  absence of a  succession.  The Bank's  failure to
obtain  such  agreement  prior to the  effectiveness  of a  succession  shall be
treated as grounds for the Employee to terminate employment for Good Reason. For
all purposes under this  Agreement,  the term "Bank" shall include any successor
to the Bank's  business and/or assets which executes and delivers the assumption
agreement  described  in this  Subsection  (a) or  which  becomes  bound by this
Agreement by operation of law.

                                       5


          (b)  EMPLOYEE'S  SUCCESSORS.  This  Agreement  and all  rights  of the
Employee  hereunder  shall inure to the benefit of, and be  enforceable  by, the
Employee's  personal  or  legal  representatives,   executors,   administrators,
successors, heirs, distributees, devisees and legatees.

     4.   MISCELLANEOUS PROVISIONS.
          -------------------------

          (a)  NOTICE. Notices and all other communications contemplated by this
Agreement  shall be in writing  and shall be deemed to have been duly given when
personally  delivered   or when mailed by U.S.  registered  or  certified  mail,
return  receipt  requested  and postage  prepaid . In the case of the  Employee,
mailed  notices  shall be  addressed  to him at the home  address  which he most
recently  communicated to the Bank in writing.  In the case of the Bank,  mailed
notices shall be addressed to its corporate headquarters,  and all notices shall
be directed to the attention of its Secretary.

          (b)  WAIVER. No provision of this Agreement shall be modified,  waived
or  discharged  unless  the  modification,  waiver or  discharge is agreed to in
writing  and  signed by the Employee  and by an  authorized  officer of the Bank
(other than the  Employee).  No waiver by  either  party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other  condition or provision or of the same
condition or provision at another time.

          (c)  WHOLE AGREEMENT. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this  Agreement have been made or entered into by either party with
respect to the subject matter hereof.

          (d)  NO SETOFF;  WITHHOLDING  TAXES. There shall be no right of setoff
or counterclaim, with respect to any claim, debt or obligation, against payments
to the Employee  under this  Agreement.  All payments made under this  Agreement
shall be subject to reduction to reflect taxes required to be withheld by law.

          (e)  CHOICE OF LAW. The  validity,  interpretation,  construction  and
performance  of this  Agreement  shall be  governed  by the laws of the State of
California.

          (f)  SEVERABILITY. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or  enforceability
of any other provision hereof, which shall remain in full force and effect.

          (g)  ARBITRATION OF DISPUTES.  All claims,  disputes and other matters
in  question  arising  out of or  relating  to this  Agreement  or the breach or
interpretation  thereof,  other than those matters which are to be determined by
the Bank in its sole and  absolute  discretion,  shall be  resolved  by  binding
arbitration before a representative member,  selected by the mutual agreement of
the parties, of the Judicial Arbitration and Mediation Services, Inc . ("JAMS"),
presently located at 111 Pine Street, Suite 710 in San Francisco, California. In
the event JAMS is unable or  unwilling to conduct the  arbitration  provided for
under the terms of this paragraph, or has discontinued its business, the parties

                                       6



agree that a  representative  member,  selected by the mutual  agreement  of the
parties, of the American Arbitration  Association ("AAA"),  presently located at
417 Montgomery Street, in San Francisco,  California,  shall conduct the binding
arbitration referred to in this paragraph. Notice of the demand for arbitration
shall be filed in writing with the other party to this  Agreement  and with JAMS
(or AAA, if  necessary).  In no event shall the demand for  arbitration  be made
after the date when institution of legal or equitable  proceedings based on such
claim,  dispute or other  matter in question  would be barred by the  applicable
statute  of  limitations.  The  arbitration  shall be  subject  to such rules of
procedure  used or  established  by JAMS,  or if there  are  none,  the rules of
procedure  used or  established by AAA.  Any award rendered by JAMS or AAA shall
be final and binding upon the parties, and  as applicable, upon their respective
heirs, beneficiaries, legal representatives, agents, successors and assigns, and
may be entered in any courts having jurisdiction  thereof. The obligation of the
parties to arbitrate  pursuant to this clause shall be specifically  enforceable
in accordance with, and shall be conducted  consistently with, the provisions of
Title 9 of Part 3 of the California  Code of Civil  Procedure.  Any  arbitration
hereunder shall be conducted in Bakersfield, California, unless otherwise agreed
to by the parties.

          (h)  ATTORNEYS'  FEES. In the event of any  arbitration  or litigation
concerning any controversy, claim or dispute between the parties hereto, arising
out of or relating to this Agreement or the breach hereof, or the interpretation
hereof,  the prevailing party shall be entitled to recover from the losing party
reasonable expenses,  attorneys' fees and costs incurred in connection therewith
or in the  enforcement or collection of any judgment or award rendered  therein.
The "prevailing party" means the party determined by the arbitrator(s) or court,
as the case may be, to have most  nearly  prevailed,  even if such party did not
prevail in all  matters,  not  necessarily  the one in whose favor a judgment is
rendered.

          (i)  NO  ASSIGNMENT.  The rights of any person to payments or benefits
under this Agreement  shall not be made subject to option or assignment,  either
by  voluntary  or  involuntary  assignment  or by  operation  of law,  including
(without  limitation)  bankruptcy,  garnishment,  attachment or other creditor's
process, and any action in violation of this Subsection (i) shall be void.

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Bank by its duly  authorized  officer,  as of the day and year first
above written



EXECUTIVE:                              SAN JOAQUIN BANK,



/s/ Bruce Maclin                        By: /s/ Bart Hill
- ------------------------------------        ------------------------------------
BRUCE MACLIN, Chairman of the Board         BART HILL, President and CEO



                                        By: /s/ Stephen M. Annis
                                            ------------------------------------
                                            Stephen M. Annis, Senior V.P.

                                       7

EX-99

                                                                           99.16

                               FIRST AMENDMENT TO
                           CHANGE IN CONTROL AGREEMENT

     This is an amendment to the CHANGE IN CONTROL AGREEMENT  previously entered
into as of January 28, 1999,  by and between BRUCE MACLIN (the  "Employee")  and
SAN JOAQUIN BANK, (the "Bank").

     1. The three unnumbered  paragraphs following Paragraph 1(d)(ii) are hereby
deleted in order that the Severance  Payment shall be determined  without regard
to any limitations based on Consideration involved in a transaction constituting
a Change in Control.

     2. In all other  respects,  the  parties  reaffirm  the  Change in  Control
Agreement  dated January 28, 1999.

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Bank by its duly  authorized  officers,  this 7th day of June, 2001.



EXECUTIVE:                            SAN JOAQUIN BANK,



/s/ Bruce Maclin                      By: /s/ Bart Hill
- ------------------------------------      ------------------------------------
BRUCE MACLIN,  Chairman of the Board      BART HILL, President President and CEO



                                      By: /s/ Stephen M. Annis
                                          ------------------------------------
                                          STEVE ANNIS, Senior Vice President

                                        1

EX-99

                                                                   Exhibit 99.17


                               SECOND AMENDMENT TO
                               -------------------
                           CHANGE IN CONTROL AGREEMENT
                           ---------------------------


     This is an amendment to the CHANGE IN CONTROL AGREEMENT and FIRST AMENDMENT
TO CHANGE IN CONTROL AGREEMENT  previously  entered into on January 28, 1999 and
June 7, 2001,  respectively,  by and between  BRUCE  MACLIN and SAN JOAQUIN BANK
(collectively, the "CHANGE IN CONTROL AGREEMENT").

The parties to this AMENDMENT hereby agreeto the following:

A.   That the  creation  of the bank  holding  company  to be named San  Joaquin
     Bancorp., a California  corporation,  and the subsequent acquisition of San
     Joaquin Bank, a California  corporation, by San Joaquin  Bancorp., does not
     constitute  a "Change  in  Control"  under  Paragraph  1.(a) of the  CHANGE
     IN CONTROL AGREEMENT.

B.   That the change of  BRUCE  MACLIN's employment  status from Chairman of the
     Board of San  Joaquin  Bank to  Chairman  of the Board and Chief  Executive
     Officer of  San Joaquin Bancorp.,  and Chainnan of the Board of San Joaquin
     Bank, does not constitute "Good Reason" under Paragraph 1.(b) of the CHANGE
     IN CONTROL AGREEMENT.

C.   That neither the transaction  described in Paragraph A above nor the change
     in  employment  status  of BRUCE  MACLIN  described  in  Paragraph  B above
     entitles BRUCE MACLTN to the Severance Payment described in Paragraph l.(c)
     or Paragraph 1.(d) of the CHANGE IN CONTROL  AGREEMENT,  or to any benefits
     in the  Incentive  Programs  described  in  Paragraph  1.(e) of the  CHANGE
     INCONTROL AGREEMENT.

NOW,  THEREFORE,the  parties to this AMENDMENT  hereby agree to amend the CHANGE
IN CONTROL AGREEMENT as follows:

     1.   The words "SAN JOAQUIN BANK,  (the  "Bank")" in the initial  paragraph
          are hereby changed to state:

               SAN JOAQUIN BANK and SAN JOAQUIN BANCORP.
               For  purposes  of this  Agreement,  the term the "Bank"
               shall hereinafter collectiveIy referto SAN JOAQUIN BANK
               and/or SAN JOAQUIN BANCORP.

     2.   In all other  respects,  the  parties  reaffirm  the CHANGE IN CONTROL
          AGREEMENT dated January 28, 1999 and amended on June 7, 2001.


                            [SIGNATURE PAGE TO FOLLOW]

                                       1


     IN WITNESS WHEREOF, each of the parties has executed this Amendment, in the
case of San  Joaquin  Bank  and  San  Joaquin  Bancorp  by its  duly  authorized
officers, this 30th day of April, 2003.


EXECUTIVE:                            SAN JOAQUIN BANK



/s/ Bruce Maclin                      By:  /s/ Bart Hill
- --------------------------------         ----------------------------------
Bruce Maclin                          Bart Hill, President and CEO


                                      By:  /s/ Stephen M. Annis
                                         ----------------------------------
                                      Steve Annis, Chief Financial Officer



                                      SAN JOAQUIN BANCORP



                                      By:  /s/ Bart Hill
                                         ----------------------------------
                                      Bart Hill, President


                                      By:  /s/ Stephen M. Annis
                                         ----------------------------------
                                      Steve Annis, Chief Financial Officer



      [SIGNATURE PAGE TO SECOND AMENDMENT TO CHANGE IN CONTROL AGREEMENT]

                                       2

EX-99

                                                                           99.18


                          CHANGE IN CONTROL AGREEMENT


     THIS CHANGE IN CONTROL AGREEMENT is entered into as of 1-28, 1999, by
and between BART HILL (the "Employee") and SAN JOAQUIN BANK, (the "Bank").

