WESTERN SIERRA BANCORP, PRE 14A, 1999-06-08

WESTERN SIERRA BANCORP
PRE 14A, 1999-06-08
STATE COMMERCIAL BANKS

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<PAGE>

SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:

[X] Preliminary Proxy Statement [ ] Confidential for Use of the Commision
only (as permitted by Rule 14a-6(e)(2))

[ ] Definitive Proxy Statement [ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

WESTERN SIERRA BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

<PAGE>

June 28, 1999

Dear Shareholders:

You are cordially invited to attend Western Sierra Bancorp's Annual Meeting of
Shareholders which will be held at Cameron Park Country Club, 3201 Royal Drive,
Cameron Park, California, on Tuesday, July 27, 1999, at 6:00 p.m.

At the Meeting, shareholders will be asked to elect directors for the ensuing
year, amend the Bylaws to change the range of directors, adopt the Western
Sierra Bancorp 1999 Stock Option Plan and ratify the appointment of auditors.
Information regarding the nominees for election of directors, the amendment of
the Bylaws, the 1999 Stock Option Plan and the appointment of auditors is set
forth in the accompanying Proxy Statement.

It is important that your shares be represented at the Meeting, whether or not
you plan to attend. Please indicate on the enclosed proxy card your vote on the
matters presented, and sign, date and return the proxy card in the enclosed
envelope. If you do attend the Meeting and wish to vote in person, your proxy
will be withdrawn at that time. We urge you to vote "FOR" the election of all
of the nominees named in the Proxy Statement, "FOR" the amendment of the Bylaws,
"FOR" approval of the 1999 Stock Option Plan and "FOR" the appointment of
auditors.

Joseph A. Surra
Chairman of the Board

<PAGE>

WESTERN SIERRA BANCORP
4011 PLAZA GOLDORADO CIRCLE
CAMERON PARK, CALIFORNIA 95682

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

JULY 27, 1999

TO THE SHAREHOLDERS OF
WESTERN SIERRA BANCORP:

Notice is hereby given that the Annual Meeting of Shareholders (the "Meeting")
of Western Sierra Bancorp (the "Bancorp") will be held at the Cameron Park
Country Club, 3201 Royal Drive, Cameron Park, California, on July 27, 1999 at
6:00 p.m. for the purpose of considering and voting upon the following matters:

1. ELECTION OF DIRECTORS. To elect fifteen (15) persons to serve as directors
of the Bancorp until their successors are duly elected and qualified.

Robert G. Albrecht Thomas Manz
Charles W. Bacchi Harold S. Prescott, Jr.
Barbara L. Cook Darol B. Rasmussen
Kirk Doyle Osvaldo I. Scariot
William J. Fisher Richard C. Seeba
Gary D. Gall Joseph A. Surra
Richard L. Golemon Howard "Bud" Van Lente
John Helms

2. AMENDMENT OF BYLAWS. To amend Section 3.2 of the Bancorp's Bylaws to
change the range of directors from 8 to 15, to 11 to 21.

3. ADOPTION OF STOCK OPTION PLAN. To adopt the Western Sierra Bancorp 1999
Stock Option Plan.

4. RATIFICATION OF AUDITORS. To ratify the appointment of Perry-Smith & Co.,
LLP as the Bancorp's independent auditors for the year 1999.

5. TRANSACTION OF OTHER BUSINESS. To transact such other business as may
properly come before the Meeting and any adjournment or adjournments
thereof.

The board of directors has fixed the close of business on June 15, 1999 as the
record date for determination of shareholders entitled to notice of, and to vote
at, the Meeting.

The Bylaws of the Bancorp set forth the following procedures for nominations to
the board of directors:

Nominations for election of members of the board may be made by the board
or by any holder of any outstanding class of capital stock of the
corporation entitled to vote for the election of directors. Notice of
intention to make any nominations (other than for persons named in the
notice of the

<PAGE>

meeting called for the election of directors) shall be made in writing
and shall be delivered or mailed to the president of the corporation by
the later of: (i) the close of business twenty-one (21) days prior to
any meeting of shareholders called for the election of directors; or
(ii) ten (10) days after the date of mailing of notice of the meeting to
shareholders. Such notification shall contain the following information
to the extent known to the notifying shareholder: (a) the name and
address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the number of shares of capital stock of the
corporation owned by each proposed nominee; (d) the name and residence
address of the notifying shareholder; (e) the number of shares of
capital stock of the corporation owned by the notifying shareholder; (f)
the number of shares of capital stock of any bank, bank holding company,
savings and loan association or other depository institution owned
beneficially by the nominee or by the notifying shareholder and the
identities and locations of any such institutions; and (g) whether the
proposed nominee has ever been convicted of or pleaded nolo contendere
to any criminal offense involving dishonesty or breach of trust, filed a
petition in bankruptcy or been adjudged bankrupt. The notification
shall be signed by the nominating shareholder and by each nominee, and
shall be accompanied by a written consent to be named as a nominee for
election as a director from each proposed nominee. Nominations not made
in accordance with these procedures shall be disregarded by the
chairperson of the meeting, and upon his or her instructions, the
inspectors of election shall disregard all votes cast for each such
nominee. The foregoing requirements do not apply to the nomination of a
person to replace a proposed nominee who has become unable to serve as a
director between the last day for giving notice in accordance with this
paragraph and the date of election of directors if the procedure called
for in this paragraph was followed with respect to the nomination of the
proposed nominee.

BY ORDER OF THE BOARD OF DIRECTORS

Dated: June 28, 1999 Osvaldo I. Scariot, Secretary

WE URGE YOU TO VOTE IN FAVOR OF MANAGEMENT'S PROPOSALS BY SIGNING AND RETURNING
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING IN PERSON. THE ENCLOSED PROXY IS SOLICITED BY THE BANCORP'S BOARD
OF DIRECTORS. ANY SHAREHOLDER GIVING A PROXY MAY REVOKE IT PRIOR TO THE TIME IT
IS VOTED BY FILING WITH THE SECRETARY OF THE BANCORP AN INSTRUMENT REVOKING IT
OR A DULY EXECUTED PROXY BEARING A LATER DATE, OR BY ATTENDING THE MEETING AND
VOTING IN PERSON. PLEASE INDICATE ON THE PROXY WHETHER OR NOT YOU EXPECT TO
ATTEND THE MEETING SO THAT WE CAN ARRANGE ADEQUATE ACCOMMODATIONS.

<PAGE>

WESTERN SIERRA BANCORP

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

JULY 27, 1999

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of Proxies
for use at the 1999 Annual Meeting of Shareholders (the "Meeting") of Western
Sierra Bancorp (the "Bancorp") to be held on Tuesday, July 27, 1999 at 6:00 p.m.
at the Cameron Park County Club, 3201 Royal Drive, Cameron Park, California, and
at any and all adjournments thereof.

It is anticipated that this Proxy Statement and the accompanying Notice and form
of Proxy will be mailed to shareholders eligible to receive notice of, and to
vote at, the Meeting on or about June 28, 1999.

REVOCABILITY OF PROXIES

A form of Proxy for voting your shares at the Meeting is enclosed. Any
shareholder who executes and delivers such Proxy has the right to and may revoke
it at any time before it is exercised by filing with the Secretary of the
Bancorp an instrument revoking it or a duly executed Proxy bearing a later date.
In addition, the powers of the proxyholders will be suspended if the person
executing the Proxy is present at the Meeting and elects to vote in person by
advising the chairman of the Meeting of his or her election to vote in person,
and voting in person at the Meeting. Subject to such revocation or suspension,
all shares represented by a properly executed Proxy received in time for the
Meeting will be voted by the proxyholders in accordance with the instructions
specified on the Proxy. UNLESS OTHERWISE DIRECTED IN THE ACCOMPANYING PROXY,
THE SHARES REPRESENTED BY YOUR EXECUTED PROXY WILL BE VOTED "FOR" ALL OF THE
MATTERS PRESENTED HEREIN, AND IF ANY OTHER BUSINESS IS PROPERLY PRESENTED AT THE
MEETING, SUCH PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
MANAGEMENT.

