PIONEER BANCORPORATION
10-12G, 1999-04-29
STATE COMMERCIAL BANKS
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<PAGE>
 
      FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1999
                                              REGISTRATION NO.
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  ----------

                                    FORM 10

                                GENERAL FORM FOR

                           REGISTRATION OF SECURITIES

                     Pursuant to Section 12(b) or 12(g) of
                      the Securities Exchange Act of 1934

                                  ----------

                             PIONEER BANCORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                         <C>
            Nevada                                                            88-0301208
  (State or other jurisdiction                                (I.R.S. employer identification number)
of incorporation or organization)

       10 State Street                                                        89501-2351
        Reno, Nevada                                                          (Zip code)
   (Address of principal
    executive offices)
</TABLE>

                                 (775)-688-7900
              (Registrant's telephone number, including area code)

                          Securities to be registered
                     pursuant to Section 12(b) of the Act:

                                      None

                          Securities to be registered
                     pursuant to Section 12(g) of the Act:

                         Common Stock, $0.01 par value
                                (Title of Class)

================================================================================
<PAGE>
 
                             PIONEER BANCORPORATION

                         FORM 10 REGISTRATION STATEMENT

ITEM 1.  BUSINESS.

     Pioneer Bancorporation ("Pioneer") is a bank holding company registered
under the Bank Holding Company Act of 1956, as amended (the "BHCA").  Pioneer
was formed on June 2, 1993 under the laws of the State of Nevada in connection
with a holding company reorganization of Pioneer Citizens Bank of Nevada (the
"Bank") that was approved by the shareholders on September 15, 1993 and became
effective on October 31, 1993.  At December 31, 1998, Pioneer had 547
shareholders of record owning 8,679,279 shares of Pioneer's $0.01 par value
common stock ("Common Stock").

     The Bank, a wholly owned subsidiary of Pioneer, was opened in 1965 and is
regulated by the Nevada Department of Business & Industry, Financial
Institutions Division ("Division") and by the Federal Deposit Insurance
Corporation ("FDIC"), its primary federal regulator and the insurer of its
deposits.

Primary Market Area

     Pioneer conducts its banking business through its main office in Reno and
13 branches located throughout Nevada in the cities of Reno (3 branches), Las
Vegas (6 branches), Carson City (1 branch), Henderson (2 branches) and Sparks (1
branch).  Pioneer focuses its banking and other services on individuals,
professionals, and small to medium-sized businesses throughout its market area.
At December 31, 1998, Pioneer had total consolidated assets of $1.03 billion.

Competition

       In the very competitive Reno and Las Vegas areas, Pioneer competes with a
number of international banking groups, out-of-state banking companies, state-
wide banking organizations, several local community banks, savings banks,
savings and loans, and credit unions throughout its market area.  Pioneer's
principal market area is divided into three separate regions based upon
population and the presence of banking offices.  In the northern part of Nevada,
the delineated communities are Washoe County and Carson City.  These communities
include the cities of Reno, Sparks, Carson City, and Incline Village.  To the
south, the Bank has delineated Clark County, including the cities of Las Vegas,
North Las Vegas, Henderson, Boulder City, and Summerlin.

       Pioneer is Nevada's sixth largest commercial bank and the state's largest
independent community bank.  The following is the most recent information
available concerning the Bank's major competitors in its principal market area,
indicating deposit size and percentage market share.

                                       1
<PAGE>
 
<TABLE>
<CAPTION>
                                                               Data as of June 30, 1998
                                     ----------------------------------------------------------------------------
                                                Total Deposits                        Percentage Market
        Name of Institution                     (in thousands)                              Share
- -----------------------------------  -------------------------------------  -------------------------------------
CLARK COUNTY
 
Las Vegas/Henderson/Boulder
 City/Summerlin
- -----------------------------------
<S>                                  <C>                                    <C>
Pioneer Citizens Bank                                          $  362,721                                   3.60%
Bank of America, N.A.                                           2,973,962                                  29.48%
Norwest Bank Nevada, N.A.                                       1,537,543                                  15.24%
Wells Fargo Bank, N.A.                                          1,276,209                                  12.65%
First Security Bank of Nevada                                     894,894                                   8.87%
Nevada State Bank                                                 715,013                                   7.09%
Citibank, N.A.                                                    512,643                                   5.08%
U.S. Bank, N.A.                                                   428,375                                   4.25%
California Federal Bank                                           347,232                                   3.44%
BankWest of Nevada                                                256,878                                   2.55%
First Republic Bank                                               128,182                                   1.27%
Colonial Bank                                                     118,714                                   1.18%
Community Bank of Nevada                                          118,541                                   1.18%
Silver State Bank                                                 105,490                                   1.05%
 
WASHOE COUNTY
 
Reno/Sparks/Incline Village
- -----------------------------------
Pioneer Citizens Bank                                          $  359,951                                  10.83%
U.S. Bank, N.A.                                                   668,901                                  20.13%
Bank of America                                                   653,317                                  19.66%
Norwest Bank Nevada, N.A.                                         576,823                                  17.36%
Wells Fargo Bank, N.A.                                            478,945                                  14.41%
California Federal Bank                                           177,470                                   5.34%
Sierra West Bank                                                  127,825                                   3.85%
Comstock Bank                                                     105,117                                   3.16%
Interwest Bank                                                     81,788                                   2.46%
Nevada Banking Company                                             35,217                                   1.06%
Heritage Bank of Nevada                                            33,752                                   1.02%
 
CARSON CITY
 
Carson City
- -----------------------------------
Pioneer Citizens Bank                                          $   46,156                                   6.62%
Wells Fargo Bank, N.A.                                            145,571                                  20.88%
Bank of America                                                   108,175                                  15.51%
Norwest Bank Nevada, N.A.                                          99,916                                  14.33%
Comstock Bank                                                      79,583                                  11.41%
U.S. Bank, N.A.                                                    69,208                                   9.93%
Sierra West Bank                                                   65,580                                   9.41%
Nevada State Bank                                                   8,946                                   1.28%
</TABLE>

                                       2
<PAGE>
 
Services Provided

     Lending Activities.  The Bank offers a variety of loans to meet the credit
     ------------------                                                        
needs of the communities it serves.  The Bank offers and encourages applications
for a variety of secured and unsecured loans to help meet the needs of its
communities, dependent upon the Bank's financial condition and size, legal
impediments, local economic conditions and consistency with safe and sound
operating practices.  While specific credit programs may vary from time to time,
based on Bank policies and market conditions, every effort is made to encourage
applications for the following credit services throughout its communities.

     Consumer Loans.  A variety of consumer loans are offered by the Bank
     --------------                                                      
including personal loans, motor vehicle loans, boat loans, recreational vehicle
loans, home improvement loans, home equity loans, open-end credit lines, both
secured and unsecured, and overdraft protection credit lines.  The Bank credit
cards are also offered in affiliation with MBNA American Bank, N.A.

     In 1998, the Bank implemented a consumer phone-in lending service,
available 24 hours a day and 7 days a week.  Callers may apply over the phone
for almost any type of consumer loan offered, or may simply call for information
or credit rates.

     Real Estate Loans.  The Bank offers home improvement loans and home equity
     -----------------                                                         
loans and credit lines.  Loans for construction, rehabilitation or repurchase of
commercial, industrial and residential development projects are also available
through the Bank.

     Business Loans.  A wide range of loans and open-end credit arrangements are
     --------------                                                             
offered by the Bank to businesses of every size, from small sole proprietorships
to large corporate entities, with purposes ranging from working capital and
inventory acquisition to equipment purchases and business expansion.  The Bank
also offers commercial leasing and participates in the Small Business
Administration (SBA) financing programs.

     Agricultural Loans.  The Bank offers loans for agricultural and ranching
     ------------------                                                      
purposes.  These include expansion loans, short-term working capital loans,
equipment loans and cattle or livestock loans.

     The Board of Directors has approved specific lending policies and
procedures for the Bank and is responsible for implementation of the policies.
The lending policies and procedures include guidelines for loan term, loan-to-
value ratios, collateral appraisals and interest rates. The loan policies also
vest varying levels of loan authority in management, the Bank's loan committee
and the Board of Directors. Management of the Bank monitors lending activities
through weekly loan committee meetings, monthly reporting and periodic review of
loans.

     Deposit Services.  The Bank offers the full range of deposit services
     ----------------                                                     
that are typically available in most banks and savings and loan associations,
including checking accounts, savings, money market accounts and various types of
certificates of deposit.  The transaction accounts and certificates of deposit
are tailored to the Bank's primary market area at rates competitive with those
offered in the area.  All deposit accounts are insured by the FDIC to the
maximum amount permitted by law.

     Investment Services.  The Bank provides alternative investment services
     -------------------                                           
through a third party vendor, including annuities, securities, mutual funds and
discount brokerage services to its customers. The Bank offers these products in
a manner consistent with the principles of prudent and safe banking and in
compliance with applicable laws, rules, regulations and regulatory guidelines.
The Bank also offers investment services to its Trust Department customers.

                                       3
<PAGE>
 
     Other Services.  These services include automated teller machines (ATMs).
     --------------                                                   
ATM access cards, point-of-sale (POS) debit card (Master Card's Master
Money(TM)), check guarantee cards, safe deposit boxes, merchant credit card
services, travelers cheques, savings bonds, direct deposit, night deposit, cash
management services, trust services, and investment services.

     The Bank offers "Bank-By-Phone", a service which allows retail customers 
24-hour access to deposit and loan account information, and a customer service
center for account inquiries. The Bank is a member of the Star and Plus cash
machine networks.

Employees

     Pioneer currently employees 310 full-time equivalent employees.

Supervision and Regulation

     General
     -------

     Pioneer is extensively regulated under federal and state law. These laws
and regulations are primarily intended to protect depositors, not shareholders.
The discussion below describes and summarizes certain statutes and regulations.
These descriptions and summaries are qualified in their entirety by reference to
the particular statute or regulation. Changes in applicable laws or regulations
may have a material effect on the business and prospects of Pioneer. The
operations of Pioneer may also be affected by changes in the policies of banking
and other government regulators. Pioneer cannot accurately predict the nature or
extent of the effects on its business and earnings that fiscal or monetary
policies, or new federal or state laws, may have in the future.

     Federal Bank Holding Company Regulation
     ---------------------------------------

     Pioneer is a bank holding company as defined in the Bank Holding Company
Act of 1956, as amended (the "BHCA") because of its ownership of the Bank, and
is therefore subject to regulation, supervision and examination by the Federal
Reserve. In general, the BHCA limits the business of bank holding companies to
owning or controlling banks and engaging in other activities closely related to
banking. Pioneer must file periodic reports with the Federal Reserve and must
provide it with such additional information as it may require.

     Holding Company Bank Ownership.  The BHCA requires every bank holding
     ------------------------------                                       
company to obtain the prior approval of the Federal Reserve before (i)
acquiring, directly or indirectly, ownership or control of any voting shares of
another bank or bank holding company if, after such acquisition, it would own or
control more than 5% of such shares, (ii) acquiring all or substantially all of
the assets of another bank or bank holding company, or (iii) merging or
consolidating with another bank holding company.

     Holding Company Control of Nonbanks.  With some exceptions, the BHCA also
     -----------------------------------                                 
prohibits a bank holding company from acquiring or retaining direct or indirect
ownership or control of more than 5% of the voting shares of any company which
is not a bank or bank holding company, or from engaging directly or indirectly
in activities other than those of banking, managing or controlling banks, or
providing services for its subsidiaries. The principal exceptions to these
prohibitions involve certain non-bank activities which, by statute or by Federal
Reserve regulation or order, have been identified as activities closely related
to the business of banking or of managing or controlling banks. In making this
determination, the Federal Reserve considers whether the performance of such
activities by a bank holding company can be expected to produce benefits to the
public such as greater convenience, increased competition or gains in the
efficient use of resources, which can be expected to outweigh the 

                                       4
<PAGE>
 
risks of possible adverse effects such as decreased or unfair competition,
conflicts of interest or unsound banking practices. The Economic Growth and
Regulatory Reduction Act of 1996 amended the BHCA to eliminate the requirement
that bank holding companies seek prior Federal Reserve approval before engaging
in certain permissible nonbanking activities if the holding company is well-
capitalized and meets certain other specified criteria.

     Transactions with Affiliates.  Subsidiary banks of a bank holding company
     ----------------------------                                     
are subject to restrictions imposed by the Federal Reserve Act on extensions of
credit to the holding company or its subsidiaries, on investments in their
securities and on the use of their securities as collateral for loans to any
borrower. These regulations and restrictions may limit Pioneer's ability to
obtain funds from the Bank for its cash needs, including funds for payment of
dividends, interest and operational expenses.

     Tying Arrangements.  Under the Federal Reserve Act and certain regulations
     ------------------                                            
of the Federal Reserve, a bank holding company and its subsidiaries are
prohibited from engaging in certain tying arrangements in connection with any
extension of credit, lease or sale of property or furnishing of services. For
example, the Bank may not generally require a customer to obtain other services
from it or from Pioneer, and may not require that the customer promise not to
obtain other services from a competitor, as a condition to an extension of
credit to the customer.

     Federal and State Bank Regulation
     ---------------------------------

     General.  The Bank is a Nevada stock bank with deposits insured by the
     -------                                                               
FDIC,  and is subject to the supervision and regulation of the FDIC and the
Nevada Department of Business and Industry, Financial Institutions Division.
Both of these agencies have the authority to prohibit the Bank from engaging in
what the agencies believe constitute unsafe or unsound banking practices.

     CRA.  The Community Reinvestment Act (the "CRA") requires that, in
     ---                                                               
connection with examinations of financial institutions within their
jurisdiction, the Federal Reserve or the FDIC evaluates the record of the
financial institutions in meeting the credit needs of their local communities,
including low and moderate income neighborhoods, consistent with the safe and
sound operation of those banks.  These factors are also considered in evaluating
mergers, acquisitions and applications to open a branch or facility.

     Insider Credit Transactions.  Banks are also subject to certain
     ---------------------------                                    
restrictions imposed by the Federal Reserve Act on extensions of credit to
executive officers, directors, principal shareholders or any related interests
of such persons.  Extensions of credit (i) must be made on substantially the
same terms, including interest rates and collateral as, and follow credit
underwriting procedures that are not less stringent than, those prevailing at
the time for comparable transactions with persons not covered above and who are
not employees, and (ii) must not involve more than the normal risk of repayment
or present other unfavorable features.  Banks are also subject to certain
lending limits and restrictions on overdrafts to such persons.  A violation of
these restrictions may result in the assessment of substantial civil monetary
penalties on the affected bank or any officer, director, employee, agent or
other person participating in the conduct of the affairs of that bank, the
imposition of a cease and desist order, and other regulatory sanctions.

     FDICIA.  Under the Federal Deposit Insurance Corporation Improvement
     ------                                                              
Act ("FDICIA"), each federal banking agency has prescribed, by regulation, non-
capital safety and soundness standards for institutions under its authority.
These standards cover internal controls, information systems and internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, compensation, fees and benefits, such other operational and managerial
standards as the agency determines to be appropriate, and standards for asset
quality, earnings and stock valuation.  An institution 

                                       5
<PAGE>
 
which fails to meet these standards must develop a plan acceptable to the
agency, specifying the steps that the institution will take to meet the
standards. Failure to submit or implement such a plan may subject the
institution to regulatory sanctions. Management believes that the Bank meets all
such standards, and therefore does not believe that these regulatory standards
materially affect Pioneer's business operations.

     Interstate Banking and Branching
     --------------------------------

     The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "Interstate Act") permits nationwide interstate banking and branching under
certain circumstances. This legislation generally authorizes interstate
branching and relaxes federal law restrictions on interstate banking. Currently,
bank holding companies may purchase banks in any state, and states may not
prohibit such purchases. Additionally, banks are permitted to merge with banks
in other states as long as the home state of neither merging bank has opted out.
The Interstate Act requires regulators to consult with community organizations
before permitting an interstate institution to close a branch in a low-income
area.

     Under recent FDIC regulations, banks are prohibited from using their
interstate branches primarily for deposit production. The FDIC has accordingly
implemented a loan-to-deposit ratio screen to ensure compliance with this
prohibition.

     Nevada has enacted "opting in" legislation in accordance with the
Interstate Act provisions generally allowing banks, other depository
institutions, and holding companies to engage in interstate mergers with, or
acquisitions of, Nevada depository institutions (including banks), subject to
certain "aging" and regulatory approval requirements. The "aging" requirements
are that the Nevada depository institution must have been chartered on or before
September 28, 1995 or must have been in existence for at least five years prior
to the transaction. Branches generally may not be opened or acquired separately
in Nevada by an out-of-state depository institution. An out-of-state depository
institution may, however, open or acquire a de novo branch in a Nevada county
with a population of less than 100,000 people. In addition, once an out-of-state
depository institution has acquired a depository institution within Nevada, the
out-of-state depository institution may open additional branches within the
state.

     Deposit Insurance
     -----------------

     The deposits of the Bank are currently insured to a maximum of $100,000 per
depositor through the Bank Insurance Fund ("BIF") administered by the FDIC. The
Bank is required to pay semiannual deposit insurance premium assessments to the
FDIC.

      FDICIA included provisions to reform the federal deposit insurance system,
including the implementation of risk-based deposit insurance premiums. FDICIA
also permits the FDIC to make special assessments on insured depository
institutions in amounts determined by the FDIC to be necessary to give it
adequate assessment income to repay amounts borrowed from the U.S. Treasury and
other sources or for any other purpose the FDIC deems necessary. The FDIC has
implemented a risk-based insurance premium system under which banks are assessed
insurance premiums based on much risk they present to BIF. Banks with higher
levels of capital and a low degree of supervisory concern are assessed lower
premiums than banks with lower levels of capital or a higher degree of
supervisory concern.

                                       6
<PAGE>
 
     Dividends
     ---------

     Other than proceeds received from the purchase of stock by officers and
directors in connection with the exercise of stock options or directors' fees,
the principal source of Pioneer's cash revenues is dividends received from the
Bank. The payment of dividends is subject to government regulation, in that
regulatory authorities may prohibit banks and bank holding companies from paying
dividends which would constitute an unsafe or unsound banking practice. In
addition, a bank may not pay cash dividends if that payment could reduce the
amount of its capital below that necessary to meet minimum applicable regulatory
capital requirements. Nevada banking statutes also place limitations on a bank's
ability to pay distributions (which includes cash dividends) in certain
respects. First, no distribution may be made by a bank if the distribution would
reduce the bank's stockholders' equity below its initial level. Second, a bank's
stockholders' equity must not fall below six percent of the bank's average total
daily deposit liabilities for the preceding 60 days. Distributions that would
result in such percentage being less than six percent are, therefore,
prohibited. For purposes of these Nevada law restrictions, a bank's
stockholders' equity includes the reserve for loan losses. Other than the laws
and regulations noted above which apply to all banks and bank holding companies,
neither Pioneer nor the Bank are currently subject to any regulatory
restrictions on their dividends. The Bank has been paying cash dividends, as
needed, to Pioneer and Pioneer has been paying regular stock dividends to its
shareholders. No assurances can be given that dividends will continue to be
paid. Pioneer historically has not paid cash dividends, nor does it expect to
pay them in the foreseeable future.

     Capital Adequacy
     ----------------

     Federal bank regulatory agencies use capital adequacy guidelines in the
examination and regulation of bank holding companies and banks. If capital falls
below minimum guideline levels, the holding company or bank may be denied
approval to acquire or establish additional banks or non-bank businesses or to
open new facilities.

     The FDIC and Federal Reserve use risk-based capital guidelines for banks
and bank holding companies. These are designed to make such capital requirements
more sensitive to differences in risk profiles among banks and bank holding
companies, to account for off-balance sheet exposure and to minimize
disincentives for holding liquid assets. Assets and off-balance sheet items are
assigned to broad risk categories, each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance sheet items. The guidelines are minimums, and the Federal
Reserve has noted that bank holding companies contemplating significant
expansion programs should not allow expansion to diminish their capital ratios
and should maintain ratios well in excess of the minimum. The current guidelines
require all bank holding companies and federally-regulated banks to maintain a
minimum risk-based total capital ratio equal to 8%, of which at least 4% must be
Tier I capital. Tier I capital for bank holding companies includes common
shareholders' equity, certain qualifying perpetual preferred stock and minority
interests in equity accounts of consolidated subsidiaries, less intangibles
except as described above.

     The Federal Reserve also employs a leverage ratio, which is Tier I capital
as a percentage of total assets less intangibles, to be used as a supplement to
risk-based guidelines. The principal objective of the leverage ratio is to
constrain the maximum degree to which a bank holding company may leverage its
equity capital base. The Federal Reserve requires a minimum leverage ratio of
3%. However, for all but the most highly rated bank holding companies and for
bank holding companies seeking to expand, the Federal Reserve expects an
additional cushion of at least 1% to 2%.

                                       7
<PAGE>
 
     FDICIA created a statutory framework of supervisory actions indexed to the
capital level of the individual institution. Under regulations adopted by the
FDIC, an institution is assigned to one of five capital categories depending on
its total risk-based capital ratio, Tier I risk-based capital ratio, and
leverage ratio, together with certain subjective factors. Institutions which are
deemed to be "undercapitalized" depending on the category to which they are
assigned are subject to certain mandatory supervisory corrective actions.
Pioneer does not believe that these regulations have any material effect on its
operations.

     Effects of Government Monetary Policy
     -------------------------------------

     The earnings and growth of Pioneer are affected not only by general
economic conditions, but also by the fiscal and monetary policies of the federal
government, particularly the Federal Reserve. The Federal Reserve can and does
implement national monetary policy for such purposes as curbing inflation and
combating recession, but its open market operations in U.S. government
securities, control of the discount rate applicable to borrowings from the
Federal Reserve, and establishment of reserve requirements against certain
deposits, influence the growth of bank loans, investments and deposits, and also
affect interest rates charged on loans or paid on deposits. The nature and
impact of future changes in monetary policies and their impact on Pioneer cannot
be predicted with certainty.

     Changes in Banking Laws and Regulations
     ---------------------------------------

     The laws and regulations that affect banks and bank holding companies are
currently undergoing significant changes. This year, legislation was proposed in
Congress which contained proposals to alter the structure, regulation, and
competitive relationships of the nation's financial institutions. Although the
legislation was not passed in the 1998 general session of Congress, similar
legislation may be proposed in the coming years and, if enacted into law, such
bills could have the effect of increasing or decreasing the cost of doing
business, limiting or expanding permissible activities (including activities in
the insurance and securities fields), or affecting the competitive balance among
banks, savings associations, and other financial institutions. Some of these
bills may reduce the extent of federal deposit insurance, broaden the powers or
the geographical range of operations of bank holding companies, alter the extent
to which banks could engage in securities activities, and change the structure
and jurisdiction of various financial institution regulatory agencies. Whether
or in what form such legislation may be adopted, or the extent to which the
businesses of Pioneer and the Bank might be affected thereby, cannot be
predicted with certainty.

                                       8
<PAGE>
 
ITEM 2.  FINANCIAL INFORMATION.

Selected Financial Data

     The following financial data of Pioneer are derived from Pioneer's
historical audited financial statements and related footnotes.  The information
set forth below should be read in conjunction with  "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements and related footnotes contained elsewhere in this Registration
Statement.

              Selected Financial Data For Years Ended December 31
              ---------------------------------------------------
                    (dollars in thousands except share data)
<TABLE>
<CAPTION>
STATEMENTS OF                  1998        1997        1996        1995        1994
EARNINGS DATA
- --------------------------------------------------------------------------------------
<S>                         <C>         <C>         <C>         <C>         <C>
Total interest income       $   68,866  $   55,624  $   42,364  $   36,738  $   26,762
Total interest expense          28,745      21,694      15,844      13,010       7,282
                          ------------------------------------------------------------
Net interest income             40,121      33,930      26,520      23,728      19,480
 
Provision for loan losses        2,125       1,300       1,015       1,155         990
                          ------------------------------------------------------------
Net interest income after
 provision for loan losses      37,996      32,630      25,505      22,573      18,490
 
Gain on sale of available 
 for sale securities             2,016         111         ---          36         (18)
Total other income               8,235       7,475       5,391       4,414       3,673
Total other expense             30,002      23,716      19,332      16,738      13,589
                          ------------------------------------------------------------
Income before taxes             18,245      16,500      11,564      10,285       8,556
 
Income taxes                     4,954       4,956       3,480       3,282       2,726
                          ------------------------------------------------------------
Net income                  $   13,291  $   11,544  $    8,084  $    7,003  $    5,830
 
Net income per share*
  Basic                           1.54        1.36        0.96        0.83        0.69
  Diluted                         1.54        1.33        0.92        0.81        0.67
                          ============================================================
 
Average weighted common
 shares outstanding*
  Basic                      8,627,432   8,469,314   8,449,481   8,446,639   8,446,639
  Diluted                    8,627,432   8,689,886   8,755,787   8,749,435   8,735,267
 
<CAPTION>
- --------------------------------------------------------------------------------------
CONSOLIDATED BALANCE              1998        1997        1996        1995        1994
 SHEET DATA
- --------------------------------------------------------------------------------------
<S>                         <C>         <C>         <C>         <C>         <C>
Total assets                 1,031,257     851,261     631,137     499,456     416,353
Net loans                      576,105     434,548     351,896     286,706     221,690
Deposits                       899,747     739,778     563,477     432,575     382,253
Shareholders' equity            67,554      54,057      40,997      33,002      24,985
</TABLE>

* Earnings per share are computed on the basis of the weighted average number of
shares outstanding plus the common stock equivalents which would arise from the
exercise of stock options.  Weighted shares outstanding are adjusted
retroactively for the effect of stock splits and dividends.

                                       9
<PAGE>

<TABLE>
<CAPTION> 
                                                               Years ended December 31,
                                            -----------------------------------------------------------
KEY FINANCIAL RATIOS                               1998                1997                 1996
- -------------------------------------------------------------------------------------------------------
<S>                                         <C>                 <C>                  <C>
Return on Average Assets                                 1.46%                1.57%                1.47%
Return on Average Equity                                22.28%               24.38%               22.05%
Average Equity to Average Assets                         6.55%                6.44%                6.67%
</TABLE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations

     Statements made in this report that state the intentions, beliefs,
expectations or predictions of the future by Pioneer or its management are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995.  Pioneer's actual results could differ materially
from those projected in such forward-looking statements.

     Overview
     --------

     For 1998, Pioneer realized record annual earnings of $13,291,000 and $1.54
per share (diluted) on an after-tax basis.  This is a 15% increase in net
earnings over 1997's $11,544,000 and $1.33 per share (diluted).  These results
represent the ninth consecutive year of increased earnings. Return on equity and
return on assets, common measures of bank performance, totaled 22.28% and 1.46%,
respectively, compared to 24.38% and 1.57% in 1997.  Pioneer paid a 10% stock
dividend in February 1998 and declared a three-for-two stock split in July 1998.
All per share data computations are calculated after giving retroactive effect
to stock dividends and stock splits.

     Total assets reached $1,031,257,000, a 21% increase from $851,261,000 in
1997.  Total loans also experienced record growth to $576,105,000 from the
$434,548,000 level at the end of 1997.  Total deposits grew from $739,778,000 to
$899,747,000 at December 31, 1998.  These amounted to 33% and 22% growth rates,
respectively.  Performance at Pioneer over the past three years has largely been
the result of a continued commitment to the maintenance of high levels of
customer service, an aggressive branch expansion plan and successful face-to-
face business development efforts.

     Net income for 1998 included after-tax net gains of $1,310,000 on sales of
$60,914,000 par value available-for-sale securities.

     Pioneer's net interest margin at December 31, 1998 was 4.72%, as compared
to 5.13% at December 31, 1997 and 5.44% at December 31, 1996.  On a tax
equivalent basis, the net interest margin was 4.92% at December 31, 1998, 5.25%
at December 31, 1997 and 5.53% at December 31, 1996.

     Balance Sheet Analysis
     ----------------------

     Average earning assets as a percentage of average total assets was 92% for
1998, as compared to 90% for 1997.  Earning assets grew 21% to $939,287,000 at
December 31, 1998.  Interest-bearing liabilities grew 24% to $735,410,000 at
December 31, 1998.

                                       10
<PAGE>
 
     Loans
     -----

     The loan portfolio continues to be the largest component of earning assets
and the 33% growth in 1998 of that component has resulted in a favorable
increase in earnings for Pioneer.  However, competition for loan business has
been keen with non-bank and traditional bank competitors willing to lend at
substantially lower rates than were offered just last year.  If loan yields
continue to be driven down by this intense competition, Pioneer's future
earnings could be adversely effected.  The Bank will continue to be an
aggressive force in its lending markets while actively managing portfolio with
safety and soundness as important objectives.

     The Bank started a leasing program in 1998 to serve both the northern and
southern regions.  It is management's intention to favorably increase the
overall yield of the loan portfolio with this program.  The Bank has also
increased its presence in the tax-exempt loan market as evidenced by the 371%
growth in the state and municipal obligations category.

     In 1997, the total loan portfolio increased 23% with real estate loans
contributing the highest growth, 28%, in the portfolio from 1996.  Interim
construction and land development lending grew 46% as it continued to be a very
important growth area for the Bank's real estate portfolio.  The real estate
portfolio has been 60 plus percent of the total portfolio for the last five
years while contributing almost nothing to the charge-off totals over that
period.

     Classification of Loans
     -----------------------

     The Bank is required under applicable law and regulations to review their
loans on a regular basis and to classify them as "satisfactory," "special
mention," "substandard," "doubtful" or "loss." A loan which possesses no
apparent weakness or deficiency is designated "satisfactory." A loan which
possess weaknesses or deficiencies deserving close attention is designated as
"special mention." A loan is generally classified at "substandard" if it
possesses a well-defined weakness and the Bank will probably sustain some loss
if the weaknesses or deficiencies are not corrected. A loan is classified as
"doubtful" if a probable loss of principal and/or interest exists but the amount
of the loss, if any, is subject to the outcome of future events which are
undeterminable at the time of classification. If a loan is classified as "loss,"
the Bank either established a specific valuation allowance equal to the amount
classified as loss or charges off such amount.

     Non-accrual loans are those which have become delinquent for more than 90
days.  Placement of loans on non-accrual status does not necessarily mean that
the outstanding loan principal will not be collected but rather than timely
collection of principal and interest is in question.  When a loan is placed on
non-accrual status, interest accrued but not received is reversed.  The amount
of interest income which would have been recorded in fiscal 1998, 1997, 1996,
1995 and 1994 on non-accrual loans was $42,000, $40,000, $29,000, $38,000 and
$0, respectively.   A non-accrual loan may be restored to accrual status when
principal and interest payments are brought current or when brought to 90 days
or less delinquent and continuing payment of principal and interest is expected.

     The Allowance for Loan Losses
     -----------------------------

     The allowance for loan losses is based upon management's assessment of
various factors including, but not limited to, current and future economic
trends, historical loan losses, delinquencies, underlying collateral values, as
well as current and potential risks identified in the loan portfolio.

     The following tables summarize, by loan category and portfolio percentages,
transactions in the allowance for loan losses and the allocation of the
allowance for the last five years.

                                       11
<PAGE>
 
                  Allocation of the Allowance for Loan Losses
                         and Non-Accrual Loans Detail
                            (dollars in thousands)

<TABLE>
<CAPTION>
                                                                  December 31, 1998
                           ---------------------------------------------------------------------------------------------
                                   Percent of
                                    Loans to                 Gross                                          Non-Accrual 
                                  Total Loans                Loans                Allowance                    Loans
                           ---------------------------------------------------------------------------------------------
<S>                          <C>                     <C>                    <C>                    <C>
Commercial                                    25.9%               $151,691                 $1,816                   $684
Real Estate                                   66.9%                391,587                  4,688                     98
Agricultural                                   0.1%                    462                      5                    ---
Installment                                    5.5%                 32,211                    386                     12
State and Municipal                            1.4%                  8,380                    100                    ---
Leases                                         0.2%                    714                      9                    ---
                           ---------------------------------------------------------------------------------------------
                                             100.0%               $585,045                 $7,004                   $794
                           =============================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                                  December 31, 1997
                           ---------------------------------------------------------------------------------------------
                                   Percent of
                                    Loans to                 Gross                                          Non-Accrual 
                                  Total Loans                Loans                Allowance                    Loans
                           ---------------------------------------------------------------------------------------------
<S>                          <C>                     <C>                    <C>                    <C>
Commercial                                    26.9%               $118,862                 $1,553                   $793
Real Estate                                   65.5%                289,590                  3,783                    127
Agricultural                                   ---                      70                      1                    ---
Installment                                    7.2%                 31,647                    413                    ---
State and Municipal                            0.4%                  1,781                     23                    ---
Leases                                         ---                     ---                    ---                    ---
                           ---------------------------------------------------------------------------------------------
                                             100.0%               $441,950                 $5,773                   $920
                           =============================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                                  December 31, 1996
                           ---------------------------------------------------------------------------------------------
                                   Percent of
                                    Loans to                 Gross                                          Non-Accrual 
                                  Total Loans                Loans                Allowance                    Loans
                           ---------------------------------------------------------------------------------------------
<S>                          <C>                     <C>                    <C>                    <C>
Commercial                                    29.6%               $106,089                 $1,458                 $  162
Real Estate                                   63.1%                226,018                  3,106                  1,309
Agricultural                                   ---                     ---                    ---                    ---
Installment                                    6.9%                 24,633                    338                     66
State and Municipal                            0.4%                  1,512                     21                    ---
Leases                                         ---                     ---                    ---                    ---
                           ---------------------------------------------------------------------------------------------
                                             100.0%               $358,252                 $4,923                 $1,537
                           =============================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                                  December 31, 1995
                           ---------------------------------------------------------------------------------------------
                                   Percent of
                                    Loans to                 Gross                                          Non-Accrual 
                                  Total Loans                Loans                Allowance                    Loans
                           ---------------------------------------------------------------------------------------------
<S>                          <C>                     <C>                    <C>                    <C>
Commercial                                    31.6%               $ 92,169                 $1,267                 $  ---
Real Estate                                   60.2%                175,787                  2,416                  1,652
Agricultural                                   ---                     ---                    ---                    ---
Installment                                    8.0%                 23,331                    320                    ---
State and Municipal                            0.2%                    512                      7                    ---
Leases                                         ---                     ---                    ---                    ---
                           ---------------------------------------------------------------------------------------------
                                             100.0%               $291,799                 $4,010                 $1,652
                           =============================================================================================
</TABLE>

                                       12
<PAGE>
 
<TABLE>
<CAPTION>
                                                                  December 31, 1994
                           ---------------------------------------------------------------------------------------------
                                   Percent of
                                    Loans to                 Gross                                          Non-Accrual 
                                  Total Loans                Loans                Allowance                    Loans
                           ---------------------------------------------------------------------------------------------
<S>                          <C>                     <C>                    <C>                    <C>
Commercial                                    26.9%               $ 60,798                 $  820                 $  ---
Real Estate                                   64.9%                146,544                  1,977                    ---
Agricultural                                   0.2%                    354                      5                    ---
Installment                                    7.8%                 17,631                    238                    ---
State and Municipal                            0.2%                    530                      7                    ---
Leases                                         ---                     ---                    ---                    ---
                           ---------------------------------------------------------------------------------------------
                                             100.0%               $225,857                 $3,047                 $  ---
                           =============================================================================================
</TABLE>

<TABLE>
<CAPTION>
ANALYSIS OF THE ALLOWANCE FOR LOAN         1998             1997             1996             1995             1994
 LOSSES (dollars in thousands)
- ------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>              <C>              <C>              <C>              <C>
BEGINNING BALANCE                             $5,773           $4,923           $4,010           $3,047           $2,509
 
CHARGE-OFFS
  Commercial                                     619              406               96              167              395
  Real Estate                                    ---              ---              ---               54              ---
  Installment Loans                              366              128              114               29              168
                                    ------------------------------------------------------------------------------------
    Total Charge-offs                            985              534              210              250              563
 
RECOVERIES                                        91               84              108               58              111
                                    ------------------------------------------------------------------------------------
NET CHARGE-OFFS                                  894              450              102              192              452
 
PROVISION                                      2,125            1,300            1,015            1,155              990
                                    ------------------------------------------------------------------------------------
ENDING BALANCE                                $7,004           $5,773           $4,923           $4,010           $3,047
                                    ====================================================================================
 
Ratio of net charge-offs to
 average loans outstanding                      0.18%            0.12%            0.03%            0.07%            0.21%
</TABLE>

     The following table details loan repricing information for fixed and
variable loans.