     1.   CHANGE IN CONTROL.

          (a)  DEFINITION.  For all purposes  under this  Agreement,  "Change in
Control" shall mean the occurrence of any of the following events after the date
of this Agreement:

               (i)  the dissolution or liquidation of the Bank;

               (ii) a  reorganization,  merger or consolidation of the Bank with
          one or more  corporations  as a result  of  which  the Bank is not the
          surviving corporation;

               (iii) any sale,  lease,  exchange or other  transfer (in one or a
          series of transactions)  of all or substantially  all of the assets of
          the Bank;

               (iv) any merger or consolidation of the Bank in which the holders
          of  voting  stock  of  the  Bank  immediately  before  the  merger  or
          consolidation  will  not  own  fifty  percent  (50%)  or  more  of the
          outstanding  voting shares of the continuing or surviving  corporation
          immediately after such merger or consolidation; or

               (v)  a change of 50% or more  (rounded to the next whole  person)
          in the  membership  of the  Board of  Directors  of the Bank  within a
          12-month period,  unless the election or nomination by stockholders of
          each new  director  within such period was  approved by the vote of at
          least 75%  (rounded to the next whole  person) of the  directors  then
          still in office who were in office at the  beginning  of the  12-month
          period.

          (b)  GOOD REASON. For all purposes under this Agreement, "Good Reason"
shall mean that the Employee:

               (i)  Has  incurred  a  material  reduction  in his  authority  or
          responsibility as the Bank's President/Chief Executive Officer;

               (ii) Has incurred a reduction in his "base  compensation,"  bonus
          opportunity or benefits and perquisites; or

               (iii) Has been notified that his principal  place of work will be
          relocated by a distance of 50 miles or more.

                                       1



     For purposes of this Agreement,  "base  compensation" shall mean annualized
base salary as  reflected in the Bank's  payroll  records as of the date of this
Agreement and as may be subsequently adjusted upward for increases.

          (c)  SEVERANCE  PAYMENT.  The Employee  shall be entitled to receive a
severance  payment from the Bank (the  "Severance  Payment") if within the first
twenty-four  (24) month period after the  occurrence of a Change in Control [the
twenty-four  (24) month  period will be renewed if a separate  Change of Control
occurs within twenty-four (24) months of the preceding Change of Control]:

               (i)  The Employee  voluntarily  resigns his  employment  for Good
          Reason;

               (ii) The Bank terminates the Employee's employment for any reason
          other than Cause or Disability; or

               (iii) If, during the 30-day  period  commencing on the date which
          is 90 days after the Change in Control  the  Employee  terminates  his
          employment (with or without Good Reason).

The  Severance  Payment  shall  be made in a lump  sum not  more  than  five (5)
business days following the date of the employment  termination  and shall be in
an amount  determined under Subsection (d) below. The Severance Payment shall be
in lieu of any other  payments,  including  payments under the Bank's  severance
policy, or benefits for periods subsequent to the termination of employment.

     For all purposes under this Agreement, "Cause" shall mean:

               (i)  A willful act by the Employee which  constitutes  misconduct
          or fraud and which has a material adverse effect on the Bank; or

               (ii) Conviction  of, or a plea of "guilty" or "no  contest" to, a
          felony.

No act, or failure to act, by the Employee shall be considered  "willful" unless
committed  without  good faith and without a  reasonable  belief that the act or
omission was in the Bank's best interest.

     "Disability"  shall have the same  meaning  as under the  Bank's  Long-Term
Disability Plan.

          (d)  AMOUNT. The amount of the Severance Payment shall be equal to the
sum of the following:

               (i)  3 times the Employee's annual rate of base compensation,  as
          in effect on the date of the  employment  termination  (or if greater,
          the date of this Agreement); plus

               (ii) 3 times the highest  annual bonus awarded to the Employee by
          the  Bank  during  the  last  three  years  prior  to the  date of the
          employment termination (regardless of when paid).

                                       2



     Notwithstanding  the  foregoing,   the  amount  payable  pursuant  to  this
Agreement  shall be the  lesser  of (i) one  percent  (1%) of the  Consideration
involved  in the  transaction  giving  rise to the  Change in  Control as of the
closing  of any  applicable  transaction  or other  event  AND  (ii) the  amount
determined utilizing the formula set forth above; provided,  however, that under
no  circumstances  shall the  amount  payable be reduced to less than the amount
determined  utilizing the above formula  where "2 times" is  substituted  for "3
times" in Sections  1(d)(i) and 1(d)(ii).  For purposes of this  Agreement,  the
term "Consideration"  shall mean the total proceeds and other consideration paid
or received or to be paid or received in connection with the transaction  (which
consideration  shall be deemed to include amounts in escrow),  including without
limitation:  (A) cash; (B) notes,  securities and other  property;  (C) payments
made in installments;  (D) amounts payable under employment contracts (in excess
of ordinary compensation),  consulting agreements,  agreements not to compete or
similar arrangements  (including such payments to management) other than amounts
payable pursuant to this Agreement;  (E) earnout or contingent payments (whether
or not related to future earnings or operations); (F) any indebtedness for money
borrowed or other liability that is assumed in connection with the  transaction;
and (G) the net value of assets not sold in connection  with any  disposition of
assets.

     Earnout  or  contingent  payments  will be  valued  at the  closing  of the
transaction  based on the best case  financial  plan put forth by the Bank.  For
purposes of this definition,  non-cash consideration shall be valued as follows:
(A)  publicly  traded  securities  shall be valued as the average of the closing
prices (as recorded in the Wall Street  Journal) for the five trading days prior
to the closing of the transaction and (B) any other non-cash consideration shall
be valued at the fair market value  thereof as  determined  in good faith by the
Bank. In the event of a transaction,  other than acquisition of assets, in which
less than all of the stock of the Bank is acquired,  the Consideration  shall be
calculated  pursuant  to this  paragraph  as a sale of stock in which all of the
stock of the Bank has been  acquired at a price  equal to the highest  price per
share  paid for any shares  acquired  during the five  trading days prior to the
closing of the transaction.

     In the event of a Change in Control  described in Section  1(a)(v) which is
not also described in Sections 1(a)(i) through (iv),  "Consideration" shall mean
the valuation of the Bank calculated by the actual number of outstanding  shares
of stock in the Bank  multiplied  by the  average  of the  closing  price of the
Bank's  stock for the thirty  (30)  trading  days prior to the date on which the
Change in Control occurs (whether or not any trades actually occurred).

          (e)  INCENTIVE PROGRAMS. If a Change in Control occurs with respect to
the Bank,  the Employee  shall become fully vested in all awards  heretofore  or
hereafter  granted to him under all stock  option,  stock  appreciation  rights,
restricted  stock,  phantom  stock or similar  plans or  agreements of the Bank,
regardless of any provisions in such plans or agreements that do not provide for
full  vesting.  (To the extent  that such plans or  agreements  provide for full
vesting on an earlier date than this Agreement,  such plans or agreements  shall
prevail.)

     On or immediately prior to a Change of Control, the Bank will contribute to
an  irrevocable  grantor  trust the then present value of the  Employee's  fully
vested benefit under the Employee Salary Continuation Agreement dated October 3,
1996, as amended April 10, 1997,  April 20, 1998, and January 28, 1999,  between
the  Employee  and the  Bank  (the  "ESC").  Upon a  termination  of  employment

                                       3



described in  Subsection  (c) above,  the Employee  will receive a lump sum cash
distribution  from the trust equal to the amount  determined in accordance  with
the ESC.

          (f)  INSURANCE  COVERAGE.  During the  thirty-six  (36)  month  period
commencing  upon a termination of employment  described in Subsection (c) above,
the  Employee  (and,  where  applicable,  his  dependents)  shall be entitled to
continue  participation  in the group  insurance  plans  maintained by the Bank,
including life, disability and health insurance programs, as if he were still an
employee of the Bank. Where  applicable,  the Employee's  salary for purposes of
such  plans  shall  be  deemed  to be equal  to his  base  compensation  used in
Subsection  (d)(i)  above.  To the extent that the Bank finds it  impossible  to
cover the Employee under its group  insurance  policies  during such  thirty-six
(36) month period, the Bank shall provide the Employee with  individual policies
which offer at least the same level of coverage  and which  impose not more than
the same costs on him as if he were still an employee of the Bank. The foregoing
notwithstanding,  in the event that the Employee becomes eligible for comparable
group  insurance  coverage  in  connection  with new  employment,  the  coverage
provided by the Bank under this Subsection (f) shall terminate immediately.  Any
group health continuation  coverage that the Bank is otherwise required to offer
under the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA") shall
be  offered  when  coverage  under  this  Subsection  (f)  terminates.

          (g)  NO MITIGATION. The Employee shall not be required to mitigate the
amount of any  payment  contemplated  by this  Section 1 (whether by seeking new
employment or in any other manner).  Except as expressly  provided in Subsection
(f) above,  no such payment  shall be reduced by earnings  that the Employee may
receive from any other source.

     2.   TAX EFFECT OF PAYMENTS.

          (a)  GROSS-UP  PAYMENT.  In the event that it is  determined  that any
payment or  distribution  of any type to or for the benefit of the Employee made
by the Bank, by any of its affiliates,  by any person who acquires  ownership or
effective  control  of the Bank or  ownership  of a  substantial  portion of the
Bank's assets  [within the meaning of Section 28OG of the Internal  Revenue Code
of 1986,  as amended,  and the  regulations  thereunder  (the "Code")] or by any
affiliate  of  such  person,   whether  paid  or  payable  or   distributed   or
distributable  pursuant to  the terms of this Agreement or otherwise (the "Total
Payments"),  would be subject to the excise tax  imposed by Section  4999 of the
Code or any interest or  penalties  with respect to such excise tax (such excise
tax, together with any such interest or penalties,  are collectively referred to
as the  "Excise  Tax"),  then the  Employee  shall be  entitled  to  receive  an
additional  payment  (a  "Gross-Up  Payment")  in an amount  that shall fund the
payment by the  Employee of any Excise Tax on the Total  Payments as well as all
income  taxes  imposed on the  Gross-Up  Payment,  any Excise Tax imposed on the
Gross-Up Payment and any interest or penalties  imposed with respect to taxes on
the  Gross-Up  Payment or any Excise Tax.

          (b)  DETERMINATION BY AUDITORS.  All mathematical  determinations  and
all determinations of whether any of the Total Payments are "parachute payments"
(within  the meaning of Section  280G of the Code) that are  required to be made
under this Section 2, including all determinations of whether a Gross-Up Payment
is required,  of the amount of such Gross-Up  Payment and of amounts relevant to
the  last  sentence of this Section 2, shall be made by the independent auditors

                                       4



retained  by the  Bank,  most  recently  prior to the  Change  of  Control  (the
"Auditors"),  who  shall  provide  their  determination  (the  "Determination"),
together  with  detailed  supporting  calculations  regarding  the amount of any
Gross-Up  Payment and any other  relevant  matters,  both to the Bank and to the
Employee within seven (7) business days of the Employee's  termination  date, if
applicable,  or such earlier time as is requested by the Bank or by the Employee
(if the  Employee  reasonably  believes  that any of the Total  Payments  may be
subject to the Excise  Tax).  If the  Auditors  determine  that no Excise Tax is
payable by the Employee,  it shall furnish the Employee with a written statement
that such Auditors have concluded  that no Excise Tax is payable  (including the
reasons therefor) and that the Employee has substantial  authority not to report
any Excise Tax on the Employee's federal income tax return. If a GrossUp Payment
is  determined to be payable,  it shall be paid to the Employee  within five (5)
business days after the  Determination is delivered to the Bank or the Employee.
Any  determination  by the  Auditors  shall  be  binding  upon  the Bank and the
Employee, absent manifest error.

