Business Bancorp and Valley Merchants Bank, N.A. Reach Definitive Merger Agreement.

Business Editors

SAN BERNARDINO, Calif.--(BUSINESS WIRE)--April 5, 2000

Business Bancorp (OTC BB:BZBC) (www.businessbank.com), Alan J. Lane, president and CEO of Business Bancorp and Charles D. Rogness, president and CEO of Valley Merchants Bank, N.A., of Hemet, Calif. announced Wednesday that the two companies have reached a definitive agreement to merge.

In signing the agreement, the parties agreed to an all cash transaction in the amount of $12.2 million, or approximately $22.69 per share of Valley Merchants Bank Common Stock outstanding at the closing. The transaction, scheduled for completion during the third quarter of 2000, is subject to regulatory approval as well as the approval of shareholders of Valley Merchants Bank, N.A. The purchase price will be financed, in part, through Business Bancorp's recent issuance of $10,000,000 in 10 7/8% Fixed Rate Capital Trust Pass Through Securities, which was completed on March 23, 2000. Under the agreement, Valley Merchants Bank, N.A. will be merged with Business Bancorp's subsidiary, Business Bank of California.

In joint statements issued by Lane and Rogness, the executives cited enhanced shareholder value, similar business lines and outstanding customer service as factors in the strategic partnership.

Lane's comments on today's announcement indicate that the signing of the merger agreement strongly supports the Bank's corporate objectives. "The location of Valley Merchants Bank in a strong growth area in the Inland Empire is a natural extension of our expanding geographic market." He added, "Valley Merchants has a history of strong profitability and growth, and they enjoy an impeccable reputation with the community they serve. Their customer base, an excellent mix of commercial and retail clients, closely approximates that of our other offices."

It is expected that Rogness, will remain as a part of the bank's management staff through the date of his retirement at the end of this year. "This," Lane offered, "will contribute to a smooth transition for both institutions, and was an additional motivator in our decision."

Rogness agreed that the merger has outstanding potential for Valley Merchants Bank and Business Bank of California. "After considering a number of possible strategic partnerships, we feel very strongly that the agreement we have signed with Business Bank of California represents the best transaction for our shareholders."

"In addition," he added, "the similarities in organizational philosophies between the two banks will provide an environment in which our customers will flourish."

In conclusion Rogness commented on the specific benefits to Valley Merchants' customer base, "Some immediate benefits will be evident to customers of Valley Merchants Bank as a result of the transition. Business Bank of California has the product diversity and technological sophistication to take our operation to the next level. New delivery channels such as online banking and bill payment, PC based cash management services for businesses and Visa debit cards will be welcomed by many of our current customers."

The addition of the Valley Merchants Bank office in Hemet will bring the total number of Business Bank of California branch offices to eight. Business Bank of California has served the Inland Empire since 1984 and operates other branches in the cities of San Bernardino, Corona, Ontario, Redlands, Hesperia and Phelan. The Bank is strongly focused on providing high quality, personalized services to small businesses, professionals and consumers. Visit Business Bank of California on the Internet at www.businessbank.com. Information regarding Business Bancorp stock can be obtained on the OTC bulletin board utilizing the symbol (BZBC).