                     Maturity and Repricing for the Bank's
                      Loan Portfolio at December 31, 1998
                                 (in thousands)
<TABLE>
<CAPTION>
LOAN REPRICING                           Fixed Rate              Variable Rate             Total Loans
- ------------------------------------------------------------------------------------------------------------
<S>                                <C>                      <C>                      <C>
0-90 days                                         $ 15,758                 $229,535                 $245,293
91-365 days                                         31,938                   13,579                   45,517
1 year-5 years                                     108,203                   91,745                  199,948
5 years or more                                     87,154                    5,197                   92,351
                                 ---------------------------------------------------------------------------
                                                  $243,053                 $340,056                 $583,109
Loans on which the accrual of
 interest has been discounted                          ---                      ---                      ---
                                 ---------------------------------------------------------------------------
                                                  $243,053                 $340,056                 $583,109
 
Allowance for Loan Losses                              ---                      ---                 $ (7,004)
                                 ---------------------------------------------------------------------------
                                                  $243,053                 $340,056                 $576,105
</TABLE>

                                       13
<PAGE>
 
     Investments
     -----------

     The investment portfolio is the second largest earning asset category and
is comprised mostly of securities categorized as available-for-sale.

     The carrying value of the available-for-sale securities portfolio grew 28%
to $269,476,000 at December 31, 1998 from $211,004,000 at December 31, 1997.
The carrying value of the held-to-maturity securities portfolio grew 13% to
$46,102,000 from $40,861,000.  Pioneer continues to invest more excess funds
into the available-for-sale portfolio so as to have more flexibility in managing
the investment portfolio assets.  In 1998, the Bank began to shift more
investment dollars to U.S. agency debentures from direct U.S. government notes
and bonds due to the more favorable yield levels of the agencies.  A large part
of the U.S. Agency securities growth for 1998 came in the category of high
quality mortgage-backed securities and collateralized mortgage obligations.
These investments have extended slightly the duration of the total investment
portfolio, however, the Bank was paid for the extension through favorable
yields.  Both the available-for-sale portfolio as well as the held-to-maturity
portfolio have average durations of approximately 60 months.

     Pioneer also substantially increased its overall investment in municipal
securities during 1998.  The combined (available-for-sale and held-to-maturity)
tax-exempt municipal portfolio grew 68% during 1998.  Pioneer has experienced a
favorable decrease in its effective tax rate due to the growth in tax-exempt
holdings.  Management does not anticipate reaching an amount in total tax-exempt
investments that would warrant alternative minimum tax treatment.

     The average federal funds balance for 1998 was only 8% over that of 1997's
average which was in turn 142% more than the 1996 average balance.

     In 1997, the Bank began to shift more investment dollars into the U.S.
agency market.  Higher yields for fairly equal risk and increased use as
collateral for public funds pledging and repurchase agreement transactions, were
reasons for the high growth in U.S. agency investment.  Tax-exempt municipal
bond investments grew substantially also as the Bank continued to lower its
effective tax rate.

     The following table displays investment securities balances and repricing
information for the portfolio.

                          Investment Portfolio Detail
                     (carrying value dollars in thousands)
                               as of December 31,

<TABLE>
<CAPTION>
                                                       Percentage                         Percentage
                                                         Change                             Change
                                                        Previous                           Previous
                                        1998              Year             1997              Year             1996
                                 --------------------------------------------------------------------------------------- 
<S>                                <C>              <C>               <C>              <C>               <C>
U.S. Treasuries                           $ 52,962            -56.7%         $122,347             18.3%         $103,410
 
U.S. Agencies                              164,219            131.9%           70,801            150.3%           28,287
 
State, County, and Municipal                98,397             67.6%           58,717             83.1%           32,065
                                 --------------------------------------------------------------------------------------- 
Total                                     $315,578             25.3%         $251,865             53.8%         $163,762
                                 =======================================================================================
</TABLE>

                                       14
<PAGE>
 
<TABLE>
<CAPTION>
As of December 31, 1998
Maturing Within                           One            One to           Five to           Over
(in thousands)                           Year          Five Years        Ten Years        Ten Years          Total
- -----------------------------------------------------------------------------------------------------------------------
<S>                                 <C>              <C>              <C>              <C>              <C>
U.S. Treasuries                             $32,410          $20,552          $   ---          $   ---         $ 52,962
U.S. Agencies                                 7,299           44,697           33,102           79,121          164,219
State, County, and Municipal                  2,144           16,911           58,625           20,717           98,397
                                  -------------------------------------------------------------------------------------
Total                                       $41,853          $82,160          $91,727          $99,838         $315,578
                                  =====================================================================================
</TABLE>

     Deposits
     --------

     The Bank continues to gather most of its deposit base from small business
sources.  The retail base continues to grow with new and improved product
offerings, however, management recognizes that customer service, not a vast
retail branch network, is going to be the key to the Bank's retail growth.  In
1998, the Bank experienced some changes in the typical sources of deposit growth
as well as the ever increasing competition for deposit dollars.  While interest-
bearing deposits grew 26% over 1997, the certificates of deposit portion of that
total grew by 108%.  In previous years much of the Bank's growth has been in
money market and tiered interest accounts.  Money market account balances
actually decreased 9% due to a large municipal entity closing an account
relationship in June.  The Bank planned for this eventuality by carrying a
larger than normal federal funds position in the first months of 1998. Including
the closure of the municipal account, money market balances would have grown
approximately 10%.

     1998 was indeed an indicator of what is in store for many community banks
as more competition for deposits comes from mutual funds, high yield money
market accounts and other non-bank investment opportunities.  The Bank has
responded by remaining very competitive in the traditional deposit products as
well as offering repurchase agreements and a commercial sweep product to
business customers.

     As evidence of the trend toward more interest-bearing deposits at the Bank,
average noninterest-bearing deposits decreased as a percentage of average total
interest-bearing liabilities in 1998 to 22% from 24% for the years 1997 and
1996.

     Total deposits grew 31% in 1997 with noninterest-bearing balances growing
28% and interest-bearing deposits growing 33% over 1996 balances.  Money market
accounts (personal, business and public) grew to $277 million at December 31,
1997 from $211 million at December 31, 1996.  In 1997, customers enjoyed
increased access to their deposits through the Bank's introduction of a debit
card product and a 24-hour automated bank-by-phone line.

     The following table details repricing information for the Bank's time
deposits.

                  Time Deposit Maturities at December 31, 1998
                                 (in thousands)

<TABLE>
<CAPTION>
TIME DEPOSIT MATURITIES                         Under                     $100,000                  Total Time
                                               $100,000                    or more                   Deposits
- ---------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                        <C>                        <C>
0-90 days                                              $ 21,167                   $ 41,099                   $ 62,266
91-180 days                                              19,423                     20,210                     39,633
181-365 days                                             40,925                     35,552                     76,477
Over 1 year                                              17,583                     12,289                     29,872
                                    ---------------------------------------------------------------------------------
                                                       $ 99,098                   $109,150                   $208,248
</TABLE>

                                       15
<PAGE>
 
     Borrowing
     ---------

     As part of Pioneer's funds management and liquidity plan, the Bank has
arranged to have short- term and long-term borrowing facilities available. The
short-term and overnight facilities are federal funds purchasing lines as
reciprocal arrangements to the federal funds selling agreements in place with
various correspondent banks. These borrowings are generally unsecured. For long-
term funding needs, the Bank has credit available of $10.9 million immediately
and up to 30% of assets with additional collateral through the Federal Home Loan
Bank of San Francisco. At December 31, 1998, the Bank did not have term
borrowings outstanding.

     Capital
     -------

     Pioneer continues to exceed the regulatory capital levels for a "well-
capitalized" bank.  As total assets have grown at a substantial rate, the
capital generation effect of nine years of record net earnings has been the
primary reason that capital ratios have remained above the "well-capitalized"
level.

     Because of Pioneer's growth and expansion, management and the board have
chosen not to pay cash dividends to shareholders, however, annual 10% or 20%
stock dividends have been the rule for the past nine years.

     The following table sets forth Pioneer's actual capital ratios for 1998,
1997 and 1996 as well as the quantitative measures established by regulatory
authorities.

<TABLE>
<CAPTION>
                                                                                                          To Be Well
                                                                                                       Capitalized Under
CAPITAL ADEQUACY                                                           For Capital                 Prompt Corrective
(dollars in thousands)                        Actual                    Adequacy Purposes              Action Provisions
- --------------------------------------------------------------------------------------------------------------------------
                                       Amount          Ratio          Amount          Ratio          Amount          Ratio
<S>                             <C>            <C>             <C>            <C>             <C>            <C>
December 31, 1998
  Total Capital
    (to Risk Weighted Assets)         $73,533           10.5%        $55,954            8.0%        $69,954           10.0%
  Tier 1 Capital
    (to Risk Weighted Assets)          66,529            9.5%         28,000            4.0%         42,000            6.0%
  Tier 1 Capital
    (to Average Assets)                66,529            7.2%         37,000            4.0%         46,250            5.0%
 
December 31, 1997
  Total Capital
    (to Risk Weighted Assets)         $58,369           10.9%        $42,723            8.0%        $53,423           10.0%
  Tier 1 Capital
    (to Risk Weighted Assets)          52,596            9.9%         21,350            4.0%         32,050            6.0%
  Tier 1 Capital
    (to Average Assets)                52,596            7.2%         29,450            4.0%         36,800            5.0%
 
December 31, 1996
  Total Capital
    (to Risk Weighted Assets)         $45,574           10.9%        $33,416            8.0%        $41,770           10.0%
  Tier 1 Capital
    (to Risk Weighted Assets)          40,651            9.7%         16,708            4.0%         25,062            6.0%
  Tier 1 Capital
    (to Average Assets)                40,651            7.4%         21,883            4.0%         27,354            5.0%
</TABLE>

                                       16
<PAGE>
 
     Liquidity
     ---------

     Daily liquidity management seeks to ensure that Pioneer's cash and cash
equivalents (cash and due from banks and fed funds sold) position is adequate to
meet any deposit withdrawals as well as loan funding needs.  Pioneer is funded
predominately by core small business and retail deposits, which are stable and
add to the liquidity management of the Bank.

     In the short-term, securities with the available-for-sale classification
are a secondary source of liquidity.  The fair value of available-for-sale
securities maturing in one year or less at December 31, 1998 totaled $41.9
million.

     For longer term liquidity needs, management continues to use a maturity
laddering strategy in the investment portfolio as well as having access to
short-term securities via the available-for-sale classification.  Additional
funding sources were outlined under the "Borrowing" caption above.

     The Bank's liquidity ratio at December 31, 1998 was 38.4% as compared to
40.4% at December 31, 1997.

Results of Operations

     Net Interest Income
     -------------------

     The following table provides information on net interest income for the
past three years, setting forth average balances of interest-earning assets and
interest-bearing liabilities, the interest income earned and interest expense
recorded thereon and the resulting average yield-cost ratios.

          Average Balance Sheets and Analysis of Net Interest Earnings
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                           Average             Int Income/
For the Year Ended                                         Balance               Expense                 Yield
December 31, 1998                                  ------------------------------------------------------------------ 
<S>                                                  <C>                   <C>                   <C>
Loans, net (1)                                                   $504,067               $49,588                  9.84%
Securities (2)                                                    274,496                15,483                  5.64%
Federal Funds Sold                                                 70,721                 3,795                  5.37%
                                                   ------------------------------------------------------------------
  Total Earning Assets                                           $849,284               $68,866                  8.11%
 
Cash and Due Banks                                                 47,688
Bank Premises and Equipment, net                                   15,081
Other Assets                                                       12,251
                                                   ----------------------
  Total Assets                                                   $924,304
                                                   ======================
 
Time Deposits of $100,000 or more                                $ 71,370               $ 3,886                  5.44%
Other Interest-Bearing Deposits                                   530,568                21,651                  4.08%
Repurchase Agreements                                              64,936                 3,208                  4.94%
                                                   ------------------------------------------------------------------
  Total Interest-Bearing Liabilities                             $666,874               $28,745                  4.31%
 
Noninterest-Bearing Deposits                                      193,168
Other Liabilities                                                   3,513
Shareholders' Equity                                               60,749
                                                   ----------------------
  Total Liabilities and Shareholders' Equity                     $924,304
                                                   ======================
Net Interest Income                                                                     $40,121
                                                                         ======================
Net Yield on Interest-Earning  Assets                                                                            4.72%
</TABLE>

                                       17
<PAGE>
 
<TABLE>
<CAPTION>
                                                           Average             Int Income/
For the Year Ended                                         Balance               Expense                 Yield
December 31, 1997                                  ------------------------------------------------------------------ 
<S>                                                  <C>                   <C>                   <C>
Loans, net (1)                                                   $385,378               $39,909                 10.36%
Securities (2)                                                    210,564                12,228                  5.81%
Federal Funds Sold                                                 65,279                 3,487                  5.34%
                                                   ------------------------------------------------------------------
  Total Earning Assets                                           $661,221               $55,624                  8.41%
 
Cash and Due Banks                                                 51,931
Bank Premises and Equipment, net                                   12,244
Other Assets                                                       10,594
                                                   ----------------------
  Total Assets                                                   $735,990
                                                   ======================
 
Time Deposits of $100,000 or more                                $ 31,809               $ 1,674                  5.26%
Other Interest-Bearing Deposits                                   455,032                18,207                  4.00%
Repurchase Agreements                                              34,391                 1,813                  5.27%
                                                   ------------------------------------------------------------------
  Total Interest-Bearing Liabilities                             $521,232               $21,694                  4.16%
 
Noninterest-Bearing Deposits                                      163,437
Other Liabilities                                                   4,916
Shareholders' Equity                                               46,405
                                                   ----------------------
  Total Liabilities and Shareholders' Equity                     $735,990
                                                   ======================
Net Interest Income                                                                     $33,930
                                                                         ======================
Net Yield on Interest-Earning  Assets                                                                            5.13%
</TABLE>

<TABLE>
<CAPTION>
                                                           Average             Int Income/
For the Year Ended                                         Balance               Expense                 Yield
December 31, 1996                                  ------------------------------------------------------------------
<S>                                                  <C>                   <C>                   <C>
Loans, net (1)                                                   $307,349               $32,225                 10.48%
Securities (2)                                                    152,751                 8,624                  5.65%
Federal Funds Sold                                                 26,970                 1,515                  5.62%
                                                   ------------------------------------------------------------------
  Total Earning Assets                                           $487,070               $42,364                  8.70%
 
Cash and Due Banks                                                 40,944
Bank Premises and Equipment, net                                   10,896
Other Assets                                                        8,137
                                                   ----------------------
  Total Assets                                                   $547,047
                                                   ======================
 
Time Deposits of $100,000 or more                                $ 37,647               $ 2,000                  5.31%
Other Interest-Bearing Deposits                                   326,857                12,738                  3.90%
Repurchase Agreements                                              19,438                 1,106                  5.69%
                                                   ------------------------------------------------------------------
  Total Interest-Bearing Liabilities                             $383,942               $15,844                  4.13%
 
Noninterest-Bearing Deposits                                      122,869
Other Liabilities                                                   4,470
Shareholders' Equity                                               35,766
                                                   ----------------------
  Total Liabilities and Shareholders' Equity                     $547,047
                                                   ======================
Net Interest Income                                                                     $26,520
                                                                         ======================
Net Yield on Interest-Earning  Assets                                                                            5.44%
</TABLE>

(1)  Non-accrual loans are included in the average balance, but interest on such
     loans is not recognized in the interest income.
(2)  Municipal interest income is not tax equalized.

                                       18
<PAGE>
 
     The following rate/volume analysis depicts the increase (decrease) in net
interest income attributable to interest rate fluctuations (change in rate
multiplied by prior period average balance) and volume fluctuations (change in
average balance multiplied by prior period rate) when compared to the preceding
year.

                         Changes Due to Volume and Rate
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                    1998 vs 1997
                                                                   Changes due to
                                                 Volume                 Rate                  Total
                                        -------------------------------------------------------------------
<S>                                       <C>                   <C>                    <C>
Loans, net                                             $11,762               $(2,083)               $ 9,679
Securities                                               3,615                  (360)                 3,255
Federal Funds Sold                                         292                    16                    308
                                        -------------------------------------------------------------------
  Total                                                $15,669               $(2,427)               $13,242
 
Time Deposits of $100,000 or more                      $ 2,152               $    60                $ 2,212
Other Interest-Bearing Deposits                          3,076                   368                  3,444
Repurchase Agreements                                    1,516                  (121)                 1,395
                                        -------------------------------------------------------------------
  Total                                                $ 6,744               $   307                $ 7,051
                                        -------------------------------------------------------------------
Net Interest Income                                    $ 8,925               $(2,734)               $ 6,191
                                        ===================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                                     1997 vs 1996
                                                                    Changes due to
                                                 Volume                  Rate                   Total
                                        --------------------------------------------------------------------
<S>                                       <C>                    <C>                    <C>
Loans, net                                             $ 8,086                  $(402)               $ 7,684
Securities                                               3,350                    254                  3,604
Federal Funds Sold                                       2,050                    (78)                 1,972
                                        --------------------------------------------------------------------
  Total                                                $13,486                  $(226)               $13,260
 
Time Deposits of $100,000 or more                      $  (307)                 $ (19)               $  (326)
Other Interest-Bearing Deposits                          5,121                    348                  5,469
Repurchase Agreements                                      793                    (86)                   707
                                        --------------------------------------------------------------------
  Total                                                $ 5,607                  $ 243                $ 5,850
                                        --------------------------------------------------------------------
Net Interest Income                                    $ 7,879                  $(469)               $ 7,410
                                        ====================================================================
</TABLE>

Note:  The change in interest not due solely to volume or rate has been
allocated in proportion to the absolute dollar amounts of the change in each.

     The Bank's net interest income increased $6.2 million in 1998 versus 1997.
The net interest income increase attributable to volume increases was a
favorable $8.9 million over 1997.  However, interest-earning assets were subject
to downward rate pressure during 1998 due to three decreases in the U.S. prime
rate as well as extensive competition for loans.  These factors, coupled with a
competitive environment for deposit dollars, created a $2.7 million decrease in
net interest income attributable to rate variances.

                                       19
<PAGE>
 
     The net yield on interest-earning assets (net interest margin) decreased 41
basis points in 1998 versus 1997.  The cost of interest-bearing liabilities
increased 15 basis points, again reflecting the increased competition for
deposit dollars and the substantial growth in time deposit and repurchase
agreement balances over 1997 levels.  The cost of $100,000 and over time
deposits increased 18 basis points in the face of rate decreases during 1998,
however, the loan yield drop of 52 basis points was the most drastic rate change
from 1997.  As the Bank has grown and expanded its customer base, there are more
opportunities to underwrite larger, more competitively priced loans that exist
in the current market.  The three prime rate decreases during 1998 directly
affected the Bank's variable rate loan portfolio which was 58% of the portfolio
at December 31, 1998.  The investment securities portfolio experienced a
decrease in yield of 17 basis points while the yield on fed funds sold actually
increased slightly due to the availability of more competitive conduits for
federal funds sales.

     In 1997, the Bank's net interest income increased $7.4 million over 1996.
The net interest income increase attributable to 1997 volume increases was a
favorable $7.9 million.  60% of the volume related interest income increase was
attributable to the loan portfolio, as the Bank grew this portfolio average
balance by 25% in 1997.  The fairly small negative rate variance of $0.5 million
between 1997 and 1996 was caused by a mixture of positive and negative rate
variances within both, interest-earning asset categories and interest-bearing
liabilities.

     The net yield on interest-earning assets decreased 31 basis points in 1997.
From 1996 to 1997, the yield on loans decreased due in large part to increasing
competition among local banks while investment securities yields increased
slightly as maturities were slightly extended as the Bank prepared for
anticipated decreases in general interest rates.  In 1997, the Bank increased
money market and tiered interest account rates to remain competitive in the
deposit market, however, the cost of time deposits decreased due to favorable
repricing of maturities at lower rates.

     Other Income
     ------------

     The following table details dollar amount and percentage changes of certain
categories of other income for the three years ended December 31, 1998.

<TABLE>
<CAPTION>
OTHER INCOME                                            Percent                         Percent
(dollars in thousands)             1998        %         Change     1997        %        Change     1996        %
                                   Amount   of Total   Prev. Yr.   Amount   of Total   Prev. Yr.   Amount   of Total
- --------------------------------------------------------------------------------------------------------------------
<S>                               <C>       <C>        <C>         <C>      <C>        <C>         <C>      <C>
Service Charges on Deposit
 Accounts                         $ 3,232       31.5%        6.0%  $3,050       40.2%       24.7%  $2,446       45.4%
 
Merchant Credit Card Income         1,988       19.4%        8.6%   1,831       24.1%       24.6%   1,469       27.2%
Trust Department Income             1,554       15.2%       17.9%   1,318       17.4%       87.7%     702       13.0%
Gain on Sale of Securities
 Held-to-Maturity                      --         --          --       --         --      -100.0%      10        0.2%
Gain on Sale of Securities
 Available-for-Sale                 2,016       19.7%     1716.2%     111        1.5%         --       --         --
 
ATM Network Fees Earned               276        2.7%       16.9%     236        3.1%       15.1%     205        3.8%
Other Income                        1,185       11.5%       13.9%   1,040       13.7%       86.0%     559       10.4%
                                ------------------------------------------------------------------------------------
                                  $10,251      100.0%       35.1%  $7,586      100.0%       40.7%  $5,391      100.0%
</TABLE>

  Service charges on deposit accounts continue to be the major non-interest
income category.  Other categories such as merchant credit card income and trust
department income are growing, however, in 1998 the large realized gain in the
available-for-sale securities portfolio caused that category to be the second
biggest contributor last year.  Management's decision to realize some of the
gains within the available-for-sale portfolio was made on the premise that the
Bank could replace the yields of the securities to be sold with slight extension
in duration.  Also, this presented an opportunity to reinvest 

                                       20
<PAGE>
 
some of the proceeds into various low risk mortgage-backed securities and
collateralized mortgage obligations.

     In 1998, an outside consulting group was hired to assist management in
identifying ways to enhance the contributions of current non-interest income
sources, specifically service charges on deposit accounts.  As another ongoing
process, the Bank continues to explore other possible non-interest income
sources such as insurance sales and additional trust products.

     In 1997, trust department income increased 88% from 1996 as consolidations
at competitor banks benefited Pioneer and its continued commitment toward
providing trust services to our communities. Service charges on deposits also
increased favorably due to the growth in deposits both in balance and numbers.

     Other Expense
     -------------

     The following table details dollar amount and percentage changes of certain
categories of other expense for the three years ended December 31, 1998.

<TABLE>
<CAPTION>
                                                        Percent                          Percent
OTHER EXPENSE                      1998        %         Change     1997        %         Change     1996
(dollars in thousands)             Amount   of Total   Prev. Yr.    Amount   of Total   Prev. Yr.   Amount     %
- ------------------------------------------------------------------------------------------------------------------
<S>                               <C>       <C>        <C>         <C>       <C>        <C>         <C>      <C>
Salaries and Employee Benefits    $13,939       46.5%       25.6%  $11,100       46.8%       21.9%  $ 9,108   47.1%
Occupancy and Equipment             5,966       19.9%       35.7%    4,396       18.5%       32.4%    3,320   17.2%
Merchant Credit Card Expense        1,718        5.7%        9.7%    1,566        6.6%        8.9%    1,438    7.4%
Other Expense                       8,379       27.9%       25.9%    6,654       28.1%       21.7%    5,466   28.3%
                                ----------------------------------------------------------------------------------
                                  $30,002      100.0%       26.5%  $23,716      100.0%       22.7%  $19,332  100.0%
</TABLE>

     Similar to 1997 and 1996, salaries and employee benefits continued to be
the majority of the non-interest expense category. As Pioneer has grown in total
assets, number of branches and product offerings, the number of full-time
equivalent employees at the Bank has also grown from 193 at the beginning of
1996 to 307 at December 31, 1998. In 1998, the Bank opened three branches in the
Las Vegas/ Henderson area and a Central Vault facility in Las Vegas. Also
various departments such as Marketing, Support Services (data center) and
Leasing and Lending Centers, and Business Development have added staff in
response to the increased volume of business and the growth opportunities.
Pioneer's assets per full-time equivalent employee ratio is $3.3 million,
compared to a peer ratio of $2.6 million, as published in the FDIC's Peer
Analysis for Commercial Banks with deposits between $500 million and $1 billion
as of September 30, 1998.

     Consistent with Pioneer's growth strategy, occupancy and equipment expense
grew significantly in 1998.  (The 1998 capital budget was $13.5 million compared
to $4.1 million for 1997.)  The basis of this expense was a direct result of the
three new Las Vegas branches that were built, the relocation of the data center
to a new Reno location, the completion of the Central Vault facility in Las
Vegas, the expansion of the Sparks branch, and the upgrade and enhancement of
the Bank's computer network.

     A large expense item within the other expense category is public
relations/advertising expense.  This expense category totaled $1.2 million for
1998, a 62% increase over the $0.75 million expenses in 1997.

     Cost management has always been a high priority item for management and the
board. The outside consulting group hired in 1998 was also asked to assist
management in analyzing and adjusting various branch and department processes so
as to achieve additional cost savings. The resulting 

                                       21
<PAGE>
 
recommendations were implemented, or are in the process of implementation, and
are already beginning to improve net earnings.

     For 1997, growth in salaries and employee benefits as well as occupancy and
equipment expense was related to the substantial growth that the Bank
experienced throughout the system.  New branches, more branch personnel and
department support staff, increases in the number of loan and deposit accounts
and the transactions processed within those relationships all added to the 23%
increase in other expense from 1996.  Public relations/advertising expense in
1997 increased 15% over the $0.65 million expenses in 1996.

                                       22
<PAGE>
 
Quantitative and Qualitative Disclosures About Market Risk

     Interest Rate Sensitivity Management
     ------------------------------------

     The largest component of Pioneer's earnings is net interest income, which
can fluctuate widely when interest rate movements occur.  The Bank's management
is responsible for minimizing Pioneer's exposure to interest rate risk.  This is
accomplished by developing objectives, goals and strategies designed to enhance
profitability and performance.  The ongoing management of Pioneer's interest
rate sensitivity, limits interest rate risk by controlling the mix and maturity
of assets and liabilities.  Management continually reviews the Bank's position
and evaluates alternative sources and uses of funds.  This includes any change
in external factors.  Various methods are used to achieve and maintain the
desired rate sensitive position, including the sale or purchase of assets and
product pricing.

     Pioneer views any asset or liability which matures, or is subject to
repricing within one year to be interest sensitive even though an analysis is
performed for all other time intervals as well.  The difference between interest
sensitive assets and interest sensitive liabilities for a defined period of time
is known as the interest sensitivity "gap", and may be either positive or
negative.  When the gap is positive, interest sensitive assets reprice quicker
than interest sensitive liabilities.  When negative, the reverse occurs.  Non-
interest assets and liabilities have been positioned based on management's
evaluation of the general sensitivity of these balances to migrate into rate
sensitive products.  This analysis provides a general measure of interest rate
risk but does not address complexities such as prepayment risk, basis risk and
the Bank's customer response to interest rate changes.  Currently, Pioneer's one
year interest sensitive gap is positive.  This means, if interest rates were to
change and affect assets and liabilities equally, rising rates would increase
the Bank's net interest income.  The reverse is true when rates fall.

     The following table displays the Bank's balance sheet based on the
repricing schedule of 3 months, 3 months to 1 year, 1 year to 5 years and over 5
years.

                  Asset/Liability Maturity Repricing Schedule
                               December 31, 1998
                                 (in thousands)

<TABLE>
<CAPTION>
                                                           After Three 
                                                            Months but      After One
ASSET/LIABILITY MATURITY                 Within              Within         But Within     After Five       Total
 REPRICING SCHEDULE                   Three Months          One Year        Five Years        Years
- ------------------------------------------------------------------------------------------------------------------
<S>                                   <C>            <C>                   <C>          <C>              <C>
Loans                                    $ 272,045             $  71,279     $192,773         $ 47,012    $583,109
Securities                                  23,595                18,258       82,160          191,565     315,578
Federal Funds Sold                          47,500                   ---          ---              ---      47,500
                                    ------------------------------------------------------------------------------
  Total Earning Assets                   $ 343,140             $  89,537     $274,933         $238,577    $946,187
Allowance for Loan Losses                      ---                   ---          ---           (7,004)     (7,004)
                                    ------------------------------------------------------------------------------
  Total Earning Assets                   $ 343,140             $  89,537     $274,933         $231,573    $939,183
                                    ==============================================================================
 
Interest Bearing Demand (1)              $ 369,772             $     ---     $    ---         $    ---    $369,772
Savings (1)                                 97,279                   ---          ---              ---      97,279
Time                                        62,267               116,109       29,768              104     208,248
                                    ------------------------------------------------------------------------------
   Total Deposits                        $ 529,318             $ 116,109     $ 29,768         $    104    $675,299
Repurchase Agreements                       60,111                   ---          ---              ---      60,111
                                    ------------------------------------------------------------------------------
  Total Interest Bearing Liabilities     $ 589,429             $ 116,109     $ 29,768         $    104    $735,410
 
Net Interest Rate Sensitivity Gap        $(246,289)            $ (26,572)    $245,165         $231,469    $203,773
Cumulative Gap                            (246,289)             (272,861)     (27,696)         203,773     203,773
</TABLE>
(1)  Includes deposits with no stated maturity.

                                       23
<PAGE>
 
     The following table displays expected maturity information and
corresponding interest rates for all interest-sensitive assets and liabilities
as well as the fair value of each category at December 31, 1998.

                  Expected Maturity Date at December 31, 1998
                             (Dollars in thousands)

<TABLE>
                                                                                                             Fair
                                                      1999    2000-01    2002-03   Thereafter    Total      Value
                                                  --------   --------   --------   ----------   --------   --------
<S>                                               <C>        <C>        <C>        <C>          <C>        <C>
Interest-sensitive assets:
Commercial and Industrial                         $106,480   $ 13,993   $ 20,850     $ 10,368   $151,691   $152,118
  Average interest rate                               8.87%      8.43%      8.73%        8.91%      8.82%
Construction and Development                        85,270      2,548      1,038        4,910     93,766     92,865
  Average interest rate                               9.04%      7.93%      8.70%        8.82%      9.00%
Insured or Guaranteed Residential                       46        ---        ---          ---         46         47
  Average interest rate                              10.14%       ---        ---          ---      10.14%
Conventional and Non-Farm, Non-Residential          62,575     16,339    115,512      103,349    297,775    299,280
  Average interest rate                               8.69%      9.22%      8.50%        8.31%      8.50%
Agricultural Loans                                     441        ---         21          ---        462        464
  Average interest rate                               9.74%       ---       9.13%         ---       9.71%
Loans to Individuals for Personal Expenditures      21,588      4,920      4,104        1,599     32,211     32,452
  Average interest rate                               9.57%      9.59%      8.94%        9.66%      9.50%
State and Municipal Obligations                        ---        ---        271        8,109      8,380      8,196
  Average interest rate                                ---        ---       4.29%        6.65%      4.94%
Leases                                                 398         59        257          ---        714        727
  Average interest rate                               8.13%     12.79%     10.24%         ---       9.24%
Federal funds sold                                  47,500        ---        ---          ---     47,500     47,500
  Average interest rate                               4.74%       ---        ---          ---       4.74%
Securities                                          41,853     51,321     30,839      191,565    315,578    317,111
  Average interest rate                               6.01%      5.95%      5.40%        5.54%      5.63%
                                                -------------------------------------------------------------------
Total Interest-Sensitive Assets                   $366,151   $ 89,180   $172,892     $319,900   $948,123   $950,760
                                                ===================================================================
 
Interest-sensitive liabilities:
Deposits:
  Savings(1)                                      $ 44,049   $ 37,937   $  4,830     $ 10,463   $ 97,279   $ 97,425
    Average interest rate                             2.37%      2.37%      2.37%        2.37%      2.37%
  Money Market & NOW(1)                             88,487    146,370     51,489       83,426    369,772    369,772
    Average interest rate                             3.03%      3.03%      3.03%        3.03%      3.03%
  Time certificates                                178,376     28,127      1,641          104    208,248    209,120
    Average interest rate                             5.26%      5.57%      5.25%        6.00%      5.30%
  Repurchase Agreements                             60,111        ---        ---          ---     60,111     60,111
    Average interest rate                             4.40%       ---        ---          ---       4.40%
                                                -------------------------------------------------------------------
Total Interest-Sensitive Liabilities              $371,023   $212,434   $ 57,960     $ 93,993   $735,410   $736,428
                                                ===================================================================
</TABLE>

(1)  Expected maturity based on historical life of accounts.