          (c)  UNDERPAYMENTS AND OVERPAYMENTS. As a result of uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Auditors hereunder, it is possible that Gross-Up Payments not made by the
Bank should have been made ("Underpayments") or that Gross-Up Payments will have
been made by the Bank  which  should  not have been  made  ("Overpayments").  In
either event,  the Auditors shall  determine the amount of the  Underpayment  or
Overpayment  that has occurred.  In the case of an  Underpayment,  the amount of
such  Underpayment  shall  promptly be paid by the Bank to or for the benefit of
the  Employee.  In the  case  of an  Overpayment,  the  Employee  shall,  at the
direction and expense of the Bank,  take such steps as are reasonably  necessary
(including  the filing of returns  and claims  for  refund),  follow  reasonable
instructions  from,  and  procedures  established  by,  the Bank  and  otherwise
reasonably  cooperate  with  the Bank to  correct  such  Overpayment;  provided,
however,  that (i) the Employee  shall in no event be obligated to return to the
Bank an amount greater than the net after-tax  portion of the  Overpayment  that
the  Employee  has  retained or has  recovered  as a refund from the  applicable
taxing,  authorities  and (ii) this  provision  shall be interpreted in a manner
consistent  with the intent of this  Section  2,  which is to make the  Employee
whole,  on an after-tax  basis,  for the application of the Excise Tax, it being
understood  that the correction of an  Overpayment  may result in the Employee's
repaying to the Bank an amount which is less than the Overpayment.

     3.   SUCCESSORS.

          (a)  BANK'S SUCCESSORS.  The Bank shall require any successor (whether
direct or  indirect  and  whether by  purchase,  lease,  merger,  consolidation,
liquidation  or otherwise) to all or  substantially  all of the Bank's  business
and/or  assets,  by an  agreement  in  substance  and form  satisfactory  to the
Employee,  to assume  this  Agreement  and to agree  expressly  to perform  this
Agreement  in the same  manner  and to the  same  extent  as the  Bank  would be
required to perform it in the  absence of a  succession.  The Bank's  failure to
obtain  such  agreement  prior to the  effectiveness  of a  succession  shall be
treated as grounds for the Employee to terminate employment for Good Reason. For
all purposes under this  Agreement,  the term "Bank" shall include any successor
to the Bank's  business and/or assets which executes and delivers the assumption
agreement  described  in this  Subsection  (a) or  which  becomes  bound by this
Agreement by operation of law.

                                       5



          (b)  EMPLOYEE'S  SUCCESSORS.  This  Agreement  and all  rights  of the
Employee  hereunder  shall inure to the benefit of, and be  enforceable  by, the
Employee's  personal  or  legal  representatives,   executors,   administrators,
successors, heirs, distributees, devisees and legatees.

     4.   MISCELLANEOUS PROVISIONS.

          (a)  NOTICE. Notices and all other communications contemplated by this
Agreement  shall be in writing  and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt  requested  and postage  prepaid.  In the case of the  Employee,  mailed
notices  shall be addressed to him at the home  address  which he most  recently
communicated  to the Bank in writing.  In the case of the Bank,  mailed  notices
shall be  addressed  to its  corporate  headquarters,  and all notices  shall be
directed to the attention of its Secretary.

          (b)  WAIVER. No provision of this Agreement shall be modified,  waived
or  discharged  unless the  modification,  waiver or  discharge  is agreed to in
writing  and signed by the  Employee  and by an  authorized  officer of the Bank
(other  than the  Employee).  No waiver by either  party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other  condition or provision or of the same
condition or provision at another time.

          (c)  WHOLE AGREEMENT. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this  Agreement have been made or entered into by either party with
respect to the subject matter hereof.

          (d)  NO SETOFF;  WITHHOLDING  TAXES. There shall be no right of setoff
or counterclaim, with respect to any claim, debt or obligation, against payments
to the Employee  under this  Agreement.  All payments made under this  Agreement
shall be subject to reduction to reflect taxes required to be withheld by law.

          (e)  CHOICE OF LAW. The  validity,  interpretation,  construction  and
performance  of this  Agreement  shall be  governed  by the laws of the State of
California.

          (f)  SEVERABILITY. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or  enforceability
of any other provision hereof, which shall remain in full force and effect.

          (g)  ARBITRATION OF DISPUTES.  All claims,  disputes and other matters
in  question  arising  out of or  relating  to this  Agreement  or the breach or
interpretation  thereof,  other than those matters which are to be determined by
the Bank in its sole and  absolute  discretion,  shall be  resolved  by  binding
arbitration before a representative member,  selected by the mutual agreement of
the parties, of the Judicial Arbitration and Mediation Services,  Inc. ("JAMS"),
presently located at 111 Pine Street, Suite 710 in San Francisco, California. In
the event JAMS is unable or  unwilling to conduct the  arbitration  provided for
under the terms of this paragraph, or has discontinued its business, the parties
agree that a  representative  member,  selected by the mutual  agreement  of the

                                       6



parties, of the American Arbitration  Association ("AAA"),  presently located at
417 Montgomery Street, in San Francisco,  California,  shall conduct the binding
arbitration referred to in this paragraph.  Notice of the demand for arbitration
shall be filed in writing with the other party to this  Agreement  and with JAMS
(or AAA, if  necessary).  In no event shall the demand for  arbitration  be made
after the date when institution of legal or equitable  proceedings based on such
claim,  dispute or other  matter in question  would be barred by the  applicable
statute  of  limitations.  The  arbitration  shall be  subject  to such rules of
procedure  used or  established  by JAMS,  or if there  are  none,  the rules of
procedure used or established by AAA. Any award rendered by JAMS or AAA shall be
final and binding upon the parties,  and as  applicable,  upon their  respective
heirs, beneficiaries, legal representatives, agents, successors and assigns, and
may be entered in any courts having jurisdiction  thereof. The obligation of the
parties to arbitrate  pursuant to this clause shall be specifically  enforceable
in accordance with, and shall be conducted  consistently with, the provisions of
Title 9 of Part 3 of the California  Code of Civil  Procedure.  Any  arbitration
hereunder shall be conducted in Bakersfield, California, unless otherwise agreed
to by the parties.


          (h)  ATTORNEYS'  FEES. In the event of any  arbitration  or litigation
concerning any controversy, claim or dispute between the parties hereto, arising
out of or relating to this Agreement or the breach hereof, or the interpretation
hereof,  the prevailing party shall be entitled to recover from the losing party
reasonable expenses,  attorneys' fees and costs incurred in connection therewith
or in the  enforcement or collection of any judgment or award rendered  therein.
The "prevailing party" means the party determined by the arbitrator(s) or court,
as the case may be, to have most  nearly  prevailed,  even if such party did not
prevail in all  matters,  not  necessarily  the one in whose favor a judgment is
rendered.

          (i)  NO  ASSIGNMENT.  The rights of any person to payments or benefits
under this Agreement  shall not be made subject to option or assignment,  either
by  voluntary  or  involuntary  assignment  or by  operation  of law,  including
(without  limitation)  bankruptcy,  garnishment,  attachment or other creditor's
process, and any action in violation of this Subsection (i) shall be void.

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Bank by its duly  authorized  officer,  as of the day and year first
above written.


EXECUTIVE:                              SAN JOAQUIN BANK,



/s/ Bart Hill                           By: /s/ Bruce Maclin
- ---------------------------------           -----------------------------------
BART HILL, President and CEO                BRUCE MACLIN, Chairman of the Board



                                        By: /s/ Stephen M. Annis
                                            -----------------------------------
                                            Stephen M. Annis, Senior V.P.


                                        7

EX-99

                                                                           99.19


                               FIRST AMENDMENT TO
                           CHANGE IN CONTROL AGREEMENT


     This is an amendment to the CHANGE IN CONTROL AGREEMENT  previously entered
into as of January 28, 1999, by and between BART HILL (the  "Employee")  and SAN
JOAQUIN BANK, (the "Bank").

     1.   The three  unnumbered  paragraphs  following  Paragraph  1(d)(ii)  are
hereby deleted in order that the Severance  Payment shall be determined  without
regard to any  limitations  based on  Consideration  involved  in a  transaction
constituting a Change in Control.

     2.   In all other  respects,  the  parties  reaffirm  the Change in Control
Agreement dated January 28, 1999.


     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Bank by its duly authorized officers, this 7th day of June, 2001.


EXECUTIVE:                              SAN JOAQUIN BANK,



/s/ Bart Hill                           By: /s/ Bruce Maclin
- ------------------------------              -----------------------------------
BART HILL, President & CEO                  BRUCE MACLIN, Chairman of the Board



                                        By: /s/ Stephen M. Annis
                                            -----------------------------------
                                            STEVE ANNIS, Senior Vice President




                                       1

EX-99

                                                                           99.20

                               SECOND AMENDMENT TO
                           CHANGE IN CONTROL AGREEMENT

     This is an amendment to the CHANGE IN CONTROL AGREEMENT and FIRST AMENDMENT
TO CHANGE IN CONTROL AGREEMENT  previously  entered into on January 28, 1999 and
June 7,  2001,  respectively,  by and  between  BART HILL and SAN  JOAQUIN  BANK
(collectively, the "CHANGE IN CONTROL AGREEMENT").

The parties to this AMENDMENT hereby agree to the following:

A.   That  the  creation of  the bank  holding  company to be named  San Joaquin
     Bancorp., a California  corporation,  and the subsequent acquisition of San
     Joaquin Bank, a California  corporation,  by San Joaquin Bancorp., does not
     constitute  a "Change in Control"  under  Paragraph  1.(a) of the CHANGE IN
     CONTROL AGREEMENT.

B.   That the change of BART HILL's  employment  status from President and Chief
     Executive Officer of San Joaquin Bank to President of San Joaquin Bancorp.,
     and President  and Chief  Executive  Officer of San Joaquin Bank,  does not
     constitute  "Good  Reason" under  Paragraph  1.(b) of the CHANGE IN CONTROL
     AGREEMENT.

C.   That neither the transaction  described in Paragraph A above nor the change
     in employment  status of BART HILL  described in Paragraph B above entitles
     BART  HILL to the  Severance  Payment  described  in  Paragraph  1.(c)  and
     Paragraph 1.(d) of the CHANGE IN CONTROL  AGREEMENT,  or to any benefits in
     the  Incentive  Programs  described  in  Paragraph  1.(e) of the  CHANGE IN
     CONTROL AGREEMENT.

NOW, THEREFOR, the parties to this AMENDMENT hereby agree to amend the CHANGE IN
CONTROL AGREEMENT as follows:

     1.   The words "SAN JOAQUIN BANK,  (the  "Bank")" in the initial  paragraph
          are hereby changed to state:

               SAN JOAQUIN BANK and SAN JOAQUIN BANCORP.
               For  purposes  of this  Agreement,  the term the "Bank"
               shall  hereinafter  collectively  refer to SAN  JOAQUIN
               BANK and/or SAN JOAQUIN BANCORP.