PERSONS MAKING THE SOLICITATION

This solicitation of Proxies is being made by the Bancorp's board of directors
(the "Board"). The expense of preparing, assembling, printing and mailing this
Proxy Statement and the materials used in the solicitation of Proxies for the
Meeting will be borne by the Bancorp. It is contemplated that Proxies will be
solicited principally through the use of the mail, but directors, officers and
employees of the Bancorp and Western Sierra National Bank, Lake Community Bank
and Roseville 1st National Bank (collectively referred to as the "Banks") may
solicit Proxies personally or by telephone, without receiving special
compensation therefor.

<PAGE>

VOTING SECURITIES

There were issued and outstanding ______ shares of the Bancorp's common stock
("Common Stock") on June 15, 1999, which has been fixed as the record date for
the purpose of determining shareholders entitled to notice of, and to vote at,
the Meeting (the "Record Date"). On any matter submitted to the vote of the
shareholders, each holder of Common Stock will be entitled to one vote, in
person or by Proxy, for each share of Common Stock he or she held of record on
the books of the Bancorp as of the Record Date. In connection with the election
of directors, shares may be voted cumulatively if a shareholder present at the
Meeting gives notice at the Meeting, prior to the voting for election of
directors, of his or her intention to vote cumulatively. If any shareholder of
the Bancorp gives such notice, then all shareholders eligible to vote will be
entitled to cumulate their shares in voting for election of directors.
Cumulative voting allows a shareholder to cast a number of votes equal to the
number of shares held in his or her name as of the Record Date, multiplied by
the number of directors to be elected. These votes may be cast for any one
nominee, or may be distributed among as many nominees as the shareholder sees
fit.

SHAREHOLDINGS OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

Management of the Bancorp knows of no person who owns, beneficially or of
record, either individually or together with associates, 5 percent (5%) or more
of the outstanding shares of Common Stock, except as set forth in the table
below. The following table sets forth, as of June 15, 1999, the number and
percentage of shares of Common Stock beneficially owned, directly or indirectly,
by each of the Bancorp's directors, named executive officers and principal
shareholders and by the directors and officers of the Bancorp as a group. The
shares "beneficially owned" are determined under Securities and Exchange
Commission Rules, and do not necessarily indicate ownership for any other
purpose. In general, beneficial ownership includes shares over which the
director, principal shareholder or executive officer has sole or shared voting
or investment power and shares which such person has the right to acquire within
60 days of June 15, 1999.

<PAGE>

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- --------------------------- -------------------- ----------------
<S> <C> <C>
DIRECTORS AND NAMED EXECUTIVE OFFICERS:
Robert G. Albrecht 81,700(1)
Charles W. Bacchi 9,181(2)
Barbara L. Cook 8,477(3)
Kirk Doyle 12,963(4)
William J. Fisher 10,487(5)
Gary D. Gall 100,244(6)
Richard L. Golemon 91,475(7)
John H. Helms 36,354(8)
Thomas Manz 27,744(9)
Stephanie M. Marsh 6,858(10)
Harold S. Prescott, Jr. 54,789(11)
Darol B. Rasmussen 53,158(12)
Osvaldo I. Scariot 89,334(13)
Richard C. Seeba 43,527(14)
Joseph A. Surra 99,159(15)
Howard "Bud" Van Lente 24,858(16)

All Directors and 629,985(17)
Officers as a Group (21 in all)
</TABLE>

- ---------------------
* Less than 1%.

(1) Mr. Albrecht has shared voting and investment powers as to 75,036 of
these shares. The amount includes 6,664 shares acquirable by exercise of
stock options.

(2) Mr. Bacchi has shared voting and investment powers as to 3,217 of these
shares. The amount includes 2,000 shares acquirable by exercise of stock
options.

(3) The amount includes 2,000 shares acquirable by exercise of stock options.

(4) Mr. Doyle has shared voting and investment powers as to 12,963 of these
shares.

(5) Mr. Fisher has shared voting and investment powers as to 3,823 of these
shares. The amount includes 6,664 shares acquirable by exercise of stock
options.

(6) Mr. Gall has shared voting and investment powers as to a total of 71,050
of these shares. Of these 71,050 shares, Mr. Gall has shared voting and
investment powers as to 69,755 shares in his capacity as a trustee for
the Bancorp's ESOP and KSOP. The amount includes 29,194 shares
acquirable by exercise of stock options.

(7) Mr. Golemon has shared voting and investment powers as to a total of
69,755 of these shares in his capacity as a trustee for the Bancorp's
KSOP and ESOP. The amount includes 6,664 shares acquirable by exercise
of stock options.

(8) Mr. Helms has shared investment and voting powers as to 36,354 of these
shares.

(9) Mr. Manz has shared investment powers as to 13,258 of these shares. The
amount includes 5,450 shares acquirable by exercise of stock options.

(Footnotes continued on the following page.)

<PAGE>

(10) Ms. Marsh has shared voting and investment powers as to 822 of these
shares. The amount includes 5,778 shares acquirable by exercise of stock
options.

(11) Mr. Prescott has shared voting and investment powers as to 43,725 of
these shares. The amount includes 6,664 shares acquirable by exercise of
stock options.

(12) Dr. Rasmussen has shared voting and investment powers as to 33,645 of
these shares. The amount includes 2,000 shares acquirable by exercise of
stock options.

(13) Mr. Scariot has shared voting and investment powers as to 87,334 of these
shares. The amount includes 2,000 shares acquirable by exercise of stock
options.

(14) Mr. Seeba has shared voting and investment powers as to 28,783 of these
shares. The amount includes 4,633 shares acquirable by exercise of stock
options.

(15) Mr. Surra has shared voting and investment powers as to a total of 92,495
of these shares. Of these 92,495 shares, Mr. Surra has shared voting and
investment powers as to 69,755 shares in his capacity as a trustee for
the Bancorp's KSOP and ESOP. The amount includes 6,664 shares acquirable
by exercise of stock options.

(16) Mr. Van Lente has shared voting and investment powers as to 11,048 of
these shares. The amount includes 13,810 shares acquirable by exercise
of stock options.

(17) The amount includes 113,055 shares acquirable by exercise of stock
options.

SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Bancorp's
directors and certain executive officers and persons who own more than ten
percent of a registered class of the Bancorp's equity securities (collectively,
the "Reporting Persons"), to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. The Reporting Persons are required
by Securities and Exchange Commission regulation to furnish the Bancorp with
copies of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by it, or
written representations from the Reporting Persons that no Forms 5 were required
for those persons, the Bancorp believes that, during 1998 the Reporting Persons
complied with all filing requirements applicable to them.

PROPOSAL 1:
ELECTION OF DIRECTORS

The persons named below, all of whom are current members of the Board, will be
nominated for election as directors at the Meeting to serve until the 2000
Annual Meeting of Shareholders and until their successors are elected and have
qualified. Votes of the proxyholders will be cast in such a manner as to effect
the election of all fifteen (15) nominees, as appropriate, (or as many thereof
as possible under the rules of cumulative voting.) The fifteen (15) nominees
for directors receiving the most votes will be elected directors. In the event
that any of the nominees should be unable to serve as a director, it is intended
that the Proxy will be voted for the election of such substitute nominee, if
any, as shall be designated by the Board. The Board has no reason to believe
that any of the nominees named below will be unable to serve if elected.
Additional nominations for directors may only be made by complying with the
nomination procedures which are included in the Notice of Annual Meeting of
Shareholders accompanying this Proxy Statement.

<PAGE>

The following table sets forth, as of June 15, 1999, the names of, and certain
information concerning, the persons to be nominated by the Board for election as
directors of the Bancorp.

<TABLE>
<CAPTION>
Year First
Name and Title Appointed Principal Occupation
Other than Director Age Director During the Past Five Years
- ----------------------------- --- ---------- -------------------------------------------------------------
<S> <C> <C> <C>
Joseph A. Surra 57 1983 Assistant Superintendent of Business and Facilities of Auburn
Chairman of the Board Union School District and President of Gold Country
Hardware, Inc.

Robert G. Albrecht 80 1983 President and Owner of Coyote Creek Ranch, Inc. Retired in
September 1983, as President and Chief Executive Officer of
Wismer and Becker Contractor Engineers. Served as a
director of the California Chamber of Commerce and as a
member of the Board of Governors of the Mercy Hospital
Foundation.

Charles W. Bacchi 55 1993 Rancher and partner of Bacchi Ranch. General Manager and
partner of EBAR LLC, a cattle ranch operation.