                                       24
<PAGE>
 
Year 2000 Disclosure - Pioneer and the Bank's State of Readiness

     Technical Issues
     ----------------

     The Year 2000 ("Y2K") issue is the result of the computers inability to
distinguish "00" as 2000. Computer programs that were written with only a two-
digit year may not function accurately or at all when the century changes from
1999 to 2000.  Year 2000 issues will potentially affect anything that contains
an embedded microchip.

     The major impact created by the two-digit year in computer programs
involves finding the numerous date routines, correcting them, testing the
changes and placing the program back into production. Estimates have these date
representations occurring about once every five lines of code on average. The
major cost of remediation for most companies falls into the area of identifying,
fixing and testing the two-digit dates and reinstalling the programs into
production.

     The Bank does not run core mission critical systems that rely on two-digit
code for the year. The Information Technology Incorporated (ITI) system that we
rely on utilizes a single proprietary date routine for all of their programs.
This date routine was developed in the 1980's as part of the original system
design and has proven its accuracy over the course of the past thirteen years
that the Bank has run the ITI system. The major cost element of fixing the two-
digit date was averted by running the ITI system.

     The Bank has tested the ITI system it uses twice: once at our disaster
recovery site on their equipment and once on our own main frame computer in
Reno. The results of both tests were identical, and no date related problems
occurred. The system was tested through the end of the Year 2000 to insure it
was able to determine the correct number of days occurring in the Year 2000
which will be 366 due to leap year.

     Another advantage to the ITI system is that it currently runs in more than
1,300 locations in the United States supporting more than 3,500 banks. Under the
Federal Financial Institutions Examination Council ("FFIEC") guidelines, the
system must be tested in each bank. This will make the ITI system one of the
most Y2K tested systems in the country.

     Given the design of the system, its long history of positive performance,
the intense level of Y2K testing and our own years of experience in using the
system, our confidence level is high that it will perform as designed.

     Project Management.  The Bank initiated a Year 2000 Project early in 1997 
     ------------------                                                
to address these issues. The Bank Year 2000 Project Plan has been set up
following the FFIEC recommended five-phase format: Awareness; Assessment;
Renovation; Validation; Implementation. In addition to the recommended five
phases, the Bank plan has been expanded to include Audit, Budget, Contingency
Plans and year-end plans.

     Awareness
     ---------

     The Awareness phase of our project has taken on much greater importance
than originally envisioned.  The primary reason is that the Bank feels very
strongly about informing our shareholders, customers and business partners of
our progress toward Year 2000 compliance and about the Year 2000's potential
impact on them.

                                       25
<PAGE>
 
     The Bank's Y2K communication efforts have reached all shareholders,
customers, and Bank staff. All information has been placed in our branches for
both our customers and the general public. Year 2000 presentations have been
made by members of our Y2K Team to more than 600 business people in various Reno
and Las Vegas civic clubs in an effort to raise awareness of the potential Y2K
risks. We participated in a televised program dealing with Y2K issues that had
more than a million viewers in five states.

     Awareness Phase Status.  The awareness phase of our Y2K Plan continues to 
     ----------------------                                                 
be the most active phase. The continuing need to communicate the potential Y2K
impact will last through the end of 1999. We will continue to communicate the
status of the Bank's Y2K efforts and the steps we are taking to insure the
safety and accuracy of customer funds and records.

     Assessment
     ----------

     More than 94 % of the dollar amount of the Bank's loan portfolio has been
Y2K risk assessed by the Bank lenders. The review was designed to identify
borrowers that may experience potential disruptions as a result of a failure of
their systems, external systems or suppliers that in turn could impact cash flow
and affect their financial strength. Only 11 loans in four relationships
involving $3.1 million were rated as Y2K high risk. These four relationships
plus the loans rated medium risk are being monitored on a quarterly basis by the
lenders per Bank policy. Those customers have also been advised to seek
professional Y2K assistance.

     The Bank's Trust Department is in the process of assessing the Y2K risk
associated with their fiduciary services. Outside providers of investment advice
have been required to follow the SEC's directives dealing with the soundness of
companies they recommend for investment of trust funds. In addition to Y2K
checking the new assets being added to the trust portfolios, the trust officers
have reviewed the existing assets in the account to determine if they may be a
Y2K risk to the client.

     The Bank's investment portfolio has been reviewed for insurance coverage
and maturity dates. The money derived from the maturing of some bonds may become
part of the total cash plan for the Bank. A contingency plan for cash is being
developed and will address the level of cash the Bank will retain over the
Century Date Change (CDC) weekend.

     Assessment Phase Status.  The initial assessment of loans, trust accounts,
     -----------------------                                                   
investments and large funds providers as well as our Information Systems and
environmental systems have been completed with positive results. The main
activity for the balance of the year will be monitoring the existing accounts
and reviewing the new ones.

     Renovation
     ----------

     Our automatic teller machines (ATM), Bank By Phone (VRU) Systems and Trust
Systems were successfully converted to the Y2K compliant version of their
respective software. The trust accounting system was upgraded to the Y2K
compliant version in August 1998 and continues to run in our production
environment. The Y2K update to our LAN/WAN personal computer Network Operating
System and the installation of new computer chips in our teller station
computers was completed in the first quarter of 1999. This change will enable
the teller station hardware to continue to process customer transactions into
the next century without replacing the entire computer.

     Renovation Phase Status.  The renovation phase of our project has been
     -----------------------                                               
completed for Y2K purposes.  All new programs will be subjected to the full
range of Y2K testing prior to final acceptance and installation in our
production environment.

                                       26
<PAGE>
 
     Validation
     ----------

     Testing of our mission critical core mainframe computer software was
completed in June 1998. Following extensive and exhaustive review of the output
data by our technical staff, internal audit and the users of the systems, the
data was determined to be accurate in all aspects. All non-critical software has
been tested and determined to be accurate in all respects.

     The Unisys mainframe computer in Reno was successfully tested for the Year
2000 rollover date and the leap year date as was the Unisys DP500 data capture
system in Las Vegas.

     All Y2K and Leap Year tests have been successfully completed in conjunction
with the Federal Reserve Bank including tests on the following applications:
wire transfers, Automated Clearing House (ACH) payments, bond processing and
Treasury Taxes and Loans (TT&L) tax payment system. Additional tests are
scheduled for 1999.

     Validation Phase Status.  All Y2K validation efforts have been completed 
     -----------------------                                         
with positive results.  Testing will continue in a maintenance mode.

     Implementation
     --------------

     The implementation effort at the Bank involved upgrades to several
applications and in the case of the trust application required us to upgrade our
hardware to obtain the best results from the system.   The other upgrades were
completed earlier than projected because of Y2K but were planned for later
change as a matter of normal operational planning.  All applications running in
a production mode are the most current Y2K version of the software.

     Implementation Phase Status.  The implementation phase of the Bank's Y2K
     ---------------------------                                             
project is considered to be in an ongoing maintenance mode.  All new systems
installed in the Bank are being validated as Y2K compliant prior to their
implementation.

     Non-Technical Issues
     --------------------

     The Year 2000 also has non-technical issues that have the potential to
create problems. Our environmental systems have been reviewed and determined to
be Y2K ready. Only limited changes were required with minimal expense incurred.
Our mission critical equipment such as vault doors and security systems have
been evaluated and are considered to be Y2K ready.

     We have received a response from all mission critical vendors indicating
that they are aware of the Year 2000 potential risks and have a plan in place to
address their issues. We will continue to monitor these vendors and request
periodic updates on their progress. Contingency plans are being developed to
address the potential loss of services and/or products from these vendors.

     Contingency and Year End Plans
     ------------------------------

     Initial contingency and year-end plans have been drafted for all areas of
the Bank. Both plans are considered to be "living documents" and will be refined
and updated to reflect changes and conditions that evolve or develop as time
passes. A walkthrough test of the plans is scheduled for April 1999 to insure
the plans address whatever issues may surface when the CDC arrives. Completion
of the contingency plans and their testing is expected to meet the FFIEC
guidelines.

                                       27
<PAGE>
 
     Audit
     -----

     McGladrey & Pullen, LLP a public account firm specializing in Year 2000
audits, has completed a review of our Year 2000 project and provided the Bank
with a report of their findings.  The report indicated that our plan addressed
the Y2K issues as expected and was following the FFIEC guidelines.  Overall, the
Bank is on schedule with their Year 2000 planning activities and does not have
any significant problems related to its Year 2000 compliance efforts.

     The FDIC has conducted three onsite examinations of the Bank's Y2K project
since August of 1997.  Although the audit results and conclusions may not be
revealed, the Bank considers the Y2K project on schedule or ahead of schedule.
Results of our testing have been positive and we are running the most current
version of our production software without Y2K problems.  We are currently
testing our contingency plans and year-end plans and expect they will prove
capable of addressing any problems that develop when the CDC arrives.

     Summary
     -------

     Pioneer and the Bank continue to meet its Y2K plan milestones and move
toward its goal of becoming Year 2000 compliant. Pioneer and the Bank remain
firm in their commitment to provide the needed resources to address the Year
2000 issues and continue to serve its customers into the next century.

     Estimated Costs to Address Year 2000 Issues
     -------------------------------------------

     The total financial effect that the Year 2000 issues may have on the Bank
cannot be predicted with any certainty at this time.  The single largest Y2K
expense involves the identification and modification of date routines in
software.  Because the Bank utilizes software acquired from a third party and
has no source code or programmers to work on the code, the major Y2K expense has
been avoided.  Our total budget for 1998 was $500,000 and our actual
expenditures were less than half this amount.  The budget was set at $350,000
for 1999 and $270,000 for 2000 bringing the total Y2K budget through the Year
2000 to $1.12 million.  The Bank does not consider this level of expenditure to
be material and is not expected to have a material impact on earnings.

     Risks Related to Year 2000 Issues
     ---------------------------------

     The Year 2000 poses certain risks to the Bank and its operations.  Like the
operations of many other companies, the Bank's operations can be adversely
affected by the Year 2000 triggered failures of other companies upon whom we
depend for the functioning of our automated systems and other services.
Accordingly, the Bank's operations could be materially affected, if the
operations of mission-critical third party service providers are adversely
affected.  The Bank has identified all of our mission-critical vendors and set
up a process to carry out ongoing monitoring of their Year 2000 compliance
efforts.

                           FORWARD LOOKING STATEMENTS
                       AND YEAR 2000 READINESS DISCLOSURE

     The discussion above regarding the century date change for the year 2000
includes certain "forward looking statements" concerning the future operations
of the Bank. The Bank desires to take advantage of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995 as they apply to forward
looking statements. This statement is for the express purpose of availing the
Bank of the protections of such safe harbor with respect to all "forward looking
statements". Management's ability to predict results of the effect of future
plans is inherently uncertain, and subject to factors that 

                                       28
<PAGE>

may cause result to differ materially from those projected. Factors that could
affect the actual results include the Bank's success in identifying all the Y2K
risks within the Bank, the uncertainty associated with the impact of the century
change on our customers, vendors and third-party service providers and the
economy in general.

ITEM 3.  DESCRIPTION OF PROPERTIES.

     Pioneer currently operates 13 branch offices of the Bank, with the main
office located in Reno, Nevada. The following is a description of the branch
offices.

<TABLE>
<CAPTION>
                                                                             
                                                                                Date Opened     Occupancy       
City and County                            Address               Sq. Feet       or Acquired       Status        
- --------------------------------  --------------------------  ---------------  -------------  --------------    
<S>                               <C>                         <C>              <C>            <C>
Reno Branches                                                                                  
(Washoe County)

Corporate Headquarters
 Administrative Office            10 State Street                      16,600           3/65      Leased
 
Main Branch                       One W. Liberty Street                 8,000        9/15/97      Leased
Moana-Lakeside Branch             1001 W. Moana Lane                    4,536        9/13/74      Leased
Meadowood Branch                  5050 Meadowood Mall Circle            6,419       11/18/96      Leased

Sparks Branch
(Washoe County)
Sparks Branch                     500 E. Prater Way                     4,969        6/15/93      Leased

Carson City Branch
(Carson City)
South Carson Branch               4267 S. Carson Street                 4,537       11/17/95      Leased

Las Vegas Branches
(Clark County)
Las Vegas Downtown Branch         230 S. Las Vegas Boulevard            5,380       11/13/95      Leased
Pioneer Center Branch             4170 S. Maryland Parkway             14,000        5/17/78    Bldg Owned
                                                                                               Land Leased
Spring Mountain Branch            4949 Spring Mountain Road            14,504       11/15/81      Leased
Summerlin Branch                  8400 W. Lake Mead                     3,770        10/3/94      Leased
                                  Boulevard
West Sahara Branch                8260 W. Sahara Avenue                 4,950        1/26/98      Leased
McCarran Center Branch            750 E. Warm Springs Road              4,900        7/20/98      Leased

Henderson Branches
(Clark County)
Eastgate Branch                   460 N. Stephanie Street               5,137        12/7/98      Leased
Green Valley Branch               4001 E. Sunset Road                   4,100         8/9/93      Leased
</TABLE>

                                       29
<PAGE>
 
ITEM 4.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth information as of April 1, 1999, with
respect to the shares of Pioneer Common Stock beneficially owned by (i) each
person (other than executive officers or directors whose stock ownership is
listed below), known by Pioneer to own beneficially more than 5% of Pioneer
Common Stock, (ii) each director of Pioneer, (iii) the executive officers of
Pioneer named in the Summary Compensation Table, and (iv) all directors and
executive officers of Pioneer as a group. Except as noted below, each holder has
sole voting and investment power with respect to shares of Pioneer Common Stock
listed as owned by such person or entity.  Where beneficial ownership is less
than 1% of the outstanding shares, the percentage is not reflected in the table.

Principal Shareholders (5% Owners)

<TABLE>
<CAPTION>
                                                                                        Percentage of
              Name and Address                        Number of Shares of                Outstanding
            of Beneficial Owner                       Common Stock Owned                 Common Stock
- --------------------------------------------  -----------------------------------  ------------------------
<S>                                           <C>                                  <C>
Cede & Co.                                                              1,638,932                    18.88%
P. O. Box 20
New York,  NY  10004
 
Melba E. Leaverton & Steven T. Walther                                    737,044                     8.49%
Co-Trustees of William Nixson Denton Trust
P. O. Box 7418
Reno, NV  89510
</TABLE>
 
Directors and Named Executive Officers

<TABLE>                                              
                                                                                        Percentage of     
                                                      Number of Shares of                Outstanding      
Name and Position                                     Common Stock Owned/1/             Common Stock      
- --------------------------------------------  -----------------------------------  ----------------------- 
<S>                                           <C>                                  <C>
Directors
- ---------
Louis J. Capurro, Chairman                                            510,953/2/                     5.88%
Donald A. Bernard, Vice Chairman                                      170,318                        1.96%
William E. Martin, President and CEO                                  120,444/3/                     1.38%
James N. Bahan, Director                                               76,943/4/                      ---
Jeanne Hood, Director                                                  10,531                         ---
</TABLE>

/1/ Includes shares subject to options that could be exercised within 60 days as
follows: 300 shares for each of Messrs. Capurro, Bernard, Bahan, Knauss, Mack,
Ruthe, Wells, Wilkerson and Yoxen and Ms. Hood; 3,750 shares for Mr. Martin;
and 2,250 shares for each of Messrs. Henry, J. Martin and Plunkett.
/2/ Includes 124,031 shares held by The Capurro Survivor's Trust; 272,926 shares
held by Quail Meadows Ltd. Partnership; 3,262 shares held by Capurro Irrevocable
Decedent's Trust; of which Mr. Capurro is a trustee, and 110,434 shares held by
an Irrevocable Marital Trust, of which Mr. Capurro is a trustee.
/3/ Includes 5,413 shares held in an IRA Account for the benefit of Mr. Martin.
/4/ Includes 16,479 shares held by a Trust of which Mr. Bahan is a trustee,
50,164 shares held by a Bahan Family Trust, of which Mr. Bahan and his spouse
are co-trustees, and 10,000 shares held in an IRA Account for the benefit of Mr.
Bahan.

                                       30
<PAGE>
 
<TABLE>
<S>                                           <C>                                  <C>
Ken Knauss, Director                                                   33,308/5/                      ---
Luther Mack Jr. Director                                               19,577                         ---
Charles L. Ruthe, Director                                              1,942/6/                      ---
Howard Wells Jr., Director                                             82,215/7/                      ---
Donald L. Wilkerson, Director                                         422,683/8/                     4.86%
John E. Yoxen, Director                                               330,291/9/                     3.80%
 
Executive Officers
- ------------------
A.G. Henry, EVP/COO                                                    79,158/6/                      ---
Jerry R. Martin, EVP/CCO                                               36,368/10/                     ---
Edward T. Plunkett, EVP/CFO                                             3,606                         ---
All executive officers and directors as a                           1,865,023/11/                   21.44%
 group (14 persons)
</TABLE>

ITEM 5.  DIRECTORS AND EXECUTIVE OFFICERS.

Directors

     The following table sets forth summary information about the directors of
Pioneer. Directors serve on the Board of Directors of both Pioneer and the Bank.
Directors of Pioneer serve staggered terms consisting of three groups of
directors, and at each annual meeting, members of one of the groups, on a
rotating basis, are elected for a three-year term. Pioneer's Articles of
Incorporation and Bylaws permit no more than fifteen directors. The following
table sets forth certain information with respect to the directors, some of whom
are also executive officers of Pioneer:

<TABLE>
<CAPTION>
Name                                              Age                      Position
- ----------------------------------------  -------------------  --------------------------------
<S>                                       <C>                  <C>
Term Expiring 2000
- ------------------
Donald A. Bernard                                    63        Vice Chairman of the Board of
                                                               Pioneer and the Bank
Ken Knauss                                           43        Director
William E. Martin                                    57        Director, President and CEO of
                                                               Pioneer and the Bank
</TABLE>

- ---------------------
/5/ Includes 12,401 shares held by Ken Knauss Revocable Trust, of which Mr.
Knauss is a trustee; 10,303 shares held by Knauss Irrevocable Trust for
Nicolette Knauss; and 10,304 shares held by Knauss Irrevocable Trust for Kristen
Knauss, trusts for Mr. Knauss's daughters.
/6/ Held jointly with spouse.
/7/ Includes 79,499 shares held by the Wells Family Trust, of which he and his
spouse are co-trustees and 2,716 shares in an IRA Account for the benefit of Mr.
Wells.
/8/ Includes 3,131 shares held by the Wilkerson Family Trust which Mr. Wilkerson
and his spouse are co-trustees and 419,252 shares by Mardon Investments Limited
Partnership, of which Mr. Wilkerson is a partner.
/9/ Includes 8,546 shares held by the Yoxen Family Trust, of which Mr. Yoxen and
his spouse are trustees and 321,445 shares held by the Alby Family Limited
Partnership, of which Mr. Yoxen is a partner.
/10/ Includes 2,254 shares held jointly with daughter, 1,039 shares as custodian
for his minor son and 17,202 shares held in an IRA Account for the benefit of
Mr. Martin.
/11/ Includes 13,500 shares subject to option that could be exercised within 60
days.

                                       31
<PAGE>
 
<TABLE>
<S>                                       <C>                  <C>
Term Expiring 2001
- ------------------
Louis J. Capurro                                     80        Chairman of the Board of
                                                               Pioneer and the Bank
James N. Bahan                                       60        Director
Jeanne Hood                                          72        Director
Charles L. Ruthe                                     64        Director
Howard Wells Jr.                                     61        Director
 
Term Expiring 2002
- ------------------
Luther Mack Jr.                                      59        Director
Donald L. Wilkerson                                  65        Director
John E. Yoxen                                        79        Director
</TABLE>

     The business experience of each of the directors for the past five years is
described below:

     James N. Bahan has been a director of Pioneer and the Bank since 1997. Mr.
     --------------                                                         
Bahan is the Executive Vice President of Model Dairy, a company that he and his
brother purchased in 1977. Mr. Bahan previously served as the President of Model
Dairy before it was acquired by Suiza Foods in December 1996.

     Donald A. Bernard has served as Vice Chairman of the Board of Pioneer since
     -----------------                                                    
its formation in 1993. Mr. Bernard has been a director of the Bank since 1987
and has served as Vice Chairman of the Board of the Bank since 1992. He has been
the owner of Bernard Holdings and Investment Group since 1996. Prior to that
time, he was Senior Vice President of Everen (Kemper) Securities and an
Executive Vice President at Birr Wilson.

     Louis J. Capurro has served as Chairman of the Board of Pioneer since its
     -----------------                                                    
formation in 1993. Mr. Capurro has been a director and the Chairman of the Board
of the Bank since 1965. He retired in June 1991 as Senior Vice President of
Sedgwick James Insurance Brokers, where he had worked since 1983. Prior to that
time, he was associated with the insurance firm of Capurro & McKenna and its
successors since 1946.

     Jeanne Hood has been a director of Pioneer and the Bank since 1994. Ms.
     -----------                                                         
Hood is a consultant and director with American Casino Enterprises. Prior to
that time, she served as the President, CEO, Vice Chairman and Consultant to
Elsinore Corporation, a gaming operation in Las Vegas. Ms. Hood also serves as a
director of American Vantage Companies.

     Ken Knauss has been a director of Pioneer and the Bank since 1993. Mr.
     ----------                                                         
Knauss is the President of Palm Mortuaries Inc., formerly Desert Lawn Inc., and
from 1982 - 1987, served as Vice President of Operations of the company.

     Luther Mack Jr. has been a director of Pioneer since its formation in 1993
     ---------------                                                      
and a director of the Bank since 1991. Mr. Mack is the owner and President of
Mack Associates, Inc., owning and operating McDonald's Franchise locations since
1974. He also owned and operated a television station in Reno from 1995 to 1998.
Prior to that time, he worked for the Small Business Administration and State of
Nevada.

                                       32
<PAGE>
 
     William E. Martin has been a director and the President and Chief Executive
     -----------------                                                
Officer of the Bank since joining Pioneer in 1989, and of Pioneer since its
formation in 1993. Prior to joining Pioneer, Mr. Martin served as the President
of Nevada National Bank and worked for the Office of the Comptroller of the
Currency.

     Charles L. Ruthe has been a director of Pioneer and the Bank since 1998.
     ----------------                                                  
Mr. Ruthe is the owner and Chairman of the Board of Charles L. Ruthe and
Associates, Inc., since 1975. He was employed by Boyd Gaming Corporation from
1983 to 1997 and retired as President of the Boyd Group. Mr. Ruthe continues to
serve as a consultant to Boyd Gaming, and also serves as a director of Sierra
Health Services.

     Howard Wells Jr. has been a director of Pioneer since its formation in 1993
     ----------------                                                      
and a director of the Bank since 1986. Mr. Wells is the owner and President of
Wells Cargo, Inc., a construction firm, since 1972.

     Donald L. Wilkerson has been a director of Pioneer since its formation
     -------------------                                                   
in 1993 and a director of the Bank since 1991.  Mr. Wilkerson is self employed
as an investor and developer since 1982.  Prior to that time, he was with Mason-
McDuffie Company, mortgage banking division.

     John E. Yoxen has been a director of Pioneer since its formation in 1993
     -------------                                                      
and a director of the Bank since 1971. Mr. Yoxen worked as a contractor for 26
years, until his retirement in 1986.

Executive Officers

     The following table sets forth summary information about the executive
officers of Pioneer and the Bank, listed in the summary compensation table, who
are not also directors.  Each of the executive officers has served in positions
with Pioneer and/or the Bank for the past five years.

<TABLE>
<CAPTION>
                                                                                               Term of
Name                                    Age                       Position                      Office
- ----------------------------------  -----------  ------------------------------------------  ------------
<S>                                 <C>          <C>                                         <C>
A. G. Henry                                  56  Asst. Secretary of Pioneer; Executive               1989
                                                 Vice President, Chief Operating Officer
                                                 of the Bank
Edward T. Plunkett                           61  Treasurer of Pioneer; Executive Vice                1991
                                                 President, Chief Financial Officer of
                                                 the Bank
Jerry R. Martin                              49  Executive Vice President, Chief Credit              1991
                                                 Officer of the Bank
</TABLE>

ITEM 6.    EXECUTIVE COMPENSATION

     The following information is provided regarding the compensation paid by
Pioneer, or in certain cases, the Bank, to the directors and to the Chief
Executive Officer of Pioneer and the three most highly compensated executive
officers of Pioneer or the Bank, as the case may be, whose compensation exceeded
$100,000 in fiscal year 1998.

                                       33
<PAGE>
 
Director Compensation

     Pioneer has established a program for director compensation in which each
director of Pioneer receives a fee of $2,500 for each meeting.  As authorized by
the Board, directors may elect to receive shares of Pioneer Common Stock in lieu
of director fees.  Shares of Pioneer Common Stock are issued based on the market
value of Pioneer's Common Stock on the day prior to the Board of Director's
meeting.

Deferred Compensation Plan

     The Board has also adopted a deferred compensation program for directors
and executive officers.  Under the deferred compensation program, directors may
elect to defer payment of some or all of their directors' fees and executive
officers may elect to defer all or a portion of their bonus.  There are no
company paid contributions under this program.

Executive Officer Compensation

                          Summary Compensation Table
<TABLE>
<CAPTION>
                                                                                       Long Term Compensation
                                                                              ---------------------------------------  
                                        Annual Compensation                          Awards               Payouts
                         --------------------------------------------------------------------------------------------
                                                                 Other         Restricted      Securities
                                                                 Annual           Stock        Underlying    LTIP      All Other
Name and Principal             Year       Salary   Bonus($)   Compensation       Awards         Options/    Payouts   Compensation
 Position                                                       ($) (1)             ($)          SARs(#)      ($)      ($) (2)(3)
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>           <C>       <C>        <C>            <C>               <C>          <C>       <C>
William E. Martin                  1998  $275,040  $400,000              0                 0       37,500         0        $ 6,923
President and CEO                                        (4)
- ----------------------------------------------------------------------------------------------------------------------------------
A. G. Henry, EVP and               1998  $168,000  $ 90,000              0                 0       22,500         0        $ 5,703
 Chief Operating Officer
- ----------------------------------------------------------------------------------------------------------------------------------
Jerry R. Martin, EVP and           1998  $110,040  $ 35,000              0                 0       22,500         0        $ 5,487
 Chief Credit Officer
- ----------------------------------------------------------------------------------------------------------------------------------
Edward T. Plunkett, EVP            1998  $110,040  $ 35,000              0                 0       22,500         0        $ 4,811
 and Chief Financial
 Officer
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Does not include amounts attributable to miscellaneous benefits received by
     executive officers, including the use of company-owned automobiles and the
     payment of certain club dues. In the opinion of management, the costs to
     the Bank of providing such benefits to any individual executive officer
     during the year ended December 31, 1998 did not exceed the lesser of
     $50,000 or 10% of the total of annual salary and bonus reported for the
     individual.

(2)  Includes contributions paid by Pioneer or the Bank during 1998 for the
     benefit of Messrs. Martin, Henry, J. Martin and Plunkett in the amounts of
     $5,000, $3,780, $2,889 and $2,889, respectively, pursuant to Pioneer's
     401(k) Savings Plan and Trust.

(3)  Includes insurance premiums paid by Pioneer during 1998 on behalf of
     Messrs. Martin, Henry, J. Martin and Plunkett in the amounts of $1,922,
     $1,922, $2,498 and $1,922, respectively.

(4)  Mr. Martin's bonus represents $125,000 that vested over the normal course
     of his employment at the rate of 25% upon grant, and 25% per year over the
     following three years, and $275,000 which was granted with an accelerated
     vesting schedule.

                                       34
<PAGE>
 
Executive Severance Agreements

     In February 1999, the Bank entered into severance agreements with certain
executive officers.  Under these agreements, the executive is entitled to
receive a severance payment if his or her employment is terminated voluntarily
or involuntarily, other than for cause, disability or death (i) within the
Severance Protection Period (as defined below) after a change in control, or
(ii) within sixty days before a change in control.  For Mr. Martin, the
"Severance Protection Period" is 36 months from the date of a change in control;
and for Messrs. Henry, Jerry Martin and Plunkett, the "Severance Protection
Period" is 24 months from the date of a change in control, plus an additional
month for each year of employment, for a maximum of 30 months.  The amount of
the severance payment is based on the executive's most recent salary and bonus
amount for one month, multiplied by the number of months in the Severance
Protection Period.

     The severance agreements also contain a noncompete provision that prevents
the executives from competing with the Bank, either directly or indirectly, as a
shareholder, member, partner, director, officer, manager, consultant, agent or
representative of a "competing business" in the State of Nevada for a period of
twelve months.

Consulting Agreement

     In February 1998, the Bank entered into a Consulting Agreement with Leo V.
Seevers, who, at that time served as an Executive Vice President of the Bank.
The Consulting Agreement which became effective on March 31, 1998, the date of
Mr. Seever's retirement, provides that Mr. Seevers will serve as a consultant to
the Bank for  a period of three years, until March 30, 2001 (the "Transition
Period").  As compensation for his consulting services, Mr. Seevers will receive
the sum of $360,000, payable in monthly installments over the Transition Period.

     The Consulting Agreement also contains a noncompete provision that prevents
Mr. Seevers, without the prior written authorization of the Bank, either
directly or indirectly, to own, manage, operate, control, or participate in the
ownership, management, operation or control of, or to be connected as an
officer, employee, partner, director or consultant, of any financial institution
within Clark County, Washoe County or the State of Nevada during the Transition
Period.

Stock Options

     Stock Option Grants.  The following table sets forth stock options granted
     -------------------                                                       
during 1998 to the executive officers named in the "Summary Compensation Table"
above, pursuant to Pioneer's stock option plan during the year ended December
31, 1998.

                                       35
<PAGE>

                     OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                               Potential Realizable
                                                                                                     Value at
                                                                                               Assumed Annual Rates
                                  Individual Grants                                               of Stock Price
                                                                                                   Appreciation
                                                                                                for Option Term(3)
- --------------------------------------------------------------------------------------------------------------------------
                         Number of Shares of       % of Total
                             Underlying             Options     Exercise
                               Options             Granted to    Price     Expiration
Name                       Granted (1)(2)          Employees    ($/Share)     Date               5%            10%
- --------------------------------------------------------------------------------------------------------------------------
<S>                     <C>                        <C>          <C>        <C>         <C>                 <C>
William E. Martin                      37,500             8.4%    $26.67      2/17/08              $630,078     $1,590,198
- --------------------------------------------------------------------------------------------------------------------------
A. G. Henry                            22,500             5.1%    $26.67      2/17/08              $378,047     $  954,119
- --------------------------------------------------------------------------------------------------------------------------
Jerry R. Martin                        11,250             5.1%    $26.67      2/17/08              $189,023     $  477,059
                                       11,250                     $25.33      4/14/08              $179,526     $  453,090
- --------------------------------------------------------------------------------------------------------------------------
Edward T. Plunkett                     22,500             5.1%    $26.67      2/17/08              $378,047     $  954,119
==========================================================================================================================
</TABLE>

                                                                                
(1) Shares have been adjusted to reflect a 3-for-2 stock split effective July
    29, 1998.
(2) The options are non-qualified stock options and become exercisable in five
    annual installments.  Each option was granted under Pioneer's stock option
    plan and has an exercise price equal to the fair market value of the Common
    Stock on the date of grant.
(3) The dollar amounts under these columns result from calculations at the 5%
    and 10% assumed appreciation rate established by the SEC and, therefore, are
    not intended to forecast possible future appreciation, if any, of Pioneer's
    Common Stock price.

     Stock Option Exercises.  The following table sets forth certain information
     ----------------------                                                     
concerning exercises of stock options pursuant to Pioneer's stock option plan by
the executive officers named in the "Summary Compensation Table" during the year
ended December 31, 1998 and stock options held at year end.

<TABLE>
<CAPTION>
                                      AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                                                AND YEAR-END OPTION VALUES
 
                                                                 Number of                             Value of      
                            Shares                              Unexercised                      Unexercised Options 
                          Acquired on    Value              Options at Year End1                   at Year End (2)        
          Name             Exercise     Realized   ------------------------------------------------------------------------
                                                       Exercisable       Unexercisable      Exercisable       Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------
<S>                       <C>          <C>         <C>                   <C>            <C>                   <C>
William E. Martin              82,113  $1,852,467                 3,750         33,750                   $0              $0
- ---------------------------------------------------------------------------------------------------------------------------
A. G. Henry                    61,585  $1,389,358                 2,250         20,250                   $0              $0
- ---------------------------------------------------------------------------------------------------------------------------
Jerry R. Martin                     0         ---                 2,250         20,250                   $0              $0
- ---------------------------------------------------------------------------------------------------------------------------
Edward T. Plunkett                  0         ---                 2,250         20,250                   $0              $0
===========================================================================================================================
</TABLE>
(1)  Shares have been adjusted to reflect a 3-for-2 stock split effective July
     29, 1998.
(2)  On December 31, 1998, the average closing price of Pioneer's Common Stock
     was $25.00.  For purposes of the foregoing table, stock options with an
     exercise price greater than that amount are considered to be "under water,"
     therefore, no dollar value is listed.

                                       36
<PAGE>

Employee Benefit Plans


     401(k) Savings Plan and Trust.  Pioneer and the Bank have a 401(k) Savings
     -----------------------------                                             
Plan and Trust ("401(k) Plan") covering substantially all employees.  An
employee must be at least 18 years of age and have six months of service with
Pioneer or the Bank to be eligible for the 401 (k) Plan ("Effective Date").
Under the 401(k) Plan, participants may defer a percentage of their
compensation, the dollar amount of which may not exceed the limit as governed by
law.  At the direction of the Board of Directors, Pioneer may also elect to pay
a discretionary matching contribution equal to a percentage of the amount of the
salary deferral made by the participant.  The 401(k) Plan provides that
contributions made by the employee are 100% vested immediately upon the
participant's Effective Date.  Contributions made by the employer vest 25% upon
completion of two years of employment, and vest 25% annually thereafter, and are
fully vested in the fifth year.

     A committee of the Bank acts as the Plan Administrator of the 401(k) Plan.
The general investment options are determined by the Plan's Administrative
Committee.

     Supplemental Executive Incentive Plan (Deferred Compensation Plan). 
     ------------------------------------------------------------------       
Pioneer and the Bank have adopted a deferred compensation plan ("DCP Plan")
which is open to directors, executive officers and individuals designated by the
Executive Committee of the Board of Directors. Participants may elect to defer
payment up to 100% of their salary or bonus. Upon reaching normal retirement age
or date of disability, if earlier, both as defined, participants are paid in a
lump sum or in quarterly installments over a term of up to 15 years. No
contributions were made by eligible participants in 1998.