     2.   In all other  respects,  the  parties  reaffirm  the CHANGE IN CONTROL
          AGREEMENT dated January 28, 1999 and amended on June 7, 2001.

                      [SIGNATURE PAGE TO FOLLOW]

                                       1


     IN WITNESS WHEREOF, each of the parties has executed this Amendment, in the
case of San  Joaquin  Bank  and  San  Joaquin  Bancorp  by its  duly  authorized
officers, this 30th day of April, 2003.

EXECUTIVE:                                     SAN JOAQUIN BANK

/s/ Bart Hill                                  By: /s/ Bruce Maclin
- ------------------------                          ------------------------------
Bart Hill                                      Bruce Maclin, Chairman of the
                                               Board

                                               By: /s/ Stephen M. Annis
                                                   -----------------------------
                                               Steve Annis, Chief Financial
                                               Officer



                                               SAN JOAQUIN BANCORP


                                               By: /s/ Bruce Maclin
                                                   -----------------------------
                                               Bruce Maclin, Chairman and CEO



                                               By: /s/ Stephen M. Annis
                                                   -----------------------------
                                               Steve Annis, Chief Financial
                                               Officer

                                       2

EX-99

                                                                   Exhibit 99.21

                          CHANGE IN CONTROL AGREEMENT

     THIS CHANGE IN CONTROL AGREEMENT is entered into as of June 7, 2001, by and
between STEPHEN M. ANNIS (the "Employee") and SAN JOAQUIN BANK, (the "Bank").

     1.   CHANGE IN CONTROL.
          -----------------

          (a)  DEFINITION.  For  all  purposes  under this Agreement, "Change in
Control" shall mean the occurrence of any of the following events after the date
of this Agreement:

               (i)   the dissolution or liquidation of the Bank;

               (ii)  a reorganization, merger or consolidation of the Bank with
          one or more  corporations  as a result  of  which  the Bank is not the
          surviving corporation;

               (iii) any sale,  lease,  exchange or other transfer (in one or a
          series of transactions)  of all or substantially  all of the assets of
          the Bank;

               (iv)  any  merger  or  consolidation  of the Bank in  which  the
          holders of voting stock of the Bank  immediately  before the merger or
          consolidation  will  not  own  fifty  percent  (50%)  or  more  of the
          outstanding  voting shares of the continuing or surviving  corporation
          immediately after such merger or consolidation; or

               (v)   a  change of 50% or more (rounded to the next whole person)
          in the  membership  of the  Board of  Directors  of the Bank  within a
          12-month period,  unless the election or nomination by stockholders of
          each new  director  within such period was  approved by the vote of at
          least 75%  (rounded to the next whole  person) of the  directors  then
          still in office who were in office at the  beginning  of the  12-month
          period.

          (b)  GOOD REASON. For all purposes under this Agreement, "Good Reason"
shall mean that the Employee:

               (i)    Has  incurred a material  reduction  in his  authority  or
          responsibility as the Bank's Chief Financial Officer;

               (ii)   Has incurred a reduction in his "base compensation," bonus
          opportunity or benefits and perquisites; or

               (iii)  Has been notified that his principal place of work will be
          relocated by a distance of 50 miles or more.

                                       1


     For purposes  of  this Agreement, "base compensation" shall mean annualized
base salary as  reflected in the Bank's  payroll  records as of the date of this
Agreement and as may be subsequently adjusted upward for increases.

          (c)  SEVERANCE PAYMENT.  The  Employee  shall be entitled to receive a
severance  payment from the Bank (the  "Severance  Payment") if within the first
twenty-four  (24) month period after the  occurrence of a Change in Control [the
twenty-four  (24) month  period will be renewed if a separate  Change of Control
occurs within twenty-four (24) months of the preceding Change of Control]:

               (i)    The Employee  voluntarily  resigns his employment for Good
          Reason;

               (ii)   The Bank  terminates  the  Employee's  employment  for any
          reason other than Cause or Disability; or

The  Severance  Payment  shall  be made in a lump  sum not  more  than  five (5)
business days following the date of the employment  termination  and shall be in
an amount  determined under Subsection (d) below. The Severance Payment shall be
in lieu of any other  payments,  including  payments under the Bank's  severance
policy, or benefits for periods subsequent to the termination of employment.

     For all purposes under this Agreement, "Cause" shall mean:

               (i)   A willful act by the Employee which constitutes misconduct
          or fraud and which has a material adverse effect on the Bank; or

               (ii)  Conviction of, or a plea of "guilty" or "no contest" to, a
          felony.

No act, or failure to act, by the Employee shall be considered  "willful" unless
committed  without  good faith and without a  reasonable  belief that the act or
omission was in the Bank's best interest.

     "Disability"  shall  have the  same  meaning  as under the Bank's Long-Term
Disability Plan.

          (d)  AMOUNT. The amount of the Severance Payment shall be equal to the
sum of the following:

               (i)   1  1/2   times   the   Employee's   annual  rate  of   base
          compensation,  as in effect on the date of the employment  termination
          (or if greater, the date of this Agreement); plus

               (ii)  1 1/2  times  the  highest  annual  bonus  awarded  to  the
          Employee  by the Bank during the last three years prior to the date of
          the employment termination (regardless of when paid).

          (e)  INCENTIVE PROGRAMS. No Change in Control with respect to the Bank
shall operate to accelerate  the employee's  rights to any awards  heretofore or
hereafter  granted to him under any stock  option,  stock  appreciation  rights,
restricted stock, phantom stock or similar plans, or under any annuity, pension,

                                       2


profit-sharing,  401(K)  plan or other  agreements  of the  Bank,  except to the
extent such accelerated vesting may be provided for therein.

          (f)  NO MITIGATION. The Employee shall not be required to mitigate the
amount of any  payment  contemplated  by this  Section 1 (whether by seeking new
employment or in any other manner).  Except as expressly  provided in Subsection
(f) above,  no such payment  shall be reduced by earnings  that the Employee may
receive from any other source.

     2.   SUCCESSORS.
          ----------

          (a)  BANK'S  SUCCESSORS. The Bank shall require any successor (whether
direct or  indirect  and  whether by  purchase,  lease,  merger,  consolidation,
liquidation  or otherwise) to all or  substantially  all of the Bank' s business
and/or  assets,  by an  agreement  in  substance  and form  satisfactory  to the
Employee,  to assume  this  Agreement  and to agree  expressly  to perform  this
Agreement  in the same  manner  and to the  same  extent  as the  Bank  would be
required to perform it in the  absence of a  succession.  The Bank's  failure to
obtain  such  agreement  prior to the  effectiveness  of a  succession  shall be
treated as grounds for the Employee to terminate employment for Good Reason. For
all purposes under this  Agreement,  the term "Bank" shall include any successor
to the Bank' s business and/or assets which executes and delivers the assumption
agreement  described  in this  Subsection  (a) or  which  becomes  bound by this
Agreement by operation of law.

          (b)  EMPLOYEE'S  SUCCESSORS. This  Agreement  and  all  rights  of the
Employee  hereunder  shall inure to the benefit of, and be  enforceable  by, the
Employee's  personal  or  legal  representatives,   executors,   administrators,
successors, heirs, distributees, devisees and legatees.

     3.   MISCELLANEOUS PROVISIONS.
          ------------------------

          (a)  NOTICE. Notices and all other communications contemplated by this
Agreement  shall be in writing  and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt  requested  and postage  prepaid.  In the case of the  Employee,  mailed
notices  shall be addressed to him at the home  address  which he most  recently
communicated  to the Bank in writing.  In the case of the Bank,  mailed  notices
shall be  addressed  to its  corporate  headquarters,  and all notices  shall be
directed to the attention of its Secretary.

          (b)  WAIVER.  No provision of this Agreement shall be modified, waived
or  discharged  unless the  modification,  waiver or  discharge  is agreed to in
writing  and signed by the  Employee  and by an  authorized  officer of the Bank
(other  than the  Employee).  No waiver by either  party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other  condition or provision or of the same
condition or provision at another time.

          (c)  WHOLE AGREEMENT. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly

                                       3


set forth in this  Agreement have been made or entered into by either party with
respect to the subject matter hereof.

          (d)  NO SETOFF: WITHHOLDING TAXES.  There  shall be no right of setoff
or counterclaim, with respect to any claim, debt or obligation, against payments
to the Employee  under this  Agreement.  All payments made under this  Agreement
shall be subject to reduction to reflect taxes required to be withheld by law.

          (e)  CHOICE OF LAW.  The  validity,  interpretation,  construction and
performance  of this  Agreement  shall be  governed  by the laws of the State of
California.

          (f)  SEVERABILITY. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or  enforceability
of any other provision hereof, which shall remain in full force and effect.

          (g)  ARBITRATION OF DISPUTES.  All  claims, disputes and other matters
in  question  arising  out of or  relating  to this  Agreement  or the breach or
interpretation  thereof,  other than those matters which are to be determined by
the Bank in its sole and  absolute  discretion,  shall be  resolved  by  binding
arbitration before a representative member,  selected by the mutual agreement of
the parties, of the Judicial Arbitration and Mediation Services,  Inc. ("JAMS"),
presently located at 111 Pine Street, Suite 710 in San Francisco, California. In
the event JAMS is unable or  unwilling to conduct the  arbitration  provided for
under the terms of this paragraph, or has discontinued its business, the parties
agree that a  representative  member,  selected by the mutual  agreement  of the
parties, of the American Arbitration  Association ("AAA"),  presently located at
417 Montgomery Street, in San Francisco,  California,  shall conduct the binding
arbitration referred to in this paragraph.  Notice of the demand for arbitration
shall be filed in writing with the other party to this  Agreement  and with JAMS
(or AAA, if  necessary).  In no event shall the demand for  arbitration  be made
after the date when institution of legal or equitable  proceedings based on such
claim,  dispute or other  matter in question  would be barred by the  applicable
statute  of  limitations.  The  arbitration  shall be  subject  to such rules of
procedure  used or  established  by JAMS,  or if there  are  none,  the rules of
procedure used or established by AAA. Any award rendered by JAMS or AAA shall be
final and binding upon the parties,  and as  applicable,  upon their  respective
heirs, beneficiaries, legal representatives, agents, successors and assigns, and
may be entered in any courts having jurisdiction  thereof. The obligation of the
parties to arbitrate  pursuant to this clause shall be specifically  enforceable
in accordance with, and shall be conducted  consistently with, the provisions of
Title 9 of Part 3 of the California  Code of Civil  Procedure.  Any  arbitration
hereunder shall be conducted in Bakersfield, California, unless otherwise agreed
to by the parties.

          (h)  ATTORNEYS' FEES.  In  the  event of any arbitration or litigation
concerning  any  controversy,  claim or dispute  between the parties  hereto,  a
rising  out of or  relating  to this  Agreement  or the  breach  hereof,  or the
interpretation  hereof,  the prevailing  party shall be entitled to recover from
the losing party  reasonable  expenses,  attorneys'  fees and costs  incurred in
connection  therewith or in the  enforcement  or  collection  of any judgment or
award rendered therein. The "prevailing party" means the party determined by the
arbitrator(s) or court, as the case may be, to have most nearly prevailed,  even

                                       4


if such party did not prevail in all matters,  not  necessarily the one in whose
favor a judgment is rendered.