Barbara L. Cook 67 1993 Broker Associate with Coldwell Banker. Former co-owner of
Coker & Cook Real Estate, which was sold to Coldwell
Banker.

Kirk C. Doyle 45 1999 Owner of Kirk Doyle Realty.

William J. Fisher 51 1993 President/Broker of Pacific States Development Corporation,
real estate development and marketing.

Gary D. Gall 48 1993 President and Chief Executive Officer of the Bancorp and
President and Chief Executive Western Sierra National Bank. Mr. Gall has 25 years of
Officer community banking experience.

Richard L. Golemon 66 1983 Retired President and Owner/Operator of Mays Sheet Metal, Inc.
Vice Chairman

John H. Helms 74 1999 Founder and Owner of Helms Petroleum Products Company.

Thomas Manz 50 1999 Chairman of the Board of Roseville 1st National Bank and
Director of Pacific Coast Banker's Bank. Owner of TMG
Enterprises, real estate; member of TMG Group LLC, ATM
sales and placement; and member of KMS LLC, real estate
development.

Harold S. Prescott, Jr. 67 1983 Licensed civil engineer and Owner of Prescott Engineering,
Land Surveying & Civil Engineering.

Darol B. Rasmussen 77 1987 Retired dentist and past Chairman of El Dorado County
Planning Commission.

Osvaldo I. Scariot 72 1983 Retired in 1998. Former Vice President of El Dorado
Secretary Disposal Service and President of El Dorado Landfill Company.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Year First
Name and Title Appointed Principal Occupation
Other than Director Age Director During the Past Five Years
- ----------------------------- --- ---------- -------------------------------------------------------------
<S> <C> <C> <C>
Richard C. Seeba 60 1999 Executive Vice President of the Bancorp since May, 1999 and
President and Chief Executive Officer of Roseville 1st
National Bank.

Howard "Bud" Van Lente 72 1999 Chairman of the Board of Lake Community Bank. Former
Mayor of the City of Lakeport and two-term member of the
Lakeport City Council. General Partner of DeVale, Ltd., real
estate investments.
</TABLE>

None of the directors were selected pursuant to any arrangement or understanding
other than with the directors and executive officers of the Bancorp acting
within their capacities as such. There are no family relationships between any
of the directors of the Bancorp. No director or executive officer of the
Bancorp serves as a director of any company which has a class of securities
registered under, or which is subject to the periodic reporting requirements of,
the Securities Exchange Act of 1934, or of any company registered as an
investment company under the Investment Company Act of 1940.

THE BOARD OF DIRECTORS AND COMMITTEES

The Bancorp's Board held twelve (12) meetings during 1998. None of the
directors attended less than 75 percent of all Board meetings that were held in
1998, other than Messrs. Rasmussen and Scariot. None of the directors attended
less than 75% of all Board meetings and committee meetings (of which they were a
member) that were held in 1998, other than Messrs. Bacchi, Rasmussen and
Scariot, and Ms. Cook.

In 1998, the Bancorp had a standing Audit Committee and a standing Executive
Committee.

The Audit Committee, which consisted of Messrs. Albrecht, Bacchi and Prescott,
Jr., and Ms. Cook met twelve (12) times in 1998. The purpose of the Audit
Committee is to review all internal and external examination reports, review
internal audit findings and monitor Year 2000 progress and to select the
Bancorp's independent certified public accountants.

The Executive Committee, which consisted of Messrs. Albrecht, Gall, Golemon,
Prescott, Jr., Rasmussen and Scariot met twelve (12) times in 1998. The purpose
of the Executive Committee is to review policies, review human resource issues,
grant stock options and approve other personnel matters which are in excess of
management's authority, consider mergers and acquisitions, develop marketing
programs and participate in strategic planning, and to make recommendations to
the Board regarding nominees for election of directors.

During 1998, the Bancorp did not have a nominating committee.

DIRECTOR COMPENSATION

<PAGE>

During 1998, outside directors received $300 per month from the Bancorp for
director fees and $300 per month from Western Sierra National Bank for director
fees, except the Chairman of the Board who received $1,000 per month from the
Bancorp and $300 per month from Western Sierra National Bank. During 1999,
outside directors will continue to receive $300 per month from the Bancorp for
director fees and directors of each of the Banks will receive $300 per month
from the Banks on which they serve, for director fees, except the Chairman of
the Board of the Bancorp, who will receive $1,000 per month from the Bancorp and
the Chairmen of the Boards of each of the Banks who will receive $500 per month
from the Banks on which they serve as Chairman. The outside directors of each
of the Banks will also receive $200 per month from the Banks on which they serve
as loan committee members.

In November, 1996, each of the then directors, other than Mr. Gall, was granted
stock options to acquire 4,664 shares, all at an exercise price of $8.58 per
share. The options are for a term of ten years expiring in November, 2006.
These options were fully vested upon the grant.

In May, 1999, each of the directors who was a director in 1998, other than Mr.
Gall, was granted stock options to acquire 2,000 shares, all at an exercise
price of $12.75 per share. The options are for a term of ten years expiring in
May, 2009. These options were fully vested upon the grant.

During 1998, each of the directors also participated in Western Sierra National
Bank's incentive compensation plan and each, other than Mr. Gall, earned a bonus
of $8,190 in 1998.

<PAGE>

EXECUTIVE OFFICERS

The following table sets forth information, as of June 15, 1999, concerning
executive officers of the Bancorp and certain executive officers of the Banks:

<TABLE>
<CAPTION>
Position and Principal Occupation
Name Age For the Past Five Years
- ------------------------- --- --------------------------------------------------------------
<S> <C> <C>
Gary D. Gall 48 President and Chief Executive Officer of the Bancorp and
Western Sierra National Bank.

Kirk N. Dowdell 36 Senior Vice President and Chief Credit Officer of the Bancorp
since May, 1999, and Senior Vice President and Chief Credit
Officer of Western Sierra National Bank since September,
1997. Former executive officer of Commerce Security Bank,
Sacramento, California.

Lesa A. Fynes 40 Controller of the Bancorp and Senior Vice President and Chief
Financial Officer of Western Sierra National Bank.

Teresa M. Gannon 38 Vice President and Branch Administrator of the Bancorp since
May, 1999 and Vice President and Branch Administrator of
Western Sierra National Bank.

Stephanie M. Marsh 53 Senior Vice President and Chief Administrative Officer of the
Bancorp since May, 1999 and Senior Vice President and Chief
Administrative Officer of Western Sierra National Bank since
September, 1993.

Douglas A. Nordell 50 President and Chief Executive Officer of Lake Community Bank
since November, 1998. Former Executive Vice President and
Chief Credit Officer of Roseville 1st National Bank.

Richard C. Seeba 60 Executive Vice President of the Bancorp since May, 1999 and
President and Chief Executive Officer of Roseville 1st National
Bank.

Thomas C. Warren 61 Senior Vice President and Chief Financial Officer of the
Bancorp since May, 1999 and Senior Vice President and Chief
Financial Officer of Roseville 1st National Bank since July,
1996. Former Business Consultant.
</TABLE>

EXECUTIVE COMPENSATION

During 1998, the Bancorp did not pay any cash compensation to its executive
officers and no such cash compensation is expected to be paid during 1999.
However, the persons serving as the executive officers of Western Sierra
received during 1998, and have received in 1999, cash compensation in their
capacities as executive officers of Western Sierra National Bank.