     Nonqualified Stock Option Plan.  Pioneer maintains  a Nonqualified Stock
     ------------------------------                                          
Option Plan ("Plan") for the benefit of key employees and directors of Pioneer
and the Bank.  Under the terms of the Plan, the Board or a committee appointed
by the Board may grant employees or directors of Pioneer and the Bank options to
purchase shares of Pioneer's Common Stock at a purchase price of not less than
100% of the fair market value of such stock on the date of the grant.  Options
vest in annual installments over a five year period.  The options have a term
not exceeding ten years from the date the option is granted.  The Plan is
amended and a new plan is adopted from time to time to make additional shares
available for issuance.  The Plan is currently authorized to grant up to 677,443
shares of Pioneer Common Stock.  At December 31, 1998, options to purchase
446,250 shares had been granted and 231,193 shares remain available for future
grant.

ITEM 7.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Pioneer and the Bank have had, and expects to have in the future, banking
transactions, including loans, in the ordinary course of business with
directors, executive officers, and their associates, on substantially the same
terms, including interest rates and collateral, as those prevailing at the same
time for comparable transactions with other persons, which transactions do not
involve more than the normal risk of collectability or present other unfavorable
features. As of December 31, 1998, aggregate loans to directors and executive
officers, including those made to related business interest and their
associates, totaled $5,215,000. All such loans were made in the ordinary course
of the Bank's business, on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other customers and in the opinion of management, do not
involve any undue credit risk to Pioneer or the Bank.

                                       37
<PAGE>
 
ITEM 8.  LEGAL PROCEEDINGS

     Pioneer and the Bank are parties to various claims, legal actions and
complaints in the ordinary course of their businesses.  In Pioneer's opinion,
all such matters are adequately covered by insurance, are without merit or are
of such kind, or involve such amounts, that unfavorable disposition would not
have a material adverse effect on the consolidated financial position or results
of operations of Pioneer.

ITEM 9.  MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

     Bid and ask prices for Pioneer's Common Stock are quoted in the Pink Sheets
and on the OTC Bulletin Board under the symbol "PNCZ"  As of April 1, 1999,
there were six Pink Sheet/Bulletin Board Market Makers.  The range of high and
low bid prices for the Pioneer's Common Stock for each quarter during the two
most recent fiscal years is as follows:

<TABLE>
<CAPTION>
                                            Quarterly Common Stock Price Ranges/(1)/
                     --------------------------------------------------------------------------------------
                                        1998                                        1997
                     ------------------------------------------  ------------------------------------------
Quarter                      High                  Low                   High                  Low
- -------------------  --------------------  --------------------  --------------------  --------------------
<S>                  <C>                   <C>                   <C>                   <C>
1st                                $30.66                $24.00                $14.88                $12.95
2nd                                $28.66                $24.00                $18.49                $14.24
3rd                                $25.50                $23.00                $20.45                $17.43
4th                                $26.00                $21.25                $28.49                $19.32
</TABLE>
                                        

(1) This table reflects the range of high and low bid prices for Pioneer's
    Common Stock during the indicated periods.  Prices for 1998 have been
    adjusted to reflect a three-for-two stock split that was effective July 29,
    1998 and the 10% stock dividends paid in 1997 and 1998.  The quotations
    merely reflect the prices at which transactions were proposed, and do not
    necessarily represent actual transactions.  Prices do not include retail
    markup, markdown or commissions.

     The approximate number of record holders of the Pioneer's Common stock as
of April 1, 1999 was 558.

     Pioneer historically has not paid cash dividends, nor does it expect to pay
cash dividends in the foreseeable future.

ITEM 10.  RECENT SALES OF REGISTRANT'S SECURITIES TO BE REGISTERED

     During the fiscal years 1997 and 1998, Pioneer issued 205,283 shares of
Pioneer Common Stock to certain officers and employees of Pioneer and/or the
Bank upon the exercise of stock options previously granted to such persons under
the Plan.  The aggregate price for the Pioneer Common Stock sold to such persons
was $500,890.  No underwriting discounts or commissions were paid in connection
with such sale.  The issuance and sale of Pioneer Common Stock pursuant to the
Plan is exempt from registration under the Securities Act of 1933, as amended,
pursuant to Section 4(2) of such Act, as a sale of securities not involving a
public offering.  Pioneer intends to register its Common Stock issued pursuant
to the Plan, on a Form S-8 registration statement under the Securities Act of
1933, to be effective immediately, or as soon thereafter,  following the
effective date of this Registration Statement.  In addition to the shares issued
pursuant to the exercise of stock options, the Company issued 100 qualifying
shares to director Charles Ruthe who was appointed to the Board in 1998, at a
per share price of $35.00.  The Company has also issued shares pursuant to
certain stock splits and stock dividends.

                                       38
<PAGE>
 
ITEM 11.  DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED

Description of Capital Stock

     Pioneer is currently authorized to issue 15,000,000 shares of Pioneer
Common Stock, $0.01 par value per share. The following description of Pioneer
Common Stock and certain provisions of Pioneer's Articles of Incorporation, as
amended (the "Articles") and Bylaws is a summary, does not purport to be
complete, and is subject to the detailed provisions of, and is qualified in its
entirety by reference to, the Articles and Bylaws, copies of which have been
filed as exhibits to this Registration Statement.

Voting

     The holders of Pioneer Common Stock may not cumulate their votes and are
entitled to one vote per share held of record on all matters submitted to a vote
of the stockholders. The Bylaws provide that a majority of shares, represented
in person or by proxy, entitled to vote constitutes a quorum, and that the
affirmative vote of the majority of the shares represented at a meeting at which
a quorum is present constitutes the act of the stockholders, unless the vote of
a greater number is required by law or by the Articles. The Articles and Bylaws
each contain provisions that require a greater than majority vote of shares
entitled to vote on certain actions. (See "--Removal of Directors" and "Anti-
Takeover Provisions").

Dividends

     The holders of Pioneer Common Stock are entitled to such distributions,
including cash dividends, as the Pioneer Board may declare from time to time out
of funds legally available. Dividends from Pioneer depend upon the receipt by
Pioneer of cash received pursuant to the exercise of stock options by directors
and officers, directors' fees, and distributions from the Bank because Pioneer
has no source of income.

     The declaration and payment of dividends and other distributions by the
Board of Directors of the Bank are subject to (i) the rules and regulations of
the Division and the FDIC governing the manner, amount and available sources of
payment of dividends which may be paid to shareholders of the Bank; (ii) the
methods, if any, by which permanent capital reserves may be retired or reduced;
and (iii) federal and state laws limiting the payment of distributions.

     The Board of Directors of the Bank, at its discretion, may consider paying
cash dividends when it determines that dividends are appropriate. Any such cash
dividends would be declared and paid by the Bank based on the Board of
Directors' evaluation of the then current operating results, financial condition
and future growth plans of the Bank, general business conditions, and subject to
tax and other relevant considerations and regulatory limitations (including the
requirement that the Bank's equity capital be maintained at certain minimum
levels.) (See "Item 1. BUSINESS - Supervision and Regulation - Capital
Adequacy").

     Under Nevada law applicable to banks, and subject to certain limitations,
the directors of a bank may declare a cash dividend or other distribution of so
much of the Bank's retained earnings as they deem to be appropriate. No
distributions may be paid at any time when a bank is insolvent or when payment
of them would render it insolvent or be contrary to its Articles of
Incorporation. Also, under the Federal Deposit Insurance Act, no distributions
may be paid by an FDIC insured bank while it is in default of any assessment due
the FDIC. See also "Item 1. BUSINESS - Supervision and Regulation -Dividends"
for further restrictions on a Nevada bank's ability to pay dividends or other
distributions.

                                       39
<PAGE>
 
     Also under Nevada law applicable to Pioneer, the Bank and Nevada
corporations generally, no distributions may be made by a corporation to its
stockholders if, after giving effect to the distribution, (i) the corporation
would be unable to pay its debts as they become due in the usual course of
business or (ii) the sum of the corporation's assets would be less than the sum
of its liabilities plus the amount (if any) that would be needed to satisfy the
rights of holders of any preferred stock of the corporation, assuming the
corporation were to be dissolved at the time of the distribution.

     Pioneer has been paying stock dividends to its shareholders. Stock
dividends are not subject to the Nevada law restrictions or distributions, as
described above, because a corporation's assets, liabilities and total
stockholders' equity do not change as a result of the stock dividend.

Transferability of Shares

     The shares of Common Stock are freely transferable, subject to certain
restrictions on resale imposed on (i) affiliates of Pioneer, and (ii) persons
having received shares of Pioneer Common Stock pursuant to the Plan, prior to
the filing of a registration statement to register the shares under the Plan.

Nevada Law Regarding Certain Business Transactions

     Certain provisions of the Nevada Revised Statute (the "NRS"), summarized
below, may be considered to have an anti-takeover effect and may, if a Nevada
corporation does not opt out of them, delay, deter, or prevent a tender offer,
proxy contest or other takeover attempt that a stockholder might consider to be
in such stockholder's best interest, including such an attempt as might result
in payment of a premium over the market price for shares held by stockholders.
Pioneer has not opted out of these NRS provisions, which are commonly referred
to as Nevada's "control share law" (codified in NRS [SECTIONS]78.378 through
78.3793) (the "CSL") and "business combination law" (codified in NRS
[SECTIONS]78.411 through 78.444) (the "BCL"), and Pioneer meets the statutory
standards for applicability of the CSL and the BCL.

     The CSL provides, among other things, that a person (individually or in
association with others) who acquires a "controlling interest" (which, under the
definition in the CSL, can be as small as 20% of the voting power in the
election of directors) in a corporation will obtain voting rights in the
"control shares" only to the extent such rights are conferred by a vote of the
disinterested stockholders. In addition, in certain cases where the acquiring
party has obtained such stockholder approval for voting rights, stockholders who
voted against conferring such voting rights are entitled to demand payment by
the corporation of the fair value of their shares.

     The BCL provides, among other things, for restrictions on business
"combinations" (as broadly defined in the BCL) between a corporation and a
person (individually or in association with others) who is deemed an "interested
stockholder" because such person (i) has acquired ten percent or more of the
voting power of the corporation's shares or (ii) has certain affiliations or
associations with the corporation and previously owned ten percent or more of
such voting shares.  Such business combinations are prohibited for a three-year
period specified prescribed by the BCL unless certain prior approvals by the
corporation's board of directors have been obtained.  After expiration of the
three-year period, such business combinations are still prohibited unless
certain prior approvals by the corporation's board of directors or disinterested
shareholders have been obtained or certain fair value requirements are met.

                                       40
<PAGE>
 
Special Meetings of Shareholders

     The Bylaws provide that special meetings of shareholders may be called by
the Chairman of the Board of Directors, the President, the Board of Directors,
or shareholders holding at least 50% of the shares entitled to vote at the
meeting.

Classified Board of Directors

     The Articles and the Bylaws provide for the division of the Board of
Directors into three classes nearly equal in size as possible with staggered
three-year terms. At each annual meeting of the shareholders, successors to the
directors whose terms expire at that annual meeting are elected for a three-year
term, with each director to hold office until a successor has been duly elected
and qualified. As a result, approximately one-third of the Board of Directors
will be elected each year. (See "Management Executive Officers and Directors").

Removal of Directors

     Pioneer's Articles of Incorporation and Bylaws provide that any director
may be removed from office by the affirmative vote of 75% of the shareholders
entitled to vote.

Anti-Takeover Provisions

     The Articles of Incorporation include a "super-majority" provision,
requiring that the holders of 80 percent of Pioneer Common Stock approve a
merger, consolidation, liquidation, dissolution or sale or other disposition of
all or substantially all of Pioneer's assets. This provision may not be amended
unless first approved by shareholders holding 80 percent of the shares of
Pioneer Common Stock.

ITEM 12.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

Limitation of Liability and Indemnification

     Chapter 78 of the NRS and the Bylaws, taken together, provide that Pioneer
may indemnify any person who was or is involved in any manner or was or is
threatened to be made so involved in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative, by reason of the fact that such person is or was a director,
officer, employee or agent of Pioneer or of any other business enterprise
pursuant to which the person served in such capacity at Pioneer's request,
against all expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred by such person in connection with such proceeding if the
person acted in good faith and in a manner which he or she reasonably believed
to be in, or not opposed to, the best interests of Pioneer, and with respect to
a criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. Pioneer may not, however, provide such indemnification on account of
acts or omissions finally adjudged to be intentional misconduct, fraud, or a
knowing violation of law and material to the cause of action. The
indemnification provisions of the NRS and the Bylaws include the right of an
indemnitee to receive payment of any expenses incurred in connection with a
proceeding in advance of the final disposition of the proceeding, consistent
with applicable law. The NRS and the Bylaws specify certain procedures and
conditions that apply with respect to indemnification and the advancement of
expenses.

     Indemnification of any person serving as a director, officer, employee or
agent, as described in the preceding paragraph, is mandatory to the extent that
such person has been successful on the merits or otherwise in defense of the
subject action, suit or proceeding.

                                       41
<PAGE>
 
     The indemnification rights described in the preceding paragraphs are not
exclusive of other rights to which any person seeking indemnification may
otherwise be entitled under current or future laws or by agreement with Pioneer.

     Pioneer may also purchase and maintain insurance or make other financial
arrangements on behalf of any present or past director, officer, employee or
agent of Pioneer or of any other business pursuant to which such person served
in that capacity at Pioneer's request. Such insurance or other financial
arrangements may cover liabilities asserted against or expenses incurred by,
such person in any of the aforementioned capacities, regardless of whether
Pioneer would have the authority to indemnify such person.

     Besides indemnification, the Articles of Incorporation contain a provision
that limits the personal liability of Pioneer's directors and officers to
Pioneer or its stockholders for damages for breach of fiduciary duty, except
liability for acts or omissions that involve intentional misconduct, fraud or a
knowing violation of law and liability based on payments of distributions
(including dividends) which violate the NRS.

ITEM 13.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial statements and related documents listed under Item 15 are
filed as part of this Registration Statement.

ITEM 14.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

          Not Applicable.

ITEM 15.  FINANCIAL STATEMENTS AND EXHIBITS INDEX

          (a)(1) Independent Auditors' Report.

             (2) Consolidated Balance Sheets at December 31, 1998 and December
                 31, 1997.

             (3) Consolidated Statements of Earnings for the years ended
                 December 31, 1998, December 31, 1997 and December 31, 1996.

             (4) Consolidated Statements of Changes in Shareholders' Equity and
                 Comprehensive Income.

             (5) Consolidated Statements of Cash Flows for the years ended
                 December 31, 1998, December 31, 1997 and December 31, 1996.

             (6) Notes to Consolidated Financial Statements.

          (b)    Exhibits: See "Exhibit Index."

                                       42
<PAGE>
 
                                   SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                    PIONEER BANCORPORATION
                                         (Registrant)



Date:  April 26, 1999               By:  /s/ William E. Martin
                                       -----------------------
                                           William E. Martin
                                           President and Chief Executive Officer

                                       43
<PAGE>
 
Independent Auditors' Report
The Shareholders and Board of Directors
Pioneer Bancorporation:

  We have audited the accompanying consolidated balance sheets of Pioneer
Bancorporation and subsidiary as of December 31, 1998 and 1997, and the related
consolidated statements of earnings, changes in shareholders' equity and
comprehensive income, and cash flows for each of the years in the three-year
period ended December 31, 1998. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Pioneer
Bancorporation and subsidiary as of December 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1998, in conformity with generally accepted accounting
principles.

  KPMG LLP
  
  Los Angeles, California

  January 15, 1999

                                       1
<PAGE>
 
<TABLE>
<CAPTION>
1998 Consolidated Balance Sheets
As of December 31, 1998 and 1997                      1998            1997
- -------------------------------------------------------------------------------
<S>                                            <C>             <C>        
Assets:
   Cash and Cash Equivalents:
       Cash and Due from Banks                 $   58,208,000   $  57,467,000
       Federal Funds Sold                          47,500,000      83,500,000
           Total Cash and Cash Equivalents        105,708,000     140,967,000
 
   Securities Held to Maturity, Fair Value
     of $47,627,000 and $41,870,000 as of 
     December 31, 1998 and 1997, respectively      46,102,000      40,861,000
   Securities Available for Sale                  269,476,000     211,004,000
   Loans (less allowance for credit losses of
     $7,004,000 and $5,773,000 as of December
     31, 1998 and 1997, respectively)             576,105,000     434,548,000
   Premises and Equipment, Net                     18,049,000      10,886,000
   Interest Receivable                              7,258,000       6,408,000
   Deferred Tax Asset, Net                          2,098,000       1,092,000
   Other Assets                                     6,461,000       5,495,000
- -------------------------------------------------------------------------------
   Total Assets                                $1,031,257,000   $ 851,261,000
- -------------------------------------------------------------------------------
 
Liabilities and Shareholders' Equity:
  Liabilities:                                
     Deposits:                              
        Demand:                             
           Noninterest Bearing                 $  224,448,000   $ 201,956,000
           Interest Bearing                       118,748,000      94,049,000
        Savings                                    97,279,000      66,352,000
        Money Market                              251,024,000     277,413,000
        Time - under $100,000                      99,098,000      59,104,000
        Time - $100,000 and over                  109,150,000      40,904,000
          Total Deposits                          899,747,000     739,778,000
                                           
     Securities Sold Under Repurchase       
       Agreements                                  60,111,000      53,728,000
     Other Liabilities                              3,845,000       3,698,000
- -------------------------------------------------------------------------------
  Total Liabilities                            $  963,703,000   $ 797,204,000
- -------------------------------------------------------------------------------
 
  Shareholders' Equity:
     Common Stock, $.01 par value, authorized
       10,000,000 shares; issued and 
       outstanding 8,679,279 shares in 1998 
       and 5,109,515 shares in 1997            $       87,000   $      51,000
       Paid-In Surplus                             43,587,000      21,973,000
       Accumulated Other Comprehensive Income:
          Net Unrealized Gain on Securities
            Available for Sale, Net of Tax
            effect of $482,000 and $687,000
            respectively                            1,025,000       1,460,000
       Retained Earnings                           22,855,000      30,573,000
- -------------------------------------------------------------------------------
   Total Shareholders' Equity                      67,554,000      54,057,000
- -------------------------------------------------------------------------------
   Total Liabilities and Shareholders' Equity  $1,031,257,000   $ 851,261,000
- -------------------------------------------------------------------------------
</TABLE>
   See accompanying notes to consolidated financial statements.
 

                                       2
<PAGE>
 
<TABLE>
<CAPTION>
1998 Consolidated Statements of Earnings
Years ended December 31, 1998, 1997 and 1996                          1998            1997            1996
- -------------------------------------------------------------------------------------------------------------
<S>                                                            <C>             <C>             <C>
Interest Income:                                       
  Interest and Fees on Loans                                    $  49,588,000   $  39,909,000   $  32,225,000
  Interest on Federal Funds Sold                                    3,795,000       3,487,000       1,515,000
  Interest on Securities:                              
       Taxable                                                     11,904,000      10,168,000       7,284,000
       Exempt from Federal Income Taxes                             3,579,000       2,060,000       1,340,000
- -------------------------------------------------------------------------------------------------------------
  Total Interest Income                                         $  68,866,000   $  55,624,000   $  42,364,000
- -------------------------------------------------------------------------------------------------------------
                                                       
Interest Expense:                                      
  Interest on Deposits                                             25,537,000      19,881,000      14,738,000
  Interest on Federal Funds and Repurchase Agreements               3,208,000       1,813,000       1,106,000
- -------------------------------------------------------------------------------------------------------------
  Total Interest Expense                                        $  28,745,000   $  21,694,000   $  15,844,000
- -------------------------------------------------------------------------------------------------------------
                                                       
Net Interest Income:                                               40,121,000      33,930,000      26,520,000
  Provision for Credit Losses                                       2,125,000       1,300,000       1,015,000
- -------------------------------------------------------------------------------------------------------------
  Net Interest Income after Provision for Credit Losses         $  37,996,000   $  32,630,000   $  25,505,000
- -------------------------------------------------------------------------------------------------------------
                                                       
Other Income:                                          
  Service Charges on Deposit Accounts                               3,232,000       3,050,000       2,446,000
  Merchant Credit Card Income                                       1,988,000       1,831,000       1,469,000
  Trust Department Income                                           1,554,000       1,318,000         702,000
  Gain on Sale of Securities Held to Maturity                               -               -          10,000
  Gain on Sale of Securities Available for Sale                     2,016,000         111,000               -
  ATM Network Fees Earned                                             276,000         236,000         205,000
  Other Income                                                      1,185,000       1,040,000         559,000
- -------------------------------------------------------------------------------------------------------------
  Total Other Income                                            $  10,251,000   $   7,586,000   $   5,391,000
- -------------------------------------------------------------------------------------------------------------
                                                       
Other Expenses:                                        
  Salaries and Employee Benefits                                   13,939,000      11,100,000       9,108,000
  Occupancy Expense                                                 5,966,000       4,396,000       3,320,000
  Merchant Credit Card Expense                                      1,718,000       1,566,000       1,438,000
  Other Expense                                                     8,379,000       6,654,000       5,466,000
- -------------------------------------------------------------------------------------------------------------
  Total Other Expenses                                          $  30,002,000   $  23,716,000   $  19,332,000
- -------------------------------------------------------------------------------------------------------------
                                                       
Income before Income Taxes:                                        18,245,000      16,500,000      11,564,000
  Income Taxes                                                      4,954,000       4,956,000       3,480,000
- -------------------------------------------------------------------------------------------------------------
  Net Income                                                    $  13,291,000   $  11,544,000   $   8,084,000
- -------------------------------------------------------------------------------------------------------------
                                                       
Net Income per Common Share:                           
  Basic Net Income Per Share                                            $1.54           $1.36           $0.96
- -------------------------------------------------------------------------------------------------------------
  Diluted Net Income Per Share                                          $1.54           $1.33           $0.92
</TABLE>

   See accompanying notes to consolidated financial statements.
 

                                       3
<PAGE>
 
1998 Consolidated Statements of Changes in Shareholders' Equity and
Comprehensive Income
Years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
                                                                                        Accumulated Other   
                                            Common Stock     Paid-In        Retained      Comprehensive   Shareholders'    Total
                                              Shares         Amount          Surplus        Earnings        Income        Equity
<S>                                           <C>          <C>            <C>          <C>              <C>           <C>
December 31, 1995
   Balance:                                    2,539,302   $     25,000   $  9,946,000   $ 22,397,000   $    634,000  $  33,002,000
   --------------------------------------------------------------------------------------------------------------------------------
   Stock Split Effected in the form of 
     a Dividend                                  507,823          5,000         (9,000)             -              -         (4,000)
   Common Stock Issuance                           9,297             (a)       219,000              -              -        219,000
   Comprehensive Income:
     Net Income                                        -              -              -      8,084,000              -      8,084,000
     Net unrealized change in Securities
       Available for Sale, net of tax
        effect of ($142,000)                           -              -              -              -       (302,000)      (302,000)
   Total Comprehensive Income                                                                                             7,782,000
   Three-for-Two Stock Split                   1,525,663         15,000        (17,000)             -              -         (2,000)
December 31, 1996
   Balance:                                    4,582,085   $     45,000   $ 10,139,000   $ 30,481,000   $    332,000  $  40,997,000
   --------------------------------------------------------------------------------------------------------------------------------
   Stock Dividend                                458,067          5,000     11,442,000    (11,452,000)             -         (5,000)
   Common Stock Issuance                           7,778             (a)       242,000              -              -        242,000
   Comprehensive Income:
     Net Income                                        -              -              -     11,544,000              -     11,544,000
     Net unrealized change in Securities
       Available for Sale, net of tax 
       effect of $530,000                              -              -              -              -      1,128,000      1,128,000
   Total Comprehensive Income                                                                                            12,672,000
   Exercise of Stock Options                      61,585          1,000        150,000              -              -        151,000
December 31, 1997
   Balance:                                    5,109,515   $     51,000   $ 21,973,000   $ 30,573,000   $  1,460,000   $ 54,057,000
   --------------------------------------------------------------------------------------------------------------------------------
   Stock Dividend                                525,207          5,000     20,995,000    (21,009,000)             -         (9,000)

   Common Stock Issuance                           9,520             (a)       302,000              -              -        302,000
   Comprehensive Income:
     Net Income                                        -              -              -     13,291,000              -     13,291,000
     Net unrealized change in Securities
       Available for Sale, net of tax 
       effect of $205,000                              -              -              -              -       (435,000)      (435,000)

   Total Comprehensive Income                                                                                            12,856,000
   Three-for-Two Stock Split                   2,891,339         29,000        (32,000)             -              -         (3,000)

   Exercise of Stock Options                     143,698          2,000        349,000              -              -        351,000
December 31, 1998
   Balance:                                    8,679,279   $     87,000   $ 43,587,000   $ 22,855,000   $  1,025,000   $ 67,554,000
   --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

   See accompanying notes to consolidated financial statements.
   (a) Amount is less than $1,000.
 

                                       4
<PAGE>
 
<TABLE>
<CAPTION> 
1998 Consolidated Statements of Cash Flows
Years ended December 31, 1998, 1997 and 1996                                             1998            1997            1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>             <C>             <C> 
Cash Flows from Operating Activities:
   Net Income                                                                       $  13,291,000   $  11,544,000   $   8,084,000   
      Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
      Depreciation and Amortization                                                     2,301,000       1,716,000       1,296,000
      Amortization, Accretion of Premiums and Discounts on Investments                    512,000         662,000         798,000
   Provision for Credit Losses                                                          2,125,000       1,300,000       1,015,000
   Deferred Income Taxes                                                                 (782,000)       (332,000)       (290,000) 
   Gain on Sale of Premises and Equipment                                                (380,000)       (324,000)         (2,000)
   Gain on Sale of Securities Held to Maturity                                                  -               -         (10,000)
   Gain on Sale of Securities Available for Sale                                       (2,016,000)       (111,000)              -
   Increase in Interest Receivable                                                       (850,000)     (1,576,000)       (838,000) 
   (Increase) Decrease in Other Assets                                                   (966,000)     (1,454,000)        245,000
   Increase in Unamortized Loan Origination Fees                                          307,000         196,000         350,000
   Increase (Decrease) in Other Liabilities                                               147,000         476,000         152,000
      Total Adjustments                                                                   398,000         553,000       2,716,000
- ----------------------------------------------------------------------------------------------------------------------------------
   Net Cash Provided by Operating Activities                                        $  13,689,000   $  12,097,000   $  10,800,000
- ----------------------------------------------------------------------------------------------------------------------------------
 
Cash Flows from Investing Activities:
   Proceeds from Maturities and Calls of:
      Held to Maturity Securities                                                   $   4,945,000   $  50,292,000   $  20,446,000
      Available for Sale Securities                                                    25,535,000      18,750,000      25,700,000
   Proceeds from Sales of Available for Sale Securities                                60,914,000      12,893,000               -
   Purchase of Securities Held to Maturity                                            (10,317,000)    (58,111,000)              -
   Purchase of Securities Available for Sale                                         (143,945,000)   (110,816,000)    (94,350,000)
   Net Increase in Loans                                                             (144,080,000)    (84,232,000)    (66,663,000)
   Proceeds from Sale of Premises and Equipment                                         2,675,000       4,941,000           2,000
   Acquisition of Premises and Equipment                                              (11,759,000)     (5,127,000)     (3,370,000) 
   Loan Recoveries                                                                         91,000          84,000         108,000
- ----------------------------------------------------------------------------------------------------------------------------------
   Net Cash Used in Investing Activities                                            $(215,941,000)  $(171,326,000)  $(118,127,000)
- ----------------------------------------------------------------------------------------------------------------------------------
 
Cash Flows from Financing Activities:
   Net Increase (Decrease) from Federal Funds Purchased                                         -   $  (2,970,000)  $     220,000
   Net Increase in Demand Deposits and Savings Accounts                                51,729,000     151,119,000     146,391,000
   Net Increase (Decrease) in Certificates of Deposit                                 108,240,000      25,182,000     (15,490,000)
   Net Increase (Decrease) in Securities Sold under Repurchase Agreements               6,383,000      33,257,000      (8,053,000)
   Proceeds from Sale of Stock                                                            302,000         242,000         219,000
   Proceeds from Exercise of Options                                                      351,000         151,000               -
   Cash Paid for Fractional Shares at Dividend and Split                                  (12,000)         (5,000)         (6,000)
- ----------------------------------------------------------------------------------------------------------------------------------
       Net Cash Provided by Financing Activities                                    $ 166,993,000   $ 206,976,000   $ 123,281,000
- ----------------------------------------------------------------------------------------------------------------------------------
 
   Net Increase (Decrease) in Cash and Cash Equivalents:                            $ (35,259,000)  $  47,747,000   $  15,954,000   

      Cash and Cash Equivalents Beginning of Year                                     140,967,000      93,220,000      77,266,000
- ----------------------------------------------------------------------------------------------------------------------------------
   Cash and Cash Equivalents End of Year                                            $ 105,708,000   $ 140,967,000   $  93,220,000
- ----------------------------------------------------------------------------------------------------------------------------------

Supplemental Disclosure of Cash Flow Information:
   Interest Paid During the Year                                                    $  28,580,000   $  21,569,000   $  15,875,000
   Income Taxes Paid During the Year                                                $   6,000,000   $   5,750,000   $   4,075,000
</TABLE>

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>
 
1998 Notes to Consolidated Financial Statements

1. Summary of Significant Accounting and Reporting Policies

    The significant accounting and reporting policies of Pioneer Bancorporation
("the Company") and its wholly-owned subsidiary Pioneer Citizens Bank of Nevada
("PCBN") are summarized below. These policies conform with generally accepted
accounting principles and with general practice within the banking industry.
Certain reclassifications have been made to prior years` consolidated financial
statements to conform with current year presentation. All material intercompany
balances and transactions have been eliminated

(a) Basis of Presentation

    The accompanying consolidated financial statements include the accounts of
the Company and PCBN. PCBN is a state chartered commercial bank serving the
communities of Reno, Sparks, Carson City, Las Vegas, Summerlin and Henderson.
PCBN became a wholly-owned subsidiary of the Company on October 31, 1993.

    In preparing the consolidated financial statements, management is required
to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the dates of the consolidated balance sheets and the
consolidated results from operations for the periods presented. Actual results
could differ significantly from those estimates.

    Material estimates that are particularly susceptible to significant material
change in the near term relate to the allowance for credit losses. While
management believes that these allowances are currently adequate, future
additions may be necessary based on changes in economic conditions. In addition,
various regulatory agencies, as part of their examination process, periodically
review the allowances for credit losses. Such agencies may require the Company
to recognize additions to these allowances based on their judgements about
information available to them at the time of their examination.

(b) Securities Held to Maturity

    Securities held to maturity are carried at cost, adjusted for amortization
of premiums and accretion of discounts, computed using the interest method. The
Company determines the classification of securities at the time of their
purchase. The Company classifies securities as held to maturity when it has the
positive intent and ability to hold such securities to maturity. The Company
considers its asset/liability strategies, liquidity needs and other factors in
determining its ability and intent to hold securities to maturity.

(c) Securities Available for Sale

    The Company has designated certain securities as available for sale at the
time of their purchase. The Company determines which securities are available
for sale by evaluating whether such securities would be sold in response to
liquidity needs, asset/liability management and other factors. Amortization of
premiums and accretion of discounts are computed using the interest method. The
cost of securities sold is determined using the specific identification method.
Unrealized gains and losses, net of tax, on securities available for sale are
reported as a separate component of other comprehensive income until realized.
Declines in the fair value of individual securities held to maturity or
available for sale below their cost that are other than temporary would result
in write-downs of the individual securities to their fair value. The related
write-downs would be included in net income as realized losses.

(d) Allowance for Credit Losses

    The allowance for credit losses is maintained at a level believed by
management to be adequate to provide for potential loan losses based on
management's evaluation of the loan portfolio, prevailing and anticipated
economic conditions, and the Company's previous loan loss experience. The
allowance is based on estimates and ultimate losses may vary from current
estimates. The allowance is increased by provisions charged to operations and
reduced by loans charged off, net of recoveries. In addition, regulatory
examiners may require the Company to recognize additions to the allowance based
upon information available to them at the time of their examination.

    The Company evaluates loans for impairment on a periodic basis. A loan is
considered impaired when, based on current information of events, it is probable
that a creditor will be unable to collect all amounts due (i.e. principal and
interest) according to the contractual terms of the loan agreement. The
measurement of impairment may be based upon (i) the present value of the
expected future cash flows of the impaired loan discounted at the loans original
effective interest rate, (ii) the observable market price of the impaired loan,
or (iii) the fair value of the collateral of a collateral dependent loan. The

                                       6
<PAGE>
 
amount by which the recorded investment of the loan exceeds the measure of the
impaired loan is recognized by recording of valuation allowance with a
corresponding charge to the provision for credit losses.

    The Company stratifies its loan portfolio by size and treats smaller
performing loans with an outstanding balance less than $250,000 as a homogenous
portfolio. For loans in excess of $250,000, the Company conducts a periodic
review of each loan in order to test for impairment. Cash payments received on
loans considered impaired are applied to principal amounts due first until fully
recovered and then to any forgone interest.

(e) Premises and Equipment

    Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation for consolidated financial statement purposes is
computed on the straight-line method over the estimated useful lives. Leasehold
improvements are amortized over the economic life of the improvement or lease
term, whichever is shorter.

    The estimated useful lives of premises and equipment are as follows:
        Building and Improvements: 10 to 39 years
        Furniture, Fixtures and Equipment: 3 to 10 years

    As events or circumstances warrant, the Company assesses the recoverability
of its premises and equipment by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.

(f) Other Real Estate Owned

    Other real estate owned, if any, would include foreclosed properties held
for sale and would be recorded at estimated fair value less costs to sell.

(g)  Interest Income on Loans

    Interest on loans is accrued and credited to income based on the principal
amount outstanding. The accrual of interest on loans is discontinued when, in
the opinion of management, there is an indication that the borrower may be
unable to meet payments as they become due.

    Upon such discontinuance, all unpaid accrued interest is reversed. Cash
collections on nonaccrual loans are generally applied as a reduction to the
recorded investment of the loan. Loans are returned to accrual status only after
all past due amounts have been received and the borrower has demonstrated
sustained performance.

(h) Loan Origination Fees and Costs

    Loan origination fees and certain direct origination costs are capitalized
and recognized as an adjustment of the yield on the related loan on a level
yield basis.

