--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
--------------------------------------------------------------------------------
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934
     For the quarterly period ended June 30, 2006
                                    -------------


[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     For the transition period from____________ to ____________


                        Commission file number  000-50323
                                               -----------

                               SERVICE 1ST BANCORP
        -----------------------------------------------------------------
        (Exact name of small business Issuer as specified in its Charter)


        State of California                                  32-0061893
  -------------------------------                        -------------------
  (State or other jurisdiction of                          (IRS Employer
   incorporation or organization)                        Identification No.)


                   49 W. 10th Street, Tracy, California 95376
                   ------------------------------------------
                    (Address of principal executive offices)


                                 (209) 956-7800
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)


      ---------------------------------------------------------------------
      (Former name, former address and former fiscal year, if changed since
                                  last report)


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

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


State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: 2,386,239 shares of registrant's
common stock were outstanding at August 11, 2006.



The Index to Exhibits is located at page 24.
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  Financial Statements

                       SERVICE 1ST BANCORP AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                       (Unaudited)
ASSETS                                                   06/30/06         12/31/05
                                                      -------------    -------------
<S>                                                   <C>              <C>
Cash and due from banks                               $   5,142,134    $   9,024,556
Federal funds sold                                          590,000               --
                                                      -------------    -------------
         Cash and cash equivalents                        5,732,134        9,024,556

Certificates of deposit with other banks                    293,720          993,720
Investment securities available-for-sale                 66,434,223       67,873,931
Investment securities held-to-maturity                    1,397,055          936,040
Loans, net                                              108,390,821       82,533,132
Bank premises and equipment, net                          1,046,386          671,450
Cash surrender value of life insurance                    3,502,402        3,436,150
Accrued interest receivable                               1,055,462          958,001
Other Assets                                              3,844,263        2,902,290

                                                      -------------    -------------
         Total assets                                 $ 191,696,466    $ 169,329,270
                                                      =============    =============


LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:
   Noninterest-bearing demand                         $  29,861,863    $  27,388,426
   Money market, NOW and savings                         72,538,488       85,127,700
   Time deposits under $100,000                          28,452,492       13,643,135
   Time deposits $100,000 and over                       29,839,178       24,982,406
                                                      -------------    -------------
         Total deposits                                 160,692,021      151,141,667
Other borrowings                                         13,926,000        1,030,000
Accrued interest and other liabilities                    1,299,041        1,583,502
                                                      -------------    -------------

         Total liabilities                              175,917,062      153,755,169

Shareholders' equity:
   Preferred stock, no par value, 10,000,000 shares
     authorized, none issued or outstanding                      --               --

   Common stock, no par value, 30,000,000 shares
     authorized, issued and outstanding, 2,386,239
     shares at June 30, 2006 and December 31,
      2005                                               15,992,913       15,992,913
   Additional paid-in-capital                                99,298               --
   Retained earnings (deficit)                              786,006          299,946
Accumulated other comprehensive income, net of tax       (1,098,813)        (718,758)

                                                      -------------    -------------
         Total shareholders' equity                      15,779,404       15,574,101

                                                      -------------    -------------
         Total liabilities and shareholders' equity   $ 191,696,466    $ 169,329,270
                                                      =============    =============
</TABLE>

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

                                       2
<PAGE>

                       SERVICE 1ST BANCORP AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                             For the periods ending
                                   (unaudited)

<TABLE>
<CAPTION>
                                                        For the three months ended     For the six months ended
                                                        ---------------------------   ---------------------------
                                                          06/30/06       06/30/05       06/30/06       06/30/05
                                                        ------------   ------------   ------------   ------------
<S>                                                     <C>            <C>            <C>            <C>
Interest income:
   Interest and fees on loans                           $  2,271,226   $  1,341,071   $  4,164,600   $  2,598,487
   Interest on investments                                   734,390        581,580      1,468,028      1,109,786
   Interest on fed funds sold                                  5,610         46,384         24,112        108,011
   Other interest income                                         975         22,745          7,809         32,973
                                                        ------------   ------------   ------------   ------------
      Total interest income                                3,012,201      1,991,780      5,664,549      3,849,257

Interest expense:
   Interest expense on deposits                            1,107,460        648,090      2,051,577      1,236,396
   Interest on borrowings                                    170,272          1,029        202,777          1,029
                                                        ------------   ------------   ------------   ------------
   Total interest expense                                  1,277,732        649,119      2,254,354      1,237,425
                                                        ------------   ------------   ------------   ------------

Net interest income before provision for loan losses       1,734,469      1,342,661      3,410,195      2,611,832

Provision for loan losses                                     95,000         80,000        140,000        140,000
                                                        ------------   ------------   ------------   ------------

Net interest income after provision for loan losses        1,639,469      1,262,661      3,270,195      2,471,832

Other Income:
   Service charges, fees, and other income                    66,052         76,995        137,477        146,684
   Gain on the sale of investment securities                      --          3,193             --          3,193
   Gain on sale and servicing of loans                        32,685         35,285         59,071        126,687
   Referral fees on mortgage loans                                --         12,795             --         24,434
   Earnings on cash surrender value of life insurance         38,416         26,316         76,215         52,121
                                                        ------------   ------------   ------------   ------------
      Total other income                                     137,153        154,584        272,763        353,119

Other Expenses:
   Salaries and employee benefits                            829,696        607,838      1,643,251      1,213,291
   Occupancy expense                                         151,784         76,640        309,480        152,860
   Equipment expense                                          56,823         51,482        108,165         97,715
   Data processing and other professional fees               152,085         93,507        320,637        202,314
   Office supplies and equipment                              40,243         33,476         83,026         69,549
   Loan department expense                                    20,439         25,862        124,525         43,111
   Advertising and promotion                                  61,985         36,208         91,574         69,998
   Directors fee and expenses                                 43,134         22,920         85,575         44,223
   FDIC and state assessments                                 13,244         20,838         33,379         41,203
   Other operating expenses                                   81,825         74,555        138,872        148,206
                                                        ------------   ------------   ------------   ------------
      Total other expenses                                 1,451,258      1,043,326      2,938,484      2,082,470
                                                        ------------   ------------   ------------   ------------

Income before income taxes                                   325,364        373,919        604,474        742,481
Income tax expense                                            40,634        103,280        118,414        217,406
                                                        ------------   ------------   ------------   ------------

   Net income                                           $    284,730   $    270,639   $    486,060   $    525,075
                                                        ============   ============   ============   ============