<PAGE>

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------------
Annual Compensation Awards Payouts
- -------------------------------------------- -------- -------- --------- --------- ---------- ----------- ------- -----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -------------------------------------------- -------- -------- --------- --------- ---------- ----------- ------- -----------
Other
Annual Restricted All Other
Compen- Stock LTIP Compen-
Name and Salary Bonus sation(1) Award(s) Options/ Payouts sation(3)
Principal Position Year ($) ($) ($) ($) SARs(2) ($) ($)
- -------------------------------------------- -------- -------- --------- --------- ---------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary D. Gall 1998 140,500 106,486 11,147 0 0 0 9,129
President and Chief Executive Officer of -------- -------- --------- --------- ---------- ----------- ------- -----------
the Bancorp and Western Sierra National 1997 127,500 67,529 8,497 0 27,500 0 10,773
Bank -------- -------- --------- --------- ---------- ----------- ------- -----------
1996 120,000 37,312 8,260 0 11,660 0 7,580
- -------------------------------------------- -------- -------- --------- --------- ---------- ----------- ------- -----------
Stephanie Marsh 1998 74,940 54,743 3,840 0 0 0 7,938
Senior Vice President and Chief -------- -------- --------- --------- ---------- ----------- ------- -----------
Administrative Officer of Western Sierra 1997 71,070 33,964 3,750 0 3,300 0 7,162
National Bank -------- -------- --------- --------- ---------- ----------- ------- -----------
1996 68,400 18,656 3,495 0 5,830 0 4,710
- -------------------------------------------- -------- -------- --------- --------- ---------- ----------- ------- -----------
</TABLE>

(1) These amounts represent perquisites consisting of country club fees for
all officers; and automobile allowance and family health insurance
premiums for Mr. Gall.
(2) These amounts are adjusted for stock dividends. The Bancorp has no SARs.
(3) This amount represents the cost of premiums for life insurance and
Western Sierra National Bank's contribution for the 401(k) Plan and
ESOP.

<PAGE>

OPTION/SAR EXERCISES AND YEAR END VALUE TABLE

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION/SAR VALUE

<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
- ----------------------------- ----------------------- ------------------ -------------------- -----------------------
Value of
Number of Unexercised In-
Unexercised the-Money
Options/SARs at Options/SARs at
Year End (#) Year End ($)
Shares Acquired on Value Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable(1) Unexercisable(1)
- ----------------------------- ----------------------- ------------------ -------------------- -----------------------
<S> <C> <C> <C> <C>
Gary D. Gall 0 N/A 19,294/21,164 137,142/134,465

Stephanie M. Marsh 0 N/A 4,818/4,312 35,694/29,724
- ----------------------------- ----------------------- ------------------ -------------------- -----------------------
</TABLE>

(1) The Bancorp has no SARs.

<PAGE>

EMPLOYMENT CONTRACTS

On December 4, 1997, Western Sierra National Bank entered into an agreement with
Mr. Gall to provide him with severance benefits of up to two year's worth of his
regular compensation at the time of severance of employment in the event of (i)
any merger or consolidation where Western Sierra National Bank is (A) not the
surviving or resulting corporation or (B) the surviving corporation and the
shareholders of Bancorp at the time immediately prior to such merger will own
less than 50% on a direct or indirect basis of the voting equity interests of
the surviving corporation after such merger, (ii) upon transfer of all or
substantially all of the assets of Western Sierra National Bank, or (iii) a sale
of the equity securities of Bancorp representing more than 50% of the aggregate
voting power of all outstanding equity securities of the Bancorp to any person
or entity, or any group of persons and/or entities acting in concert (any of
these events shall be referred to as an "Acquisition"). The severance agreement
is for a term of 5 years, and in the event of an Acquisition, if Mr. Gall is not
given a new employment agreement that is satisfactory to him in his sole
discretion within 15 days prior to the date of consummation of the Acquisition,
then Western Sierra National Bank shall pay him the severance payment in a lump
sum.

On December 4, 1997, Western Sierra National Bank also entered into an agreement
with Ms. Marsh to provide her with severance benefits of up to two year's worth
of her regular compensation at the time of severance of employment in the event
of (i) any merger or consolidation where Western Sierra National Bank is (A) not
the surviving or resulting corporation or (B) the surviving corporation and the
shareholders of Bancorp at the time immediately prior to such merger will own
less than 50% on a direct or indirect basis of the voting equity interests of
the surviving corporation after such merger, (ii) upon transfer of all or
substantially all of the assets of Western Sierra National Bank, or (iii) a sale
of the equity securities of Bancorp representing more than 50% of the aggregate
voting power of all outstanding equity securities of the Bancorp to any person
or entity, or any group of persons and/or entities acting in concert (any of
these events shall be referred to as an "Acquisition"). The severance agreement
is for a term of 5 years, and in the event of an Acquisition, if Ms. Marsh is
not retained by the resulting corporation in a position comparable to that of
the highest level senior vice president or a position acceptable to her for a
period of up to two years because she is terminated by the resulting corporation
or constructively terminated by the resulting corporation, then she is to be
paid the severance payment in a lump sum within ten days of such termination.

Mr. Gall also has a salary continuation agreement which provides that Western
Sierra National Bank will pay him $75,000 per year for 15 years following his
retirement from Western Sierra National Bank at age 65 or later. In the event of
disability while Mr. Gall is actively employed prior to age 65, he will receive
a benefit amount that is a percentage of the $75,000 per year for 15 years based
on the vesting schedule below beginning with the month following his termination
of employment. In the event of termination without cause or voluntary
termination, Mr. Gall shall receive a benefit amount that is a percentage of the
$75,000 per year for 15 years based on the vesting schedule below beginning with
the month following the month in which Mr. Gall attains age 65 or terminates
employment, whichever is later. In the event Mr. Gall dies while actively
employed by Western Sierra National Bank, his beneficiary will receive from
Western Sierra National Bank $75,000 per year for 15 years, commencing with the
month following Mr. Gall's death. Upon a change of control of Western Sierra
National Bank, Mr. Gall will receive from Western Sierra National Bank, $75,000
per year for 15 years, beginning with the month following the month in which Mr.
Gall attains age 65 or terminates employment, whichever is later. The vesting
schedule is 5% per year of service for the first seventeen years beginning
January 9, 1995, and decreases to an additional 3% per year of service for the
last five years. Payment of salary continuation benefits to Mr. Gall is subject
to his not working as an employee, independent contractor, or consultant of or
for a branch of a financial institution located within a 30 mile radius of the
headquarters of Western Sierra National Bank for a period of one year after Mr.
Gall terminates employment with Western Sierra National Bank.

<PAGE>

PROPOSAL 2:
AMENDMENT OF BYLAWS

Section 3.2 of the Bancorp's Bylaws currently provides that the range of
directors of the Bancorp shall be from 8 to 15. In that it was agreed in the
mergers with Lake Community Bank and Roseville 1st Community Bancorp that board
members of each of these boards be added to the Bancorp's Board, it is necessary
to amend Section 3.2 of the Bancorp's Bylaws to increase the range of the
Bancorp's Board to 11 to 21 directors. Therefore, shareholders are requested to
approve an amendment of Section 3.2 of the Bancorp's Bylaws to increase the
range of the Board from 8 to 15 directors, to 11 to 21 directors.

If the amendment of the Bylaws is approved, it is the intention of the Board to
appoint Howard A. "Skip" Jahn as a member of the Board. Mr. Jahn served as a
real estate broker with CB Richard Ellis until 1998 and is a Partner of
Jackson-Jahn Commercial Real Estate. Mr. Jahn is 54 years of age. Mr. Jahn is
the beneficial owner of 19,397 shares of Common Stock, of which he has shared
voting and investment powers as to 4,844 shares.

Approval of the amendment of the Bancorp's Bylaws requires the affirmative vote
of a majority of the outstanding shares of Common Stock entitled to vote at the
Meeting.

MANAGEMENT RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE AMENDMENT OF SECTION
3.2 OF THE BANCORP'S BYLAWS.

PROPOSAL 3:
ADOPTION OF THE WESTERN SIERRA BANCORP
1999 STOCK OPTION PLAN

INTRODUCTION

The Western Sierra Bancorp 1999 Stock Option Plan (the "Plan"), subject to
approval by the Bancorp's shareholders, provides for the granting of options to
purchase shares of Common Stock at option prices per share which must not be
less than one hundred percent (100%) of the fair market value per share of
Common Stock at the time each option is granted. It is intended that options
granted pursuant to the Plan qualify for treatment either as "incentive stock
options" within the meaning of Section 422 of the Code, or as "nonqualified
stock options," as shall be determined and designated upon the grant of each
option. The Plan provides that 400,000 shares of the Bancorp's authorized but
unissued Common Stock will be available for issuance under the Plan. The summary
below is subject to the provisions of the Plan, a copy of which is attached to
this Proxy Statement as Exhibit A.

The Bancorp is unable to make any additional stock option grants in that all of
the shares under the Western Sierra Bancorp 1997 Stock Option Plan have been
granted. There are currently options outstanding to acquire 253,137 shares of
Common Stock. The Board believes it is advisable for the shareholders to adopt
the Plan in order to have options available as an additional means of retaining
and attracting competent directors and personnel for the Bancorp and its
subsidiaries, and for inducing high levels of performance and efforts for the
benefit of the Bancorp and its shareholders.