(i) Net Income per Share

    The Company reports both basic and diluted net income per share. Basic net
income per share is determined by dividing net income by the average number of
shares of common stock outstanding, while diluted net income per share is
determined by dividing the average number of shares of common stock outstanding
adjusted for the dilutive effect of common stock equivalents. The net income per
share data for 1997 and 1996 has been restated to give retroactive recognition
to the stock dividend and the stock split declared in 1998 (see Note 11).

(j) Income Taxes

    Provisions for income taxes are based on taxes payable or refundable for the
current year (after exclusion of non-taxable income such as interest on state
and municipal securities and loans) and deferred taxes on temporary differences
between the amount of taxable income and pretax financial income and between the
tax basis of assets and liabilities and their reported amounts in the
consolidated financial statements. Deferred tax assets and liabilities are
included in the consolidated financial statements at currently enacted income
tax rates applicable to the period in which the deferred tax assets and
liabilities are expected to be realized or settled. As changes in tax laws or
rates are enacted, deferred tax assets and 

                                       7
<PAGE>
 
liabilities are adjusted through the provision for income taxes. Deferred tax
assets are recognized subject to management's judgement that realization is more
likely than not.

(k) Repurchase Agreements

    Securities sold under agreement to repurchase generally mature within one to
four days from the transaction date. At December 31, 1998 one transaction was
individually over 10% of shareholders' equity. This agreement was with a
customer of the Bank.

(l) Statements of Cash Flows

    For purposes of the statements of cash flows, cash and cash equivalents
include cash on hand, amounts due from banks and Federal Funds sold. Generally,
Federal Funds are purchased and sold for one-day periods.

(m) Stock Option Plan

    Prior to January 1, 1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations.
As such, compensation expense would be recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. On
January 1, 1996, the Company adopted certain provisions of SFAS No. 123,
Accounting for Stock-Based Compensation, which permits entities to recognize as
expense over the vesting period the fair value of all stock-based awards on the
date of grant. Alternatively, SFAS No. 123 also allows entities to continue to
apply the provisions of APB Opinion No. 25 and provide pro forma net income and
pro forma earnings per share disclosures for employee stock option grants made
in 1995 and future years as if the fair-value-based method defined in SFAS No.
123 had been applied. The Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions
of SFAS No. 123.

(n) Comprehensive Income

    On January 1, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. SFAS No. 130 establishes standards for reporting and
presentation of comprehensive income and its components in a full set of
financial statements. Comprehensive income consists of net income and net
unrealized gains (losses) on securities and is presented in the consolidated
statements of stockholders' equity and comprehensive income. The Statement
requires only additional disclosures in the consolidated financial statements;
it does not affect the Company's financial position or results 0of operations.
Prior year financial statements have been reclassified to conform to the
requirements of SFAS No. 130.

2. Cash and Due From Banks

    The Company was required to maintain cash balances of $4,177,000 and
$4,746,000 at December 31, 1998 and 1997, respectively, to cover services
provided by correspondent banks. Federal Reserve Board regulations require that
PCBN maintain certain reserve balances on deposit with the Federal Reserve Bank.
Cash balances maintained to meet reserve requirements are not available for use
by PCBN or the Company. The Federal Reserve required balances were $2,400,000
and $920,000 at December 31, 1998 and 1997, respectively.

                                       8
<PAGE>
 
3. Securities Held to Maturity

    The carrying values and estimated fair values of securities held to maturity
at December 31, 1998 and 1997 are summarized as follows:

<TABLE>
<CAPTION>
                                                                                                   Gross       Gross
                                                                                     Carrying    Unrealized  Unrealized     Fair
                                                                                       Value       Gains       Losses       Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>          <C>         <C>         <C>
1998:
     U.S. Treasuries                                                                $         -  $        -     $     -  $         -
     State, County and Municipal                                                     46,102,000   1,582,000      57,000   47,627,000
- ------------------------------------------------------------------------------------------------------------------------------------

     Total                                                                          $46,102,000  $1,582,000     $57,000  $47,627,000
- ------------------------------------------------------------------------------------------------------------------------------------

1997:
     U.S. Treasuries                                                                $ 4,006,000  $        -     $     -  $ 4,006,000
     State, County and Municipal                                                     36,855,000   1,059,000      50,000   37,864,000
- ------------------------------------------------------------------------------------------------------------------------------------

     Total                                                                          $40,861,000  $1,059,000     $50,000  $41,870,000
- ------------------------------------------------------------------------------------------------------------------------------------

The carrying values and estimated fair values of securities held to maturity at
 December 31, 1998, by contractual maturity, are shown below:
                                                                                     Carrying                               Fair
                                                                                       Value                                Value
- ------------------------------------------------------------------------------------------------------------------------------------
Maturing Within:
     One Year                                                                       $ 1,836,000                          $ 1,846,000

     One to Five Years                                                               10,403,000                           10,608,000

     Five to Ten Years                                                               28,497,000                           29,799,000

     Over Ten Years                                                                   5,366,000                            5,374,000
- ------------------------------------------------------------------------------------------------------------------------------------

     Total                                                                          $46,102,000                          $47,627,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     Securities carried at approximately $0 and $4,006,000 at December 31, 1998
     and 1997, respectively, were pledged to secure various state and local
     government and trust deposits as required or permitted by law.

                                       9
<PAGE>
 
4. Securities Available for Sale

The amortized cost and estimated fair values of securities available for sale at
December 31, 1998 and 1997 are summarized as follows:

<TABLE>
<CAPTION>
                                                                                                 Gross       Gross
                                                                                  Amortized    Unrealized  Unrealized      Fair
                                                                                    Cost         Gains       Losses        Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>            <C>         <C>         <C>
1998:
     U.S. Treasuries                                                             $ 52,121,000  $  841,000  $        -   $ 52,962,000
     U.S. Agencies                                                                164,450,000     801,000   1,032,000    164,219,000
     State, County and Municipal                                                   51,392,000     947,000      44,000     52,295,000
- ------------------------------------------------------------------------------------------------------------------------------------

     Total                                                                       $267,963,000  $2,589,000  $1,076,000   $269,476,000
- ------------------------------------------------------------------------------------------------------------------------------------

1997:
     U.S. Treasuries                                                             $116,880,000  $1,494,000  $   33,000   $118,341,000
     U.S. Agencies                                                                 70,404,000     557,000     160,000     70,801,000
     State, County and Municipal                                                   21,569,000     296,000       3,000     21,862,000
- ------------------------------------------------------------------------------------------------------------------------------------

     Total                                                                       $208,853,000  $2,347,000  $  196,000   $211,004,000
- ------------------------------------------------------------------------------------------------------------------------------------
 
The amortized cost and estimated fair values of securities available for sale
 at December 31, 1998, by contractual maturity, are shown below:
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Amortized                                Fair
                                                                                    Cost                                   Value
- ------------------------------------------------------------------------------------------------------------------------------------
Maturing Within:
     One Year                                                                    $ 39,712,000                           $ 40,017,000
     One to Five Years                                                             70,591,000                             71,757,000
     Five to Ten Years                                                             62,531,000                             63,230,000
     Over Ten Years                                                                95,129,000                             94,472,000
- ------------------------------------------------------------------------------------------------------------------------------------

     Total                                                                       $267,963,000                           $269,476,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

         Securities with fair value of approximately $31,700,000 and $67,637,000
     at December 31, 1998 and 1997, respectively, were pledged to secure various
     state and local government and trust deposits as required or permitted by
     law. Proceeds from the sales of available for sale securities during 1998,
     1997 and 1996 were approximately $60,914,000, $12,893,000 and $0,
     respectively. Gross gains (losses) of $2,020,000 and $(4,000) in 1998,
     $115,000 and ($4,000) in 1997, and no gains (losses) in 1996 were realized
     on those sales.

         During 1998, $596,000 of unrealized gains arose during the year and are
     included in comprehensive income ($387,000, net of tax), and $1,265,000 of
     previously unrealized gains ($822,000, net of tax) were realized in
     earnings.

                                       10
<PAGE>
 
5. Loans and Leases

<TABLE>
<CAPTION>

The following is a summary of loans by major category at December 31, 1998, and 1997:        1998          1997
- -------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>           <C>
 
     Commercial and Industrial                                                           $151,691,000  $118,862,000
     Real Estate Loans:      
          Construction and Land Development                                                93,766,000    85,479,000
          Insured or Guaranteed Residential                                                    46,000        46,000
          Conventional and Non-Farm, Non-Residential                                      297,775,000   204,065,000
     Agricultural Loans                                                                       462,000        70,000
     Loans to Individuals for Personal Expenditures                                        32,211,000    31,647,000
     State and Municipal Obligations                                                        8,380,000     1,781,000
     Leases                                                                                   714,000             -
     Subtotal                                                                             585,045,000   441,950,000
 
     Less:    Allowance for Credit Losses                                                   7,004,000     5,773,000
              Unamortized Loan Origination Fees, Net of Direct Costs                        1,936,000     1,629,000
- -------------------------------------------------------------------------------------------------------------------
     Loans Net                                                                           $576,105,000  $434,548,000
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

As of December 31, 1998 and 1997 the Company had no impaired loans for which a
specific allowance had been established. Nonaccrual and impaired loans amounted
to $794,000 and $920,000, respectively, as of December 31, 1998 and 1997. The
average recorded investment in impaired loans was $1,555,000 and $473,000,
respectively for the years ended December 31, 1998 and 1997. As the Company
places all impaired loans on nonaccrual status, no interest income was
recognized on impaired loans during the years ended December 31, 1998 and 1997.
The amount of interest income that would have been recorded on nonaccrual loans
was approximately $42,000, $40,000 and $29,000 for 1998, 1997, and 1996,
respectively.

 
6. Allowance for Credit Losses

<TABLE>
<CAPTION>
Changes in the allowance for credit losses are as follows:                                    1998           1997          1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>            <C>           <C>
     Balance at Beginning of Year                                                          $ 5,773,000   $ 4,923,000   $ 4,010,000
     Loans Charged Off                                                                        (985,000)     (534,000)     (210,000)
     Recoveries of Loans Previously Charged Off                                                 91,000        84,000       108,000
     Net Loans Charged Off                                                                    (894,000)     (450,000)     (102,000)
     Provision for Credit Losses                                                             2,125,000     1,300,000     1,015,000
- ----------------------------------------------------------------------------------------------------------------------------------
     Balance at End of Year                                                                $ 7,004,000   $ 5,773,000   $ 4,923,000
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

7. Premises and Equipment, Net

<TABLE>
<CAPTION>
Major classifications of premises and equipment at December 31, 1998 and 1997
 are summarized as follows:                                                                                1998         1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                     <C>           <C>
     Land                                                                                                $ 1,122,000   $ 1,206,000
     Buildings                                                                                             2,310,000     1,239,000
     Leasehold Improvements                                                                               11,204,000     6,700,000
     Furniture and Equipment                                                                              11,662,000     7,756,000
     Subtotal                                                                                             26,298,000    16,901,000

     Less:     Accumulated Depreciation and Amortization                                                   8,249,000     6,015,000
- ----------------------------------------------------------------------------------------------------------------------------------
     Premises and Equipment, Net                                                                         $18,049,000   $10,886,000
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       11
<PAGE>
 
8. Deposits

  At December 31, 1998 and 1997, the Company had time deposits of $100,000 or
more of $109,150,000 and $40,904,000, respectively. Interest paid on time
deposits of $100,000 or more for 1998, 1997 and 1996 was $3,886,000, $1,674,000
and $2,000,000, respectively.

  Scheduled maturities of certificates of deposit at December 31, 1998 are
summarized as follows:

<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S>                                                                                                  <C>        
     1999                                                                                               $178,376,000
     2000                                                                                                 27,044,000
     2001                                                                                                  1,083,000
     2002                                                                                                  1,640,000
     2003                                                                                                      1,000
     2004 and Beyond                                                                                         104,000
- ----------------------------------------------------------------------------------------------------------------------
     Total                                                                                              $208,248,000
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
 
9. Repurchase Agreements

<TABLE>
<CAPTION>
The following table sets forth information with respect to securities sold under
 agreements to repurchase:                                                                       1998           1997          1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>           <C>            <C>
     Balance, end of year                                                                 $60,111,000   $ 53,728,000   $20,471,000
 
     Weighted average interest rate, end of year                                                 4.43%          4.98%         4.91%
 
     Average amount outstanding, during the year                                          $64,936,000   $ 34,391,000   $19,438,000
 
     Weighted average interest rate, for the year                                                4.86%          5.00%         4.91%
 
     Maximum amount outstanding at any month-end                                          $84,930,000   $ 53,728,000   $20,771,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     Securities subject to repurchase agreements are retained by PCBN's
     custodian under written agreements that recognize the customers' interests
     in the securities. Interest expense associated with securities sold under
     repurchase agreements totaled $3,155,000, $1,720,000 and $955,000 for 1998,
     1997 and 1996, respectively.

                                       12
<PAGE>
 
10. Income Taxes

<TABLE>
<CAPTION>

Federal Income Tax Expense consists of:                                  1998              1997             1996
- ------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>               <C>             
     Current Income Taxes                                             $ 5,736,000       $5,288,000        $3,770,000
     Deferred Income Taxes                                               (782,000)        (332,000)         (290,000)
- ------------------------------------------------------------------------------------------------------------------------
     Total                                                            $ 4,954,000       $4,956,000        $3,480,000
- ------------------------------------------------------------------------------------------------------------------------
 
The reasons for the variation of the effective income tax
 rate from the statutory federal tax rate are as follows:

     Tax Expense at Statutory Rate                                    $ 6,386,000       $5,775,000        $3,932,000
     Tax Effect of Tax Exempt Interest Income                          (1,199,000)        (655,000)         (414,000)
     Tax Other, Net                                                      (233,000)        (164,000)          (38,000)
- ------------------------------------------------------------------------------------------------------------------------
     Total                                                            $ 4,954,000       $4,956,000        $3,480,000
- ------------------------------------------------------------------------------------------------------------------------
                                                                                     
(As restated to reflect the actual 1997 Federal Income Tax Return as filed)               1998              1997
Deferred Tax Assets:                                                           
     Allowance for Credit Losses                                                       $ 2,386,000        $1,837,000
     Deferred Compensation                                                                 584,000           504,000
     Other                                                                                   4,000                 -
- ------------------------------------------------------------------------------------------------------------------------
     Total Gross Deferred Tax Assets                                                   $ 2,974,000        $2,341,000
- ------------------------------------------------------------------------------------------------------------------------
     Less:    Valuation Allowance                                                                -                 -
- ------------------------------------------------------------------------------------------------------------------------
              Net Deferred Tax Assets                                                  $ 2,974,000        $2,341,000
- ------------------------------------------------------------------------------------------------------------------------
Deferred Tax Liabilities:
     Plant and Equipment                                                               $    99,000        $  210,000   
     Deferred Loan Fees                                                                     13,000            13,000
     Discount Accretion on Securities                                                            -           105,000
     Unrealized Gain on Securities Available for Sale                                      529,000           753,000
     Other                                                                                 235,000           168,000
- ------------------------------------------------------------------------------------------------------------------------
     Total Gross Deferred Tax Liabilities                                              $   876,000        $1,249,000
- ------------------------------------------------------------------------------------------------------------------------
     Net Deferred Tax Assets                                                           $ 2,098,000        $1,092,000
- ------------------------------------------------------------------------------------------------------------------------
 
A summary of the change in the deferred tax asset
 (liability) for the years ended December 31, 1998 and 1997 is as follows:                  1998             1997
- ------------------------------------------------------------------------------------------------------------------------
     Deferred Tax Asset, Net Beginning of Year                                         $ 1,092,000        $1,294,000
     Change in the Tax Effect related to Unrealized (Gain)
      Loss on AFS Securities                                                               224,000          (534,000)
     Current Year Deferred Income Taxes                                                    782,000           332,000
- ------------------------------------------------------------------------------------------------------------------------
     Deferred Tax Asset, Net End of Year                                               $ 2,098,000        $1,092,000
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>

     The current federal tax receivable of $1,154,000 and receivable of $780,000
     at December 31, 1998 and 1997 respectively, is included in other assets in
     the consolidated balance sheets. In assessing the realizability of deferred
     tax assets, the Company considers whether it is more likely than not that
     some portion or all of the deferred tax assets will not be realized. The
     ultimate realization of deferred tax assets is dependent upon the ability
     to carryback losses and the generation of future taxable income during the
     periods in which those temporary differences become deductible. The Company
     considers the scheduled reversal of deferred tax liabilities, projected
     future taxable income, and tax planning strategies in making this
     assessment. Based on the level of historical taxable income and projections
     for future taxable income over the periods which deferred tax assets are
     deductible, management believes that it is more likely than not that the
     Company will realize the benefits of these deductible differences. The
     amount of the deferred tax asset considered realizable, however, could be
     reduced in the near term if estimates of future taxable income over the
     periods which deferred tax assets are deductible are reduced.

                                       13
<PAGE>
 
11. Common Stock

    On July 15, 1998, the Board of Directors declared a three-for-two stock
split to shareholders of record as of July 27, 1998. All pertinent share and per
share information for 1998, 1997 and 1996 including stock option activity has
been retroactively restated to reflect this split.

    On January 21, 1998, the Board of Directors declared a 10% stock dividend to
shareholders of record as of February 2, 1998. All pertinent share and per share
information for 1998, 1997 and 1996 including qualified stock option activity
has been retroactively restated to reflect this dividend.

    On January 15, 1997, the Board of Directors declared a 10% stock dividend to
shareholders of record as of January 31, 1997. All pertinent share and per share
information for 1997 and 1996 including qualified stock option activity has been
retroactively restated to reflect this split.

    On April 17, 1996, the Board of Directors declared a three-for-two stock
split to shareholders of record as of April 30, 1996. All pertinent share and
per share information for 1996 including qualified stock option activity has
been retroactively restated to reflect this split.

    On January 17, 1996, the Board of Directors declared a one-for-five stock
split effected in the form of a dividend to shareholders of record as of January
31, 1996. All pertinent share and per share information for 1996 including
qualified stock option activity has been retroactively restated to reflect this
split.

    In 1990, the Board of Directors approved the issuance of qualified stock
options which provide for the grant of qualified stock options to certain key
employees. The price per share at which shares may be acquired upon exercise of
qualified options is determined by the Board of Directors at the time of the
grant. The qualified options are exercisable over a vesting period until
employee termination as set forth in the respective stock option agreements.

    In 1998, the shareholders of the Company approved an amendment to a non-
qualified stock option plan dated 1991. Under this plan and amendment, options
may be granted by the Board of Directors to key employees or directors of the
Company or PCBN. The price per share at which shares may be acquired upon
exercise of non-qualified options is determined by the Board of Directors at the
time of the grant. The non-qualified options are exercisable over a vesting
period of 5-years until employee termination or option expiration as set forth
in the respective stock option agreements.

<TABLE>
<CAPTION>
A summary of changes in outstanding options is as follows:                       1998       1997     1996
- -----------------------------------------------------------------------------------------------------------
<S>                                                                            <C>        <C>       <C>
Outstanding, January 1                                                          143,698   205,283   205,283
Options granted                                                                 446,250         -         -
Options exercised                                                              (143,698)  (61,585)        -
- -----------------------------------------------------------------------------------------------------------
Outstanding, December 31                                                        446,250   143,698   205,283
</TABLE>

                                       14
<PAGE>
 
11. Common Stock (continued)

Information regarding stock option activity and prices of the shares is as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------

                                                                                              Weighted      Option        Average
                                                                                              Number of   Price Range   Option Price
                                                                                               Shares*    Per Share*     Per Share*
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>        <C>            <C>
Shares under option at:
 December 31, 1998                                                                              446,250  $29.33-$25.00        $26.58
 December 31, 1997                                                                              143,698           2.44          2.44
 December 31, 1996                                                                              205,283           2.44          2.44


Options exercisable at:
 December 31, 1998                                                                                    -              -             -
 December 31, 1997                                                                              143,698           2.44          2.44
 December 31, 1996                                                                              205,283           2.44          2.44

 
Options exercised in year ended:
 December 31, 1998                                                                              143,698           2.44          2.44
 December 31, 1997                                                                               61,585           2.44          2.44
 December 31, 1996                                                                                    -              -             -
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Adjusted for stock dividends declared in 1996, 1997 and 1998 as well as 
  3-for-2 stock splits in 1996 and 1998.

The Company applies APB 25 in accounting for the stock option plan and,
accordingly, no compensation cost has been recognized in the Consolidated
Financial Statements for the fair value of stock options granted. Had the
Company determined compensation cost based on the fair value at the grant date
for its stock options granted in 1998 under SFAS No. 123, the Company's net
income would have been reduced to the pro forma amounts indicated in the table
below for the year ended December 31, 1998:

<TABLE>
<CAPTION>
(In Thousands except per share data)
- -----------------------------------------------------
<S>                                     <C>
Net Income:
  As reported                           $13,291
  Pro Forma                              13,074
Basic net income per share:
  As reported                           $  1.54
  Pro Forma                                1.52
Diluted net income per share:
  As reported                           $  1.54
  Pro Forma                                1.52
- -----------------------------------------------------
</TABLE>

The fair value of each option granted was estimated on the date of grant using
the Black-Sholes option-pricing model with the following weighted average
assumptions for the years presented:

<TABLE>
<CAPTION>
(In Thousands except per share data)
- -----------------------------------------------------
<S>                                <C>
Dividend yield                      0%
Expected life of option (years):
  Officers                          5
  Directors                         5
Stock price volatility:
  Officers                         27%
  Directors                        27%
- -----------------------------------------------------
</TABLE>

The risk-free interest rates used in the Black-Scholes option-pricing model were
equal to comparable U.S. Treasury rates at each respective grant date. A 5-year
rate of 5.22% was used for valuing both the officers' options and the directors'
options based upon respective terms of the options. The weighted average fair
value at the date of grant for options granted during 1998 was $9.03 per option.

                                       15
<PAGE>
 
12. Related Party Transactions

    At December 31, 1998, 1997 and 1996, officers and directors of the Company
or companies with which they are affiliated were indebted to the Company in the
approximate aggregate amounts of $5,215,000, $4,556,000 and $5,428,000,
respectively. Such loans were made on substantially the same terms, including
interest rates and collateral as those prevailing at the time for comparable
transactions with other persons who were not executive officers or directors and
did not involve more than the normal risk of collectibility or present other
unfavorable features. It is the policy of the Company to have the Board of
Directors approve executive officer/director loans in advance of their funding.

13. Net Income per Share

    The following is a summary of the calculation of basic and diluted net
income per share for the years ended December 31, 1998, 1997, and 1996:

<TABLE>
<CAPTION>
                                   1998         1997         1996
- ---------------------------------------------------------------------
<S>                             <C>          <C>          <C>
Net Income                      $13,291,000  $11,544,000  $8,084,000
Basic Net Income Per Share
Weighted Average
 Shares Outstanding               8,627,432    8,469,314   8,449,481
Net Income per Share            $      1.54  $      1.36  $     0.96
- ---------------------------------------------------------------------
 
Diluted Net Income Per Share
Weighted Average
 Shares Outstanding               8,627,432    8,469,314   8,449,481
Effect of Dilutive
  Stock Options                           -      220,572     306,306
- ---------------------------------------------------------------------
                                  8,627,432    8,689,886   8,755,787
Net Income per Share            $      1.54  $      1.33  $     0.92
- ---------------------------------------------------------------------
</TABLE>

Per share amounts have been retroactively restated to reflect the stock
dividends and stock splits described in Note 11.

14. Transfers from Retained Earnings to Paid-in Surplus

    The Nevada Revised Statutes require that amounts be transferred from PCBN's
retained earnings to paid-in surplus before distribution of dividends to
shareholders from retained earnings. Such transfers are required only when net
income is generated in the previous fiscal year.

15. Employee Benefit Plans

    Effective August 1, 1987, the Company adopted a 401(k) Savings Plan (the
"Savings Plan"). The Savings Plan is a single-employer defined contribution plan
covering substantially all full-time employees of the Company. Employees may
contribute from 1% to 15% of their annual compensation. The Company's
discretionary contribution was 50% of the contributions made by the employees in
1998, 1997 and 1996. The Company's discretionary contributions were $201,816,
$157,698 and $127,708 in 1998, 1997 and 1996, respectively.

    Effective April 15, 1992, the Company adopted a supplemental executive
compensation plan to provide an unfunded incentive compensation arrangement for
certain management, directors and highly compensated employees of the Company.
Participants may elect to defer up to 100% of their annual compensation, as
defined. Upon reaching normal retirement age or date of disability, if earlier,
both as defined, participants are paid in a lump sum or in quarterly
installments over a term of up to 15 years. No contributions were made by
eligible participants in 1998, 1997 and 1996.

                                       16
<PAGE>
 
16. Future Minimum Rental Payments

    Certain bank facilities are leased under various operating leases. Future
minimum rental payments required under operating leases that have initial or
remaining noncancelable lease terms in excess of one year as of December 31,
1998 are as follows:

<TABLE>
<CAPTION>
Year ending December 31:
- -------------------------------------------
<S>                         <C>
     1999                   $ 2,606,000
     2000                     2,620,000
     2001                     2,684,000
     2002                     2,738,000
     2003                     2,769,000
     Thereafter               3,246,000
- -------------------------------------------
     Total                  $16,663,000
- -------------------------------------------
</TABLE>

Rent expense was $2,029,000, $1,453,000 and $949,000 for the years ended
December 31, 1998, 1997 and 1996, respectively.

17. Commitments and Contingencies

    In the normal course of business, there are outstanding various commitments
and contingent liabilities which are not reflected in the consolidated financial
statements, consisting of undisbursed loan commitments, unused lines of credit
and letters of credit of $182,457,000 and $150,172,000, respectively, at
December 31, 1998 and 1997. The Company's exposure to credit loss is limited to
amounts funded or drawn. At December 31, 1998 no losses are anticipated as a
result of these commitments.

    Loan commitments are typically contingent upon the borrower meeting certain
financial and other covenants, and such commitments typically have fixed
expiration dates and require payment of a fee. As many of these commitments are
expected to expire without being drawn upon, the total commitments do not
necessarily represent future cash requirements. The Company evaluates each
potential borrower and the necessary collateral on an individual basis.
Collateral varies, but may include real property, bank deposits, debt
securities, equity securities or business assets.

    Letters of credit are conditional commitments written by the Company to
guarantee the performance of a customer to a third party. These guarantees are
issued primarily relating to purchases of goods by the Company's commercial
customers, and such guarantees are typically short-term. Credit risk is similar
to that involved in extending loan commitments to customers, and the Company,
accordingly, uses evaluation and collateral requirements similar to those for
loan commitments.

    The Company is involved both as plaintiff and defendant in litigation in the
ordinary course of its operations. Based on advice of legal counsel, management
does not anticipate that the final outcome of current or anticipated litigation
will have a materially adverse effect on the Company's operations or financial
condition.

    The Bank has a Trust Department which acts as Trustee for certain assets. At
December 31, 1998 discretionary assets totaled $104,351,000 and non-
discretionary assets totaled $316,139,000.

                                       17
<PAGE>
 
18. Financial Instrument Disclosures

    Fair value estimates, methods and assumptions are set forth below for the
Company's financial instruments.

    The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.

(a)  Cash and Due from Banks and Federal Funds Sold/Purchased

    The carrying amount is a reasonable estimate of fair value.

(b)  Securities held to Maturity and Securities Available for Sale

    The carrying amounts for short-term investments approximate fair value
because they mature in 90 days or less and do not present unanticipated credit
concerns. The fair value of long-term investments, except certain state and
municipal securities, is estimated based on bid prices published in financial
newspapers or bid quotations received from securities dealers. The fair value of
certain state and municipal securities, is estimated based on bid prices
published in financial newspapers or bid quotations received from securities
dealers. The fair value of certain state and municipal securities is not readily
available The carrying amounts for short-term investments approximate fair value
because they mature in 90 days or less and do not present unanticipated credit
concerns. The fair value of long-term investments, except through market sources
other than dealer quotations, so fair value estimates are based on quoted market
prices of similar instruments, adjusted for differences between the quoted
instruments and the instruments being valued.

(c) Loans

    Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type such as commercial, commercial
real estate, residential mortgage, and consumer. Each loan category is further
segmented into fixed and adjustable rate interest terms and by performing and
nonperforming categories.

    Loans which are either maturing or subject to repricing in the short term
are valued for fair value purposes by using the carrying amount for such loans.
For other loans fair value is estimated by discounting scheduled cash flows
through estimated maturity using estimated market discount rates that reflect
the credit and interest rate risk inherent in the loan.

(d)  Deposit Liabilities

    Under FAS 107, the fair value of deposits with no stated maturity, such as
noninterest-bearing demand deposits, savings, and NOW accounts and money market
and checking 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 is estimated using the rates currently offered for
deposits of similar remaining maturities.

(e) Repurchase Agreements

    The carrying amounts of borrowings under repurchase agreements approximate
the fair value.

(f)  Commitments to Extend Credit and Letters of Credit

    The fair value of commitments to extend credit and the fair value of letters
of credit are estimated based on fees currently charged for similar agreements.
As recorded, deferred income arising from these unrecognized financial
instruments is insignificant to the consolidated financial statements. Estimated
fair value is not presented herein.

                                       18
<PAGE>
 
(g) Fair Value Disclosures

The estimated fair market value of Pioneer Bancorporation's Financial
Instruments at December 31, 1998 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
                                                         1998         1998          1997           1997
- ------------------------------------------------------------------------------------------------------------
                                                       Carrying    Estimated      Carrying      Estimated
                                                        Amount     Fair Value      Amount       Fair Value
- ------------------------------------------------------------------------------------------------------------
<S>                                                 <C>           <C>           <C>           <C>
Financial Assets:
     Cash and Cash Equivalents                       $105,708,000  $105,708,000  $140,967,000  $140,967,000
     Securities:                                   
       Available for Sale                             269,476,000   269,476,000   211,004,000   211,004,000
       Held to Maturity                                46,102,000    47,635,000    40,861,000    41,870,000
     Loans Net                                        576,105,000   586,149,000   434,548,000   435,362,000
- ------------------------------------------------------------------------------------------------------------
                                                   
Financial Liabilities:                             
     Deposits:                                     
       Noninterest-bearing                           $224,448,000  $224,448,000  $201,956,000  $201,956,000  
       Interest-bearing                               118,748,000   118,748,000    93,500,000    93,500,000
       Savings                                         97,279,000    97,425,000    66,352,000    66,500,000
       Money Market                                   251,024,000   251,024,000   278,022,000   278,022,000
     Certificates of Deposit                          208,248,000   209,120,000    99,948,000   100,048,000
     Securities Sold under Repurchase Agreements       60,111,000    60,111,000    53,728,000    53,728,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>

(h) Limitations

    Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering
for sale at one time the Company's entire holdings of a particular financial
instrument. Because no market exists for a significant portion of the Company's
financial instruments, fair value estimates are based on judgements regarding
future expected loss experience, current economic conditions, risk
characteristics of various financial instruments, and other factors. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgement and therefore cannot be determined with precision. Changes
in assumptions could significantly effect the estimates.

    Fair value estimates are based on existing on-and-off 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. For example, premises and equipment are not considered
financial assets. In addition, the tax ramifications related to the realization
of the unrealized gains and losses can have a significant effect on fair value
estimates and have not been considered in these estimates.

19. Risks Associated with Financial Instruments

Credit Risk

    Credit risk of a financial instrument is the possibility that a loss may
result from the failure of another party to perform in accordance with the terms
of the contract. The most significant credit risk associated with the Company's
financial instruments is concentrated in its loans receivable. Additionally, the
Company is subject to credit risk on certain off-balance sheet financial
instruments. The Company utilizes a loan monitoring system to evaluate the level
of credit risk on its loan portfolio and utilizes a similar process for Company
standby letters of credit.

Market Risk

    Market risk of a financial instrument is the possibility that future changes
in market prices may reduce the value of a financial instrument or increase the
contractual obligations of the Company. The Company's market risk is
concentrated in its portfolios of securities available-for-sale and loans
receivable. The Company's securities available-for-sale are traded in active
markets. The values of these securities are susceptible to fluctuations in the
general market. When a borrower fails to meet the contractual requirements of
his loan agreement, the Company is subject to the market risk of the collateral
securing the loan.

                                       19
<PAGE>
 
Interest Rate Risk

    Financial instruments are subject to interest rate risk to the extent that
they reprice on a frequency, degree or basis that varies from market repricing.
The Company is subject to interest rate risk to the degree that its interest
earning assets reprice on a different frequency or schedule than its interest-
bearing liabilities. The Company closely monitors the pricing sensitivity of its
financial instruments and utilizes asset/liability techniques to mitigate the
impact of interest rate risk.

Concentrations of Credit Risk

    The Company's lending activities are conducted in the state of Nevada. The
Company currently focuses on the origination of commercial and real estate
loans. The largest concentration of the Company's loan portfolio is located in
the Washoe, Carson and Clark County areas of Nevada. The ability of the
Company's borrowers to repay their commitments is contingent on several factors,
including the economic conditions in the borrower's geographic region, primarily
Nevada, market interest rates and upon the individual financial condition of the
borrower.

20. Regulatory Matters

    The Company is required to maintain minimum amounts of capital to total
"risk weighted" assets, as defined by the banking regulators. At December 31,
1998, the Company was required to have minimum Tier 1 and total risk-based
capital ratios of 4.0% and 8.0%, respectively. The Company's actual risk-based
capital ratios at that date were 9.5% and 10.5%, respectively.

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

    Quantitative measures established by regulation to ensure capital adequacy
require PCBN 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, 1998, that PCBN
meets all capital adequacy requirements to which it is subject.

    As of December 31, 1998, the most recent notification from the FDIC
categorized PCBN as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, PCBN must maintain
minimum total risk-based, Tier 1 risk-based, Tier 1 leverage ratios as set forth
in the table. There are no conditions or events since the notification that
management believes have changed the institution's category.

    PCBN's actual capital amounts and ratios are also presented in the table. No
amounts were deducted from capital for interest-rate risk.