Net income per share - basic                            $       0.12   $       0.11   $       0.20   $       0.22
                                                        ============   ============   ============   ============

Net income per share - diluted                          $       0.11   $       0.10   $       0.19   $       0.20
                                                        ============   ============   ============   ============
</TABLE>

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

                                       3
<PAGE>

                               SERVICE 1ST BANCORP
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                       Common Stock                                                         Other         Total
                                --------------------------                Comprehensive  Accumulated    Comprehensive  Shareholders'
                                   Shares        Amount       Surplus        Income         Deficit        Income         Equity
                                ------------  ------------  ------------  ------------   ------------   ------------   ------------
<S>                                <C>        <C>           <C>           <C>            <C>            <C>            <C>
Balance January 1, 2005            1,541,664  $ 15,425,042  $         --                 $ (1,117,844)  $   (205,527)  $ 14,101,671

Common stock sold, net of             49,273       567,871                                                                  567,871
    costs of $11,086

Three-for-two stock split
    including cash for
    fractional shares                795,302                                                   (4,829)                       (4,829)

Comprehensive income:
   Net income                                                             $  1,422,619      1,422,619                     1,422,619
   Unrealized losses on
     securities net of
     taxes of $357,867                                                        (509,594)            --       (509,594)      (509,594)

   Reclassification adjustment
      for gains included in net
      income, net of tax of
      $2,554                                                                    (3,637)            --         (3,637)        (3,637)
                                                                          ------------
   Comprehensive income                                                   $    909,388
                                                                          ============

                                ------------  ------------  ------------                 ------------   ------------   ------------
Balance December 31, 2005          2,386,239    15,992,913            --                      299,946       (718,758)    15,574,101

   Surplus from options expense                                   99,298                                                     99,298
Comprehensive income:
   Net income                                                             $    486,060        486,060                       486,060
   Unrealized losses on
      securities net of taxes
      of $267,398                                                             (380,055)                     (380,055)      (380,055)
                                                                          ------------
   Comprehensive income                                                   $    106,005
                                                                          ============

                                ------------  ------------  ------------                 ------------   ------------   ------------
Balance June 30, 2006              2,386,239  $ 15,992,913  $     99,298                 $    786,006   $ (1,098,813)  $ 15,779,404
                                ============  ============  ============                 ============   ============   ============
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       4
<PAGE>

                       SERVICE 1ST BANCORP AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the six months ended June 30, 2006 and 2005
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                            2006            2005
                                                                                    ------------    ------------
<S>                                                                                 <C>             <C>
Operating activities:
   Net income                                                                       $    486,060    $    525,075
Adjustments to reconcile net income to net cash from operating activities:
    Provision for loan losses                                                            140,000         140,000
    Depreciation                                                                          80,656          87,612
    Amortization and accretion on securities                                             134,573         152,547
    Gain on sale of securities, net                                                           --          (3,193)
    Earnings on cash surrender value life insurance, net                                 (66,252)        (43,338)
    Options expense                                                                       99,298              --
    Gain on sale of loans                                                                (12,733)        (67,226)
    Increase in accrued interest                                                         (97,461)       (238,728)
    Increase in other assets                                                            (652,265)       (664,326)
    (Decrease) Increase in accrued expenses and other liabilities                       (284,461)        150,882
                                                                                    ------------    ------------

 Net cash (used in) provided by operating activities                                    (172,585)         39,305

Investing activities:
   Purchases of securities available-for-sale                                         (3,274,813)    (19,244,662)
   Purchases of securities held to maturity                                             (500,000)             --
    Proceeds from sales of available-for-sale securities                                      --         878,193
    Proceeds from payments, maturities and calls of available-for-sale securities      3,894,905       8,571,666
    Proceeds from payments, maturities and calls of held-to-maturity securities           54,265         146,552
   Net increase in loans                                                             (26,135,106)     (5,432,561)
   Proceeds from sales of loans                                                          150,150         995,223
           Net Purchase of (redemption of) certificates of deposit at other banks        700,000      (3,047,893)
   Purchases of premises and equipment                                                  (455,592)        (89,021)
                                                                                    ------------    ------------
 Net cash used by investing activities                                               (25,566,191)    (17,222,503)

Financing activities:
   Net (decrease) increase in demand, interest-bearing deposits and savings          (23,758,910)     21,371,016
   Net increase in time deposits                                                      33,309,264       1,575,829
    Net proceeds from sale of stock (proceeds from sale of common stock,
        net of costs)                                                                         --         567,871
   Net change in borrowings                                                           12,896,000              --
                                                                                    ------------    ------------
 Net cash provided by financing activities                                            22,446,354      23,514,716
                                                                                    ------------    ------------

Net (decrease) increase in cash and cash equivalents                                  (3,292,422)      6,331,518
Cash and cash equivalents at beginning of period                                       9,024,556      11,042,365
                                                                                    ------------    ------------

Cash and cash equivalents at end of period                                          $  5,732,134    $ 17,373,883
                                                                                    ============    ============

Supplemental disclosures of cash flow information:
   Interest                                                                         $  2,290,551    $  1,277,719
   Income taxes                                                                     $    247,000    $    120,000
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       5
<PAGE>

                               SERVICE 1ST BANCORP
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION AND MANAGEMENT REPRESENTATION

         The accompanying unaudited consolidated financial statements of Service
1st Bancorp (the "Company") have been prepared in accordance with the
instructions to Form 10-QSB and, therefore, do not include information or
footnote disclosures required by generally accepted accounting principles for
complete financial statements. For further information, refer to the financial
statements and related footnotes included in the Company's annual report on Form
10-KSB for the year ended December 31, 2005. In the opinion of management, the
financial statements presented herein include all adjustments (consisting of
normal recurring accruals) necessary to present fairly, in all material
respects, the financial position of the Company as of June 30, 2006 and the
Company's income statement for the three months and six months ended June 30,
2006 and 2005, and the statement of cash flows for the six months ended June 30,
2006 and 2005. Operating results for interim periods are not necessarily
indicative of operating results for an entire fiscal year.

         The balance sheet as of December 31, 2005, has been derived from the
audited balance sheet as of that date.

Reclassifications

         Certain reclassifications were made to prior periods presented to
conform to the current year. These reclassifications are of a normal recurring
nature.