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SUMMARY OF THE PLAN

The Plan will be administered by the Board. All options under the Plan will be
granted at an exercise price of not less than 100 percent of the fair market
value of the shares of Common Stock on the date of grant, except for an
incentive stock option granted to an optionee who at the time of the grant owns
more than 10% of the total combined voting power of all classes of stock of the
Bancorp or a subsidiary of the Bancorp, in which case the option price shall not
be less than 110% of the fair market value of such stock. The purchase price of
any shares purchased upon exercise is payable in full in cash or, subject to
applicable law, with Common Stock previously acquired by the optionee and held
by the optionee for a period of at least six months. The equivalent dollar value
of shares used to effect a purchase shall be the fair market value of the Common
Stock on the date of exercise.

Options granted pursuant to the Plan shall be for a term of up to ten (10)
years, except for certain incentive stock options described below. Each option
shall be exercisable in installments and upon such conditions as the Board shall
determine. Options granted shall vest over a period no greater than five years,
and no less than 20% of such option shall vest annually. Optionees shall have
the right to exercise all or a portion of the option at any time or from time to
time with respect to the vested part of their stock options. If any option shall
expire without being exercised in full, the shares will again become available
for granting of stock options under the Plan. The Plan shall expire on June 15,
2009.

Incentive stock options may be granted to full-time salaried officers and
management level employees of the Bancorp or a subsidiary. No director who is
not also a full-time salaried officer or management level employee may be
granted an incentive stock option pursuant to the Plan. No incentive stock
option with a term of more than five (5) years may be granted to any person who
at the time of grant owns stock possessing more than 10% of the total combined
voting power or value of all classes of stock of the Bancorp or a subsidiary of
the Bancorp. Nonqualified stock options may be granted to directors, full-time
salaried officers and management level employees of the Bancorp or its
subsidiaries.

TAX CONSEQUENCES TO THE OPTIONEE

The following describes, generally, the major federal income tax consequences
relating to stock options issued under the Plan. If all of the requirements of
the Plan are met, generally no taxable income will result to an optionee upon
the grant of an incentive or nonqualified stock option.

INCENTIVE STOCK OPTIONS. If the optionee is employed by the Bancorp (or a
subsidiary) continuously from the date of grant until at least three months
before the option is exercised and otherwise satisfies the requirements of the
Plan and applicable law, the optionee will not recognize taxable income upon
exercise of the option. If the optionee is not employed by the Bancorp (or a
subsidiary) continuously from the date of grant until at least three months
before the option is exercised for a reason other than death or disability, the
optionee will recognize ordinary income at the time the option is exercised. The
Bancorp will be allowed a deduction for federal income tax purposes only if, and
to the extent that, the optionee recognizes ordinary income. Upon exercise of an
incentive stock option, the excess of the fair market value of the shares
received over the option price at the time of exercise is treated as an item of
tax preference which may result in the imposition of the alternative minimum
tax.

On a subsequent sale of shares acquired by the exercise of an incentive stock
option, gain or loss will be recognized in an amount equal to the difference
between the amount realized on the sale and the optionee's tax basis of the
shares sold. If a disposition (generally a sale, exchange, gift or similar
lifetime transfer of legal title) of stock received pursuant to an incentive
stock option does not take place until more than two years after the grant of
such option and more than one year after the exercise of such option, any gain
or loss realized on such disposition will

<PAGE>

be treated as long-term capital gain or loss. Under such circumstances, the
Bancorp will not be entitled to a deduction for income tax purposes in
connection with the exercise of the option.

If a disposition of stock received pursuant to an exercise of an incentive stock
option occurs within two years after the grant of such option or one year after
the exercise of such option, the optionee must treat any gain realized as
ordinary income to the extent of the lesser of (i) the fair market value of such
stock as of the date of exercise less the option price, or (ii) the amount
realized on disposition of the stock less the option price. Such ordinary income
realized is deductible by the Bancorp for federal income tax purposes. Any
additional amount realized on the disposition will be taxable as either
long-term or short-term capital gain, depending on the holding period.

NONQUALIFIED STOCK OPTIONS. In general, when an optionee exercises a
nonqualified stock option, the optionee recognizes ordinary income in the amount
of the excess of the fair market value of the shares received upon exercise over
the aggregate amount paid for those shares, and the Bancorp may deduct as an
expense the amount of income so recognized by the optionee. For capital gains
purposes, the holding period of the shares begins upon the exercise of the
option, and the optionee's basis in the shares is equal to the fair market value
of the shares on the date of exercise.

If, upon exercise of a nonqualified option, the optionee pays all or part of the
purchase price by delivering to the Bancorp shares of already-owned stock, there
are no federal income tax consequences to the optionee or the Bancorp to the
extent of the number of shares so delivered. As to any additional shares issued,
the optionee recognizes ordinary income equal to the aggregate fair market value
of the additional shares received, less any cash paid to the Bancorp, and the
Bancorp is allowed to deduct as an expense the amount of such income. For
purposes of calculating tax upon disposition of the shares acquired, the holding
period and basis of the new shares, to the extent of the number of old shares
delivered, is the same as for those old shares. The holding period for the
additional shares begins on the date the option is exercised, and the basis in
those additional shares is equal to the taxable income recognized by the
optionee, plus the amount of any cash paid to the Bancorp.

Upon a subsequent disposition of the shares received on exercise, the difference
between the amount realized on such disposition and the fair market value of the
shares on the date of exercise generally will be treated as a separate capital
gain or loss.

EXCISE TAX. In addition, the exercise of outstanding options that become
exercisable upon certain major corporate events may result in all or a portion
of the difference between the fair market value of the option shares and the
exercise price of any shares issuable in respect to such options being
characterized "parachute payments." A 20% excise tax is imposed on the optionee
on any amount so characterized and the Bancorp will be denied any tax deduction
for such amount.

WITHHOLDING TAXES. The Bancorp is generally required to withhold applicable
payroll taxes with respect to compensation income recognized by optionees. The
Bancorp is also generally required to make certain information reports to the
Internal Revenue Service with respect to any income of an optionee attributable
to transactions involving the grant or exercise of options and/or the
disposition of shares acquired on exercise of options.

OTHER TERMS AND CONDITIONS

Options under the Plan shall not be transferable by the optionee during the
optionee's lifetime. In the event of termination of employment or cessation as a
director as a result of the optionee's death or disability, to the extent
exercisable on the date employment or directorship terminates, the option shall
remain exercisable for up to one (1) year (but not beyond the end of the
original option term) by the disabled optionee or, in the event of death of the

<PAGE>

optionee, by the person or persons to whom rights under the option shall have
passed by will or the laws of descent and distribution. In addition, if an
optionee dies during the three month period referred to below, the option shall
expire one year after the date of such death.

If an optionee's employment is terminated, unless termination was for cause or
if an optionee's directorship is terminated, the optionee shall have the right,
for a three-month period after such termination, to exercise that portion of the
option which was exercisable immediately prior to such termination. If an
optionee's employment is terminated for cause (which shall include malfeasance
or gross misfeasance in the performance of duties or conviction of a crime
involving moral turpitude), the option shall expire within 30 days of the date
of termination. However, in no event may the option be exercised after the end
of the original option term.

In the event of certain changes in the outstanding Common Stock, such as stock
dividends, stock splits, recapitalization, reclassification, reorganization,
merger, stock consolidation or otherwise, appropriate and proportionate
adjustments shall be made in the number, kind and exercise price of shares
covered by any unexercised options or portions thereof. In the event of
liquidation of the Bancorp or upon a reorganization, merger or consolidation of
the Bancorp with one or more corporations, the result of which the Bancorp is
not the surviving corporation or the Bancorp becomes a subsidiary of another
corporation, a sale of substantially all of the assets of the Bancorp to another
corporation, or upon a sale representing more than 80% of equity securities
voting power of the Bancorp to any person or entity (any one of which shall be
referred to as a "Terminating Event"), the Plan shall terminate and all options
theretofore granted shall completely vest and become immediately exercisable.
All outstanding options not exercised by the time of the Terminating Event shall
at such time terminate. However, any options not exercised at the time of a
Terminating Event shall not terminate if they have been assumed or substituted
by the successor corporation.