                                       20
<PAGE>
 
20. Regulatory Matters continued:

<TABLE>
<CAPTION>
 
                                                                                           To Be Well   
                                                                                        Capitalized Under
                                                                   For Capital          Prompt Corrective
                                           Actual               Adequacy Purposes       Action Provisions
- -------------------------------------------------------------------------------------------------------------
                                      Amount      Ratio       Amount        Ratio        Amount        Ratio
- -------------------------------------------------------------------------------------------------------------
<S>                                 <C>           <C>       <C>             <C>      <C>             <C>
As of December 31, 1998:
     Total Capital
       (to Risk Weighted Assets)    $73,533,000   10.5%      $55,954,000      8.0%     $69,954,000      10.0%  
     Tier 1 Capital                                       
       (to Risk Weighted Assets)    $66,529,000    9.5%      $28,000,000      4.0%     $42,000,000       6.0%  
     Tier 1 Capital                                                                                           
       (to Average Assets)          $66,529,000    7.2%      $37,000,000      4.0%     $46,250,000       5.0%  
As of December 31, 1997:                                                                                      
     Total Capital                                                                                            
       (to Risk Weighted Assets)    $58,369,000   10.9%     $42,723,000      8.0%     $53,423,000      10.0%  
     Tier 1 Capital                                                                                           
       (to Risk Weighted Assets)    $52,596,000    9.9%     $21,350,000      4.0%     $32,050,000       6.0%  
     Tier 1 Capital                                                                                           
       (to Average Assets)          $52,596,000    7.2%     $29,450,000      4.0%     $36,800,000       5.0%   
- -------------------------------------------------------------------------------------------------------------
</TABLE>

PCBN, as a Nevada corporation, is limited in making distribution to its
stockholders, the Company, to the lesser of the retained earnings of the Bank or
the net income of the Bank for its last three fiscal years, less the amount of
any distributions during such period.

21. Pioneer Bancorporation (Parent Company Only)

<TABLE>
<CAPTION>
(Condensed Balance Sheet at December 31,)                             1998         1997
<S>                                                                <C>          <C>
Assets:
     Cash and Non-Interest Bearing Due From Subsidiary             $     3,000  $         -
     Interest Bearing Due From Subsidiary                            1,107,000      608,000
     Investment In Subsidiary                                       66,400,000   53,437,000
     Other Assets                                                       64,000       12,000
- ------------------------------------------------------------------------------------------------
       Total  Assets                                               $67,574,000  $54,057,000
- ------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity:
     Other Liabilities                                             $    20,000  $         -
- ------------------------------------------------------------------------------------------------
       Total  Liabilities                                          $    20,000  $         -
- ------------------------------------------------------------------------------------------------
     Shareholders Equity:
       Common Stock, $.01 par value, 10,000,000
           shares authorized; 8,679,279 and 5,109,515 issued
           and outstanding in 1998 and 1997, respectively          $    87,000  $    51,000
       Paid-In Surplus                                              43,587,000   21,973,000
       Accumulated Other Comprehensive Income:
           Net Unrealized Gain on Securities Available for Sale      1,025,000    1,460,000
       Retained Earnings                                            22,855,000   30,573,000
- ------------------------------------------------------------------------------------------------
       Total  Shareholders' Equity                                 $67,554,000  $54,057,000
- ------------------------------------------------------------------------------------------------
       Total  Liabilities and Shareholders' Equity                 $67,574,000  $54,057,000
- ------------------------------------------------------------------------------------------------
</TABLE>

                                       21
<PAGE>
 
21. Pioneer Bancorporation (Parent Company Only) continued:

<TABLE>
<CAPTION>
Condensed Statement of Income for the year ended December 31,:            1998           1997           1996
- ------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>            <C>            <C>
Income:
       Interest Income on Due From Subsidiary                         $     43,000   $     16,000   $     5,000
- ------------------------------------------------------------------------------------------------------------------
       Total Income                                                   $     43,000   $     16,000   $     5,000
- ------------------------------------------------------------------------------------------------------------------
     Expense:
       Salaries and Benefits                                          $     55,000   $          0   $         0
       Other Expense                                                  $    145,000   $     92,000        32,000
- ------------------------------------------------------------------------------------------------------------------
       Total Expense                                                  $    200,000   $     92,000   $    32,000
- ------------------------------------------------------------------------------------------------------------------
     Profit (Loss) before Income Taxes:                               $   (157,000)  $    (76,000)  $   (27,000)
     Applicable Tax Benefit                                                (50,000)       (24,000)       (9,000)
- ------------------------------------------------------------------------------------------------------------------
     Income before Equity in Undistributed Income of Subsidiary       $   (107,000)  $    (52,000)  $   (18,000)
- ------------------------------------------------------------------------------------------------------------------
     Equity in Undistributed Income of Subsidiary                     $ 13,398,000   $ 11,596,000   $ 8,102,000
- ------------------------------------------------------------------------------------------------------------------
       Net Income                                                     $ 13,291,000   $ 11,544,000   $ 8,084,000
- ------------------------------------------------------------------------------------------------------------------
 
Condensed Statement of Cash Flows for the year ended December 31,:            1998           1997          1996
- ------------------------------------------------------------------------------------------------------------------
 
     Cash Flows from Operating Activities:
       Net Income                                                     $ 13,291,000   $ 11,544,000   $ 8,084,000
       Adjustments to Reconcile Net Income to Net Cash
       Provided by Operating Activities:
           Undistributed Income of Subsidiary                         $(13,398,000)  $(11,596,000)  $(8,102,000)
           (Increase) Decrease in Other Assets                        $    (52,000)  $     11,000   $    13,000
           Increase (Decrease) in Other Liabilities                   $     20,000   $     (7,000)  $         0
- ------------------------------------------------------------------------------------------------------------------
           Total Adjustments                                          $(13,430,000)  $(11,592,000)  $(8,089,000)
- ------------------------------------------------------------------------------------------------------------------
       Net Cash Used in Operating Activities                          $   (139,000)  $    (48,000)  $    (5,000)
- ------------------------------------------------------------------------------------------------------------------
 
     Cash Flows from Investing Activities:
 
- ------------------------------------------------------------------------------------------------------------------
       Net Cash Used in Investing Activities                          $          0   $          0   $         0
- ------------------------------------------------------------------------------------------------------------------
 
     Cash Flows from Financing Activities:
           Dividend from Subsidiary                                   $          -   $          -   $    50,000
           Proceeds from Sale of Stock                                $    302,000   $    242,000   $   219,000
           Proceeds from Exercise of Options                          $    351,000   $    151,000   $         -
           Cash Paid for Fractional Shares at Dividend and Split           (12,000)        (5,000)       (6,000)
- ------------------------------------------------------------------------------------------------------------------
       Net Cash Provided by Financing Activities                      $    641,000   $    388,000   $   263,000
- ------------------------------------------------------------------------------------------------------------------
 
       Net Increase in Cash and Cash Equivalents                      $    502,000   $    340,000   $   258,000
       Cash and Cash Equivalents, Beginning of Year                   $    608,000   $    268,000   $    10,000
- ------------------------------------------------------------------------------------------------------------------
       Cash and Cash Equivalents, End of Year                         $  1,110,000   $    608,000   $   268,000
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       22
<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------


Exhibit No.      Description
- ----------       -----------

   3.1           Amended and Restated Articles of Incorporation.
    
   3.2           Amended and Restated Bylaws.

   4.1           Form of Stock Certificate.

  10.1           Nonqualified Stock Option Plan.

  10.2           Nonqualified Stock Option Agreement

  10.3           Severance Agreement for William E. Martin

  10.4           Form of Severance Agreement for A.G. Henry, Jerry R. Martin and
                 Edward T. Plunkett

  10.5           Consulting Agreement with Leo V. Seevers

  22             Pioneer Citizens Bank is the only subsidiary of Registrant    

  27             Financial Data Schedule


<PAGE>
 
                                                                     EXHIBIT 3.1

                                 COMPOSIT COPY

                           ARTICLES OF INCORPORATION

                                      OF

                            PIONEER BANCORPORATION

     The undersigned individual, acting as incorporator of a corporation under
the Nevada Revised Statutes, does hereby adopt the following Articles of
Incorporation for such corporation:

                                    I.  NAME
                                        ----
                                        
     The name of the corporation is PIONEER BANCORPORATION.


                 II.  RESIDENT AGENT AND ADDRESS
                      --------------------------
     The address of the corporation's initial resident agent and the agent's
street address where process may be served upon the corporation are:

          Name                                  Address
          ----                                  -------
     Shelle K. Grim-Brooks                   10 State Street
                                             Reno, Nevada 89501


                    III.  PURPOSE OR PURPOSES
                          -------------------
     The corporation is formed for the purpose of any activity within the
purposes for which corporations may be organized under the Nevada Revised
Statutes.

                                 IV.  DURATION
                                      --------
     The duration of the corporation shall be perpetual.

                                       1
<PAGE>
 
                               V.  CAPITALIZATION
                                   --------------

     5.1   Authorized Shares.  The aggregate number of shares which the
           -----------------                                           
corporation shall have authority to issue is 15,000,000 shares of a single class
of common stock.  The par value of each share shall be $0.01.

     5.2   Preemptive Rights.    Shareholders shall not have the preemptive
           -----------------                                               
right to acquire preemptive right to acquire unissued or treasury stock of the
corporation or securities convertible into shares or carrying stock purchase
warrants or privileges.

     5.3  Cumulative Voting. Cumulative voting shall not be used in the election
          -----------------                                                     
of directors.

     5.4  Transfer Restrictions.  The corporation shall have the right by
          ---------------------                                          
appropriate action to impose restrictions upon the transfer of any shares of its
common stock, or any interest therein, from time to time issued, provided that
such restrictions, or notice thereof, shall be set forth upon the face or the
back of the certificate representing such shares of common stock.

                  VI.  GOVERNING BOARD
                       ---------------

     6.1   Directors.    Members of the governing board of the corporation shall
be styled Directors. The number of Directors shall be not less than five (5) and
no more than fifteen (15) as fixed by the corporation's bylaws.  The names and
addresses of the initial Directors to serve until their successors are elected
and qualified are:

                                       2
<PAGE>
 
     Name                         Address
     ----                         -------
     Thomas E. Bahan              10 State Street
                                  Reno, Nevada 89501

     Donald A. Bernard            10 State Street
                                  Reno, Nevada 89501

     Robert T. Bigelow            10 State Street
                                  Reno, Nevada 89501

     Louis J. Capurro             10 State Street
                                  Reno, Nevada 89501

     Luther Mack, Jr.             10 State Street
                                  Reno, Nevada 89501

     William E. Martin            10 State Street
                                  Reno, Nevada 89501

     Howard Wells, Jr.            10 State Street
                                  Reno, Nevada 89501

     Donald L. Wilkerson          10 State Street
                                  Reno, Nevada 89501

     Terrence L. Wright           10 State Street
                                  Reno, Nevada 89501

     John E. Yoxen                10 State Street
                                  Reno, Nevada 89501


     6.2  Removal of Directors.  Any Director may be removed from office by the
          --------------------                                                 
affirmative vote of seventy-five percent (75%) of the stockholders entitled to
vote.

                  VII.  ANTI-TAKEOVER PROVISIONS
                        ------------------------

     7.1   No merger, consolidation, liquidation or dissolution of the
corporation nor any action that would result in the sale or other disposition of
all or substantially all of the assets of the corporation shall be valid unless
first approved by the affirmative vote of the holders of at least eighty percent
(80%) of the outstanding shares of common stock.  This Article 7.1 may not be
amended unless first approved by the affirmative vote of the holders of at least
eighty percent (80%) of the outstanding shares of common stock.

                                       3
<PAGE>
 
     7.2  The Board of Directors may, if it deems it advisable, oppose a tender
or other offer for the corporation's securities, whether the offer is in cash or
in securities of a corporation or otherwise.  When considering whether to oppose
an offer, the Board of Directors may, but it is not legally obligated to,
consider any pertinent issue; by way of illustration, but not of limitation, the
Board of Directors may, but shall not be legally obligated to, consider any or
all of the following:

            7.2.1  Whether the offer price is acceptable based on the historical
                   and present operating results or financial condition of the
                   corporation;

            7.2.2  Whether a more favorable price could be obtained for the
                   corporation's securities in the future;

            7.2.3  The impact which an acquisition of the corporation would have
                   on the employees, depositors and customers of the corporation
                   and its subsidiaries and the communities which they serve;

            7.2.4  The reputation and business practices of the offeror and its
                   management and affiliates as they would affect the employees,
                   depositors and customers of the corporation and its
                   subsidiaries and the future value of the corporation stock;

            7.2.5  The value of the securities (if any) which the offeror is
                   offering in exchange for the corporation's securities, based
                   on an analysis of the worth of the corporation as compared to
                   the corporation or other entity whose securities are being
                   offered; and

            7.2.6  Any antitrust or other legal and regulatory issues that are
                   raised by the offer.

      7.3

                                       4
<PAGE>
 
            If the Board of Directors determines that an offer described in
            Article 7.2 should be rejected, it may take any lawful action to
            accomplish its purpose, including, but not limited to,any or all of
            the following: Advising shareholders not to accept the offer,
            litigation against the offeror; filing complaints with all
            governmental and regulatory authorities; acquiring the corporation's
            securities; selling or otherwise issuing authorized but unissued
            securities or treasury stock or granting options with respect
            thereto; acquiring a company to create an anti-trust or other
            regulatory problem for the offeror; soliciting a more favorable
            offer from another individual or entity.

                         VIII.  LIMITATION OF LIABILITY
                                -----------------------

No Director or officer of the corporation shall be personally liable to the
corporation or its shareholders for damages for breach of fiduciary duty as a
Director or officer involving any act or omission of any such Director or
officer; provided, however, that the foregoing provision shall not eliminate or
limit the liability of a Director or officer (i) for acts or omissions which
involve intentional misconduct, fraud or a knowing violation of law, or (ii) the
payment of distributions in violation of Section 78.300 of the Nevada Revised
Statutes.  Any repeal or modification of this Article VIII shall be prospective
only and shall not adversely affect any limitation on the personal liability of
a Director or officer of the corporation for acts or omissions prior to such
repeal or modification.

                        IX.   INCORPORATOR
                              ------------
     The name and address of the incorporator signing these Articles of
Incorporation is:

     Name                  Address
     ----                  -------

     William E. Martin     10 State Street
                           Reno, Nevada 89501

As filed June 2, 1993, and amended April 16, 1996 and March 24, 1999.

                                       5

<PAGE>
 
                                                                     EXHIBIT 3.2

                                    BYLAWS
                                      OF
                            PIONEER BANCORPORATION
                                        
                                   ARTICLE 1

                                    Offices
                                    -------

     1.1  Principal Office. The principal office of Pioneer Bancorporation (the
          ----------------                                                     
"Corporation") shall be at 10 State Street, Reno, Nevada 89501.

     1.2  Other Offices.  The Corporation may have such other offices within or
          -------------                                                        
without the State of Nevada as the Board of Directors may, from time to time,
determine.

     1.3  Resident Agent and Address.  The name of the resident agent and the
          --------------------------                                         
agent's street address (the "Registered Office") where process may be served
upon the Corporation are: Shelle K. Grim-Brooks, 10 State Street, Reno, Nevada
89501.  The Registered Office or the resident agent may be changed from time to
time by the Board of Directors as provided by law.

                                   ARTICLE 2

                         Stock and the Transfer Thereof
                         ------------------------------

     2.1  Stock Certificates.
          ------------------ 

          (a) The shares of the Corporation shall be represented by certificates
signed by the President or a Vice President, and by the Secretary or an
Assistant Secretary of the Corporation and shall be sealed with the seal of the
Corporation or a facsimile thereof.  Any or all of the signatures on the
certificate may be facsimile.  In case any officer, transfer agent or registrar
who has signed shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of its issue.

          (b) If this Corporation issues shares of more than one class, every
certificate representing the shares issued shall set forth upon the face or back
of the certificate or shall state that the Corporation will furnish to any
shareholder upon request and without charge a full statement of the
designations, preferences, limitations and relative rights of the shares of each
class authorized to be issued, so far as the same have been determined, and, if
the Corporation is authorized to issue any preferred or special class in series,
the variations in the relative rights and preferences between the shares of each
such series, so far as the same have been fixed and determined, and the
authority of the Board of Directors to fix and determine the relative rights and
preferences of subsequent series.

                                       1
<PAGE>
 
          (c)   Each certificate representing shares shall state upon the face
thereof:

                    (i)  The name of the Corporation and that it is organized
                under the laws of the State of Nevada,

                    (ii) The name of the person to whom issued,

                    (iii)  The number and class of shares and the designation of
                the series, if any, which such certificate represents, and

                    (iv) The par value of each share or that the share has no
                par value, as the case may be.

          (d)  No certificate shall be issued for any share until such share is
fully paid.

     2.2  Consideration for Shares.  Shares shall be issued for such
          ------------------------                                  
consideration expressed in dollars, but not less than the par value thereof, as
shall be fixed from time to time by the Board of Directors.  The consideration
for the issuance of shares may be paid, expressed in dollars, as shall be fixed
by the Board of Directors.  Treasury shares may be disposed of by the
Corporation for such consideration expressed in dollars, but not less than the
par value thereof, as shall be fixed from time to time by the Board of
Directors.

     2.3  Transfer Agent and Registrar for Shares.  The Board of Directors shall
          ---------------------------------------                               
appoint one or more transfer agents and registrars for the shares of stock of
the Corporation.  The Corporation itself may be a transfer agent and registrar
for its shares.  Each transfer agent shall maintain, among other records, a
shareholders' ledger setting forth the names and addresses of the holders of all
issued shares of the Corporation, the number and class of shares held by each,
the certificate numbers representing the shares, and the date of issue of the
certificates representing the shares.  Each registrar shall also maintain a
stock register setting forth, among other things, the total number of shares of
each class of shares which the Corporation is authorized to issue and the total
number of shares actually issued.  The shareholders' ledger and the stock
register are hereby identified as the stock transfer books of the Corporation.
The names and addresses of shareholders as they appear on the shareholders'
ledger maintained by the transfer agent shall be the official list of
shareholders of record of the Corporation.  The name and address of each
shareholder of record as they appear on the shareholders' ledger shall be
conclusive evidence as to who are the shareholders entitled to receive notice of
the meetings of shareholders, to vote at the meetings, and to own, enjoy and
exercise any other property or rights deriving from the shares of the
Corporation.

     2.4  Lost, Stolen and Destroyed Certificates.  The Board of Directors may
          ---------------------------------------                             
direct a new certificate(s) to be issued in place of any certificate(s) which
has been allegedly lost, stolen or destroyed upon receipt of an affidavit of
that fact by the person claiming the certificate of stock to be lost, stolen or
destroyed, and the Board of Directors when authorizing such issue of a new
certificate(s) may, in its discretion, require the owner of such lost, stolen or
destroyed certificate(s) or his legal representative to advertise the same in
such manner as it shall require or give the Corporation a bond in such sum as it
may direct as indemnity against any claim that may be made against the
Corporation, or both.  Except as provided herein, no new certificate evidencing
shares of stock shall be issued until the old certificate(s) for which the new
certificate(s) is to be issued is surrendered for cancellation.

                                       2
<PAGE>
 
     2.5  Transfers of Shares.  Except as otherwise provided by law, the stock
          -------------------                                                 
of the Corporation shall be transferable or assignable only on the books of the
Corporation by the holder thereof in person or by his duly authorized attorney
upon surrender of the certificate(s) for such shares duly endorsed or
transferred.  The Corporation shall be entitled to treat the holder of record,
including any voting trust, of any share of stock as the holder in fact thereof
and, accordingly, shall not be bound to recognize any equity or any other claim
to or interest in such share on the part of any other person, whether or not it
shall have express or other notice thereof, except as may be required by the
laws of Nevada.

     2.5  Transfer Restrictions. The Corporation shall have the right to impose
          ---------------------                                                
restrictions upon the transfer of any shares of its common stock or any interest
therein, from time to time issued, provided that such restrictions as made from
time to time be so imposed or notice of the substance thereof shall be set forth
upon the face or back of the certificates representing such shares of stock.

                                   ARTICLE 3

                     Shareholders and Shareholders' Meeting
                     --------------------------------------

     3.1  Annual Meeting.  The annual meeting of the shareholders for the
          --------------                                                 
election of Directors and the transaction of such other business as may properly
come before the meeting shall be held each year on the third Wednesday in March
at 11:00 a.m. or such other date and hour determined by the Board of Directors.
The place of the annual meeting shall be the principal executive office of the
Corporation or such other place within or without the State of Nevada as the
Board of Directors may determine.  Failure to hold the annual meeting at the
designated time shall not work a forfeiture or dissolution of the Corporation.

     3.2  Special Meetings. Special meetings of the shareholders may be called
          ----------------                                                    
at any time by the Chairman of the Board, the President, the Board of Directors
or the holders of shares of not less than fifty percent (50%) of all shares
entitled to vote at the meeting.  Special meetings shall be held at the
principal office of the Corporation or such other place within or without the
State of Nevada as the Board of Directors may determine.

     3.3  Notices of Meetings.  Written notice stating the place, day, hour and
          -------------------                                                  
purpose or purposes of the meeting shall be delivered not less than ten (10)
days nor more than sixty (60) days before the date of the meeting, either
personally or by mail, or by other means of written communication, charges
prepaid, by or at the direction of the President, the Secretary, or the officer
or persons calling the meeting, to each shareholder of record entitled to vote
at such meeting.

     3.4  Notice and Waiver.
          ----------------- 

          (a) Notice to shareholders of record, if mailed, shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at his address as it appears on the stock transfer books of the Corporation,
with postage thereon paid.  If three successive letters mailed to the last-known
address of any shareholder of record are returned as undeliverable, no further
notices to such shareholder shall be necessary, until another address for such
shareholder is made known to the Corporation.

                                       3
<PAGE>
 
          (b) When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken.  At the adjourned
meeting, the Corporation may transact any business which might have been
transacted at the original meeting.  If after the adjournment date a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each shareholder of record entitled to vote at the meeting.

          (c) When any notice is required to be given to any shareholder of the
Corporation, a waiver thereof in writing signed by the person entitled to such
notice, in person or by proxy, whether before, at or after the time stated
therein, shall be equivalent to the giving of such notice.  By attending a
meeting, a shareholder waives objection to lack of notice of such meeting unless
the shareholder, prior to the conclusion of the meeting, objects to the holding
of the meeting or the transaction of business at the meeting; and by attending a
meeting, a shareholder waives objection to consideration of such meeting of a
particular matter not within the purpose(s) described in the meeting notice,
unless the shareholder objects to considering the matter when it is presented.

     3.5  Closing of Transfer Books and Fixing Record Date.  For the purpose of
          ------------------------------------------------                     
determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of any
dividend, or in order to make determination of shareholders for any proper
purpose, the Board of Directors of the Corporation may provide that the stock
transfer books shall be closed for a stated period not to exceed in any case
sixty (60) days immediately preceding such meeting.  If the stock transfer books
are closed for the purpose of determining shareholders entitled to notice of or
to vote at a meeting of shareholders, such books shall be closed for at least
ten (10) days immediately preceding such meeting.  In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to denote
more than sixty (60) days and, in case of a meeting of shareholders, not less
than ten (10) days prior to the date on which the particular action requiring
such determination of shareholders is to be taken.  If the stock transfer books
are not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or of
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders.  When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this paragraph, such determination shall apply to any adjournment
thereof.

     3.6  Voting List.  The officer or agent having charge of the stock transfer
          -----------                                                           
books for shares of the Corporation shall prepare a complete list of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order within each class, series, or group of
shareholders, with the address of and the number of shares held by each.  The
record shall be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder for any purpose germane to
the meeting for reasonable periods during the meeting.  The original stock
transfer books shall be prima facie evidence as to who are the shareholders
entitled to examine such record or transfer books or to vote at any meeting of
shareholders.  Failure to comply with these requirements shall not affect the
validity of any action taken at any such shareholders' meeting.

                                       4
<PAGE>
 
     3.7  Quorum.  A quorum at any meeting of the shareholders shall consist of
          ------                                                               
a majority of the shares entitled to vote, represented in person or by proxy.
If a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting entitled to vote on the subject matter, which shares
voting affirmatively also constitute at least a majority of the required quorum,
shall be the act of the shareholders unless the Articles of Incorporation or the
Nevada Revised Statutes require a greater number of affirmative votes.

     3.8  Proxies.  At all meetings of shareholders, a shareholder may vote by
          -------                                                             
proxy, executed in writing by the shareholder or his duly authorized agent.
Such proxy shall be filed with the Secretary of the Corporation before or at the
time of the meeting.  No proxy shall be valid after eleven (11) months from the
date of its execution unless otherwise provided in the proxy.  No proxy shall be
valid after the expiration of seven (7) years from the date of its creation.

     3.9  Voting of Shares.   Each outstanding share of common stock shall be
          -----------------                                                  
entitled to one vote on each matter submitted to vote at a meeting of
shareholders.  Cumulative voting is not authorized in the election of Directors
or for any other purpose.

     3.10 Voting of Shares By Certain Holders.
          ----------------------------------- 

          (a) Neither treasury shares nor shares held by another corporation, if
the majority of the shares are entitled to vote for the election of Directors of
such other corporation is held by the Corporation, shall be voted at any meeting
or counted in determining the total number of outstanding shares at any given
time.

          (b) Shares standing in the name of another corporation, domestic or
foreign, may be voted by any officer, agent, or proxy appointed by any of them,
unless some other person, by resolution of its board or pursuant to its bylaws,
shall be appointed to vote such shares.

          (c) Shares held by any person in any representative or fiduciary
capacity, may be voted by him, either in person or by proxy, without a transfer
of such shares into his name.

          (d) A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
or a nominee of the pledgee.

          (e) Redeemable shares which have been called for redemption shall not
be entitled to vote on any matter and shall not be deemed outstanding shares on
and after the date on which written notice of redemption has been mailed to
shareholders and a sum sufficient to redeem such shares has been deposited with
a bank or trust company with irrevocable instruction and authority to pay the
redemption price to the holders of the shares upon surrender of certificates
therefore.

     3.11  Chairman.  The Chairman of the Board of the Corporation, or in his
           --------                                                          
absence the Vice Chairman, shall act as Chairman at all meetings of the
shareholders.

                                       5
<PAGE>
 
     3.12  Conduct of Meetings.  Meetings of shareholders shall be conducted as
           -------------------                                                 
follows:

          (a) The Chairman of the meeting shall have absolute authority over
matters of procedure and there shall be no appeal of the ruling of the Chairman.
The Chairman shall state the from rules under which the meeting or appropriate
part thereof shall be conducted.

          (b) If disorder should arise which prevents continuation of the
legitimate business of the meeting, the Chairman may quit the chair and announce
the adjournment of the meeting, and upon his doing, the meeting is immediately
adjourned.

          (c)  The Chairman may ask or require that anyone not a bona fide
shareholder or proxy leave the meeting.

          (d) A resolution or motion shall be considered for vote only if
proposed by a shareholder or duly authorized proxy, and seconded by an
individual who is a shareholder or duly authorized proxy other than the
individual who proposed the resolution or motion.

     3.13 Vote.  Voting shall be oral or by written ballot.
          ----                                             

     3.14 Action By Shareholders Without a Meeting.
          -----------------------------------------

         (a) Any action required to be taken at a shareholders' meeting may be
taken without  a meeting if all the shareholders entitled to vote thereon
consent thereto in writing and such consent is delivered to the Secretary of the
Corporation for inclusion in the minutes or for filing with the Corporation
records.  Any action taken is effective when all shareholders entitled to vote
have signed the consent, unless the consent specifies a different effective
date.

         (b) Written consent of the shareholders entitled to vote has the same
force and effect as a unanimous vote of such shareholders and may be stated as
such in any document. The record date for determining shareholders entitled to
take action without a meeting is the date the first shareholder signs the
consent.

                                   ARTICLE 4
                                        
                         Directors, Powers and Meetings
                         ------------------------------

     4.1  General Powers.  The business and affairs of the Corporation shall be
          --------------                                                       
managed by a Board of Directors, except as otherwise provided by the Nevada
Revised Statutes, the Articles of Incorporation or these Bylaws.

     4.2  Number, Tenure and Qualifications.  The Directors of the Corporation
          ---------------------------------                                   
shall consist of no less than five (5) and no more than fifteen (15) natural
persons of the age of 18 years or older who need not be shareholders of the
Corporation.  The number of Directors to serve until the next succeeding annual
meeting may be increased or decreased from time to time by resolution of a
majority of the Board of Directors or by resolution of the shareholders at each
annual meeting of shareholders.  At the 1994 annual meeting of shareholders, one
third of the total number of Directors shall be elected for a term of three (3)
years each; one-third of the total number of Directors elected for a term of two
(2) years each and one-third of the total number of Directors elected for a term
of one (1) year each.  If the total number of Directors is not divisible by
three (3), the odd numbered Director(s) shall be elected for one (1) year each.
At the 1995 annual meeting of shareholders and at each subsequent annual
meeting, the 

                                       6
<PAGE>
 
number of Directors to be elected shall be elected for terms of three (3) years
each. Each Director shall hold office until his successor has been elected and
has qualified.

     4.3  Resignations and Removal.  Any Director may resign by written notice
          ------------------------                                            
of his resignation to the Corporation, which resignation shall be effective upon
receipt thereof by the Corporation or at such subsequent time as shall be
specified in the notice of resignation.  Directors shall be removable from
office by the affirmative vote of seventy-five percent (75%) of the shareholders
entitled to vote.

     4.4  Filling Vacancies.  Any vacancy occurring in the Board of Directors,
          -----------------                                                   
however caused, and newly created directorships resulting from an increase in
the authorized number of Directors, may be filled by the affirmative vote of a
majority of the remaining Directors even though less than a quorum of the Board
of Directors, or by a sole remaining Director.  A Director so elected shall hold
office until the next succeeding annual meeting of shareholders and until his
successor shall have been elected and qualified.

     4.5  Annual and Regular Meetings.  The annual meeting of the Board of
          ---------------------------                                     
Directors or any committee designated by the Board of Directors shall be held
without notice other than this Bylaw immediately after, and at the same place
as, the annual meeting of shareholders.  The Board of Directors may provide, by
resolution, the time and place, either within or outside Nevada, for the holding
of additional regular meetings without other notice than such resolution.

     4.6  Special Meetings.  Special meetings of the Board of Directors or any
          ----------------                                                    
committee designated by the Board may be called by or at the request of the
President or any two (2) Directors.

     4.7  Notice and Waiver. Notice of any special meeting of the Board of
          -----------------
Directors or any committee designated by the Board of Directors shall be given
by written notice mailed to each Director at his business address at least five
(5) days prior to the meeting, or by notice given at least twenty-four (24)
hours previously by telegram, telephone, telecopy, or written notice delivered
personally. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail so addressed, with postage thereon prepaid.
If notice be given by telegram, such notice shall be deemed to be delivered when
the telegram is delivered to the telegraph company. Notice need not be given to
any Director who signs a waiver of notice or a consent to holding the meeting or
an approval of the minutes thereof, whether before or after the meeting. The
attendance of a Director at a meeting constitutes a waiver of notice of such
meeting unless the Director, prior to the conclusion of the meeting, objects to
holding the meeting or transacting business at the meeting and does not
thereafter vote for or dissent to action taken at the meeting. Neither business
to be transacted at nor the purpose of any special meeting of the Board of
Directors or any committee designated by the Board of Directors need be
specified in the notice or waiver of notice of such meeting.

     4.8  Telephone Meetings.  Members of the Board of Directors or any
          ------------------                                           
committee designated by such Board of Directors may participate in a meeting of
the Board of Directors or committee by means of conference telephone or similar
communications equipment by which all persons participating in the meeting can
hear each other at the same time.

     4.9  Action by Directors Without Meeting.  Any action required or permitted
          -----------------------------------                                   
to be taken at a meeting of the Directors of the Corporation or of any committee
thereof, may be taken without a meeting if prior or subsequent to the action of
all members of the Board or such committee consents in writing.  The consent
shall be delivered to the Secretary for inclusion in the minutes of the Board or
committee.  Action taken without a meeting is effective when all 

                                       7
<PAGE>
 
Directors or committee members have signed the consent, unless the consent
specified a different effective date. Such consent has the same force and effect
as a unanimous vote of the Board or committee and may be stated as such in any
document.

     4.10  Quorum.  A majority of the authorized number of Directors shall
           ------                                                         
constitute a quorum for the transaction of business.  The act of the majority of
the Directors present at a meeting in which a quorum is present shall be the act
of the Board of Directors.

     4.11  Presumption of Assent.  The assent of a Director of the Corporation
           ---------------------                                              
who is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be entered in the minutes of the meeting unless
a Director's dissent is recorded in the minutes.  A director who is absent from
a meeting of the Board at which such action is taken shall be presumed to have
concurred in the action unless he shall file his dissent with the Secretary of
the Corporation within a reasonable time after learning of such action.

     4.12  Executive Committee and Other Committees.  The Board of Directors, by
           ----------------------------------------                             
resolution adopted by a majority of the entire Board, may appoint from among its
members an executive and one or more other committees, each consisting of one or
more directors, each committee of which to the extent provided in such
resolution, shall have and may exercise all of the authority of the Board of
Directors, but no such committee shall have the authority of the Board of
Directors in reference to amending the Articles of Incorporation; electing or
appointing any Director or removing any officer or Director; adopting a plan of
merger or consolidation; recommending to the shareholders of the sale, lease,
exchange or other disposition of all or substantially all of the property and
assets of the Corporation otherwise than in the usual and regular course of its
business; recommending to the shareholders a voluntary dissolution of the
Corporation or revocation thereof; or making, altering or repealing the Bylaws
of the Corporation.  The designation of such committees and the delegation
thereto of authority shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed by law.

     4.13  Chairman of the Board.  The Chairman of the Board, if such officer
           ---------------------                                             
shall be chosen by the Board of Directors, shall preside at all meetings of the
Board of Directors at which he is present.  He shall, subject to the direction
of the Board of Directors, have general oversight over the affairs of the
Corporation and shall, from time to time, consult and advise with the President
in the direction and management of the Corporation's business and affairs, and
shall also do and perform such other duties as may, from time to time, be
assigned to him by the Board of Directors.

     4.14  Vice Chairman of the Board.  The Vice Chairman of the Board, if such
           --------------------------                                          
officer shall be chosen by the Board of Directors, shall, in  the absence of the
Chairman of the Board, preside at all meetings of the Board of Directors and
perform the duties and exercise the powers of the Chairman of the Board.  He
shall do and perform such other duties as may, from time to time, be assigned to
him by the Board of Directors.

     4.15  Dividends.  If and in the manner permitted by the Nevada Revised
           ---------                                                       
Statutes, the Board of Directors of the Corporation may, from time to time,
declare, and the Corporation may pay dividends in cash, property, or its own
shares.

     4.16  Conflict of Interest.
           -------------------- 

           (a) No contract or other transaction between the Corporation and one
or more of its Directors, or between the Corporation and any other corporation,
firm or association 

                                       8
<PAGE>
 
in which one or more of its Directors or officers are Directors or officers or
are financially interested, shall be void or voidable solely because such
Director or officer is present at the meeting of the Board or committee thereof
which authorizes or approves the contract or transaction, or because his or
their votes are counted for such purpose if:

                    (i)  The contract or other transaction is fair as to the
               Corporation at the time it is authorized, approved or ratified.