Stock-Based Compensation

         On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004)
(SFAS No. 123R), Share-Based Payment, which addresses the accounting for
stock-based payment transactions in which an enterprise receives employee
services in exchange for (a) equity instruments of the enterprise or (b)
liabilities that are based on the fair value of the enterprise's equity
instruments or that may be settled by issuance of such equity instruments. In
January 2005, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 107, which provides supplemental implementation
guidance for SFAS No. 123R. SFAS No. 123R eliminates the ability to account for
stock-based compensation transactions using the intrinsic value method under
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and instead generally requires that such transactions be accounted
for using a fair-value-based method. SFAS No. 123R requires the use of a
valuation model to calculate the fair value of stock-based awards. The Company
has elected to use the Black-Scholes Model for option valuation. This model
incorporates various assumptions including volatility, expected life, and
interest rates. The expected volatility is based on the historical volatility of
the Company's common stock over the most recent period commensurate with the
estimated expected life of the Company's stock options adjusted for the impact
of unusual fluctuations not reasonably expected to recur and other relevant
factors. The expected life of an award is based on historical experience and on
the terms and conditions of the stock awards granted to employees.

         The assumptions used for the six-month period ended June 30, 2006 are
as follows:

                WEIGHTED AVERAGE ASSUMPTIONS FOR OPTIONS GRANTED
                            DURING THE PERIOD ENDED:

                                                        June 30, 2006
                                                       ---------------
              Expected Life                                 72 months
              Stock Volatility                                 55.58%
              Risk free interest rate                           4.77%
              Dividend yield                                    0.00%

         The Company has elected the modified prospective transition method as
permitted by SFAS No. 123R and accordingly prior periods have not been restated
to reflect the impact of SFAS No. 123R. The modified prospective transition
method requires that stock-based compensation expense be recorded for all new
and unvested stock options, restricted stock, restricted stock units, and
employee stock purchase plan shares that are ultimately expected to vest as the
requisite service is rendered beginning on January 1, 2006, the first day of the
Company's fiscal year 2006. Stock-based

                                       6
<PAGE>

                               SERVICE 1ST BANCORP
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION AND MANAGEMENT REPRESENTATION (continued)

compensation expense for awards granted prior to January 1, 2006 is based on the
grant date fair-value as determined under the pro forma provisions of SFAS No.
123. The Company has recorded an incremental $50,076 of stock-based compensation
expense during the quarter ended June 30, 2006 and $99,298 for the six months
ended June 30, 2006 as a result of the adoption of SFAS No. 123R.

         Prior to the adoption of SFAS No. 123R, the Company measured
compensation expense for its employee stock-based compensation plans using the
intrinsic value method prescribed by APB Opinion No. 25. The Company applied the
disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, Accounting for
Stock-Based Compensation - Transition and Disclosure as if the fair-value-based
method had been applied in measuring compensation expense. Under APB Opinion No.
25, when the exercise price of the Company's employee stock options was equal to
the market price of the underlying stock on the date of the grant, no
compensation expense was recognized.

         The following table illustrates the effect on net income after taxes
and net income per common share as if the Company had applied the fair value
recognition provisions of SFAS No. 123 to stock-based compensation during the
six-month period ended June 30, 2005 (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                  For the three     For the six
                                                                   months ended     months ended
                                                                  June 30, 2005    June 30, 2005
                                                                  -------------    -------------
<S>                                                               <C>              <C>
         Net income as reported                                   $     270,639    $     525,075

         Deduct: Total stock-based
           employee compensation expense determined under fair
           value based method of all awards, net of related tax
           effects                                                $      (3,623)   $     (72,474)
         Pro forma net income                                     $     234,402    $     452,601
         Earnings per share:
         Basic-as reported                                        $        0.11    $        0.22
         Basic-pro forma                                          $        0.10    $        0.19

         Diluted-as reported                                      $        0.10    $        0.20
         Diluted-pro forma                                        $        0.09    $        0.17
</TABLE>

                                       7
<PAGE>

                               SERVICE 1ST BANCORP
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - EARNINGS PER SHARE (EPS)

         Basic EPS excludes dilution and is computed by dividing income
available to common shareholders' by the weighted-average number of common
shares outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in earnings of the entity as of June 30, 2006 and 2005.
Weighted average shares outstanding used in the computation of basic earnings
per share were 2,386,239 and 2,385,393 in 2006 and 2005, respectively. Weighted
average shares outstanding used in the computation of diluted earnings per share
were 2,559,450 and 2,610,697 in 2006 and 2005, respectively. All earnings per
share data have been retroactively adjusted for the three-for-two stock split
declared on September 15, 2005 for shareholders of record on September 29, 2005.

NOTE 3 - SECURITIES

         Securities are classified in three categories and accounted for as
follows: debt and equity securities that the Company has the positive intent and
ability to hold to maturity are classified as held-to-maturity and are measured
at amortized cost; debt and equity securities bought and held principally for
the purpose of selling in the near term are classified as trading securities and
are measured at fair value, with unrealized gains and losses included in
earnings; debt and equity securities not classified as either held-to-maturity
or trading securities are deemed available-for-sale and are measured at fair
value, with unrealized gains and losses, net of applicable taxes reported in a
separate component of stockholders' equity. Any gains or losses on sales of
investments are computed on a specific identification basis.

         The tables below reflect the composition of investment securities,
amortized cost, unrealized gains and losses and estimated fair values as of June
30, 2006.

<TABLE>
<CAPTION>
                                                                  Gross           Gross         Estimated
                                                 Amortized      Unrealized      Unrealized        Fair
                                                    Cost          Gains           Losses          Value
                                                ------------   ------------    ------------    ------------
<S>                                             <C>            <C>             <C>             <C>
Available-for-Sale Securities:
Obligations of U.S. Government Agencies         $ 30,593,521   $         --    $   (749,605)   $ 29,843,916
State and public subdivisions                     13,888,851             64        (289,492)     13,599,423
Asset backed-securities                            7,686,510             --        (261,380)      7,425,130
Mortgage backed-securities                        16,135,980          6,719        (576,945)     15,565,754
                                                ------------   ------------    ------------    ------------
                                                $ 68,304,862   $      6,783    $ (1,877,422)   $ 66,434,223
                                                ============   ============    ============    ============

                                                                  Gross           Gross         Estimated
                                                 Amortized      Unrealized      Unrealized        Fair
                                                    Cost          Gains           Losses          Value
                                                ------------   ------------    ------------    ------------
Held-to-Maturity Securities:
Obligations of U.S. Government Agencies         $    500,000   $         --    $    (34,567)   $    465,433
State and public subdivisions                        638,926             --         (13,229)        625,697
Asset backed-securities                               48,068             --              --          48,068
Mortgage backed-securities                           210,062            934          (1,841)        209,155
                                                ------------   ------------    ------------    ------------
                                                $  1,397,055   $        934    $    (49,637)   $  1,348,352
                                                ============   ============    ============    ============
</TABLE>

         Securities carried at approximately $51,803,000 were pledged to secure
deposits of public funds and borrowing arrangements.