The Board reserves the right to suspend, amend or terminate the Plan, and, with
the consent of the optionee, make such modifications of the terms and conditions
of his/her option as it deems advisable, except that the Board may not, without
further approval of a majority of the shareholders, increase the maximum number
of shares covered by the Plan, change the minimum option price, increase the
maximum term of options under the Plan or permit options to be granted to anyone
other than a director, officer or management level employee.

No option granted pursuant to the Plan shall be exercisable until all necessary
regulatory and shareholder approvals are obtained. No grants under the Plan have
been made; however, it is anticipated that options may be granted to directors
and executive officers of the Bancorp in the near future.

Adoption of the Plan requires the affirmative vote of a majority of the
outstanding shares of Common Stock represented and voting at the Meeting.

MANAGEMENT RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ADOPTION OF THE WESTERN
SIERRA BANCORP 1999 STOCK OPTION PLAN.

<PAGE>

PROPOSAL 4:
RATIFICATION OF AUDITORS

The firm of Perry-Smith & Co., LLP, Sacramento, California, served as
independent certified public accountants for the Bancorp and the Banks through
the year 1998. The Bancorp has selected Perry-Smith & Co., LLP to serve as the
Bancorp's independent certified public accountants for the year 1999. All
services rendered by Perry-Smith & Co., LLP were approved by the Board, which
has determined the firm of Perry-Smith & Co., LLP to be independent. It is
expected that one or more representatives of Perry-Smith & Co., LLP will be
present at the Meeting and will be given the opportunity to make a statement, if
desired, and to respond to appropriate questions.

In the event shareholders do not ratify the appointment of Perry-Smith & Co.,
LLP as the Bancorp's independent certified public accountants for the
forthcoming fiscal year, such appointment will be reconsidered by the Board.

Ratification of the appointment of Perry-Smith & Co., LLP as the Bancorp's
independent certified public accountants for fiscal year 1999 requires the
affirmative vote of a majority of the outstanding shares of Common Stock
represented and voting at the meeting.

MANAGEMENT RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF PERRY-SMITH & CO., LLP AS THE BANCORP'S INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS FOR 1999.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Some of the Bancorp's directors and executive officers and their immediate
families as well as the companies with which they are associated are customers
of, or have had banking transactions with the Banks in the ordinary course of
business, and the Banks expect to have banking transactions with such persons in
the future. In management's opinion, all loans and commitments to lend included
in such transactions were made in compliance with applicable laws on
substantially the same terms, including interest rates and collateral, as those
prevailing for comparable transactions with other persons of similar
creditworthiness and, in the opinion of management, did not involve more than a
normal risk of collectibility or present other unfavorable features.

On November 24, 1998, the Bancorp signed a note with the O. I. or Linda Scariot
Revocable Living Trust dated March 19, 1992 which provides a line of credit
totaling $500,000 to the Bancorp. The stated interest rate is 8%, payable
monthly, with principal payable on demand or all outstanding principal and
interest due on November 24, 1999. As of December 31, 1998, $150,000 was
outstanding on this line of credit. Mr. O. I. Scariot is a member of the Board.

SHAREHOLDER PROPOSALS

The deadline for shareholders to submit proposals to be considered for inclusion
in the Proxy Statement for the Bancorp's 2000 Annual Meeting of Shareholders is
December 31, 1999.

<PAGE>

OTHER MATTERS

Management does not know of any matters to be presented at the Meeting other
than those set forth above. However, if other matters come before the Meeting,
it is the intention of the persons named in the accompanying Proxy as
proxyholders to vote the shares represented by the Proxy in accordance with the
recommendations of management on such matters, and discretionary authority to do
so is included in the Proxy.

WESTERN SIERRA BANCORP

Dated: June 28, 1999 Osvaldo I. Scariot, Secretary

The Annual Report to Shareholders for the fiscal year ended December 31, 1998 is
being mailed concurrently with this Proxy Statement to all shareholders of
record as of June 15, 1999.

IT IS VERY IMPORTANT THAT EVERY SHAREHOLDER VOTE. WE URGE YOU TO SIGN AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING IN PERSON.

IN ORDER TO PROVIDE ADEQUATE MEETING ACCOMMODATIONS, PLEASE INDICATE ON THE
PROXY WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING.

<PAGE>

EXHIBIT A

WESTERN SIERRA BANCORP

1999 STOCK OPTION PLAN

1. PURPOSE

The purpose of the Western Sierra Bancorp 1999 Stock Option Plan (the
"Plan") is to strengthen Western Sierra Bancorp (the "Bancorp") and those
corporations which are or hereafter become subsidiary corporations of the
Bancorp by providing an additional means of attracting and retaining competent
directors, officers and management level employees and by providing to
participating directors, officers and management level employees added incentive
for high levels of performance. The Plan seeks to accomplish these purposes and
achieve these results by providing a means whereby such directors, officers and
management level employees may purchase shares of the common stock of the
Bancorp pursuant to options granted in accordance with the Plan.

Options granted pursuant to the Plan are intended to be either "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended from time to time (the "Code"), or "nonqualified stock
options", as shall be determined and designated upon the grant of each option
hereunder.

2. ADMINISTRATION

The Plan shall be administered by the Board of Directors (the "Board").
Any action of the Board with respect to the administration of the Plan shall be
taken pursuant to a majority vote, or the unanimous written consent, of its
members. Subject to the express provisions of the Plan, the Board shall have
the authority to construe and interpret the Plan, define the terms used herein,
prescribe, amend and rescind, the rules and regulations relating to
administration of the Plan, and make all other determinations necessary or
advisable for administration of the Plan.

All decisions, determinations, interpretations or other actions by the
Board shall be final, conclusive and binding on all persons, optionees,
grantees, subsidiary corporations of the Bancorp and any successors-in-interest
to such parties.

<PAGE>

3. INCENTIVE STOCK OPTIONS

All options granted which are designated at the time of grant as an
"incentive stock option" shall be deemed an incentive stock option.

(a) Incentive stock options granted under the Plan are intended to be
qualified under Section 422 of the Code.

(b) Full-time salaried officers and management level employees of the
Bancorp or a subsidiary corporation (as that term is defined in Section 424(f)
of the Code), shall be eligible for selection to participate in the incentive
stock option portion of the Plan. No director of the Bancorp who is not also a
full-time salaried officer or employee of the Bancorp or a subsidiary
corporation, may be granted an incentive stock option hereunder. Subject to the
express provisions of the Plan, the Board shall (i) select from the eligible
class of employees and determine to whom incentive stock options shall be
granted, (ii) determine the discretionary terms and provisions of the respective
incentive stock option agreements (which need not be identical), (iii) determine
the times at which such incentive stock options shall be granted, (iv) determine
the number of shares subject to each incentive stock option, and (v) grant such
incentive stock options to such individuals. An individual who has been granted
an incentive stock option may, if he or she is otherwise eligible under the
Plan, be granted additional incentive stock options if the Board shall so
determine.

(c) Except as described in subsection (e) below, the Board shall not
grant an incentive stock option to purchase shares of the Bancorp's common stock
to any individual who, at the time of the grant, owns stock possessing more than
10% of the total combined voting power or value of all classes of stock of the
Bancorp or a subsidiary corporation. The attribution rules of Section 424(d) of
the Code shall apply in the determination of ownership of stock for these
purposes.

(d) The aggregate fair market value (determined as of the time the
incentive stock option is granted) of stock with respect to which incentive
stock options are exercisable for the first time by an individual during any
calendar year (under all plans of the Bancorp and its subsidiary corporations,
if any) shall not exceed $100,000, plus any greater amount as may be permitted
under subsequent amendments to the Code.

(e) The purchase price of stock subject to each incentive stock option
shall be determined by the Board 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, except, in the case of optionees who at the time of the grant own more
than ten percent (10%) of the total combined voting power of all classes of
stock of the

2
<PAGE>

Bancorp or a subsidiary corporation, in which case the purchase price of the
stock shall not be less than one hundred ten percent (110%) of the fair
market value of such stock at the time such option is granted and the term of
such option shall be for no more than five (5) years. 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.