          (i)  NO ASSIGNMENT.  The rights  of any person to payments or benefits
under this Agreement  shall not be made subject to option or assignment,  either
by  voluntary  or  involuntary  assignment  or by  operation  of law,  including
(without  limitation)  bankruptcy,  garnishment,  attachment or other creditor's
process, and any action in violation of this Subsection (i) shall be void.

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Bank by its duly  authorized  officer,  as of the day and year first
above written.

EXECUTIVE:                                  SAN JOAQUIN BANK,


/s/ Stephen M. Annis                      By /s/ Bruce Maclin
- ---------------------------------------     ------------------------------------
STEPHEN M. ANNIS, Senior Vice President     BRUCE MACLIN, Chairman of the Board



                                          By  /s/ Bart Hill
                                            ------------------------------------
                                            BART HILL, President and CEO

                                       5

EX-99

                                                                   Exhibit 99.22


                               FIRST AMENDMENT TO
                               ------------------
                           CHANGE IN CONTROL AGREEMENT
                           ---------------------------


     This is an amendment to the CHANGE IN CONTROL AGREEMENT  previously entered
into on June 7, 2001 by and between STEPHEN M. ANNIS and SAN JOAQUIN BANK.

The parties to this AMENDMENT hereby agree to the following:

A.   That the  creation  of the bank  holding  company  to be named San  Joaquin
     Bancorp., a California  corporation,  and the subsequent acquisition of San
     Joaquin Bank, a California corporation,  by San Joaquin Bancorp ., does not
     constitute  a "Change in Control"  under  Paragraph  1.(a) of the CHANGE IN
     CONTROL AGREEMENT.

B.   That the change of STEPHEN M.  ANNIS'  employment  status  from Senior Vice
     President,  Chief Financial Officer and Corporate  Secretary of San Joaquin
     Bank to Senior  Vice  President,  Chief  Financial  Officer  and  Corporate
     Secretary  of San  Joaquin  Bancorp ., and  Senior  Vice  President,  Chief
     Financial  Officer and Corporate  Secretary of San Joaquin  Bank,  does not
     constitute  "Good  Reason" under  Paragraph  1.(b) of the CHANGE IN CONTROL
     AGREEMENT.

C.   That neither the transaction  described in Paragraph A above nor the change
     in  employment  status of STEPHEN M. ANNIS  described  in Paragraph B above
     entitles STEPHEN M. ANNIS to the Severance  Payment  described in Paragraph
     1.(c) and  Paragraph  1.(d) of the  CHANGE IN CONTROL  AGREEMENT  or to any
     benefits in the  Incentive  Programs  described in  Paragraph  1.(e) of the
     CHANGE IN CONTROL AGREEMENT.

     NOW,  THEREFOR,  the parties to this  AMENDMENT  hereby  agree to amend the
CHANGE IN CONTROL AGREEMENT as follows:

     1.   The words "SAN JOAQUIN BANK,  (the  "Bank")" in the initial  paragraph
          are hereby changed to state:

               SAN JOAQUIN  BANK and SAN JOAQUIN BANCORP.  For purposes
               of this Agreement, the term the "Bank" shall hereinafter
               collectively  refer  to  SAN  JOAQUIN  BANK  and/or  SAN
               JOAQUIN BANCORP.

          2.   In all other respects, the parties reaffirm the CHANGE IN CONTROL
               AGREEMENT dated June 7, 2001.


                           [SIGNATURE PAGE TO FOLLOW]

                                        1


     IN WITNESS WHEREOF, each of the parties has executed this Amendment, in the
case of San  Joaquin  Bank  and  San  Joaquin  Bancorp  by its  duly  authorized
officers, this 30th day of April, 2003.


EXECUTIVE:                              SAN JOAQUIN BANK,



/s/ Stephen M. Annis                    By:  /s/ Bruce Maclin
- ----------------------------------         ----------------------------------
Stephen M. Annis                        Bruce Maclin, Chairman of the Board



                                        By:  /s/ Bart Hill
                                           ----------------------------------
                                        Bart Hill, President and CEO



                                        SAN JOAQUIN BANCORP,



                                        By:  /s/ Bruce Maclin
                                           ----------------------------------
                                        Bruce Maclin, Chairman and CEO



                                        By:  /s/ Bart Hill
                                           ----------------------------------
                                        Bart Hill, President


       [SIGNATURE PAGE TO FIRST AMENDMENT TO CHANGE IN CONTROL AGREEMENT]

                                       2

EX-99

                                                                   Exhibit 99.23

                           CHANGE IN CONTROL AGREEMENT

     THIS CHANGE IN CONTROL AGREEMENT is entered into as of June 7, 2001, by and
between JOHN W. IVY (the "Employee") and SAN JOAQUIN BANK, (the "Bank").

     1.   Change in Control.
          -----------------

          (a)  DEFINITION.  For all purposes  under this  Agreement,  "Change in
Control" shall mean the occurrence of any of the following events after the date
of this Agreement:

               (i)    the dissolution or liquidation of the Bank;

               (ii)   a reorganization, merger or consolidation of the Bank with
          one or more  corporations  as a result  of  which  the Bank is not the
          surviving corporation;

               (iii)  any sale,  lease,  exchange or other transfer (in one or a
          series of transactions)  of all or substantially  all of the assets of
          the Bank;

               (iv)   any  merger  or  consolidation  of the Bank in  which  the
          holders of voting stock of the Bank  immediately  before the merger or
          consolidation  will  not  own  fifty  percent  (50%)  or  more  of the
          outstanding  voting shares of the continuing or surviving  corporation
          immediately after such merger or consolidation; or

               (v)    a change of 50% or more (rounded to the next whole person)
          in the  membership  of the Board of  Directors of the Bank within a 12
          -month period,  unless the election or nomination by  stockholders  of
          each new  director  within such period was  approved by the vote of at
          least 75%  (rounded to the next whole  person) of the  directors  then
          still in office who were in office at the  beginning  of the  12-month
          period.

          (b)  GOOD REASON. For all purposes under this Agreement, "Good Reason"
shall mean that the Employee:

               (i)    Has  incurred a material  reduction  in his  authority  or
          responsibility as the Bank's Senior Loan Officer;

               (ii)   Has incurred a reduction in his "base compensation," bonus
          opportunity or benefits and perquisites; or

               (iii)  Has been notified that his principal place of work will be
          relocated by a distance of 50 miles or more.

                                       1


     For purposes of this Agreement,  "base  compensation" shall mean annualized
base salary as  reflected in the Bank's  payroll  records as of the date of this
Agreement and as may be subsequently adjusted upward for increases.

          (c)  SEVERANCE  PAYMENT.  The Employee  shall be entitled to receive a
severance  payment from the Bank (the  "Severance  Payment") if within the first
twenty-four  (24) month period after the  occurrence of a Change in Control [the
twenty-four  (24) month  period will be renewed if a separate  Change of Control
occurs within twenty-four (24) months of the preceding Change of Control]:

               (i)    The Employee  voluntarily  resigns his employment for Good
          Reason;

               (ii)   The Bank  terminates  the  Employee's  employment  for any
          reason other than Cause or Disability ; or

The  Severance  Payment  shall  be made in a lump  sum not  more  than  five (5)
business days following the date of the employment  termination  and shall be in
an amount  determined under Subsection (d) below. The Severance Payment shall be
in lieu of any other  payments,  including  payments under the Bank's  severance
policy, or benefits for periods subsequent to the termination of employment.

     For all purposes under this Agreement, "Cause" shall mean:

               (i)    A willful act by the Employee which constitutes misconduct
          or fraud and which has a material adverse effect on the Bank; or

               (ii)   Conviction of, or a plea of "guilty" or "no contest" to, a
          felony.

No act, or failure to act, by the Employee shall be considered  "willful" unless
committed  without  good faith and without a  reasonable  belief that the act or
omission was in the Bank's best interest.

     "Disability"  shall have the same  meaning  as under the  Bank's  Long-Term
Disability Plan.

          (d)  AMOUNT. The amount of the Severance Payment shall be equal to the
sum of the following:

               (i)    1  1/2  times   the   Employee's   annual   rate  of  base
          compensation,  as in effect on the date of the employment  termination
          (or if greater, the date of this Agreement); plus

               (ii)   1 1/2  times  the  highest  annual  bonus  awarded  to the
          Employee  by the Bank during the last three years prior to the date of
          the employment termination (regardless of when paid).

          (e)  INCENTIVE PROGRAMS. No Change in Control with respect to the Bank
shall operate to accelerate  the employee's  rights to any awards  heretofore or
hereafter  granted to him under any stock  option,  stock  appreciation  rights,
restricted stock, phantom stock or similar plans, or under any annuity, pension,

                                       2


profit-sharing,  401(x)  plan or other  agreements  of the  Bank,  except to the
extent such accelerated vesting may be provided for therein.

          (f)  NO MITIGATION. The Employee shall not be required to mitigate the
amount of any  payment  contemplated  by this  Section 1 (whether by seeking new
employment or in any other manner).  Except as expressly  provided in Subsection
(f) above,  no such payment  shall be reduced by earnings  that the Employee may
receive from any other source.

     2.   Successors.
          ----------

          (a)  BANK'S SUCCESSORS.  The Bank shall require any successor (whether
direct or  indirect  and  whether by  purchase,  lease,  merger,  consolidation,
liquidation  or otherwise) to all or  substantially  all of the Bank's  business
and/or  assets,  by an  agreement  in  substance  and form  satisfactory  to the
Employee,  to assume  this  Agreement  and to agree  expressly  to perform  this
Agreement  in the same  manner  and to the  same  extent  as the  Bank  would be
required to perform it in the  absence of a  succession.  The Bank's  failure to
obtain  such  agreement  prior to the  effectiveness  of a  succession  shall be
treated as grounds for the Employee to terminate employment for Good Reason. For
all purposes under this  Agreement,  the term "Bank" shall include any successor
to the Bank's  business and/or assets which executes and delivers the assumption
agreement  described  in this  Subsection  (a) or  which  becomes  bound by this
Agreement by operation of law.

          (b)  EMPLOYEE'S  SUCCESSORS.  This  Agreement  and all  rights  of the
Employee  hereunder  shall inure to the benefit of, and be  enforceable  by, the
Employee's  personal  or  legal  representatives,   executors,   administrators,
successors, heirs, distributees, devisees and legatees.

     3.   Miscellaneous Provisions.
          ------------------------

          (a)  NOTICE. Notices and all other communications contemplated by this
Agreement  shall be in writing  and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt  requested  and postage  prepaid.  In the case of the  Employee,  mailed
notices  shall be addressed to him at the home  address  which he most  recently
communicated  to the Bank in writing.  In the case of the Bank,  mailed  notices
shall be  addressed  to its  corporate  headquarters,  and all notices  shall be
directed to the attention of its Secretary.