                    (ii)  The fact of the common directorship or interest is
               disclosed or known to the Board or committee and noted in the
               minutes, and the Board or committee authorizes, approves or
               ratifies the contract or transaction in good faith by a vote
               sufficient for the purpose without counting the vote(s) of such
               Directors.

                    (iii)  The fact of the common directorship or interest is
               disclosed or known to the shareholders, and they authorize,
               approve or ratify the contract or transaction in good faith by a
               majority vote.

                    (iv)  The fact of the common directorship or financial
               interest is not disclosed or known to the Director or officer at
               the time the transaction is brought before the Board or committee
               for action.

          (b) Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes, approves or ratifies the contract or transaction.

                                   ARTICLE 5

                              Officers and Agents
                              -------------------

     5.1  Officers.  The officers of the Corporation shall consist of a
          --------                                                     
President, a Secretary and a Treasurer, each of whom shall be natural persons of
the age of eighteen (18) years or older and elected by the Board of Directors.
The Board of Directors may elect or appoint such other officers and assistant
officers and agents, including a Chairman and one or more Vice Presidents, as
may be deemed necessary.  All officers and agents of the Corporation shall have
such authority and perform such duties in the management of the Corporation as
are provided in these Bylaws. The Board of Directors shall fix the term of
office and salaries of all of the officers of the Corporation. All officers
shall hold office for the term for which he was so elected or until a successor
is elected and has qualified.  One person may hold two (2) or more offices,
except those of President and Secretary.  However, if the Corporation has only
one shareholder, then one person may hold the offices of both President and
Secretary.

     5.2  Compensation.  The compensation of all officers shall be fixed by
          ------------                                                     
resolution of the Board, except that the Board may authorize the President to
fix any compensation of an officer not exceeding a total amount specified by the
Board.

     5.3  Removal of Officers.  Any officer elected by the Board may be removed
          -------------------                                                  
by the Board of Directors with or without cause.  Such removal shall be without
prejudice to the contract rights, if any, of the person so removed.  Election of
an officer or agent shall not of itself create contract rights.

                                       9
<PAGE>
 
     5.4  Vacancies.  A vacancy in any office, however occurring, may be filled
          ---------                                                            
by the Board of Directors for the unexpired portion of the term.

     5.5  President.  In the absence of the Chairman and Vice Chairman of the
          ---------                                                          
Board, if any, the President shall preside at any meeting of the shareholders,
and at any meeting of the Board of Directors.  The President shall be in charge
of the management of the business of the Corporation and shall see that all
orders and resolutions of the Board of Directors are carried into effect, and
shall have the authority and powers necessary to perform such duties.  The
President shall have authority to negotiate and enter into any contract or
execute and deliver any instrument in the name and on behalf of the Corporation
as is necessary and appropriate.  In addition, the President shall have such
further powers and perform such further functions and duties as may, from time
to time, be assigned by the Board of Directors or as may be prescribed by these
Bylaws.

     5.6  Vice Presidents.  Each Vice President, if any, shall have such power
          ---------------                                                     
and perform such duties as the Board may from time to time prescribe or as the
President may from time to time delegate to him.

     5.7  Secretary.
          --------- 

          (a) The Secretary shall, if requested by the President, attend all
sessions of the Board of Directors and record all votes and the minutes of all
proceedings in a book or books to be kept for that purpose, and shall perform
like duties for any Board committees when required.  Such person shall cause due
notice to be given of all meetings of the shareholders and Board of Directors.
The Secretary shall keep in safe custody the corporate records and the seal of
the Corporation and when authorized by the Board of Directors shall affix the
seal to any instrument requiring it, and when so affixed, it shall be attested
by signature.  Such person shall keep at the Registered Office or the principal
place of business of the Corporation a record of the shareholders, giving names
and addresses of all shareholders and the number and class of share held by
each, and a copy of any voting trust agreement, along with a copy of the names
and addresses of the holders of interests in the voting trust, the extent of
each such holder's interest, the number of shares of stock transferred to the
voting trust, and the transfer of interests in the voting trust.  Copies of all
voting trust information shall be furnished by the trustee of the voting trust.
The Secretary shall have general charge of the stock transfer books of the
Corporation and copies of information concerning voting trusts, if any, and
shall in general perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned by the President or the Board
of Directors.

          (b)  Assistant Secretaries, if any, shall have the same duties and
powers, subject to supervision by the Secretary.

     5.8  Treasurer.
          --------- 

          (a)   The Treasurer shall have custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation, and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors.
Such person shall disburse the funds of the Corporation as may be ordered by the
Board, take proper vouchers for such disbursements, and shall render to the
President and the Board whenever they may require it an account of all
transactions and of the financial condition of the Corporation.  Such person
shall, if required by the Board, give the Corporation a bond in such sums and
with such sureties as shall be satisfactory to the Board, conditioned upon the
faithful 

                                       10
<PAGE>
 
performance of the duties and for the restoration to the Corporation of all
books, papers, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the Corporation. The Treasurer
shall sign with the President or a Vice President certificates for shares of the
Corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors.

          (b)  Assistant Treasurers, if any, shall have the same powers and
duties, subject to the supervision of the Treasurer.

                                   ARTICLE 6
          Indemnification of Directors, Officers, Employees and Agents
          ------------------------------------------------------------

     6.1  Authorization of Indemnification.  The Board of Directors may
          --------------------------------                             
authorize the Corporation to pay expenses incurred by, or to satisfy a judgment
or fine rendered or levied against, a present or former Director, officer,
employee or agent of the Corporation in an action brought by a third party
against such person (whether or not the Corporation is joined as a party
defendant) to impose liability or penalty on such person for an act alleged to
have been committed by such person while a Director, officer, employee or agent,
or by the Corporation, or by both; provided the Board of Directors determines,
in good faith, that such Director, officer, employee or agent was acting in good
faith within what such person reasonably believed to be the scope of his or her
employment or authority and for a purpose which such person reasonably believed
to be in the best interests of the Corporation or its shareholders.  Payments
authorized hereunder include amounts paid and expenses incurred in settling any
such action or threatened action.

     6.2  Expenses of Officers and Directors.  The expenses of officers and
          ----------------------------------                               
Directors incurred in defending a civil or criminal action, suit or proceeding
must be paid by the Corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an undertaking by
or on behalf of the Director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that such person is not entitled
to indemnification by the Corporation.  This provision does not affect any
rights to advancement of expenses to which corporate personnel other than
Directors or officers may be entitled under any contract or by law.

     6.3  Duties of Good Faith.  Acts or omissions are in good faith and
          --------------------                                          
transactions are fair to the Corporation if they do not involve intentional
misconduct, fraud or knowing violation of law by an officer or Director.  In
performing their respective duties, Directors and officers are entitled to rely
on information, opinions, reports, books of accounts or statements, including
financial statements and other financial data, that are prepared and presented
by:

          (a) One or more Directors, officers or employees of the Corporation
reasonably believed to be reliable and competent in the matters prepared and
presented;

          (b) Counsel, public accountants or other persons as to matters
reasonably believed to be within the preparer's or presenter's professional or
expert competence; or

          (c) A committee of the Directors on which the person relying thereon
does not serve, established in accordance with Nevada Revised Statutes 78.125,
as to matters within the committee's designated authority and matters on which
the committee is reasonably believed to merit competence, but a Director or
officer is not entitled to rely on such information, 

                                       11
<PAGE>
 
opinions, reports, books of accounts or statements if the officer or Director
has knowledge concerning the matter in question that would cause reliance
thereon to be unwarranted.

     This Article 6.3 does not create or authorize any causes of action against
the Corporation or its Directors or officers.

     6.4  Insurance.  The Corporation may purchase and maintain insurance or
          ---------                                                         
make other financial arrangements on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a Director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise for
any liability asserted against him and liability and expenses incurred by him in
his capacity as a Director, officer, employee or agent, or arising out of his
status as such, whether or not the Corporation has the authority to indemnify
him against such liability and expenses.  Such financial arrangements shall be
as provided by law.

     6.5  Nonexclusive.  The provisions provided in this Article 6 with regard
          ------------                                                        
to indemnification shall not be construed as a limitation on indemnification.
Indemnification shall at all times be allowed to the fullest extent as is now,
or in the future, provided for under the Nevada Revised Statutes.

                                   ARTICLE 7

                                 Miscellaneous
                                 -------------
                                        
     7.1  Fiscal Year.  The fiscal year of the Corporation shall be determined
          -----------                                                         
by the Board of Directors.

     7.2  Amendment of Bylaws.  Subject to repeal or change by action of a
          -------------------                                             
majority of the shareholders, except as otherwise provided by law or the
Articles of Incorporation, the Bylaws may be altered, amended or repealed, from
time to time, in whole or in part, by the affirmative vote of a majority of the
Board of Directors at a meeting called for that purpose or by consent; provided,
however, that a Bylaw or amendment thereof fixing the exact number of Directors
within the limits specified in the Articles of Incorporation or these Bylaws may
be adopted, amended or repealed by the Board of Directors.

     7.3  Conflict.  In the event of any conflict between any provision in these
          --------                                                              
Bylaws and in the Corporation's Articles of Incorporation, the provision in the
Articles shall control.

     7.4  Inspection of Bylaws.  The Corporation shall keep at the Registered
          --------------------                                               
Office the original or a copy of the Bylaws as amended or otherwise altered to
date, certified by the secretary, which shall be open to inspection by the
shareholder at all reasonable times during office hours.

     7.5  Waiver and Effective Date of Notice.   Whenever notice is required to
          -----------------------------------                                  
be given to any shareholder or Director under the provisions of the Nevada
Revised Statutes or under the provisions of the Articles of Incorporation or
these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before, at, or after the time stated therein,
shall be equivalent to the giving of such notice.

     ADOPTED this 16th day of June 1993.

                                       12
<PAGE>
 
                        BYLAWS OF PIONEER BANCORPORATION
                                        
                                   ARTICLE 7

7.2  Amendment of Bylaws.  Subject to repeal or change by action of a majority
     -------------------                                                      
of the shareholders, except as otherwise provided by law or the Articles of
Incorporation, the Bylaws may be altered, amended or repealed, from time to
               ------------------------------------------------------------
time, in whole or in part, by the affirmative vote of a majority of the Board of
- -------------------------  -----------------------------------------------------
Directors at a meeting called for that purpose or by consent; provided, however,
- --------------------------------- ---------------------------                   
that a Bylaw or amendment thereof fixing the exact number of Directors within
the limits specified in the Articles of Incorporation or these Bylaws may be
adopted, amended or repealed by the Board of Directors.

In accordance with Article 7 of the Bylaws of Pioneer Bancorporation, Section
7.2 Amendment of Bylaws:

Resolved that Article 5, Officers and Agents paragraph 5.1 Officers be amended
to read as follows:

                                   Article 5

                              Officers and Agents
                              -------------------

5.1  Officers.  The officers of the Corporation shall consist of a President, a
     --------                                                                  
Secretary and a Treasurer, each of whom shall be natural persons of the age of
eighteen (18) years or older and elected by the Board of Directors.  The
                                                                     ---
Executive Officers of the Corporation shall be a Chairman of the Board, Vice
- ----------------------------------------------------------------------------
Chairman of the Board, and President of the Corporation.  The Board of Directors
- -------------------------- ----------------------------                         
may elect or appoint such other officers and assistant officers and agents,
including a Chairman and one or more Vice Presidents, as may be deemed
necessary.  All officers and agents of the Corporation shall have such authority
and perform such duties in the management of the Corporation as are provided in
these Bylaws.  The Board of Directors shall fix the term of office and salaries
of all of the officers of the Corporation.  All officers shall hold office for
the term for which he was so elected or until a successor is elected and has
qualified.  One person may hold two (2) or more offices, except those of
President and Secretary.  However, if the Corporation has only one shareholder,
then one person may hold the offices of both President and Secretary.

Certification
- -------------

I, Shelle K. Grim-Brooks hereby certify that the foregoing resolution is a true
and correct copy of a resolution passed by a majority of the Board of Directors
of Pioneer Bancorporation at a meeting duly called and held July 20, 1994, at
which a quorum was present and voted and said resolution is still in full force
and effect and is duly recorded in the corporate minutes and records of Pioneer
Bancorporation.

Dated      July 20, 1994
      ------------------------------------
Signed     /s/ Shelle K. Grim-Brooks
      ------------------------------------     
Title      Senior Vice President                  
      ------------------------------------

                                       13

<PAGE>
                                                                     EXHIBIT 4.1

NUMBER      PIONEER                                                      SHARES
            BANCORPORATION
            PARENT COMPANY OF PIONEER CITIZENS BANK OF NEVADA

          This                                          SEE REVERSE FOR
          Certifies                                     CERTAIN CONDITIONS
          That                                          IS THE OWNER OF
                              CUSIP 72356L102                           


Fully paid and non-assessable shares of $0.01 par value common stock of Pioneer 
Bancorporation. Transferable only on the books of the Corporation by the
holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed. This Certificate and the shares represented hereby are
issued and shall be subject to all of the provisions of the Articles of
Incorporation and Bylaws of the Corporation, copies of which are on file at
the principal office of the Corporation, to all of which the owner, by
acceptance hereof, assents. In Witness Whereof the said Corporation has caused
this Certificate to be signed by its duly authorized officers and to be Sealed
with the Seal of the Corporation.

            Dated


- ------------------------------------   ---------------------------------------
Secretary                                                            President

                            PIONEER BANCORPORATION
                            Corporate Seal Nevada
                                     1993

<PAGE>
 
                                                                    EXHIBIT 10.1

                            PIONEER BANCORPORATION
                        NON-QUALIFIED STOCK OPTION PLAN

     1.  PURPOSE.

     The purpose of the Pioneer Bancorporation Non-qualified Stock Option Plan
(the "Plan") is to provide a means by which Pioneer Bancorporation (the
"Corporation"), through the grant of stock options to eligible key employees or
directors, may attract and retain persons of ability as key employees or
directors and motivate such key employees or directors to exert their best
efforts on behalf of the Corporation and any subsidiary corporation of the
Corporation.  For the purposes of the Plan, the term "Subsidiary Corporation"
means a subsidiary corporation as defined by Section 425(f) of the Internal
Revenue Code of 1986, as amended.  It is not intended that the options issued
under the Plan will qualify as incentive stock options under Section 422A of the
Internal Revenue Code of 1986, as amended.

     2.  SHARES SUBJECT TO THE PLAN.

     Subject to the provisions of Section 5(g) of the Plan, 451,629 shares of
the common stock of the Corporation shall be reserved and may be optioned under
this Plan as may be determined from time to time.  The reserved shares may be
authorized and unissued shares or treasury shares of the Corporation or any
combination of both as determined by the Board of Directors of the Corporation.
If an option granted under the Plan ceases to be exercisable in whole or in
part, the shares representing such option shall be available under the Plan for
the grant of options in the future.

     3.  ADMINISTRATION OF THE PLAN.

     The Plan shall be administered by the Board of Directors of the Corporation
or a Committee of the Board of Directors (the "Committee"), which Committee
shall consist of not less than two Directors of the Corporation.  Members of the
Committee shall be appointed by and shall serve at the pleasure of the Board of
Directors of the Corporation.  Any vacancies in the membership of the Committee
shall be filled by an appointment by the Board of Directors of the Corporation.

     The Committee shall keep minutes of its meetings.  All actions of the
Committee shall be taken by a majority of its members.  Any act approved in
writing by a majority of the Committee members shall be fully effective as it
had been taken by a vote of a majority of the members at a meeting duly called
and held.

     Subject to and not inconsistent with the provisions of the Plan, the Board
of Directors or the Committee shall have complete authority in its discretion to
interpret all provisions of the Plan consistently with the law, to prescribe the
form of the instrument evidencing any option granted under the Plan, to adopt,
amend and rescind general and special rules and regulations for the
administration of the Plan and to make all other determinations necessary or
advisable for the administration of the Plan.

                                      -1-
<PAGE>
 
     4.  ELIGIBILITY AND GRANT OF OPTIONS UNDER THE PLAN.

     Options may be granted at such times, in such amounts, and, to the extent
not inconsistent with the Plan, on such terms as the Board of Directors or the
Committee shall determine to key employees or directors of the Corporation or of
a Subsidiary Corporation.

     5.  TERMS AND CONDITIONS OF OPTIONS GRANTED UNDER THE PLAN.

Each option granted under the Plan shall be evidenced by an agreement in a form
determined by the Board of Directors or the Committee.  Such agreement shall be
subject to the following express terms and conditions, and such other terms and
conditions as the Board of Directors or the Committee may deem appropriate.

         (a) Option Period.  Each option agreement shall specify the period for
which the option thereunder is granted and shall provide that the option shall
expire at the end of such period.  The period for which an option is granted may
not exceed 10 years from the date of the grant of the option.

         (b) Exercise of Option. An option may be exercised at any time after it
has vested and prior to its expiration.

         (c) Option Price. The option price per share shall be determined by the
Board of Directors or the Committee at the time an option is granted and shall
be not less than 100 percent of the fair market value of a share of the common
stock of the Corporation on the date of the grant as determined in good faith by
the Board of Directors or the Committee. Fair market value at the time of
payment shall be determined without regard to any restriction other than a
restriction that, by its terms, will never lapse.

         (d) Payment of Purchase Price upon Exercise.  Each option shall provide
that the purchase price of the shares for which an option may be exercised shall
be paid to the Corporation at the time of exercise either in cash or with stock
of the Corporation held by the optionee for more than six months and having a
fair market value equal to the purchase price.

         (e) Nontransferability.  No option granted under the Plan shall be
transferable other than by a will of an optionee or by the laws of descent and
distribution.  During his lifetime, an option shall be exercisable only by an
optionee or by the optionee's attorney-in-fact or conservator.

         (f) Investment Representation. The shares of stock to be issued upon
the exercise of all or any portion of any option granted under the Plan shall be
issued on the condition that the optionee represents that the purchase of stock
upon such exercise shall be for investment purposes and not with a view to
resale, distribution, offering, transferring, mortgaging, pledging,
hypothecating or otherwise disposing of any such stock under the circumstances
which would constitute a public offering or distribution under the Securities
Act of 1933 or the securities laws of 

                                      -2-
<PAGE>
 
any state. No shares of stock shall be issued upon the exercise of any option
unless the Corporation shall have received from the optionee a written statement
satisfactory to legal counsel for the Corporation containing the above
representations, stating that certificates representing such shares may bear a
legend restricting their transfer and stating that the Corporation's transfer
agent or agents may be given instructions to stop transfer of any certificate
bearing such legend. Such representation and restrictions provided for herein,
shall not be required if (i) an effective registration statement for such shares
under the Securities Act of 1933 and any applicable state laws has been filed
with the Securities and Exchange Commission and with the appropriate agency or
commission of any state whose laws apply to the transaction, or (ii) an opinion
of counsel satisfactory to the Corporation has been delivered to the Corporation
to the effect that registration is not required under the Securities Act of 1933
or under the applicable securities laws of any state. In the event the
Corporation proposes to register any of its securities under the Securities Act
of 1933 or any applicable state laws, it shall notify each optionee who shall
have purchased shares of stock upon the exercise of all or of any portion of any
option granted under the Plan, and if such optionee desires to register any of
such shares of stock held by him, he shall notify the Corporation within 30 days
after receiving such notice and shall thereafter be entitled to have the
Corporation include such shares in such registration upon payment by him to the
Corporation of his pro rata share of the cost of such registration.

         (g) Adjustments in Event of Change in Common Stock. Notwithstanding any
other provision of the Plan, in the event of any change in the outstanding
common stock of the Corporation by reason of any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, combination
or exchange of shares, rights offering to purchase the common stock at a price
substantially below fair market value or of any similar change affecting the
common stock, the number and kind of shares which thereafter may be optioned and
sold under the Plan and the number and kind of shares subject to option in
outstanding option agreements and the purchase price per share thereof shall be
appropriately adjusted consistent with such change in such manner as the Board
of Directors or the Committee may deem equitable to prevent substantial dilution
or enlargement of the rights granted to, or available for, an optionee under the
Plan.

         (h) No Rights as a Shareholder.  No optionee shall have any rights as a
shareholder with respect to any shares subject to his option prior to the date
of issuance to him of a certificate or certificates for such shares.

         (i) No Rights to Continued Employment.  The Plan and any option granted
under the Plan shall neither confer upon any optionee any right with respect to
continuance of employment by the Corporation or by a Subsidiary Corporation, nor
shall it interfere in any way wish the right of the Corporation to terminate his
employment at any time.

     6.  COMPLIANCE WITH OTHER LAWS AND REGULATIONS.

     The Plan, the grant and exercise of options under the Plan, and the
obligation of the Corporation to sell and deliver shares under such options,
shall be subject to all applicable federal 

                                      -3-
<PAGE>
 
and state laws, rules and regulations and to such approvals by any government or
regulatory agency as may be required. The Corporation shall not be required to
issue or deliver any certificates for shares of common stock prior to the
completion of any registration or qualification of such shares under any federal
or state law, or any ruling or regulation of any government body which the
Corporation shall, in its sole discretion, determine to be necessary or
advisable.

     7.  AMENDMENT AND DISCONTINUANCE.

     The Board of Directors of the Corporation may amend, suspend or discontinue
the Plan; provided, however, that, subject to the provisions of Section 5(g) no
action of the Board of Directors of the Corporation or of the Board of Directors
or the Committee may (i) increase the number of shares reserved for options
pursuant to Section 2, (ii) permit the grant of any option at an option price
less than the price determined in accordance with Section 5(c), (iii) permit the
granting of options which expire beyond the period provided for in Section 5(a),
or (iv) modify the requirements as to eligibility for participation in the Plan.
Without the written consent of an optionee, no amendment or suspension of the
Plan shall alter or impair any option previously granted to him under the Plan.

     8.  EFFECTIVE DATE.

     The effective date of the Plan shall be March 20, 1991, with the plan
amendment approved by shareholders of the Corporation holding not less than a
majority of the shares present and voting at the 1998 Annual Shareholders'
Meeting.  Notwithstanding the foregoing, options were granted by the Board of
Directors or the Committee as provided by the Plan, subject to such subsequent
stockholder approval received on March 18, 1998.  The Plan shall terminate on
March 19, 2001.

     9.  NAME OF THE PLAN.

     The Plan shall be known as the Pioneer Bancorporation Non-qualified Stock
Option Plan.

     10.  EFFECT OF THE PLAN ON OTHER STOCK PLANS.

     The adoption of the Plan shall have no effect on awards made or to be made
pursuant to other stock plans covering employees and/or directors of the
Corporation, a Subsidiary Corporation, a parent corporation or any predecessors
or successors thereto.

     This Plan, as amended, was submitted to and approved by shareholders on
March 18,  1998.

                                      -4-

<PAGE>
 
                                                                    EXHIBIT 10.2
                            PIONEER BANCORPORATION
                     NON-QUALIFIED STOCK OPTION AGREEMENT


     This Non-qualified Stock Option Agreement (the "Agreement") is to be
effective as of the ____ day of _______________, by ____________________, (the
"Optionee"), and PIONEER BANCORPORATION, a Nevada corporation (the
"Corporation").

     WHEREAS, the Board of Directors of Pioneer Citizens Bank of Nevada (the
"Bank") adopted a Non-Qualified Stock Option Plan (the "Plan") on January 6,
1991, which was approved by the Bank's shareholders on March 20, 1991, and which
was assumed by the Corporation on October 31, 1993, and amended by the Board of
Directors of the Corporation on February 18, 1998, with such amendment submitted
to and approved by the Corporation's shareholders on March 18, 1998; and

     WHEREAS, Optionee is a key employee or director of the Corporation or one
or more of its subsidiaries; and

     WHEREAS, Optionee was granted an option for ____ shares of the
Corporation's common stock ($0.01 par value) as of the date above written;

     THEREFORE, in consideration of the promises contained herein and the
benefits to be derived herefrom, the parties agree as follows:


     1.    Grant of Options/Terms and Conditions. The Corporation grants to the
           -------------------------------------
Optionee Non-Qualified Stock Options (such options are sometimes hereinafter
referred to as "NSOs"), to purchase all or any part of a total of ____ shares of
the Corporation's common stock subject to the terms and conditions hereinafter
described:
  
           (a)   NSOs for the shares subject to this Agreement may be exercised
by the Optionee on or after the date the right to exercise NSOs for such shares
have vested in accordance with the following schedule, unless sooner terminated
pursuant to the terms of this Agreement, and subject to the right of
accumulation provided for herein. The right to exercise these NSOs shall vest
from time to time in accordance with the following schedule on the anniversary
date of this Agreement for the year indicated:

    Date on Which NSOs will Vest      Number of Shares for which NSOs Will Vest
    ----------------------------      -----------------------------------------




Notwithstanding the above vesting schedule, in the event of a proposed merger,
consolidation, sale of assets, exchange of stock or other reorganization
resulting in a 50% or greater change of ownership of the Corporation or its
subsidiaries, the vesting of the NSOs shall accelerate so they 

                                       1
<PAGE>
 
become exercisable at least fifteen days prior to such proposed transaction. The
NSOs shall not be exercisable after the tenth anniversary of this Agreement (the
"Expiration Date").

           (b)   Except as provided in paragraph (2) below, the NSOs may be
exercised only by Optionee during Optionee's lifetime and may not be
transferred, assigned, pledged or hypothecated in any way, and such NSOs shall
not be subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of these NSOs, or of
any right or privilege conferred hereby, contrary to the provisions of this
Agreement, or upon the levy of any attachment or similar process of these NSOs,
right or privilege, these NSOs shall immediately become null and void.

           (c)   To the extent not exercised, these NSOs shall accumulate and be
exercisable, in whole or in part, in any subsequent period but not later than
the Expiration Date.

           (d)   Optionee shall give written notice to the Corporation of
Optionee's intent to exercise any NSOs subject to this Agreement. The written
notice of intent to exercise shall be sent to the Corporate Secretary at the
Corporation's principal offices located at 10 State Street. Reno, Nevada 89501.

           (e)   The exercise of any NSO is contingent upon the receipt by the
Corporation of cash, certified bank check to its order or a combination of the
foregoing, in an amount equal to the full exercise price of the shares being
purchased or through the transfer to the Corporation of stock of the Corporation
having a fair market value equal to the purchase price and which has been held
by Optionee for more than six months.

           (f)   The exercise price for each share of common stock of the
Corporation subject to these NSOs is $_____, which has been determined in good
faith to be 100 percent of the fair market value of a share of the common stock
of the Corporation as of tile date of this Agreement.

           (g)   In the event of any change in the common stock of the
Corporation by reason of any stock dividend, recapitalization, reorganization,
merger, consolidation, split up, combination or exchange of shares, rights
offering to purchase common stock at a price substantially below fair market
value, or of any similar change affecting the common stock, then the number and
kind of shares subject to these NSOs and the purchase price per share of those
subject shares shall be appropriately adjusted consistent with such change in
such manner as the Committee established under the Plan may deem equitable to
prevent substantial dilution or enlargement of the rights granted to Optionee
hereunder. Any adjustment so made shall be final and binding upon Optionee.

           (h)   Optionee shall have no rights as a shareholder with respect to
any shares of stock subject to these NSOs prior to the date of issuance to
Optionee of a certificate or certificates for such shares.

           (i)   This option shall not confer upon Optionee any right with
respect to continuance of employment or as a director of the Corporation or of
its subsidiaries, nor, if 

                                       2
<PAGE>
 
Optionee is a key employee, shall it interfere in any way with the right of the
Corporation to terminate Optionee's employment at any time.

     2.    Expiration of Options
           ---------------------
          (a)    Optionee may not exercise any part of the NSOs granted under
the Plan unless Optionee has been an employee or served as a director of the
Corporation or of a subsidiary corporation at all times from the date of the
grant of such NSOs until the date three months prior to the date of exercise,
except as provided below. Such employment as an employee or service as a
director must have been continuous for at least one year before any NSO can be
exercised.

           (b)   If Optionee shall die while an employee or director of the
Corporation or a subsidiary corporation, Optionee's NSOs may be exercised, to
the extent that Optionee shall have been entitled to do so on the date of death,
by the person or persons to whom the Optionee's right under the NSO passes by
will or applicable law, or if no such person has such right, by Optionee's
executors or administrators, at any time, or from time to time, but not later
than the Expiration Date or two years after Optionee's death, whichever date is
earlier.

           (c)   If Optionee's employment or directorship shall terminate or
cease because of Optionee's disability, Optionee may exercise these NSOs, to the
extent that Optionee shall have been entitled to do so at the date of Optionee's
termination of employment or cessation of directorship, at any time or from time
to time, but not later than the Expiration Date or one year after termination of
employment or cessation of service as a director, whichever date is earlier.

           (d)   If Optionee's employment or directorship shall terminate or
cease by reasons other than death or disability, all right to exercise
Optionee's NSOs shall terminate at the Expiration Date or upon termination of
employment or cessation of directorship, whichever date is earlier.

     3.    Investment Representation. The Optionee represents and warrants that
           -------------------------
Optionee has acquired these NSOs for investment and not with a view to
distribution and that Optionee will acquire all shares provided for hereunder
for investment and not with a view to distribution. Upon each exercise of these
NSOs, Optionee will deliver to the Corporation a written representation to such
effect in a form prepared by counsel to the Corporation. Certificates for the
shares acquired by Optionee under these NSOs shall bear a legend substantially
in the following form:

           THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
           REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN
           ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED IN THE
           ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
           SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION

                                       3
<PAGE>
 
           THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

     4.    Restrictions Under Securities Laws. These NSOs shall be subject to
           ----------------------------------
the requirement that if at any time the Corporation determines that the listing,
registration or qualification of the shares covered thereby upon any securities
exchange or under state or federal law or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of these NSOs or the issue or purchase of shares
thereunder, these NSOs may not be exercised in whole or in part unless and until
such listing, registration, qualification, consent or approval shall have been
effective or obtained free of any conditions not acceptable to the Corporation.

     5.    Notices. Any notice to the Corporation required to be made under the
           -------
terms of the Agreement or under the terms of the Plan shall be addressed to the
Corporate Secretary at the Corporation, 10 State Street, Reno, Nevada 89501, and
any notice required to made to the Optionee under the terms of the Agreement or
under the terms of the Plan shall be addressed to Optionee at such address as
the Optionee furnishes to the Secretary of the Corporation from time to time.

     6.    Plan Governs. To the extent that this Agreement is inconsistent with
           ------------
tile Plan, tile Plan shall govern. To the extent possible, this Agreement shall
be construed consistently with the Plan.

     7.    Governing Law. This Agreement shall be construed ill accordance with
           -------------
the laws of the State of Nevada.


      IN WITNESS WHEREOF, this Non-Qualified Stock Option Agreement is executed
as of the date first written above.


                              OPTIONEE:

                              _____________________________


                              PIONEER BANCORPORATION


                              By:
                              Title: President/CEO
                                     -------------

                                       4

<PAGE>
 
                                                                    EXHIBIT 10.3
                                                                    
                         EXECUTIVE SEVERANCE AGREEMENT

     This EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is dated as of February
17, 1999 (the "Effective Date").  The parties to this Agreement ("Parties") are
PIONEER CITIZENS BANK, a Nevada state-chartered bank ("Bank"), and William E.
Martin ("Executive").

A.   Executive is employed by Bank in a managerial capacity, presently holding
     the position of President and Chief Executive Officer.

B.   Bank wishes to ensure the continued availability of Executive's services in
     the event of a change in the control of Bank, thereby allowing Bank to
     maximize the benefits obtainable from any such change.  To that end, Bank
     desires to provide incentive for Executive's continued employment with
     Bank.

NOW THEREFORE, Bank and Executive agree as follows:

                                   Agreement
                                   ---------

1.   Effective Date and Term.  As of the Effective Date, this Agreement shall be
     a binding obligation of the parties, not subject to revocation or amendment
     except by mutual consent or in accordance with its terms.  The term of this
     Agreement ("Term") shall commence as of the Effective Date and shall expire
     upon Executive's termination of employment with Bank.  Notwithstanding the
     preceding, if a definitive agreement providing for a Change in Control
     (defined below) is entered into (i) on or before the expiration of the Term
     or (ii) within sixty (60) days after Executive's termination other than for
     Cause, Disability, Retirement or death, then expiration of such Term, the
     term of this Agreement shall be extended through the Severance Protection
     Period (defined below).

2.   Commitment of Executive.  In the event that any person extends any proposal
     or offer which is intended to or may result in a Change in Control, defined
     below (a "Change in Control Proposal"), Executive shall, at Bank's request,
     assist Bank and/or its parent holding company, Pioneer Bancorporation
     ("Bancorp"), in evaluating such proposal or offer.  Further, as a condition
     to receipt of the Severance Payment (defined below), Executive agrees not
     to voluntarily resign Executive's position with Bank during any period from
     the Executive's receipt of information of a specific Change in Control
     Proposal up to the consummation or abandonment of the transaction
     contemplated by such Proposal.

3.   Severance Payment.

     a.   Payment Events.  In the event of voluntary or involuntary termination
          --------------                                                       
          of Executive's employment with Bank, other than for Cause, Disability
          (each defined below) or death (i) within the Severance Protection
          Period after a Change in Control, or (ii) within sixty (60) days
          before a Change in Control, Bank will pay Executive a severance
          payment in the amount determined pursuant to the next section
          ("Severance Payment"), payable on the later of the date of termination
          or the date of the Change in Control.  The "Severance Protection
          Period" shall be the period beginning on the Change of Control and
          continuing thereafter for thirty-six (36) months.

                                       1
<PAGE>
 
     b.   Amount of Payment.  The Severance Payment shall be an amount equal to
          -----------------                                                    
          the Payment Multiple (defined below) multiplied by the sum of (i)
          Executive's regular monthly salary in effect as of the date of
          termination of employment (as reportable on Executive's IRS Form W-2,
          but including the amount of any voluntary deferrals of salary, and
          excluding any expense allowances or reimbursements, any bonuses, any
          gain from exercise of stock options, or any other similar non-
          recurring payments) and (ii) one-twelfth of Executive's most recent
          bonus paid (as reported on Executive's IRS Form W-2).  The "Payment
          Multiple" shall be the number of months in the Severance Protection
          Period.

     c.   Limitation on Payment.  Notwithstanding anything in this Agreement to
          ---------------------                                                
          the contrary, the Severance Payment shall not exceed an amount equal
          to One Dollar ($1.00) less than the amount which would cause the
          payment, together with any other payments received from Bank to be a
          "parachute payment" as defined in Section 280G(b)(2)(A) of the
          Internal Revenue Code of 1986, as amended.

     d.   Release.  Executive agrees that in exchange for the Severance Payment,
          -------                                                               
          Executive will execute a release of any and all employment-related
          claims against the Bank.