4. NONQUALIFIED STOCK OPTIONS

(a) All options granted which are (i) in excess of the aggregate fair
market value limitations set forth in Section 3(d) hereof, (ii) designated at
the time of the grant as "nonqualified", or (iii) intended to be incentive stock
options but do not meet the requirements of incentive stock options, shall be
deemed nonqualified stock options. Nonqualified stock options granted hereunder
shall be so designated in the nonqualified stock option agreement entered into
between the Bancorp and the optionee.

(b) Directors, full-time salaried officers and management level
employees of the Bancorp or a subsidiary corporation shall be eligible for
selection to participate in the nonqualified stock option portion of the Plan.
Subject to the express provisions of the Plan, the Board shall (i) select from
the eligible class of individuals and determine to whom nonqualified stock
options shall be granted, (ii) determine the discretionary terms and provisions
of the respective nonqualified stock option agreements (which need not be
identical), (iii) determine the times at which such nonqualified stock options
shall be granted, (iv) determine the number of shares subject to each
nonqualified stock option and (v) grant such nonqualified stock options to such
individuals. An individual who has been granted a nonqualified stock option
may, if he or she is otherwise eligible under the Plan, be granted additional
nonqualified stock options if the Board shall so determine.

(c) The purchase price of stock subject to each nonqualified stock
option shall be determined by the Board 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 20.2031-2.

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<PAGE>

5. STOCK SUBJECT TO THE PLAN

Subject to adjustments as provided in Section 12, hereof, the stock to be
offered under the Plan shall be shares of the Bancorp's authorized but unissued
common stock (hereinafter called "stock") and the aggregate amount of stock to
be delivered upon exercise of all options granted under the Plan shall not
exceed 400,000 shares. If any option shall be canceled, surrendered or expire
for any reason without having been exercised in full, the underlying shares
subject thereto shall again be available for purposes of the Plan.

6. CONTINUATION OF EMPLOYMENT

Nothing contained in the Plan (or in any option agreement) shall obligate
the Bancorp or a subsidiary corporation to employ any optionee for any period or
interfere in any way with the right of the Bancorp or a subsidiary corporation
to reduce the optionee's compensation. However, the Bancorp may not reduce the
terms of any option without the approval of the optionee.

7. EXERCISE OF OPTIONS

No option shall be exercisable until all necessary regulatory and
shareholder approvals of the Plan are obtained. Except as otherwise provided in
this section, each option shall be exercisable in such installments, which need
not be equal, and upon such contingencies as the Board shall determine;
provided, however, that if an optionee shall not in any given installment period
purchase all of the shares which the optionee is entitled to purchase in such
installment period, the optionee's right to purchase any shares not purchased in
such installment period shall continue until expiration or termination of such
option. Notwithstanding the foregoing, the options shall vest at the rate of at
least 20% per year over a five year period from the date the option is granted.

Fractional share interests shall be disregarded, except that they may be
accumulated. Not less than ten (10) shares may be purchased at any one time
unless the number of shares purchased is the total number of shares which is
exercisable at such time. Options may be exercised by written notice delivered
to the Bancorp stating the number of shares with respect to which the option is
being exercised, together with the full purchase price for such shares. Payment
of the option price in full, for the number of shares to be delivered, must be
made (a) in cash or (b) subject to applicable law, with the Bancorp's stock
previously acquired by the optionee and held by the optionee for a period of at
least six months. Notwithstanding the foregoing, in the event an optionee who
has an

4
<PAGE>

incentive stock option does exercise the incentive stock option by utilizing
(b) above, the optionee should obtain tax advice as to the consequences of
such action. The equivalent dollar value of shares used to effect a purchase
shall be the fair market value of the shares on the date of exercise. If the
option is being exercised by any person other than the optionee, said notice
shall be accompanied by proof, satisfactory to counsel for the Bancorp, of
the right of such person to exercise the option. Optionees will have no
rights as shareholders with respect to stock of the Bancorp subject to their
stock option agreements until the date of issuance of the stock certificate
to them.

8. 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 shall be exercisable
during his or her lifetime only by the optionee.

9. CESSATION OF DIRECTORSHIP OR EMPLOYMENT

Except as provided in Sections 10 and 20 hereof, if an optionee ceases to
be a director or an employee of the Bancorp or a subsidiary corporation for any
reason other than his or her disability (as defined in Section 22(e)(3) of the
Code) or death, the optionee's option shall expire three (3) months after the
date of termination of such directorship or employment. During the period after
cessation of directorship or employment, such option shall be exercisable only
as to those installments, if any, which have accrued and/or vested as of the
date on which the optionee ceased to be a director or an employee of the Bancorp
or a subsidiary corporation. If an optionee is both a director and an employee,
then unless otherwise provided for in the optionee's option grant or option
agreement, such option shall expire three (3) months after the latter of the
date of termination of the optionee's directorship or employment.

10. TERMINATION OF EMPLOYMENT FOR CAUSE

If the stock option agreement so provides and if an optionee's
employment by the Bancorp or a subsidiary corporation is terminated for
cause, the optionee's option shall expire thirty (30) days from the date of
such termination. Termination for cause shall include, but not be limited
to, termination for malfeasance or gross misfeasance in the performance of
duties or conviction of a

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crime involving moral turpitude, and, in any event, the determination of the
Board with respect thereto shall be final and conclusive.

11. DISABILITY OR DEATH OF OPTIONEE

If any optionee dies while serving as a director or an employee of the
Bancorp or a subsidiary corporation, the option shall expire one (1) year after
the date of such death, except as provided in Section 20 hereof. After such
death but before such expiration, the persons to whom the optionee's rights
under the option shall have passed by will or by the laws of descent and
distribution or the executor or administrator of optionee's estate shall have
the right to exercise such option to the extent that installments, if any, had
accrued and/or vested as of the date on which the optionee ceased to be a
director or an employee of the Bancorp or a subsidiary corporation.

If the optionee shall terminate his or her directorship or employment
because of disability (as defined in Section 22(e)(3) of the Code), the optionee
may exercise this option to the extent he or she is entitled to do so at the
date of termination, at any time within one (1) year of the date of termination,
except as provided in Section 20 hereof.

If any optionee dies during the three (3) month period referred to in
Section 9 hereof, the option shall expire one (1) year after the date of such
death, except as provided in Section 20 hereof.

12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION

If the outstanding shares of the stock of the Bancorp are increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities of the Bancorp through reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation or otherwise,
without consideration to the Bancorp, 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
likewise 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. Any adjustment under this Section 12 shall be made by
the Board, 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

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issued or made available under the Plan on account of any such adjustment,
and fractional share-interests shall be disregarded, except that they may be
accumulated.

13. TERMINATING EVENTS

A Terminating Event shall be defined as any one of the following events:
(i) a dissolution or liquidation of the Bancorp; (ii) a reorganization, merger
or consolidation of the Bancorp with one or more corporations, the result of
which (A) the Bancorp is not the surviving corporation, or (B) the Bancorp
becomes a subsidiary of another corporation (which shall be deemed to have
occurred if another corporation shall own directly or indirectly, over 80% of
the aggregate voting power of all outstanding equity securities of the Bancorp);
(iii) a sale of substantially all the assets of the Bancorp to another
corporation; or (iv) a sale of the equity securities of the Bancorp representing
more than 80% of the aggregate voting power of all outstanding equity securities
of the Bancorp to any person or entity, or any group of persons and/or entities
acting in concert. When the Bancorp knows that a Terminating Event will occur
(i) the Bancorp shall deliver to each optionee no less than thirty (30) days
prior to the Terminating Event, written notification of the Terminating Event
and the optionee's right to exercise all options granted pursuant to the Plan,
whether or not vested under the Plan or applicable stock option agreement, and
(ii) all outstanding options granted pursuant to the Plan shall completely vest
and become immediately exercisable as to all shares granted pursuant to the
option immediately prior to such Terminating Event. This right of exercise
shall be conditional upon execution of a final plan of dissolution or
liquidation or a definitive agreement of consolidation or merger. Upon the
occurrence of the Terminating Event all outstanding options and the Plan shall
terminate; provided, however, that any outstanding options not exercised as of
the occurrence of the Terminating Event shall not terminate if there is a
successor corporation which assumes the outstanding options or substitutes for
such options, new options covering the stock of the successor corporation with
appropriate adjustments as to the number and kind of shares and prices.