          (b)  WAIVER. No provision of this Agreement shall be modified,  waived
or  discharged  unless the  modification,  waiver or  discharge  is agreed to in
writing  and signed by the  Employee  and by an  authorized  officer of the Bank
(other  than the  Employee).  No waiver by either  party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other  condition or provision or of the same
condition or provision at another time.

          (c)  WHOLE AGREEMENT. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this  Agreement have been made or entered into by either party with
respect to the subject matter hereof.

                                       3


          (d)  NO SETOFF,  WITHHOLDING  TAXES. There shall be no right of setoff
or counterclaim, with respect to any claim, debt or obligation, against payments
to the Employee  under this  Agreement.  All payments made under this  Agreement
shall be subject to reduction to reflect taxes required to be withheld by law.

          (e)  CHOICE OF LAW. The  validity,  interpretation,  construction  and
performance  of this  Agreement  shall be  governed  by the laws of the State of
California.

          (f)  SEVERABILITY. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or  enforceability
of any other provision hereof, which shall remain in full force and effect.

          (g)  ARBITRATION OF DISPUTES.  All claims,  disputes and other matters
in  question  arising  out of or  relating  to this  Agreement  or the breach or
interpretation  thereof,  other than those matters which are to be determined by
the Bank in its sole and  absolute  discretion,  shall be  resolved  by  binding
arbitration before a representative member,  selected by the mutual agreement of
the parties, of the Judicial Arbitration and Mediation Services,  Inc. ("JAMS"),
presently located at 111 Pine Street, Suite 710 in San Francisco, California. In
the event JAMS is unable or  unwilling to conduct the  arbitration  provided for
under the terms of this paragraph, or has discontinued its business, the parties
agree that a  representative  member,  selected by the mutual  agreement  of the
parties, of the American Arbitration  Association ("AAA"),  presently located at
417 Montgomery Street, in San Francisco,  California,  shall conduct the binding
arbitration referred to in this paragraph.  Notice of the demand for arbitration
shall be filed in writing with the other party to this  Agreement  and with JAMS
(or AAA, if  necessary).  In no event shall the demand for  arbitration  be made
after the date when institution of legal or equitable  proceedings based on such
claim,  dispute or other  matter in question  would be barred by the  applicable
statute  of  limitations.  The  arbitration  shall be  subject  to such rules of
procedure  used or  established  by JAMS,  or if there  are  none,  the rules of
procedure used or established by AAA. Any award rendered by JAMS or AAA shall be
final and binding upon the parties,  and as  applicable,  upon their  respective
heirs, beneficiaries, legal representatives, agents, successors and assigns, and
may be entered in any courts having jurisdiction  thereof. The obligation of the
parties to arbitrate  pursuant to this clause shall be specifically  enforceable
in accordance with, and shall be conducted  consistently with, the provisions of
Title 9 of Part 3 of the California  Code of Civil  Procedure.  Any  arbitration
hereunder shall be conducted in Bakersfield, California, unless otherwise agreed
to by the parties.

          (h)  ATTORNEYS'  FEES. In the event of any  arbitration  or litigation
concerning any controversy, claim or dispute between the parties hereto, arising
out of or relating to this Agreement or the breach hereof, or the interpretation
hereof,  the prevailing party shall be entitled to recover from the losing party
reasonable expenses,  attorneys' fees and costs incurred in connection therewith
or in the  enforcement or collection of any judgment or award rendered  therein.
The "prevailing party" means the party determined by the arbitrator(s) or court,
as the case may be, to have most  nearly  prevailed,  even if such party did not

                                       4


prevail in all  matters,  not  necessarily  the one in whose favor a judgment is
rendered.

          (i)  NO  ASSIGNMENT.  The rights of any person to payments or benefits
under this Agreement  shall not be made subject to option or assignment,  either
by  voluntary  or  involuntary  assignment  or by  operation  of law,  including
(without  limitation)  bankruptcy,  garnishment,  attachment or other creditor's
process, and any action in violation of this Subsection (i) shall be void.

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Bank by its duly  authorized  officer,  as of the day and year first
above written.

EXECUTIVE:                                SAN JOAQUIN BANK,


/s/ John W. Ivy                           By  /s/ Bruce Maclin
- ------------------------------------         -----------------------------------
John W. Ivy, Senior Vice President           Bruce Maclin, Chairman of the Board



                                          By  /s/ Bart Hill
                                             -----------------------------------
                                             Bart Hill, President and CEO

                                       5

EX-99

                                                                           99.24

                               FIRST AMENDMENT TO
                               ------------------
                            CHANGE CONTROL AGREEMENT
                            ------------------------

     This is an amendment to the CHANGE IN CONTROL AGREEMENT  previously entered
into on June 7,2001 by and between JOHN W. IVY and SAN JOAQUIN BANK.

The parties to this AMENDMENT hereby agree to the following:

A.   That the  creation  of the bank  holding  company  to be named San  Joaquin
     Bancorp., a California  corporation,  and the subsequent acquisition of San
     Joaquin Bank, a California  corporation,  by San Joaquin Bancorp., does not
     constitute  a "Change  in Control"  under  Paragraph 1.(a) of the CHANGE IN
     CONTROL AGREEMENT.

B.   That the  change  of JOHN W.  IVY'S  employment  status  from  Senior  Vice
     President  and  Loan  Administrator  of San  Joaquin  Bank to  Senior  Vice
     President and Loan  Administrator of San Joaquin Bancorp.,  and Senior Vice
     President and Loan  Administrator  of San Joaquin Bank, does not constitute
     "Good Reason" under Paragraph 1.(b) of the CHANGE IN CONTROL AGREEMENT.

C.   That neither the transaction  described in Paragraph A above nor the change
     in employment status of JOHN W. IVY described in Paragraph B above entitles
     JOHN W. IVY to the  Severance  Payment  described  in  Paragraph  1.(c) and
     Paragraph 1.(d) of the CHANGE IN CONTROL  AGREEMENT,  or to any benefits in
     the  Incentive  Programs  described  in  Paragraph  1.(e) of the  CHANGE IN
     CONTROL AGREEMENT.

     NOW,  THEREFOR,  the parties to this  AMENDMENT  hereby  agree to amend the
CHANGE IN CONTROL AGREEMENT as follows:

     1.   The words "SAN JOAQUIN BANK,  (the  "Bank")" in the initial  paragraph
          are hereby changed to state:

               SAN  JOAQUIN   BANK  and  SAN  JOAQUIN  BANCORP.  For
               purposes of this Agreement, the term the "Bank" shall
               hereinafter  collectively refer  to  SAN JOAQUIN BANK
               and/or SAN JOAQUIN BANCORP.

     2.   In all other  respects,  the  parties  reaffirm  the CHANGE IN CONTROL
          AGREEMENT dated June 7,2001.

                           [SIGNATURE PAGE TO FOLLOW]


                                       1


     IN WITNESS WHEREOF, each of the parties has executed this Amendment, in the
case of San  Joaquin  Bank  and  San  Joaquin  Bancorp  by its  duly  authorized
officers, this 30th day of April, 2003.

EXECUTIVE:                          SAN JOAQUIN BANK,



/s/ John W. Ivy                     By: /s/ Bruce Maclin
- -----------------                       -----------------------------------
John W. Ivy                             Bruce Maclin, Chairman fo the Board


                                    By: /s/ Bart Hill
                                        -----------------------------------
                                        Bart Hill, President and CEO

                                    SAN JOAQUIN BANCORP,



                                    By:  /s/ Bruce Maclin
                                         ----------------------------------
                                         Bruce Maclin, Chairman and CEO




                                    By: /s/ Bart Hill
                                        -----------------------------------
                                        Bart Hill, President




           [Signature Page to First Amendment to Change in Agreement]


                                       2

EX-99

                                                                           99.25

                             DEFERRED FEE AGREEMENT

         THIS  AGREEMENT  is made this 9th day of October, 1996,  by and between
SAN JOAQUIN BANK (the "Company"), and LOUIS J. BARBICH (the "Director").


                                  INTRODUCTION

         To encourage the Director to remain a member of the-Company's  Board of
Directors,  the  Company is willing  to provide to the  Director a deferred  fee
opportunity. The Company will pay the benefits from its general assets.


                                   AGREEMENT

         The Director and the Company agree as follows:


                                    ARTICLE 1
                                   DEFINITIONS

         1.1 DEFINITIONS.  Whenever used in this Agreement,  the following words
and phrases shall have the meanings specified:

             1.1.1  "CHANGE OF CONTROL" means the transfer of fifty-one (51%) or
more of the Company's  outstanding  voting common stock  followed  within twelve
(12) months of termination of the Director's status as a member of the Company's
Board of Directors.

             1.1.2  "CODE" means the Internal Revenue Code of 1986,  as amended.
References  to a Code  section  shall be deemed to be to that  section as it now
exists and to any successor provision.

             1.1.3  "DISABILITY"  means  the  Director's  inability  to  perform
substantially  all normal  duties of a director,  as determined by the Company's
Board of Directors in its sole discretion.  As a condition to any benefits,  the
Company  may  require  the  Director  to  submit  to  such  physical  or  mental
evaluations and tests as the Board of Directors deems appropriate.

             1.1.4  "ELECTION FORM" means the Form attached as Exhibit "1."

             1.1.5  "FEES"  means  the  total  directors  fees  payable  to  the
Director.


                                       1



             1.1.6  "NORMAL TERMINATION  DATE" means the Director  attaining age
seventy (70) and completing ten (10) Years of Service.

             1.1.7  "TERMINATION OF SERVICE"  means the Director's ceasing to be
a member of the Company's Board of Directors for any reason whatsoever.

                                   ARTICLE 2
                               DEFERRAL ELECTION

         2.1 INITIAL  ELECTION.  The  Director  shall  make an initial  deferral
election under this Agreement by filing with the Company a signed  Election Form
within  thirty (30) days after the date of this  Agreement.  The  Election  Form
shall set forth the amount of Fees to be deferred.  The  Election  Form shall be
effective to defer only Fees earned after the date the Election Form is received
by the Company.

         2.2 ELECTION CHANGES.

             2.2.1  GENERALLY.  The Director may modify the amount of Fees to be
deferred by filing a  subsequent  signed  Election  Form with the  Company.  The
modified  deferral shall not be effective  until the calendar year following the
year in which the subsequent Election Form is received by the Company.

             2.2.2  HARDSHIP. If an unforeseeable  financial  emergency  arising
from the death of a family member,  divorce,  sickness,  injury,  catastrophe or
similar  event  outside the control of the Director  occurs,  the  Director,  by
written  instructions to the Company may reduce or cease future  deferrals under
this Agreement.

                                   ARTICLE 3
                                DEFERRAL ACCOUNT

         3.1 ESTABLISHING AND CREDITING.  The Company shall establish a Deferral
Account on its books for the Director,  and shall credit to the Deferral Account
the following amounts:

             3.1.1  DEFERRALS. The  Fees deferred by the Director as of the time
the Fees would have otherwise been paid to the Director.