4.   Definitions.  Solely for purposes of this Agreement, the following terms
     shall have the meanings set forth below:

     a.   Bancorp.  "Bancorp" shall mean Pioneer Bancorporation, a Nevada
          -------                                                        
          corporation and parent company of Bank.

     b.   Cause.  "Cause" means any one or more of the following:
          -----                                                  

          (1)  Willful misfeasance or gross negligence in the performance of
               Executive's duties;

          (2)  Conviction of a crime in connection with such duties; or

          (3)  Conduct demonstrably and significantly harmful to the financial
               condition of the Bank.

     c.   Change in Control.  "Change in Control" shall mean either of the
          -----------------                                               
          following:

          (1)  The merger or consolidation of Bank or Bancorp into any
               corporation, or the merger or consolidation of any corporation
               into Bank or Bancorp, where at least sixty-six and two-thirds
               percent (66-2/3 %) of the stock of such corporation or Bank or
               Bancorp, as the case may be, (the "Surviving Corporation") is
               owned by other than the owners of the common stock of Bank or
               Bancorp prior to such merger or consolidation; or

          (2)  The sale of substantially all of the assets of Bank or Bancorp to
               an entity other than Bancorp or an entity owned more than fifty
               percent (50%) by Bancorp.

     d.   Disability.   "Disability" shall mean a physical or mental impairment
          ----------                                                           
          which renders Executive incapable of substantially performing the
          essential functions of such Executive's position, and which is
          expected to continue rendering Executive so 

                                       2
<PAGE>
 
          incapable for the reasonably foreseeable future, with or without
          reasonable accommodation.

     e.   Retirement.  "Retirement" shall mean voluntary termination by
          ----------                                                   
          Executive in accordance with Bank's retirement policies, including
          early retirement, if applicable to their salaried employees

5.   No Impact on Employment.

     a.   Not an Employment Agreement.  Nothing in this Agreement, express or
          ---------------------------                                        
          implied, is intended to confer upon Executive the right to employment
          with Bank.  Accordingly, except with respect to the Severance Payment,
          this Agreement shall have no effect on the determination of any
          compensation payable by Bank to Executive, or upon any of the other
          terms of Executive's employment with Bank.  The specific arrangements
          referred to herein are not intended to exclude any other benefits
          which may be available to Executive upon a termination of employment
          with Bank pursuant to employee benefit plans of Bank or otherwise.

     b.   No Change in Employment Status.  Nothing in this Agreement shall
          ------------------------------                                  
          change Executive's employment status with Bank.  Unless otherwise
          expressly provided in a separate written agreement, (i) this Agreement
          shall not alter Executive's "at will" employment relationship with
          Bank and (ii) either Executive or Bank may terminate Executive's
          employment at any time with or without notice and with or without
          cause.

6.   Noncompetition

     a.   Participation in Competing Business.  During the period from the date
          -----------------------------------                                  
          on which any Severance Payment is made and for twelve (12) months
          thereafter ("Noncompete Period"), Executive will not become involved,
          directly or indirectly, as a shareholder, member, partner, director,
          officer, manager, consultant, agent or representative of a Competing
          Business.

          (1)  Competing Business.  "Competing Business" means any financial
               ------------------                                           
               institution, credit union, or trust company within the Covered
               Area.

          (2)  Covered Area.  "Covered Area" means the State of Nevada.
               ------------                                            

     b.   Employment Outside Covered Area.  Nothing in this Agreement prevents
          -------------------------------                                     
          the Executive from accepting employment outside the Covered Area from
          a Competing Business, if, during the Noncompete Period, the Executive:
          (i) will not act as an employee or other representative or agent of
          the Competing Business within the Covered Area and (ii) will have no
          responsibilities for the Competing Business' operations within the
          Covered Area.

     c.   Passive Interest.  Nothing in this Agreement prevents the Executive
          ----------------                                                   
          from owning five percent (5%) or less of any class of security of a
          Competing Business.

     d.   Enforceability.  If a court determines that the restrictions set forth
          --------------                                                        
          in this Section 6 are unenforceable, the maximum restrictions, term,
          scope or geographical area that is enforceable will be substituted in
          place of the unenforceable provisions.

                                       3
<PAGE>
 
     e.   Exception to Arbitration.  Notwithstanding Section 11(b) below, if
          ------------------------                                          
          Executive violates this Section 6, Bank and/or Bancorp will be
          entitled to injunctive relief and/or specific performance, as well as
          to any other legal or equitable remedies to which they may be
          entitled.

7.   Proprietary Information.  Executive acknowledges that during the course of
     Executive's employment with Bank, Executive shall have access to and make
     use of certain trade secrets and confidential information (collectively
     "Confidential Information").  "Confidential Information" refers to all
     nonpublic information relating to Bank or its business that is disclosed to
     or produced by Executive, or that Executive otherwise obtains during
     employment with Bank, including but not limited to business strategies,
     financial results, lists of current or future customer accounts, key
     persons to contact with regard to customer accounts, customer needs,
     contractual agreements between Bank and other individuals, strategies and
     ideas, and compilations of information and records owned by Bank and
     regularly used in operation of Bank's business.  Executive agrees that
     Executive shall not disclose any Confidential Information, directly or
     indirectly, or use any of it in any way, except as required in the course
     of employment by Bank.  Executive further agrees that all files, records,
     documents, drawings, specifications, lists, equipment, graphics, designs,
     and similar items relating to the business of Bank, including any copies
     whether prepared by Executive or otherwise coming into Executive's
     possession, shall remain the exclusive property Bank and shall not be
     removed from the premises of Bank without prior written consent of Bank.

8.   Withholding.  All payments required to be made by Bank hereunder to
     Executive shall be subject to the withholding of such amounts, if any,
     relating to tax and other payroll deductions as Bank may reasonably
     determine should be withheld pursuant to any applicable law or regulation.

9.   Assignability.  Bank may assign this Agreement and its rights hereunder in
     whole, but not in part, to any corporation, bank or other entity with or
     into which Bank may hereafter merge or consolidate or to which Bank may
     transfer all or substantially all of its assets, if in any such case said
     corporation, bank or other entity shall by operation of law or expressly in
     writing assume all obligations of Bank hereunder as fully as if it had been
     originally made a party hereto, but may not otherwise assign this Agreement
     or its rights hereunder.  Executive may not assign or transfer this
     Agreement or any rights or obligations hereunder.

10.  Entire Agreement.  This Agreement constitutes the entire understanding
     between the parties concerning its subject matter and supersedes all prior
     agreements.  Accordingly, Executive specifically waives the terms of and
     all of Executive's rights under all change-in-control agreements and
     severance compensation provisions of any other agreements, whether written
     or oral, previously entered into with Bank.

11.  General Provisions.

     a.   Choice of Law.  This Agreement is made with reference to and is
          -------------                                                  
          intended to be construed in accordance with the laws of the State of
          Nevada.

     b.   Arbitration.  Any dispute, controversy or claim arising out of or in
          -----------                                                         
          connection with, or relating to, this Agreement or any breach or
          alleged breach hereof, shall, upon the request of any party involved,
          be submitted to, and settled by, arbitration pursuant to the rules
          then in effect of the American Arbitration Association (or under any
          other form of arbitration mutually acceptable to the parties so
          involved).  Any award rendered shall be 

                                       4
<PAGE>
 
          final and conclusive upon the parties and a judgment thereon may be
          entered in the highest court of the forum having jurisdiction. The
          arbitrator shall render a written decision, naming the substantially
          prevailing party in the action, and shall award such party all costs
          and expenses incurred, including reasonable attorneys' fees.

     c.   Attorney Fees.  In the event of any breach of or default under this
          -------------                                                      
          Agreement which results in either party incurring attorney or other
          fees, costs or expenses (including in arbitration), the prevailing
          party shall be entitled to recover from the non-prevailing party any
          and all such fees, costs and expenses, including attorney fees.

     d.   Successors.  This Agreement shall bind and inure to the benefit of the
          ----------                                                            
          Parties and each of their respective affiliates, legal
          representatives, heirs, successors and assigns.

     e.   Amendment.  This Agreement may be amended only in a writing signed by
          ---------                                                            
          the Parties.

     f.   Headings.  The headings of sections of this Agreement have been
          --------                                                       
          included for convenience of reference only.  They shall not be
          construed to modify or otherwise affect in any respect any of the
          provisions of the Agreement.

EXECUTED by each of the Parties effective as of the date first stated above.


BANK:                               EXECUTIVE:

PIONEER CITIZENS BANK,              William E. Martin
a Nevada state-charted bank


By:   /s/ Louis J. Capurro             /s/ William E. Martin
    ----------------------            ----------------------

Its:   Chairman of the Board
     -----------------------

                                       5

<PAGE>
 
                                                                    EXHIBIT 10.4

                         EXECUTIVE SEVERANCE AGREEMENT

     This EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is dated as of *Effective
Date* (the "Effective Date").  The parties to this Agreement ("Parties") are
PIONEER CITIZENS BANK, a Nevada state-chartered bank ("Bank"), and *First Name*
*Last Name* ("Executive").

A.   Executive is employed by Bank in a managerial capacity, presently holding
     the position of Executive Vice President.

B.   Bank wishes to ensure the continued availability of Executive's services in
     the event of a change in the control of Bank, thereby allowing Bank to
     maximize the benefits obtainable from any such change.  To that end, Bank
     desires to provide incentive for Executive's continued employment with
     Bank.

NOW THEREFORE, Bank and Executive agree as follows:

                                   Agreement
                                   ---------

1.   Effective Date and Term.  As of the Effective Date, this Agreement shall be
     a binding obligation of the parties, not subject to revocation or amendment
     except by mutual consent or in accordance with its terms.  The term of this
     Agreement ("Term") shall commence as of the Effective Date and shall expire
     upon Executive's termination of employment with Bank.  Notwithstanding the
     preceding, if a definitive agreement providing for a Change in Control
     (defined below) is entered into (i) on or before the expiration of the Term
     or (ii) within sixty (60) days after Executive's termination other than for
     Cause, Disability, Retirement or death, then expiration of such Term, the
     term of this Agreement shall be extended through the Severance Protection
     Period (defined below).

2.   Commitment of Executive.  In the event that any person extends any proposal
     or offer which is intended to or may result in a Change in Control, defined
     below (a "Change in Control Proposal"), Executive shall, at Bank's request,
     assist Bank and/or its parent holding company, Pioneer Bancorporation
     ("Bancorp"), in evaluating such proposal or offer.  Further, as a condition
     to receipt of the Severance Payment (defined below), Executive agrees not
     to voluntarily resign Executive's position with Bank during any period from
     the Executive's receipt of information of a specific Change in Control
     Proposal up to the consummation or abandonment of the transaction
     contemplated by such Proposal.

3.   Severance Payment.

     a.   Payment Events.  In the event of voluntary or involuntary termination
          --------------                                                       
          of Executive's employment with Bank, other than for Cause, Disability
          (each defined below) or death (i) within the Severance Protection
          Period after a Change in Control, or (ii) within sixty (60) days
          before a Change in Control, Bank will pay Executive a severance
          payment in the amount determined pursuant to the next section
          ("Severance Payment"), payable on the later of the date of termination
          or the date of the Change in Control.  The "Severance Protection
          Period" shall be the period beginning on the Change of Control and
          continuing thereafter for (i) twenty-four (24) months plus (ii) an
          additional month for 

                                       1
<PAGE>
 
          each year Executive has been employed with Bank up to six years, for a
          maximum Severance Protection Period of thirty (30) months.

     b.   Amount of Payment.  The Severance Payment shall be an amount equal to
          -----------------                                                    
          the Payment Multiple (defined below) multiplied by the sum of (i)
          Executive's regular monthly salary in effect as of the date of
          termination of employment (as reportable on Executive's IRS Form W-2,
          but including the amount of any voluntary deferrals of salary, and
          excluding any expense allowances or reimbursements, any bonuses, any
          gain from exercise of stock options, or any other similar non-
          recurring payments) and (ii) one-twelfth of Executive's most recent
          bonus paid (as reported on Executive's IRS Form W-2).  The "Payment
          Multiple" shall be the number of months in the Severance Protection
          Period.

     c.   Limitation on Payment.  Notwithstanding anything in this Agreement to
          ---------------------                                                
          the contrary, the Severance Payment shall not exceed an amount equal
          to One Dollar ($1.00) less than the amount which would cause the
          payment, together with any other payments received from Bank to be a
          "parachute payment" as defined in Section 280G(b)(2)(A) of the
          Internal Revenue Code of 1986, as amended.

     d.   Release.  Executive agrees that in exchange for the Severance Payment,
          -------                                                               
          Executive will execute a release of any and all employment-related
          claims against the Bank.

4.   Definitions.  Solely for purposes of this Agreement, the following terms
     shall have the meanings set forth below:

     a.   Bancorp.  "Bancorp" shall mean Pioneer Bancorporation, a Nevada
          -------                                                        
          corporation and parent company of Bank.

     b.   Cause.  "Cause" means any one or more of the following:
          -----                                                  

          (1)  Willful misfeasance or gross negligence in the performance of
               Executive's duties;

          (2)  Conviction of a crime in connection with such duties; or

          (3)  Conduct demonstrably and significantly harmful to the financial
               condition of the Bank.

     c.   Change in Control.  "Change in Control" shall mean either of the
          -----------------                                               
          following:

          (1)  The merger or consolidation of Bank or Bancorp into any
               corporation, or the merger or consolidation of any corporation
               into Bank or Bancorp, where at least sixty-six and two-thirds
               percent (66-2/3 %) of the stock of such corporation or Bank or
               Bancorp, as the case may be, (the "Surviving Corporation") is
               owned by other than the owners of the common stock of Bank or
               Bancorp prior to such merger or consolidation; or

          (2)  The sale of substantially all of the assets of Bank or Bancorp to
               an entity other than Bancorp or an entity owned more than fifty
               percent (50%) by Bancorp.

                                       2
<PAGE>
 
     d.   Disability.   "Disability" shall mean a physical or mental impairment
          ----------                                                           
          which renders Executive incapable of substantially performing the
          essential functions of such Executive's position, and which is
          expected to continue rendering Executive so incapable for the
          reasonably foreseeable future, with or without reasonable
          accommodation.

     e.   Retirement.  "Retirement" shall mean voluntary termination by
          ----------                                                   
          Executive in accordance with Bank's retirement policies, including
          early retirement, if applicable to their salaried employees

5.   No Impact on Employment.

     a.   Not an Employment Agreement.  Nothing in this Agreement, express or
          ---------------------------                                        
          implied, is intended to confer upon Executive the right to employment
          with Bank.  Accordingly, except with respect to the Severance Payment,
          this Agreement shall have no effect on the determination of any
          compensation payable by Bank to Executive, or upon any of the other
          terms of Executive's employment with Bank.  The specific arrangements
          referred to herein are not intended to exclude any other benefits
          which may be available to Executive upon a termination of employment
          with Bank pursuant to employee benefit plans of Bank or otherwise.

     b.   No Change in Employment Status.  Nothing in this Agreement shall
          ------------------------------                                  
          change Executive's employment status with Bank.  Unless otherwise
          expressly provided in a separate written agreement, (i) this Agreement
          shall not alter Executive's "at will" employment relationship with
          Bank and (ii) either Executive or Bank may terminate Executive's
          employment at any time with or without notice and with or without
          cause.

6.   Noncompetition

     a.   Participation in Competing Business.  During the period from the date
          -----------------------------------                                  
          on which any Severance Payment is made and for twelve (12) months
          thereafter ("Noncompete Period"), Executive will not become involved,
          directly or indirectly, as a shareholder, member, partner, director,
          officer, manager, consultant, agent or representative of a Competing
          Business.

          (1)  Competing Business.  "Competing Business" means any financial
               ------------------                                           
               institution, credit union, or trust company within the Covered
               Area.

          (2)  Covered Area.  "Covered Area" means the State of Nevada.
               ------------                                            

     b.   Employment Outside Covered Area.  Nothing in this Agreement prevents
          -------------------------------                                     
          the Executive from accepting employment outside the Covered Area from
          a Competing Business, if, during the Noncompete Period, the Executive:
          (i) will not act as an employee or other representative or agent of
          the Competing Business within the Covered Area and (ii) will have no
          responsibilities for the Competing Business' operations within the
          Covered Area.

     c.   Passive Interest.  Nothing in this Agreement prevents the Executive
          ----------------                                                   
          from owning five percent (5%) or less of any class of security of a
          Competing Business.

                                       3
<PAGE>
 
     d.   Enforceability.  If a court determines that the restrictions set forth
          --------------                                                        
          in this Section 6 are unenforceable, the maximum restrictions, term,
          scope or geographical area that is enforceable will be substituted in
          place of the unenforceable provisions.

     e.   Exception to Arbitration.  Notwithstanding Section 11(b) below, if
          ------------------------                                          
          Executive violates this Section 6, Bank and/or Bancorp will be
          entitled to injunctive relief and/or specific performance, as well as
          to any other legal or equitable remedies to which they may be
          entitled.

7.   Proprietary Information.  Executive acknowledges that during the course of
     Executive's employment with Bank, Executive shall have access to and make
     use of certain trade secrets and confidential information (collectively
     "Confidential Information").  "Confidential Information" refers to all
     nonpublic information relating to Bank or its business that is disclosed to
     or produced by Executive, or that Executive otherwise obtains during
     employment with Bank, including but not limited to business strategies,
     financial results, lists of current or future customer accounts, key
     persons to contact with regard to customer accounts, customer needs,
     contractual agreements between Bank and other individuals, strategies and
     ideas, and compilations of information and records owned by Bank and
     regularly used in operation of Bank's business.  Executive agrees that
     Executive shall not disclose any Confidential Information, directly or
     indirectly, or use any of it in any way, except as required in the course
     of employment by Bank.  Executive further agrees that all files, records,
     documents, drawings, specifications, lists, equipment, graphics, designs,
     and similar items relating to the business of Bank, including any copies
     whether prepared by Executive or otherwise coming into Executive's
     possession, shall remain the exclusive property Bank and shall not be
     removed from the premises of Bank without prior written consent of Bank.

8.   Withholding.  All payments required to be made by Bank hereunder to
     Executive shall be subject to the withholding of such amounts, if any,
     relating to tax and other payroll deductions as Bank may reasonably
     determine should be withheld pursuant to any applicable law or regulation.

9.   Assignability.  Bank may assign this Agreement and its rights hereunder in
     whole, but not in part, to any corporation, bank or other entity with or
     into which Bank may hereafter merge or consolidate or to which Bank may
     transfer all or substantially all of its assets, if in any such case said
     corporation, bank or other entity shall by operation of law or expressly in
     writing assume all obligations of Bank hereunder as fully as if it had been
     originally made a party hereto, but may not otherwise assign this Agreement
     or its rights hereunder.  Executive may not assign or transfer this
     Agreement or any rights or obligations hereunder.

10.  Entire Agreement.  This Agreement constitutes the entire understanding
     between the parties concerning its subject matter and supersedes all prior
     agreements.  Accordingly, Executive specifically waives the terms of and
     all of Executive's rights under all change-in-control agreements and
     severance compensation provisions of any other agreements, whether written
     or oral, previously entered into with Bank.

11.  General Provisions.

     a.   Choice of Law.  This Agreement is made with reference to and is
          -------------                                                  
          intended to be construed in accordance with the laws of the State of
          Nevada.

                                       4
<PAGE>
 
     b.   Arbitration.  Any dispute, controversy or claim arising out of or in
          -----------                                                         
          connection with, or relating to, this Agreement or any breach or
          alleged breach hereof, shall, upon the request of any party involved,
          be submitted to, and settled by, arbitration pursuant to the rules
          then in effect of the American Arbitration Association (or under any
          other form of arbitration mutually acceptable to the parties so
          involved).  Any award rendered shall be final and conclusive upon the
          parties and a judgment thereon may be entered in the highest court of
          the forum having jurisdiction.  The arbitrator shall render a written
          decision, naming the substantially prevailing party in the action, and
          shall award such party all costs and expenses incurred, including
          reasonable attorneys' fees.

     c.   Attorney Fees.  In the event of any breach of or default under this
          -------------                                                      
          Agreement which results in either party incurring attorney or other
          fees, costs or expenses (including in arbitration), the prevailing
          party shall be entitled to recover from the non-prevailing party any
          and all such fees, costs and expenses, including attorney fees.

     d.   Successors.  This Agreement shall bind and inure to the benefit of the
          ----------                                                            
          Parties and each of their respective affiliates, legal
          representatives, heirs, successors and assigns.

     e.   Amendment.  This Agreement may be amended only in a writing signed by
          ---------                                                            
          the Parties.

     f.   Headings.  The headings of sections of this Agreement have been
          --------                                                       
          included for convenience of reference only.  They shall not be
          construed to modify or otherwise affect in any respect any of the
          provisions of the Agreement.

EXECUTED by each of the Parties effective as of the date first stated above.

BANK:                                   EXECUTIVE:

PIONEER CITIZENS BANK,                  *First Name* *Last Name*
a Nevada state-charted bank

By:_____________________________        _____________________________

Its:____________________________

                                       5

<PAGE>
 
                                                                    EXHIBIT 10.5

                                   AGREEMENT
                                   ---------

     This Agreement (this "Agreement") is made as of February 27, 1998 by and
                                                     -----------             
between Pioneer Citizens Bank, a state chartered bank (the "Bank") and Leo V.
Seevers, an individual ("Seevers").

                            Preliminary Statements
                            ----------------------

     A.    Seevers is currently employed by the Bank in the position of
Executive Vice-President at the Bank's Reno headquarters location.

     B.    Seevers has had a long, outstanding career with the Bank, and has
decided to retire. The relationship between Seevers and the Bank is one of
mutual respect. Seevers' retirement from the Bank is on the most amicable of
terms.

     C.    The Bank recognizes that Seevers is a prominent figure in the banking
industry and in the general community in Las Vegas and in Reno, Nevada. A
competitor of the Bank may approach Seevers and engage Seevers in a capacity
that is detrimental to the Bank's business.

     D.    The primary purpose of this Agreement is to limit Seevers from
competing with the Bank during the three (3) year period commencing on the date
when Seevers retires, which will be April 1, 1998, and running through March 30,
2001 (the "Transition Period"). A secondary purpose is to set the terms and
conditions of Seevers' acting as a consultant to the Bank if the Bank calls upon
Seevers to provide certain consulting and advisory services, and if Seevers
agrees to render such services, during the Transition Period.

     In consideration of the foregoing, the mutual promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

                                   Covenants
                                   ---------

     1.    Non-Competition; Non-Solicitation. Without the prior written
           ---------------------------------  
authorization of the Bank, Seevers shall not, directly or indirectly, during the
Transition Period:

    (a)    own, manage, operate, control or participate in the ownership,
management, operation or control of, or be connected as an officer, employee,
partner, director or consultant, (other than providing Consulting Services to
the Bank) or otherwise with or have any financial interest in any entity engaged
in the practice of banking within Clark County and Washoe County, Nevada; or

     (b)   solicit or contact any employee of the Bank with a view to inducing
or encouraging such employee to leave the employ of the Bank for the purpose of
being employed by Seevers or any competitor of the Bank; or

                                       1
<PAGE>
 
     (c)   solicit any customer of the Bank to relocate his or her accounts to
that of a competitor.

     The parties hereto recognize and acknowledge that the geographical and time
limitations contained in this Section are reasonable and properly required for
the adequate protection of the Bank's interests.  The parties further
acknowledge that violation of this Section would cause irreparable injury for
which there would be no adequate remedy at law, and agree that the Bank shall be
entitled to seek injunctive relief against such violation.

     2.    Monetary Consideration.  As a material inducement to enter into this
           ----------------------                                              
Agreement, the Bank shall pay or cause to be paid to Seevers the sum of Three
Hundred Sixty Thousand Dollars ($360,000) for the Transition Period.  This
amount shall be paid in equal monthly installments payable on the last business
day of each month.

     In the event of Seevers' death, the Bank shall continue to pay the Monetary
Consideration pursuant to the payment schedule set forth above.  The payee shall
be determined in accordance with Seevers' operative estate plan, which currently
is the Revocable Living Trust Agreement made and executed March 12, 1997 by
Seevers and his wife Diane E. Seevers, as Settlors and Trustees.

     In the event the Bank is acquired by another person or entity or is merged
into another person or entity and the Bank is not the surviving entity, the
unpaid balance of the Monetary Consideration shall become due and payable on the
date the merger or acquisition is final.

     3.    Medical Insurance Benefits. As an additional material inducement to
           --------------------------
enter into this Agreement, the Bank shall provide Seevers with medical insurance
during the Transition Period which is the same as the medical insurance and
coverages Seevers received as an employee prior to his retirement.

     In the event of Seevers' death, the Bank shall continue to provide those
dependents of Seevers who were dependents at the time of his death with the same
medical insurance during the remainder of the Transition Period.

     4.    Consulting Services. During the Transition Period, the Bank may call
           -------------------
upon Seevers to perform certain consulting and advisory services for the Bank.
Seevers agrees to perform such services that the Bank and Seevers mutually agree
upon. The services may include providing business referrals, assisting the Bank
with the retention of its existing customer base, and providing information and
assistance with regard to the Bank's past and future lending decisions as well
as any other consulting and advisory services ("Consulting Services"). With the
exception of expenses addressed in Section 5 of this Agreement, he shall be paid
only the Monetary Consideration and Medical Insurance Benefits set forth above
for rendering the Consulting Services.

     5.    Expenses with Regard to Consulting Services. Seevers shall be
           -------------------------------------------
reimbursed by the Bank for all reasonable expenses incurred by him in connection
with performance of the 

                                       2
<PAGE>
 
Consulting Services provided that Seevers timely provides the Bank with a
reasonable accounting for such expenses.

     6.    Confidential Information. In view of the fact that Seevers has
           ------------------------
obtained and will continue to obtain information regarding the confidential
affairs of the Bank and its operations and customers, which is not readily
available to the pubic, Seevers agrees, during the Transition Period and
thereafter, to keep secret and to retain in the strictest confidence all
information in business and financial matters such as costs, profits, and plans
for future expansion or development, plans for rendering additional services,
methods of operation, and marketing concepts of the Bank, customer lists,
customer financial information, as well as employment policies and plans, and
any other information relating to the Bank and its operation, business and
financial affairs or the financial affairs of its customers (collectively, the
"Confidential Matters") and not to disclose the Confidential Matters to anyone
outside the Bank, either during the Transition Period or thereafter, except to
the extent reasonably required in the course of performing the Consulting
Services or with the Bank's express written consent. The covenants, agreements,
representations and warranties contained in and made pursuant to this Section
shall survive the Transition Period.

     7.    Resignation of Seevers. Concurrently with the execution of this
           ----------------------
Agreement, Seevers shall agree to resign as of April 1, 1998 as an officer and
employee of the Bank by executing and delivering to the Bank a resignation in
the form set forth on Exhibit "A" attached hereto and made a part hereof.

     8.    Confidentiality of Terms of this Agreement. As an additional material
           ------------------------------------------                      
inducement to enter into this Agreement, each party covenants and agrees that
neither he nor it, nor his or its respective heirs, successors, assigns, agents
or representatives shall disclose to anyone, to whom disclosure is not required
by law or court order, the terms of this Agreement. The parties agree that each
will disclose the following when asked about Seevers' departure from the Bank
and/or Seevers' relationship with the Bank after he terminates his employment
with the Bank on April 1, 1998: "Seevers will be retiring/retired as of April 1,
1988, and will be/is a consultant for the Bank for a three (3) year period
commencing April 1, 1998."

     9.    Arbitration. Except as is provided in Section 1 of this Agreement,
           -----------                                                         
any dispute between the parties arising out of the terms and conditions of this
Agreement that cannot be promptly settled shall be resolved by final and binding
arbitration in Reno, Nevada, in accordance with the then-prevailing Commercial
Rules of the American Arbitration Association (the "AAA"). The parties shall
select a single arbitrator. The arbitrator shall be required to abide by the
provisions of this Agreement and the arbitrator shall not modify or alter same.
The arbitrator's award shall be issued within sixty (60) days following
submission of the dispute to the AAA. The arbitrator's award shall be
unappealable. A judgment upon the award may be entered in any court having
jurisdiction of the parties.

     10.   Fees and Costs Regarding Dispute. In any action to enforce the terms
           -------------------------------- 
and conditions of this Agreement, the prevailing party shall be entitled to
recover from the other party his or its reasonable legal fees, costs and other
expenses.

                                       3
<PAGE>
 
     11.   Governing Law and Venue. This Agreement shall be governed by and
           -----------------------
construed in accordance with the laws of the State of Nevada. Any suit brought
hereon shall be brought in the appropriate state or federal court located in
Washoe County, Nevada, the parties hereto hereby waiving any claim or defense
that such form is not convenient or proper. Each party hereby agrees that any
such court shall have in personam jurisdiction over it and consents to service
of process in manner authorized by Nevada law.

     12.   Notices. All notices, requests, demands and other communications
           -------
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or by overnight commercial courier or mailed, by certified
mail, return receipt requested, as follows:

     If to the Bank:               Pioneer Citizens Bank
                                   4170 South Maryland Parkway
                                   P. O. Box 2351
                                   Las Vegas, Nevada 89109
                                   Attn: William E. Martin, President and CEO

     If to Seevers:                Leo V. Seevers
                                   3873 Vistacrest Dr
                                   Reno, NV. 89509

or to such other address as to which either party may notify the other as
provided herein.

     13.   Binding Effect. This Agreement shall be binding upon, and inure to
           -------------- 
the benefit of, the parties hereto and their respective hears, executors, legal
representatives, successors and assigns.
      
     14.   Enforceability. If any of the provisions in this Agreement, for any
           --------------
reason and to any extent, are construed to be invalid or unenforceable, the
remainder of this Agreement, and the application of the remaining covenants to
other persons or circumstances, shall not be affected thereby, but rather shall
be enforced to the greatest extent permitted by law.

     15.   Entire Agreement. This Agreement contains the entire agreement
           ----------------    
between the Bank and Seevers with respect to the subject matter hereof. This
Agreement may not be amended, waived, changed, modified or discharged except by
an instrument in writing executed by or on behalf of the party or parties
against whom any amendment, waiver, change, modification or discharge is sought
to be enforced.

     16.   Effect of Other Employment and Severance Agreements. As of April 1,
           ---------------------------------------------------
1998, this Agreement supercedes and renders null and void any and all other
employment and severance agreements and arrangements between Seevers and the
Bank, including but not limited to the September 30, 1992 amendment to the
severance arrangement between Seevers and the Bank.

                                       4
<PAGE>
 
     17.   Counterparts.  This Agreement may be executed in any number of
           ------------                                                  
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.

     18.   Fees and Costs Regarding Negotiation Of This Agreement. The Bank
           ------------------------------------------------------
shall bear its own legal fees and costs and other expenses, and Seevers'
reasonable legal fees, costs and other expenses, incurred in connection with the
negotiation, preparation and execution of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
set forth above.


SEEVERS                            BANK
                                   Pioneer Citizens Bank, a state chartered bank


/s/ Leo V. Seevers                 /s/ William E. Martin
______________________________     ______________________________   
Leo V. Seevers                     Name:  William E. Martin
                                   Title:  President/CEO
 
                                       5

<PAGE>
                                                                      EXHIBIT 22

                          SUBSIDIARIES OF REGISTRANT

Pioneer Citizens Bank

<TABLE> <S> <C>

<PAGE>
 
<ARTICLE> 9
<MULTIPLIER> 1,000
       
<S>                             <C>                     <C>
<PERIOD-TYPE>                   YEAR                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1998             DEC-31-1997
<PERIOD-START>                             JAN-01-1998             JAN-01-1997
<PERIOD-END>                               DEC-31-1998             DEC-31-1997
<CASH>                                          58,104                  57,367
<INT-BEARING-DEPOSITS>                             104                     100
<FED-FUNDS-SOLD>                                47,500                  83,500
<TRADING-ASSETS>                                     0                       0
<INVESTMENTS-HELD-FOR-SALE>                    269,476                 211,004
<INVESTMENTS-CARRYING>                          46,102                  40,861
<INVESTMENTS-MARKET>                            47,627                  41,870
<LOANS>                                        576,105                 434,548
<ALLOWANCE>                                      7,004                   5,773
<TOTAL-ASSETS>                               1,031,257                 851,261
<DEPOSITS>                                     899,747                 739,778
<SHORT-TERM>                                    60,111                  53,728
<LIABILITIES-OTHER>                              3,845                   3,698
<LONG-TERM>                                          0                       0
                                0                       0
                                          0                       0
<COMMON>                                            87                      51
<OTHER-SE>                                      67,467                  54,006
<TOTAL-LIABILITIES-AND-EQUITY>               1,031,257                 851,261
<INTEREST-LOAN>                                 49,588                  39,909
<INTEREST-INVEST>                               15,483                  12,228
<INTEREST-OTHER>                                 3,795                   3,487
<INTEREST-TOTAL>                                68,866                  55,624
<INTEREST-DEPOSIT>                              25,537                  19,881
<INTEREST-EXPENSE>                              28,745                  21,694
<INTEREST-INCOME-NET>                           40,121                  33,930
<LOAN-LOSSES>                                    2,125                   1,300
<SECURITIES-GAINS>                               2,016                     111
<EXPENSE-OTHER>                                 30,002                  23,716
<INCOME-PRETAX>                                 18,245                  16,500
<INCOME-PRE-EXTRAORDINARY>                           0                       0
<EXTRAORDINARY>                                      0                       0
<CHANGES>                                            0                       0
<NET-INCOME>                                    13,291                  11,544
<EPS-PRIMARY>                                     1.54                    1.36
<EPS-DILUTED>                                     1.54                    1.33
<YIELD-ACTUAL>                                    4.72                    5.13
<LOANS-NON>                                        794                     920
<LOANS-PAST>                                         0                       0
<LOANS-TROUBLED>                                     0                       0
<LOANS-PROBLEM>                                      0                       0
<ALLOWANCE-OPEN>                                 5,773                   4,923
<CHARGE-OFFS>                                      985                     534
<RECOVERIES>                                        91                      84
<ALLOWANCE-CLOSE>                                7,004                   5,773
<ALLOWANCE-DOMESTIC>                             7,004                   5,773
<ALLOWANCE-FOREIGN>                                  0                       0
<ALLOWANCE-UNALLOCATED>                              0                       0
        

</TABLE>


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