                                       8
<PAGE>

                               SERVICE 1ST BANCORP
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - SECURITIES cont'd

         The tables below reflect the composition of investment securities,
amortized cost, unrealized gains and losses and estimated fair values as of
December 31, 2005.

<TABLE>
<CAPTION>
                                                             Gross           Gross         Estimated
                                             Amortized     Unrealized      Unrealized        Fair
                                               Cost          Gains           Losses          Value
                                           ------------   ------------    ------------    ------------
<S>                                        <C>            <C>             <C>             <C>
Available-for-Sale Securities:
  U.S. Government Agencies                 $ 30,207,518   $         11    $   (550,676)   $ 29,656,853
  State and public subdivisions              11,755,328          3,437        (140,036)     11,618,729
  Asset backed-securities                     8,645,767            276        (161,611)      8,484,432
  Mortgage backed-securities                 18,488,944          5,762        (380,789)     18,113,917
                                           ------------   ------------    ------------    ------------

                                           $ 69,097,557   $      9,486    $ (1,233,112)   $ 67,873,931
                                           ============   ============    ============    ============

Held-to-Maturity Securities:
  State and public subdivisions            $    623,646   $     19,382    $         --    $    643,028
  Asset backed-securities                        82,721            414              --          83,135
  Mortgage backed-securities                    229,673          3,174            (536)        232,311
                                           ------------   ------------    ------------    ------------

                                           $    936,040   $     22,970    $       (536)   $    958,474
                                           ============   ============    ============    ============
</TABLE>

NOTE 4 - LOANS

         Service 1st Bank's customers are primarily located in San Joaquin
County. At June 30, 2006, approximately 66.6% of the Bank's loans are for real
estate and construction loans and approximately 21.3% of the Bank's loans are
for general commercial users including professional, retail, and small
businesses. Consumer loans make up approximately 2.4% of the loan portfolio,
leases make up 6.7% of the loan portfolio, with agriculture loans making up the
remaining 3.0%. Generally, real estate loans are collateralized by real property
while commercial and other loans are collateralized by funds on deposit,
business or personal assets. Repayment is generally expected from the sale of
property for real estate loans and cash flows of the borrowers for other loans.

Major classifications of loans were:
                                                  6/30/2006         12/31/2005
                                                -------------     -------------
Construction and land development loans         $  37,102,697     $  27,787,719
Real estate loans                                  36,140,938        33,672,659
Commercial loans                                   23,449,264        18,109,304
Leases                                              7,351,826                --
Agricultural loans                                  3,279,523         1,964,690
Consumer loans                                      2,626,811         2,430,356
                                                -------------     -------------
                                                  109,951,059        83,964,728
Deferred loan fees and costs                         (291,188)         (308,102)
Allowance for loan losses                          (1,269,050)       (1,123,494)
                                                -------------     -------------
     Total net loans                            $ 108,390,821     $  82,533,132
                                                =============     =============

                                       9
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

         Certain matters discussed or incorporated by reference in this
Quarterly Report on Form 10-QSB including, but not limited to, matters described
in "Item 2 - Management's Discussion and Analysis or Plan of Operation," are
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as amended. Such forward-looking statements may contain words related to future
projections including, but not limited to, words such as "believe," "expect,"
"anticipate," "intend," "may," "will," "should," "could," "would," and
variations of those words and similar words that are subject to risks,
uncertainties and other factors that could cause actual results to differ
materially from those projected. Factors that could cause or contribute to such
differences include, but are not limited to, the following: (1) variances in the
actual versus projected growth in assets; (2) return on assets; (3) loan and
lease losses; (4) expenses; (5) changes in the interest rate environment
including interest rates charged on loans, earned on securities investments and
paid on deposits; (6) competition effects; (7) fee and other noninterest income
earned; (8) general economic conditions nationally, regionally, and in the
operating market areas of the Company and its subsidiaries; (9) changes in the
regulatory environment; (10) changes in business conditions and inflation; (11)
changes in securities markets; (12) data processing problems; (13) a decline in
real estate values in the Company's operating market areas; (14) the effects of
earthquakes, floods, fires and other natural disasters, (15) terrorism, the
threat of terrorism or the impact of the current military conflict in Iraq and
the conduct of the war on terrorism by the United States and its allies, as well
as other factors. Other cautionary statements and information set forth in this
report should be carefully considered and understood as being applicable to all
related forward-looking statements contained in this report, when evaluating the
business prospects of the Company and its subsidiaries.

         Forward-looking statements are not guarantees of performance. By their
nature, they involve risks, uncertainties and assumptions. The future results
and shareholder values may differ significantly from those expressed in these
forward-looking statements. You are cautioned not to put undue reliance on any
forward-looking statement. Any such statement speaks only as of the date of this
report, and in the case of any documents that may be incorporated by reference,
as of the date of those documents. We do not undertake any obligation to update
or release any revisions to any forward-looking statements, to report any new
information, future event or other circumstances after the date of this report
or to reflect the occurrence of unanticipated events, except as required by law.
However, your attention is directed to any further disclosures made on related
subjects in our subsequent reports filed with the Securities and Exchange
Commission on Forms 10-KSB, 10-QSB and 8-K.

BUSINESS ORGANIZATION

         Service 1st Bancorp (the "Company") is a California corporation and was
incorporated on January 23, 2004 to act as a holding company for Service 1st
Bank (the "Bank"). The Bank became a subsidiary of the Company effective June
26, 2004. As of June 30, 2006, the Company maintained its administrative office
in Tracy, San Joaquin County and the Bank operated two full-service offices in
the cities of Stockton and Tracy in San Joaquin County. The Bank has a temporary
office in the City of Lodi, California while the tenant improvements are
completed on the permanent office in Lodi, California. The Bank plans to open
the permanent office in Lodi during August 2006. The Bank offers a full range of
commercial banking services to individuals, small and medium sized businesses,
municipalities and professionals in San Joaquin County and the surrounding
communities.