14. AMENDMENT AND TERMINATION

The Board 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 the option as it shall deem

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<PAGE>

advisable; provided that, except as permitted under the provisions of
Sections 12 and 13 hereof, no 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;

(d) permit options to be granted to anyone other than directors,
full-time salaried officers or management level employees of
the Bancorp or a subsidiary corporation;

may be adopted without the Bancorp having first obtained any necessary
regulatory and shareholder approvals required by law.

No option may be granted during any suspension or after termination of the
Plan. Amendment, suspension or termination of the Plan shall not (except as
otherwise provided in Section 12 hereof), without the consent of the optionee,
alter or impair any rights or obligations under any option theretofore granted.

15. 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 described in Sections 3(b) and 4(b)
hereof; provided, however, that if appropriate resolutions of the Board indicate
that an option is granted as of and on some future date, the time such option is
granted shall be such future date. If action by the Board is taken by unanimous
written consent of its members, the action of the Board shall be deemed to be at
the time the last member of the Board signs the consent.

16. 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. No shares shall be purchased upon the
exercise of any option unless and until the Bancorp has fully complied with all
applicable requirements of any regulatory agency having jurisdiction over the
Bancorp including registration of the stock options and underlying shares, as

8
<PAGE>

necessary, and all applicable requirements of any exchange upon which stock of
the Bancorp may be listed. The optionee shall give the Bancorp notice of any
sale or disposition of any such shares not more than five (5) days after such
sale or disposition.

17. EFFECTIVE DATE OF THE PLAN

The Plan shall be deemed adopted by the Board as of June 15, 1999 and shall
be effective immediately subject to approval by the shareholders of the Bancorp
within twelve months of the date the Plan is adopted, by the vote of a majority
of the outstanding shares represented and voting at a duly held meeting of
shareholders at which a quorum is present, or by the written consent vote of the
holders of a majority of the outstanding shares of the Bancorp's stock. No
option under the Plan shall be exercised prior to the shareholders' approval of
the Plan.

18. TERMINATION

Unless previously terminated by the Board, the Plan shall terminate at the
close of business on June 15, 2009. No options shall be granted under the Plan
thereafter, but such termination shall not affect any option theretofore
granted.

19. OPTION AGREEMENT

Each option shall be evidenced by a written stock option agreement executed
by the Bancorp and the optionee 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. Each incentive stock option agreement shall contain such terms and
provisions as the Board may determine to be necessary in order to qualify such
option as an incentive stock option within the meaning of Section 422 of the
Code.

20. OPTION PERIOD

Each option and all rights and obligations thereunder shall expire on such
date as the Board may determine, but not later than ten (10) years from the date
such option is granted, and shall be subject to earlier termination as provided
elsewhere in the Plan.

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<PAGE>

21. EXCULPATION AND INDEMNIFICATION

To the extent permitted by applicable law in effect from time to time, no
member of the Board shall be liable for any act or omission of any other member
of the Board nor for any act or omission on the member's own part, except the
member's own willful misconduct or gross negligence. The Bancorp and its
subsidiary corporations shall pay expenses incurred by, and satisfy a judgment
or fine rendered or levied against, a present or former member of the Board in
any action brought by a third party against such person (whether or not the
Bancorp is joined as a party defendant) to impose a liability or penalty on such
person while a member of the Board arising with respect to the Plan or
administration thereof or out of membership on the Board or all or any
combination of the preceding; provided, the Board determines in good faith that
such member of the Board was acting in good faith, within what such member of
the Board reasonably believed to be the scope of his or her employment or
authority, and for a purpose which he or she reasonably believed to be in the
best interests of the Bancorp or its shareholders. Payments authorized
hereunder include amounts paid and expenses incurred in settling any such action
or threatened action. This Section 21 does not apply to any action instituted
or maintained in the right of the Bancorp by a shareholder or holder of a voting
trust certificate representing shares of the Bancorp or a subsidiary corporation
thereof. The provisions of this Section 21 shall apply to the estate, executor,
administrator, heirs, legatees or devisees of a member of the Board and the term
"person" as used in this Section 21 shall include the estate, executor,
administrator, heirs, legatees or devisees of such person.

22. AGREEMENT AND REPRESENTATIONS OF OPTIONEE

Unless the shares of stock covered by the Plan have been registered with
the Securities Exchange Commission, each optionee shall, by accepting an
option, represent and agree, for himself or herself and his or her
transferees by will or the laws of descent and distribution, that all stock
will be acquired for investment and not for resale or distribution. Upon
such exercise of any portion of an option, the person entitled to exercise
the same shall, upon request of the Bancorp, furnish evidence satisfactory to
the Bancorp (including a written and signed representation) to the effect
that the stock is being acquired in good faith for investment and not for
resale or distribution. Furthermore, the Bancorp, at its sole discretion, may
take all reasonable steps, including affixing the

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<PAGE>

following legend (and/or such other legend or legends as counsel shall
require) on certificates embodying the shares:

The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be sold, pledged,
hypothecated or otherwise transferred or offered for sale in the
absence of an effective registration statement with respect to them
under the Securities Act of 1933 or a written opinion of counsel for
the optionee which opinion shall be acceptable to counsel for the
Bancorp that registration is not required.

to assure itself against any sale or distribution by the optionee which does not
comply with the Plan or any federal or state securities laws.

The Bancorp agrees to remove any legend affixed to the certificates
embodying the shares pursuant to this Section 22 when all of the restrictions on
the transfer of the shares, whether imposed by the Plan or federal or state law,
have terminated.

23. INFORMATION TO EMPLOYEES

The Bancorp shall provide optionees with financial statements of the
Bancorp at least annually.

<PAGE>

PROXY

WESTERN SIERRA BANCORP

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
hereby appoints Messrs. Harold S. Prescott, Jr., Darol B. Rasmussen and Joseph
A. Surra and each of them as proxyholders with full power of substitution, to
represent, vote and act with respect to all shares of common stock of Western
Sierra Bancorp (the "Bancorp") which the undersigned would be entitled to vote
at the meeting of shareholders to be held on July 27, 1999 at 6:00 p.m., at the
Cameron Park Country Club, 3201 Royal Drive, Cameron Park, California or any
adjournments thereof, with all the powers the undersigned would possess if
personally present as follows:

1. Election of fifteen (15) persons to be directors.

[ ] FOR ALL NOMINEES LISTED ABOVE [ ] WITHHOLD AUTHORITY
(Except as marked to the contrary below)

(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space below.)

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

2. Amendment of Section 3.2 of the Bancorp's Bylaws to change the range of
directors from 8 to 15, to 11 to 21.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. Adoption of the Western Sierra Bancorp 1999 Stock Option Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. Ratification of the appointment of Perry-Smith & Co., LLP as the Bancorp's
independent auditors for the year 1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

5. Transaction of such other business as may properly come before the meeting
and any adjournments or adjournments thereof.

<PAGE>
PLEASE SIGN AND DATE BELOW

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS. The
Proxy confers authority to vote and shall be voted in accordance with such
recommendation unless a contrary instruction is indicated, in which case, the
shares represented by the Proxy will be voted in accordance with such
instruction. IF NO INSTRUCTION IS SPECIFIED WITH RESPECT TO THE MATTER TO BE
ACTED UPON, THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED IN ACCORDANCE WITH
THE RECOMMENDATIONS OF MANAGEMENT. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED IN ACCORDANCE WITH
THE RECOMMENDATIONS OF MANAGEMENT.

(Please date this Proxy and sign your name as it appears on your stock
certificates. Executors, administrators, trustees, etc., should give their full
title. If a corporation, please sign in full corporate name by the president or
other authorized officer. If a partnership, please sign in partnership name by
an authorized person. All joint owners should sign.)

[ ] I DO [ ] I DO NOT EXPECT TO ATTEND THE MEETING.

--------------------------------
(Number of Shares)

--------------------------------
(Please Print Your Name)

--------------------------------
(Date)

--------------------------------
(Signature of Shareholder)

THIS PROXY MAY BE REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE SECRETARY OF
THE BANCORP A DULY EXECUTED PROXY BEARING A LATER DATE OR AN INSTRUMENT REVOKING
THIS PROXY, OR BY ATTENDING THE MEETING AND VOTING IN PERSON.