                                       2


             3.1.2  INTEREST. On each  anniversary of the date of this Agreement
and  immediately  prior to the payment of any benefits,  interest on the account
balance  since the  preceding  credit  under this Section  3.1.2,  if any, at an
annual  rate,  compounded  annually,  equal  to the  rate  being  paid  on  such
anniversary  date by Company on ninety (90) day jumbo  certificates  of deposit,
such rate to be used for the following twelve (12) month period.

         3.2 STATEMENT OF ACCOUNTS.  The Company  shall provide to the Director,
within one hundred twenty (120) days after each anniversary of this Agreement, a
statement setting forth the Deferral Account balance.

         3.3 ACCOUNTING DEVICE ONLY. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind.  The  Director  is a general  unsecured  creditor of the
Company for the payment of  benefits.  The benefits  represent  the mere Company
promise to pay such  benefits.  The  Director's  rights  are not  subject in any
manner  to  anticipation,   alienation,  sale,  transfer,   assignment,  pledge,
encumbrance, attachment, or garnishment by the Director's creditors.

                                   ARTICLE 4
                               LIFETIME BENEFITS

         4.1 NORMAL TERMINATION  BENEFIT.  Upon  the  Director's  Termination of
Service,  the Company  shall pay to the Director  the benefit  described in this
Section 4.1.

             4.1.1  AMOUNT OF BENEFIT. The benefit under this Section 4.1 is the
Deferral Account balance at the Director's Termination of service.

             4.1.2  PAYMENT OF BENEFIT. The Company shall pay the benefit to the
Director in one hundred  twenty (120)  monthly  installments  commencing  on the
first day of the month  following the  Director's  Termination  of Service.  The
Company shall continue to credit interest under Section 3.1.2 at the annual rate
determined  as provided  therein on the  remaining  account  balance  during any
applicable  installment  period.  Such  payments  shall be calculated to provide


                                       3



equal  monthly  payments  based on the interest  rate in effect when the initial
payment is made and readjusted annually to take into account any fluctuations in
the rate of interest as determined under Section 3.1.2.

         4.2 DISABILITY  BENEFIT.  If  the  Director  terminates  service  as  a
director for Disability  prior to the Normal  Termination Date the Company shall
pay to the Director the benefit described in this Section 4.2.

             4.2.1  AMOUNT OF BENEFIT. The benefit under this Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.

             4.2.2  PAYMENT OF BENEFIT. The Company shall pay the benefit to the
Director in one hundred  twenty (120)  monthly  installments  commencing  on the
first day of the month  following the  Director's  Termination  of Service.  The
Company shall continue to credit interest under Section 3.1.2  determined in the
same manner as provided  therein on the  remaining  account  balance  during any
applicable  installment  period.  Such  payments  shall be calculated to provide
equal  monthly  payments  based on the interest  rate in effect when the initial
payment is made and readjusted annually to take into account any fluctuations in
the rate of interest as determined under Section 3.1.2.

         4.3 CHANGE OF CONTROL  BENEFIT.  Upon a Change of Control,  the Company
shall pay to the Director  the benefit  described in this Section 4.3 in lieu of
any further benefit under this Agreement.

             4.3.1  AMOUNT OF BENEFIT. The benefit under this Section 4.3 is the
Deferral Account balance at the date of the Change of Control (as reduced by any
distributions made prior to the change of control).

             4.3.2  PAYMENT OF BENEFIT. The Company shall pay the benefit to the
Director  in a lump sum within  thirty (30) days after the date of the Change of
Control.

         4.4 HARDSHIP DISTRIBUTION.  Upon the Company's determination (following
petition by the  Director)  that the  Director  has  suffered  an  unforeseeable
financial  emergency as described in Section 2.2.2, the Company shall distribute
to the Director all or a portion of the Deferral  Account  balance as determined
by the  Company,  but in no event  shall the  distribution  be  greater  than is

                                       4


necessary to relieve the financial hardship.

                                    ARTICLE 5
                                 DEATH BENEFITS

         5.1 DEATH  DURING ACTIVE  SERVICE.  If the  Director  dies while in the
active  service  of the  Company,  the  Company  shall  pay  to  the  Director's
beneficiary the benefit described in this Section 5.1.

             5.1.1  AMOUNT OF  BENEFIT.  The  benefit  under  Section 5.1 is the
Deferral Account balance at the date of the Director's death.

             5.1.2  PAYMENT OF BENEFIT. The Company shall pay the benefit to the
beneficiary within thirty (30) days following the Director's death.

         5.2 DEATH DURING BENEFIT  PERIOD.  If the Director  dies after  benefit
payments  have  commenced  under this  Agreement  but before  receiving all such
payments,  the  Company  shall  pay the  remaining  benefits  to the  Director's
beneficiary  at the same time and in the same  amounts they would have been paid
to the Director had the Director survived.

                                   ARTICLE 6
                                 BENEFICIARIES

         6.1 BENEFICIARY   DESIGNATIONS.   The   Director   shall   designate  a
beneficiary by filing a written  designation with the Company.  The Director may
revoke  or  modify  the  designation  at any time by  filing a new  designation.
However,  designations  will only be  effective  if signed by the  Director  and
accepted  by  the  Company  during  the  Director's  lifetime.   The  Director's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases  the Director,  or if the Director names a spouse as beneficiary and
the marriage is  subsequently  dissolved.  If the Director  dies without a valid
beneficiary designation,  all payments shall be made to the Director's surviving
spouse,  if any,  and if none,  to the  Director's  surviving  children  and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Director's estate.


                                       5



         6.2 FACILITY  OF  PAYMENT.  If  a benefit is  payable to a minor,  to a
person  declared  incompetent,   or  to  a  person  incapable  of  handling  the
disposition  of his or her  property,  the Company  may pay such  benefit to the
guardian,  legal  representative  or person  having  the care or custody of such
minor,  incompetent person or incapable person. The Company may require proof of
incompetency,  minority  or  guardianship  as it may deem  appropriate  prior to
distribution of the benefit.  Such distribution  shall completely  discharge the
Company from all liability with respect to such benefit.

                                   ARTICLE 7
                          CLAIMS AND REVIEW PROCEDURES

         7.1 CLAIMS  PROCEDURE.   The  Company   shall  notify   the  Director's
beneficiary  in  writing,  within  ninety  (90)  days  of  his  or  her  written
application  for  benefits,  of his or her  eligibility  or  noneligibility  for
benefits under the Agreement.  If the Company determines that the beneficiary is
not eligible for benefits or full  benefits,  the notice shall set forth (1) the
specific reason for such denial,  (2) a specific  reference to the provisions of
the Agreement on which the denial is based,  (3) a description of any additional
information or material  necessary for the claimant to perfect his or her claim,
and a description of why it is needed, and (4) an explanation of the Agreement's
claims review procedure and other appropriate  information as to the steps to be
taken if the  beneficiary  wishes to have the  claim  reviewed.  If the  Company
determines  that there are special  circumstances  requiring  additional time to
make a  decision,  the  Company  shall  notify the  beneficiary  of the  special
circumstances  and the date by which a decision is expected to be made,  and may
extend the time for up to an additional ninety-day period.

         7.2 REVIEW PROCEDURE.  If the  beneficiary is determined by the Company
not to be eligible for benefits,  or if the beneficiary  believes that he or she
is entitled to greater or different  benefits,  the  beneficiary  shall have the
opportunity  to have such claim reviewed by the Company by filing a petition for
review  with the  Company  within  sixty (60) days  after  receipt of the notice


                                       6


issued by the Company.  Said petition shall state the specific  reason which the
beneficiary  believes  entitle him or her to benefits or to greater or different
benefits.  Within sixty (60) days after  receipt by the Company of the petition,
the Company shall afford the beneficiary (and counsel, if any) an opportunity to
present  his or her  position  to the  Company  orally  or in  writing,  and the
beneficiary (or counsel) shall have the right to review the pertinent documents.
The Company shall notify the  beneficiary  of its decision in writing within the
sixty-day period,  stating specifically the basis of its decision,  written in a
manner  calculated  to  be  understood  by  the  beneficiary  and  the  specific
provisions of the Agreement on which the decision is based.  If,  because of the
need for a hearing, the sixty-day period is not sufficient,  the decision may be
deferred for up to another  sixty-day period at the election of the Company, but
notice of this deferral shall be given to the beneficiary.

                                   ARTICLE 8
                           AMENDMENTS AND TERMINATION

         This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.

         The Company may amend or terminate  this Agreement at any time prior to
the Director's  Termination of Service by written notice to the Director.  In no
event shall this Agreement be terminated  without payment to the Director of the
Deferral Account balance  attributable to the Director's  deferrals and interest
credited on such amounts.

                                   ARTICLE 9
                                 MISCELLANEOUS

         9.1 BINDING  EFFECT.  This  Agreement  shall bind the  Director and the
Company,  and their  beneficiaries,  survivors,  executors,  administrators  and
transferees.

         9.2 NO GUARANTY  OF  SERVICE.  This  Agreement  is not a  contract  for
services.  It does not give the  Director  the right to remain a director of the
Company,  nor does it  interfere  with the  shareholders'  rights to replace the
Director.  It also  does not  require  the  Director  to remain a  director  nor

                                       7




interfere with the Director's right to terminate services at any time.

         9.3 NON-TRANSFERABILITY.  Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

         9.4 TAX  WITHHOLDING.  The Company  shall  withhold  any taxes that are
required to be withheld from the benefits provided under this Agreement.

         9.5 APPLICABLE  LAW. This Agreement and all rights  hereunder  shall be
governed by the laws of California,  except to the extent  preempted by the laws
of the United States of America.

         9.6 UNFUNDED  ARRANGEMENT.  The Director  and  beneficiary  are general
unsecured  creditors  of the  Company  for the  payment of  benefits  under this
Agreement.  The benefits  represent  the mere promise by the Company to pay such
benefits.  The rights to benefits are not subject in any manner to anticipation,
alienation,  sale, transfer,  assignment,  pledge,  encumbrance,  attachment, or
garnishment  by  creditors.  Any insurance on the  Director's  life is a general
asset of the Company to which the Director and beneficiary  have no preferred or
secured claim.

         IN WITNESS WHEREOF,  the Director and a duly authorized Company officer
have signed this Agreement.