         The following analysis is designed to provide a more complete
understanding of the material changes and trends related to the Company's
financial condition, results of operations, cash flows, and capital resources.
This discussion should be read in conjunction with the financial statements
included in Item 1 of the Annual Report on Form 10-KSB for the year ended
December 31, 2005.

CRITICAL ACCOUNTING POLICIES

Use of Estimates in the Preparation of Financial Statements

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
Company's management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. Note 1 to the Financial Statements describes the
significant accounting policies used in the preparation of the financial
statements. A critical accounting policy is defined as one that is both material
to the presentation of the Company's financial statements and requires
management to make difficult, subjective or complex judgments that could have a
material effect on the Company's financial condition and results of operations.
Management believes that the matters described below are critical accounting
policies.

                                       10
<PAGE>

Allowance for Loan Losses

         The allowance for loan losses is established through a provision for
loan losses charged to expenses. Loans are charged against the allowance for
loan losses when management believes that the collectibility of the principal is
unlikely. The allowance is an amount that management believes will be adequate
to absorb losses inherent in existing loans and commitments to extend credit,
based on evaluations of collectibility and prior loss experience of loans and
commitments to extend credit. The evaluations take into consideration such
factors as changes in the nature and volume of the portfolio, overall portfolio
quality, loan concentration, specific problem loans, commitments, and current
economic conditions that may affect the borrowers' ability to pay.

Summary of Financial Condition

         The Company's total consolidated assets increased 13.2% from December
31, 2005 to June 30, 2006. As of June 30, 2006, total consolidated assets were
$191,696,466 compared to $169,329,270 as of December 31, 2005, and $161,367,042
at June 30, 2005. The increase in growth was primarily from an increase in
loans.

         Total net loans at June 30, 2006 were $108,390,821 compared to
$82,533,132 at December 31, 2005 and $72,686,912 at June 30, 2005. This
represents an increase in net loans of 31.3% from December 31, 2005.

         Cash and due from banks declined 43.0% from December 31, 2005 to June
30, 2006. In the last quarter of 2005, the Company requested permission from the
Federal Reserve Bank of San Francisco to implement a deposit reclassification
program. The program allows banks to treat a portion of their demand deposit
accounts as savings accounts for regulatory reporting purposes. This
reclassification significantly decreases the uninvested cash that banks must
reserve for demand deposit accounts. The Company was able to reduce its reserve
requirement by approximately $5.1 million. Those funds were utilized to fund the
Bank's loan growth.

         Total deposits were $160,692,021 at June 30, 2006 compared to
$151,141,667 at December 31, 2005 and $145,055,427 at June 30, 2005.
Noninterest-bearing DDA accounts increased from $27,388,426 at December 31, 2005
to $29,861,863 at June 30, 2006. Money market, NOW, and savings accounts
decreased to $72,538,488 at June 30, 2006 from $85,127,700 at December 31, 2005.
This decline was caused by depositors moving to higher interest bearing
accounts. Time deposits under $100,000 increased from $13,643,135 at December
31, 2005 to $28,452,492 at June 30, 2006. Time deposits of $100,000 and over
increased from $24,982,406 at December 31, 2005 to $29,839,178 at June 30, 2006.
The increase in time deposits under $100,000 was primarily from the Bank's
participation in the national Certificate of Deposit Account Registry (CDARS)
program. Through this program, the Bank can offer $25,000,000 of FDIC insurance
coverage for time deposits. When the Bank places these deposits into the CDARS
network, it has the option of receiving reciprocal deposits from other banks in
the network. Reciprocal deposits from the CDARS program increased from
$8,266,739 at December 31, 2005 to $20,546,521 at June 30, 2006. The increase in
time deposits over $100,000 was primarily from a $5,000,000 increase in time
deposits from the State of California.

         Other borrowings at June 30, 2006 were $13,926,000 compared to
$1,030,000 at December 31, 2005. The borrowings were utilized to fund the rapid
growth in new loan originations. The borrowings consist of advances from the
Federal Home Loan Bank of San Francisco and securities sold under an agreement
to repurchase.

Results of Operations

         Net income for the three months ended June 30, 2006 was $284,730
compared to $270,639 for the second quarter of 2005. Net income for the six
months ended June 30, 2006 was $486,060 compared to $525,075 for June 30, 2005.
Income tax for the three months ended June 30, 2006 was $40,634 compared to
$103,280 in the same quarter of 2005. Income tax expense for the six months
ended June 30, 2006 was $118,414 compared to $217,406 for the same time period
in 2005.

         Basic earnings per share for the three months ended June 30, 2006 were
$0.12 per share compared to $0.11 for the three months ended June 30, 2005.
Diluted earnings per share for the three months ended June 30, 2006 and 2005
were $0.11 and $0.10, respectively. Basic earnings per share for the six months
ended June 30, 2006 were $0.20 per share compared to $0.22 for 2005. Diluted
earnings per share for the six months ended June 30, 2006 were $0.19 compared to
$0.20 for 2005.

                                       11
<PAGE>

         The decline in income before income taxes for the three months and six
months ended June 30, 2006 was primarily from the staffing for the new Lodi
branch scheduled to open in mid-August 2006. The Bank hired staff and has been
conducting an extensive training program in preparation for the opening of the
branch. The Bank has also incurred a $21,882 monthly increase in rental expense
for Lodi.

         Another factor contributing to the decline in income before taxes was
the adoption of SFAS No. 123R. The Company had stock based compensation expense
of $50,076 for the second quarter of 2006 and $99,298 of expense for the six
months ended June 30, 2006. There was no expense reflected on the income
statement for this compensation in 2005.

Net Interest Income and Net Interest Margin

         Net interest income, the primary component of the net earnings of a
financial institution, refers to the difference between the interest earned on
loans and investments and the interest paid on deposits and borrowings. Please
see the tables of average balance sheet and net interest income below.

         The following table sets forth average balance sheet information,
interest income and expense, average yields and rates, and net interest income
and margin for the three months ending June 30, 2006 and 2005.

<TABLE>
<CAPTION>
                                                     June 30, 2006                                   June 30, 2005
                                      --------------------------------------------    --------------------------------------------
                                                                        Average                                          Average
                                         Average          Income/      Yield or          Average         Income/        Yield or
                                         Balance          Expense      Rate Paid         Balance         Expense        Rate Paid
                                      -------------    -------------  ------------    -------------    -------------  ------------
<S>                                   <C>              <C>                    <C>     <C>              <C>                    <C>
Interest-earning assets:
Interest-bearing deposits             $     420,093    $       4,999          4.77%   $   3,006,647    $      22,744          3.03%
Investments                              69,498,877          730,366          4.22%      60,108,955          581,581          3.88%
Federal funds sold                          405,131            5,610          5.55%       6,648,339           46,384          2.80%
Loans (1) (2)                           104,195,123        2,271,226          8.74%      70,436,322        1,341,071          7.64%
                                      -------------    -------------                  -------------    -------------
   Total interest-earning assets        174,519,224        3,012,201          6.92%     140,200,263        1,991,780          5.70%

Allowance for possible loan losses       (1,218,519)                                     (1,076,186)
Cash and due from banks                   3,446,733                                       8,672,964
Bank premises and equipment                 874,776                                         641,169
Accrued interest receivable                 923,815                                         647,255
Other assets                              5,694,271                                       4,370,352
                                      -------------                                   -------------
   Total assets                       $ 184,240,300                                   $ 153,455,817
                                      =============                                   =============

Interest-Bearing Liabilities:
Demand deposits                       $  67,299,123          532,034          3.17%   $  67,923,676          353,847          2.09%
Savings and money market accounts        11,766,345           53,516          1.82%      15,672,988           43,818          1.12%
Time Deposits                            47,985,957          521,910          4.36%      27,049,501          250,425          3.71%
Other borrowings                         12,763,939          170,272          5.35%         131,603            1,029          3.14%
                                      -------------    -------------                  -------------    -------------
   Total interest-bearing
     liabilities                        139,815,364        1,277,732          3.67%     110,777,768          649,119          2.35%

Non-interest bearing demand deposits     27,222,608                                      26,961,114
Other Liabilities                           377,055                                       1,096,831
                                      -------------                                   -------------
   Total liabilities                    167,415,027                                     138,835,713
Shareholders' equity                     16,825,273                                      14,620,104
                                      -------------                                   -------------
   Total liabilities and
     shareholders' equity             $ 184,240,300                                   $ 153,455,817
                                      =============                                   =============

                                                       -------------                                   -------------
Net interest income                                    $   1,734,469                                   $   1,342,661
                                                       =============                                   =============
Net interest margin on average interest earning assets (3)                    3.99%                                           3.84%
</TABLE>

1.   Average loan balances include average deferred loan fees of $296,143 and
     $282,384 for the three months ending June 30, 2006 and 2005, respectively.
2.   Interest on loans includes fees of $60,549 and $44,650 for the three month
     periods ending June 30, 2006 and 2005, respectively.
3.   Net interest margin is computed by dividing net interest income by total
     average earning assets.

All average balances have been computed using daily balances.

                                       12
<PAGE>

The following table sets forth average balance sheet information, interest
income and expense, average yields and rates, and net interest income and margin
for the six months ended June 30, 2006 and 2005.

<TABLE>
<CAPTION>
                                                  June 30, 2006                                   June 30, 2005
                                   --------------------------------------------    --------------------------------------------
                                                                     Average                                          Average
                                      Average          Income/      Yield or          Average         Income/        Yield or
                                      Balance          Expense      Rate Paid         Balance         Expense        Rate Paid
                                   -------------    -------------  ------------    -------------    -------------  ------------
<S>                                <C>              <C>                    <C>     <C>              <C>                    <C>
Interest-earning assets:
Interest-bearing deposits          $     823,554    $      18,677            4.57%   $   2,137,016    $      32,973            3.11%
Investments                           69,337,614        1,457,160            4.24%      57,956,096        1,109,786            3.86%
Federal funds sold                     1,061,527           24,112            4.58%       8,185,898          108,011            2.66%
Loans (1) (2)                         96,099,130        4,164,600            8.74%      70,047,384        2,598,487            7.48%
                                   -------------    -------------                    -------------    -------------
   Total interest-earning assets     167,321,825        5,664,549            6.83%     138,326,394        3,849,257            5.61%

Allowance for loan losses             (1,172,664)                                       (1,030,845)
Cash and due from banks                3,512,498                                         8,348,592
Bank premises and equipment              754,527                                           636,977
Accrued interest receivable              861,462                                           585,183
Other assets                           5,976,867                                         4,282,279
                                   -------------                                     -------------
   Total assets                    $ 177,254,515                                     $ 151,149,279
                                   =============                                     =============

Interest-bearing liabilities:
Demand deposits                    $  68,258,746        1,013,184            2.99%   $  69,011,711          672,707            1.97%
Savings and money market accounts     14,584,168          128,316            1.77%      14,553,021           73,802            1.02%
Time Deposits                         43,377,688          910,077            4.23%      26,993,658          489,887            3.66%
Other borrowings                       7,654,775          202,777            5.34%          66,165            1,029            3.14%
                                   -------------    -------------                    -------------    -------------
   Total interest-bearing
     liabilities                     133,875,377        2,254,354            3.40%     110,624,555        1,237,425            2.26%

Non-interest bearing demand
   deposits                           26,542,275                                        24,902,458
Other Liabilities                      1,127,877                                           862,893
                                   -------------                                     -------------
   Total liabilities                 161,545,529                                       136,389,906
Shareholders' equity                  15,708,986                                        14,759,373
                                   -------------                                     -------------
   Total liabilities and
      shareholders' equity         $ 177,254,515                                     $ 151,149,279
                                   =============                                     =============

                                                    -------------                                     -------------
Net interest income                                 $   3,410,195                                     $   2,611,832
                                                    =============                                     =============
Net interest margin on average interest earning assets (3)                   4.11%                                             3.81%
</TABLE>

1.   Average loan balances include average deferred loan fees of $291,373 and
     $270,100 for the six months ending June 30, 2006 and 2005, respectively.
2.   Interest on loans includes fees of $110,432 and $90,860 for the six months
     ending June 30, 2006 and 2005, respectively.
3.   Net interest margin is computed by dividing net interest income by total
     average earning assets.

All average balances have been computed using daily balances.