DIRECTOR:                                    COMPANY:

                                             SAN JOAQUIN BANK,
/s/ Louis J. Barbich
- ----------------------------                 By  /s/ Bruce Maclin
LOUIS J. BARBICH                               ----------------------------
                                                 BRUCE MACLIN
                                                 Chairman of the Board



                                       8



                                    EXHIBIT I
                                       TO
                         DEFERRED COMPENSATION AGREEMENT

                                DEFERRAL ELECTION


I elect to defer compensation under my Deferred Compensation  Agreement with the
Company, as follows:


================================================================================

     Amount of Deferral           Frequency of Deferral            Duration
================================================================================

[Initial and Complete One]     [Initial One]                 [Initial One]

 X I elect to defer 100% of    __ Beginning of Year          __ This Year Only
   my Salary                   X  Each pay period            __ For __ [insert
                               __ Monthly                       Number] Years
__ I elect to defer $__        __ Quarterly                  __ Until the Early
   of my Salary                __ Semi-Annually                 Retirement Date
                               __ End of Year                X  Until the Normal
__ I elect not to defer                                         Retirement Date

- --------------------------------------------------------------------------------
[Initial and Complete One]     [Initial One]                 [Initial One]

 X I elect to defer 100% of    __ First Bonus Payment        __ This Year Only
   my Bonus                                                  __ For __ [insert
                               X  Each Bonus Payment            Number] Years
__ I elect to defer $__                                      __ Until the Early
   of my Bonus                 __ Last Bonus Payment            Retirement Date
                                                             X  Until the Normal
__ I elect not to defer                                         Retirement Date

================================================================================

I  understand  that I may  change  the  amount,  frequency  and  duration  of my
deferrals by filing a new election  form with the  Company;  provided,  however,
that any  subsequent  election  will not be effective  until the  calendar  year
following the year in which the new election is received by the Company.




                                 FORM OF BENEFIT

 I elect to receive benefits under the Agreement in the following form:


[Initial One]

 X      Lump sum
- ---
___     Equal monthly installments for _ [insert Number of Months] months

I understand that I may not change the form of benefit elected, even if I later
change the amount of my deferrals under the Agreement.


                             BENEFICIARY DESIGNATION

I  designate  the  following  as  beneficiary  of  benefits  under the  Deferred
Compensation Agreement payable following my death:


Primary: /s/ Sheryl Barbich
         -----------------------------------------------------------------------

Contingent: Estate of Louis J. Barbich
           ---------------------------------------------------------------------

NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE AND
      THE EXACT NAME AND DATE OF THE TRUST AGREEMENT.

I understand  that I may change these  beneficiary  designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically  revoked  if the beneficiary  predeceases me, or if I have
named by spouse as beneficiary in the event of the dissolution of our marriage.

Signature    /s/ Louis J. Barbich
         -----------------------------------

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

Date     10/29/96
     ---------------------------------------

Accepted by the Company this 12 day of November, 1996.

By    /s/ Bruce Maclin
   ------------------------------------------
Title  Chairman
     ----------------------------------------

EX-99

                                                                           99.26

                                   ADDENDUM TO
                             DEFERRED FEE AGREEMENT


        This is an addendum to the DEFERRED  FEE  AGREEMENT  previously  entered
into on October 9, 1996 by and between LOUIS J. BARBICH and SAN JOAQUIN BANK.

The parties to this ADDENDUM hereby agree to the following:

A.      That the  creation of the bank  holding  company to be named San Joaquin
        Bancorp., a California  corporation,  and the subsequent  acquisition of
        San  Joaquin  Bank,  a  California corporation, by San Joaquin Bancorp.,
        does not  constitute  a "Change  in  Control"  under Paragraph 1.1.1  of
        the DEFERRED FEE AGREEMENT.

B.      That the  transaction  described  in  Paragraph A above does not entitle
        LOUIS J. BARBICH to the Change in Control Benefit described in Paragraph
        4.3 of the DEFERRED FEE AGREEMENT.

C.      In all other respects,  the parties  reaffirm the DEFERRED FEE AGREEMENT
        dated October 9, 1996.

        IN WITNESS WHEREOF,  each of the parties has executed this ADDENDUM,  in
the case of San Joaquin Bank by its duly  authorized  officer,  this 30th day of
April, 2003.

DIRECTOR:                            SAN JOAQUIN BANK

/s/ Louis J. Barbich                 By:  /s/ Bruce Maclin
- ------------------------                  -----------------------------------
Louis J. Barbich                          Bruce Maclin, Chairman of the Board

EX-99

                                                                   Exhibit 99.27


                            STOCK TRANSFER AGREEMENT

                                    BETWEEN
                                    -------

                                SAN JOAQUIN BANK
                                ----------------

                                      AND
                                      ---

                   CONTINENTIAL STOCK TRANSFER & TRUST COMPANY
                   -------------------------------------------

This Agreement states the terms under which  Continental  Stock Transfer & Trust
Company will provide  Transfer  Agency and Registrar and services for the common
stock of San Joaquin Bank.

A.              TERM
                ----
                This Agreement shall have a term of THREE (3) YEARS, beginning
on, October 1, 2005.

B.              FEE
                ---
                The fee for the services listed in Section C provided in this
Agreement will be as indicated below. Fees presume approximately 400 registered
holders.

                $600.00 US MONTHLY ADMINISTRATIVE FEE
                (The fee for the first month of services will be waived;
                out-of-pockets will be charged as incurred.)

C.              SERVICES
                --------
                Continental Stock Transfer will provide the services listed
below. NO REASONABLE LIMITATIONS ARE BEING PLACED ON THE NUMBER OF TRANSACTIONS
COVERED BY THIS AGREEMENT, EXCEPT AS NOTED. SERVICES WILL INCLUDE:

o  Shareholder listings, including alphabetic, zip code, geographical, or share
   range analysis
o  Certificate detail reports showing all shares issued and surrendered
o  Address labels and other material, including insertion of enclosures for
   shareholder mailings of annual and quarterly reports

ACCOUNT MAINTENANCE:

                o  Annual Administrative Services as Transfer Agent
                o  Annual Administrative Services as Registrar
                o  Maintaining shareholder accounts, including processing of
                   new accounts
                o  Processing other routine file maintenance adjustments
                o  Posting all transactions, including debit and credit
                   certificates to the stockholder file
                o  Responding to shareholder inquiries

CERTIFICATE ISSUANCE:

                o  Certificate issuance, cancellation and registration
                o  Processing option requests including DWAC services
                o  Daily Transfer Reports
                o  Processing NYC window items
                o  Combining certificates into large denominations
                o  Maintaining stop transfers, including the placing and
                   removing of same



MAILING, REPORTING AND MISCELLANEOUS SERVICES:

                o  Mailing the quarterly report, if required
                o  Supplying shareholder labels, as requested
                o  Providing full shareholder listings, as requested
                o  Providing statistical reports, as requested
                o  Providing mailing labels, as requested
                o  Coding "multiple" accounts at a single household to suppress
                   mailing of reports to same

ANNUAL MEETING SERVICES:

                o  Preparing an Annual Meeting Record Date listing
                o  Preparing the proxy card
                o  Enclosing and mailing the Annual Report with Proxy material
                o  Receiving, opening and examining returned proxies
                o  Curing defective proxies
                o  Providing proxy lists containing voting results
                o  Tabulating returned proxies
                o  Verifying broker bills

DISTRISUTION SERVICES: (annual dividend)

                o  Preparing and mailing the annual dividend along with any
                   enclosure
                o  Preparing a disbursement journal
                o  Preparing and filing Federal Information Returns (Form 1099)
                   of dividends paid in a year and mailing a statement of such
                   to each stockholder
                o  Preparing and filing annual withholding return and payments
                   to government of income taxes withheld from non-resident
                   aliens (Form 1042)
                o  Coding "undeliverable" accounts to suppress mailing dividend
                   checks to same
                o  Processing and recordkeeping of accumulated uncashed
                   dividends
                o  Replacing lost checks
                o  Providing photocopies of canceled checks when requested
                   (banking fee is an out-of-pocket)
                o  Furnishing requested dividend information to stockholders

INTERNET SERVICES: (Optional at $25.00 monthly)

         No agent offers a more complete package of Internet services.
         CONTINENTALINK provides benefits to company personnel involved with
         shareholder and stock-related matters. Internet communications with
         shareholders offers an efficient method of dispersing information while
         it fosters cost savings through reduced postage and materials usage.
         Shareholders expect and appreciate the convenience of having access to
         their stock holdings' information.

               CONTINENTALINK COMPLETE INVESTOR RELATIONS PACKAGE
               --------------------------------------------------

         This service, which is available 24/7, allows the shareholder "self
         serve", PIN secured access to individual records to review holdings,
         dividends, DRP participation and other matters. The service provides a
         convenient and efficient web answer to many questions, which may be
         currently handled over the telephone or in writing. Our entire web
         package offers e-mail, access to basis forms, tax forms and other
         materials, including DRP information.

Shareholders may also consent to receive Annual Meeting and other materials over
the web, and thus promote great money-savings opportunity for the corporation.



                   CONTINENTALINK SERVICES - FOR CORPORATIONS
                   ------------------------------------------


This service allows the company access to complete stock issue information; it
also provides "universal PIN secured access" to all individual shareholder
account records. This service is excellent for any corporation that wishes to
assist shareholders/employees with questions about holdings or to monitor
security related issues.

An excellent and very extensive reporting capability is included with this
package. Corporations may receive both scheduled and "ad hoc" Excel formatted
reports over the Internet. These can be structured to meet a variety of
informational sort parameters.

Proxy Services  - Two Proxy services are available.
- --------------

VOTING ON THE INTERNET THROUGH CONTINENTALINK
$.05 per position voted

TELEPHONIC PROXY VOTING
$300.00 one-time set-up fee, plus $.25 per call

Note: The above per item charges are less than return postage charges that
would be incurred by using traditional mail.

D.              ITEMS NOT COVERED
                -----------------
                Services not stated under "Standard Services" will be billed
separately at a rate negotiated or at a fee listed in Continental's Fee
Schedule. A one-time conversion fee will be applied. Out-of-pocket expenses
will be billed as incurred.

E.              CONTRACT ACCEPTANCE
                -------------------
                By means of affixing an authorized signature the parties
indicate acceptance of the terms and conditions of this Agreement.


SAN JOAQUIN BANK                        CONTINENTAL STOCK TRANSFER &
                                        TRUST COMPANY



By:  /s/                                  /s/
   ---------------------------------    ------------------------------------


Title: Senior Vice President                    VICE PRESIDENT
       -----------------------------    ------------------------------------

Date:  September 20, 2005                       5-1-06
       -----------------------------    ------------------------------------

Issued:  April 14, 2005
Revised: August 8, 2005

EX-99

                                                                   Exhibit 99.28


RESOLUTION OF THE BOARD OF DIRECTORS INCREASING THE APPLICABLE LIMIT ON ANNUAL
BENEFITS PAYABLE TO BRUCE MACLIN AND BART HILL PURSUANT TO THEIR AMENDED AND
RESTATED EXECUTIVE SALARY CONTINUATION AGREEMENTS DATED JUNE 18, 2004.


The Bank and Messrs. Maclin and Hill are parties to certain Executive Salary
Continuation Agreements, as amended, which were initially entered into in 1996
and amended several times since then. On, January 22, 2005, the Board approved
an increase in the applicable limit on annual benefits payable under these
Continuation agreements from $250,000 to $300,000.

EX-99

                                                                   Exhibit 99.29


STATEMENT RELATING TO THE PAYMENT OF CLUB DUES FOR EXECUTIVE OFFICERS.


The Bank has an informal program to pay certain club membership dues for the
Named Executive Officers and certain other officers. These club memberships are
used for customer entertainment and similar bank-related activities. The
officers are responsible for paying for any fees or charges relating to personal
use of these clubs, other than the membership dues. In support of this program,
the Bank owns several equity memberships in these local clubs.