                                       13
<PAGE>

         Net interest income for the three months ended June 30, 2006 was
$1,734,469 compared to $1,342,661 for 2005. Net interest income for the six
months ended June 30, 2006 was $3,410,195 compared to $2,611,832 for 2005.
Average interest-earning assets for the three months ended June 30, 2006 were
$174,519,224 compared to $140,200,263 during the same three months of 2005. The
yield earned on average interest-earning assets during the second quarter of
2006 was 6.92% compared to 5.70% during the second quarter of 2005. The average
rate paid on interest bearing-liabilities increased from 2.35% for the second
quarter of 2005 to 3.67% during the second quarter of 2006. Average
interest-earning assets for the six months ended June 30, 2006 was $167,321,825
compared to $138,326,394 during the same six months of 2005. The yield earned on
average interest-earning assets during the six months ended June 30, 2006 was
6.83% compared to 5.61% during the same period of 2005. The average rate paid on
interest bearing liabilities increased to 3.40% for the six months ended June
30, 2006 compared to 2.26% during the same period for 2005. The increase in
rates earned on loans, investments, and paid on deposits was a result of the
Federal Reserve Bank raising interest rates seventeen times from July 1, 2004
through June 29, 2006.

Allowance and Provision for Loan Losses

         The Company assesses and manages credit risk on an ongoing basis
through stringent credit review and approval policies, extensive internal
monitoring, and established formal lending policies. Additionally, the Bank
contracts with an outside source to periodically review the existing loan
portfolio.

         Management believes its ability to identify and assess risk and return
characteristics of the Company's loan portfolio is critical for profitability
and growth. Management strives to continue the historically low level of credit
losses by continuing its emphasis on credit quality in the loan approval
process, active credit administration, and regular monitoring. Management has
implemented a loan review and grading system that functions to continually
assess the credit risk inherent in the loan portfolio.

         In extending credit and commitments to borrowers, the Bank generally
requires collateral and/or guarantees as security. The repayment of such loans
is expected to come from cash flows or from proceeds from the sale of selected
assets of the borrowers. The Bank's requirement for collateral and/or guarantees
is determined on a case-by-case basis in connection with management's evaluation
of the creditworthiness of the borrower. Collateral held varies, but may include
accounts receivable, inventory, property, plant and equipment, income-producing
properties, residences, and other real property.

         Construction loans and other real estate secured loans comprise 66.6%
of total loans outstanding at June 30, 2006. Although management believes such
loans have no more than the normal risk of collectibility, a substantial decline
in the economy in general, or a decline in real estate values in the Company's
primary operating market areas in particular, could have an adverse impact on
the collectibility of such loans. In addition, such an occurrence could result
in an increase in loan losses and an increase in the provision for loan losses,
which could adversely affect the Company's future prospects, results of
operations, overall profitability, and the market price of the Company's common
stock.

         The provision for loan losses for the three months ended June 30, 2006
was $95,000 compared to $80,000 during the same quarter of 2005. The provision
for loan losses for the six months ended June 30, 2006 was $140,000, as well as
during the same period of 2005. At June 30, 2006, the allowance for loan losses
was $1,269,050 compared to $1,123,494 at December 31, 2005. The ratio of
allowance for loan losses to gross loans was 1.15% at June 30, 2006 compared to
1.34% at December 31, 2005. The allowance for loan losses is adjusted by charges
to income and decreased by charge-offs (net of recoveries). Management's
periodic evaluation of the adequacy of the allowance is based on past loan loss
experience, known and inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay, the estimated value of any
underlying collateral, and current economic conditions. Additional provisions
will be added as new loans are placed on the books in an amount adequate to
support the risks inherent in the portfolio.

                                       14
<PAGE>

         The following table summarizes the changes in the allowances for loan
losses arising from loans charged-off, recoveries on loans previously
charged-off, and additions to the allowance which have been charged to operating
expenses and certain ratios relating to the allowance for loan losses.

<TABLE>
<CAPTION>
                                                                          For the six months
                                                                            ended June 30,
                                                                  -------------------------------
                                                                       2006              2005
                                                                  -------------     -------------
<S>                                                               <C>               <C>
Outstanding Loans:
  Average for the Period                                          $  96,099,130     $  70,047,384
  End of the Period                                                 109,951,059        74,064,200
Allowance For Loan Losses:
Balance at Beginning of Year                                          1,123,494           963,000
Actual Charge-Offs:
  Commercial                                                                 --                --
  Consumer                                                                   --                --
  Real Estate                                                                --                --
                                                                  -------------     -------------
Total Charge-Offs                                                            --                --
                                                                  -------------     -------------
Less Recoveries:
  Commercial                                                                 --                --
  Consumer                                                                5,556                --
  Real Estate                                                                --                --
                                                                  -------------     -------------
Total Recoveries                                                          5,556                --
                                                                  -------------     -------------
Net Loans Charged-Off                                                     5,556                --
Provision for Loan Losses                                               140,000           140,000
                                                                  -------------     -------------
Balance at End of Period                                          $   1,269,050     $   1,103,000
                                                                  =============     =============
Ratios:
Net Loans Charged-Off (Recoveries) to Average Loans                        (.01)%               0%
Allowance for Loan Losses to Total Loans                                   1.15%             1.49%
Net Loans Charged-Off (Recoveries) to Beginning
  Allowance for Loan Losses                                                (.49)%               0%

Net Loans Charged-Off (Recoveries) to Provision for Loan Losses           (3.97)%               0%

Allowance for Loan Losses to Nonperforming Loans                       2,957.81%         1,500.48%
</TABLE>

Nonaccrual Loans, Loans Past Due 90 Days and OREO

         Management generally places loans on nonaccrual status when they become
90 days past due, unless the loan is well secured and in the process of
collection. Loans are charged off when, in the opinion of management, collection
appears unlikely. There were nonaccrual loans of $42,905 at June 30, 2006,
$73,510 at June 30, 2005, and $54,020 at December 31, 2005.

         At June 30, 2006, there were loans totaling $42,905 that were
considered impaired or troubled debt restructurings compared to $73,510 at June
30, 2005 and $309,256 at December 31, 2005. These loans were delinquent and
placed on nonaccrual, but management believes that the loans will be collected
in full. The loans were placed on nonaccrual to defer future income recognition
until the delinquent payments have been received. There were no loan
concentrations in excess of 10% of total loans not otherwise disclosed as a
category of loans as of June 30, 2006 or December 31, 2005. Management is not
aware of any potential problem loans, which were accruing and current at June
30, 2006 or December 31, 2005, where serious doubt exists as to the ability of
the borrower to comply with the present repayment terms. There was no other real
estate owned at June 30, 2006 and December 31, 2005.

                                       15
<PAGE>

Other Income

         Other income for the three months ended June 30, 2006 was $137,153
compared to $154,584 for the same period during 2005. Other income for the six
months ended June 30, 2006 was $272,763 compared to $353,119 for the same period
during 2005. The Bank offers loans on single family homes through a third party
lender. The Bank receives fees for the packaging of the loans provided to the
third party lender. The loans are funded by and become assets of the third party
lender. The fees on such loans for the three months ended June 30, 2005 were
$12,795 and for the six months ended June 30, 2005 were $24,434. There was no
income from this activity for 2006 due to a decline in refinancing of such
loans. The Bank originates loans through various government guarantee programs.
The guaranteed portion of these loans can be sold in the secondary market. Gains
on loans sold in the secondary market and the servicing of these loans for the
three months ended June 30, 2006 were $32,685 compared to $35,285 during the
same period in 2005. Gains on loans sold in the secondary market and the
servicing of these loans for the six months ended June 30, 2006 were $59,071
compared to $126,687 during the same period in 2005. The gains on the guaranteed
portion of loans sold for the six months ended June 30, 2006 were $12,733
compared to a gain of $67,226 in 2005.

Other Expense

         Salaries and employee benefits for the three months ended June 30, 2006
were $829,696 compared to $607,838 for the three months ended June 30, 2005.
Salaries and employee benefits for the six months ended June 30, 2006 were
$1,643,251 compared to $1,213,291 for the six months ended June 30, 2005. The
increase in salaries and employee benefits during 2006 was a result of an
increase in the number of employees in preparation for opening a new Lodi,
California office in mid-August, 2006. Beginning in 2006, the Company is
required to record expense related to employee and director stock-based
compensation. The portion of the expense for the three months ended June 30,
2006 related to employee stock options was $30,666 and the comparable expense
for the six months ended June 30, 2006 was $60,478. There was no expense
recorded on the income statement for stock-based compensation for 2005. There
were 40 employees at June 30, 2006 compared to 33 at June 30, 2005.

         Occupancy and equipment expense for the three months ended June 30,
2006 was $208,607 compared to $128,122 for the same period of 2005. Occupancy
and equipment expense was $417,645 for the six months ended June 30, 2006
compared to $250,575 for the same period during 2005. The increase in expense is
related to rent in the amount of $21,882 per month for the Company's new office
in Lodi, California, a new administrative office in Tracy, California, and an
annual cpi increase in the lease expense for the other branch offices.

         Data processing and other professional fees increased from $93,507 for
the three months ended June 30, 2005 to $152,085 for the three months ended June
30, 2006. Data processing and other professional fees for the six months ended
June 30, 2006 was $320,637 compared to $202,314 for the same period during 2005.
The primary increase in professional fees is for management recruitment fees
paid to locate new employees.

         Loan department expense for the three months ended June 30, 2006 was
$20,439 compared to $25,862 for the same period of 2005. Loan department expense
for the six months ended June 30, 2006 was $124,525 compared to $43,111 for the
same period of 2005. The primary increase in loan department expense for the six
months ended June 30, 2006 was the amortization expense for loan servicing
assets. When the Company sells a government guaranteed loan it establishes a
loan servicing asset, which is the anticipated servicing over the estimated
remaining term of the loans sold. If these loans payoff early the remaining
unamortized servicing asset is written off. During the first quarter of 2006,
two large SBA loans paid off early.

         The remainder of the other operating expenses increased due to the
growth of the company.

         Income tax expense for the three months ended June 30, 2006 was $40,634
compared to $103,280 for the same period in 2005. Income tax expense for the six
months ended June 30, 2006 was $118,414 compared to $217,406 for the same period
in 2005. To reduce the Company's tax expense, the Company has increased the
amount of municipal securities in its portfolio. These investments have
substantially reduced federal income tax expense. At June 30, 2006, the Company
owned $14,238,347 of municipal securities compared to $2,368,897 at June 30,
2005. During 2006, the Company began funding leases. Some of these leases allow
the Company to recognize accelerated depreciation expense for tax purposes
further reducing the Company's tax liability.

Capital Resources

         Total shareholders' equity at June 30, 2006 was $15,779,404 compared to
$15,574,101 at December 31, 2005. The increase was primarily from the net income
for the six months ended June 30, 2006 of $486,060. Due to rising interest rates
there was an increase in accumulated other comprehensive income, net of tax of
$380,055.

         The Company and the Bank are subject to regulations issued by the Board
of Governors of the Federal Reserve System and the FDIC, which require
maintenance of a certain level of capital. Under the regulations, capital

                                       16
<PAGE>

requirements are based upon the composition of an institution's asset base and
the risk factors assigned to those assets. The guidelines characterize an
institution's capital as being "Tier 1" capital (defined to be principally
shareholders' equity less intangible assets) and "Tier 2" capital (defined to be
principally the allowance for loan losses, limited to one and one-fourth percent
of gross risk weighted assets). The guidelines require the Company and the Bank
to maintain a risk-based capital target ratio of 8%, one-half or more of which
should be in the form of Tier 1 capital.

         The following table shows the Company's and the Bank's actual capital
amounts and ratios at June 30, 2006 and December 31, 2005, as well as the
minimum capital ratios for capital adequacy under the regulatory framework
(dollar amounts are in thousands).

<TABLE>
<CAPTION>
                                                                                                       To be well-capitalized
                                                                             For capital adequacy      under prompt corrective
                                                          Actual                   purposes               action provisions
                                                  ----------------------    -----------------------    -----------------------
                                                    Amount       Ratio        Amount        Ratio        Amount        Ratio
                                                  ----------   ---------    ----------    ---------    ----------    ---------
As of June 30, 2006:
<S>                                                 <C>           <C>          <C>             <C>        <C>             <C>
Company:
   Total capital (to risk weighted assets)          $18,139       12.4%        $11,615         8.0%           N/A          N/A
   Tier 1 capital (to risk weighted assets)         $16,870       11.6%        $ 5,807         4.0%           N/A          N/A
   Tier 1 capital (to average assets)               $16,870        8.5%        $ 7,933         4.0%           N/A          N/A
Bank:
   Total capital (to risk weighted assets)          $17,377       12.0%        $11,615         8.0%       $14,519         10.0%
   Tier 1 capital (to risk weighted assets)         $16,046       11.1%        $ 5,807         4.0%       $ 8,711          6.0%
   Tier 1 capital (to average assets)               $16,046        8.8%        $ 7,302         4.0%       $ 9,128          5.0%

As of December 31, 2005:

Company:
   Total capital (to risk weighted assets)          $17,404       15.1%        $ 9,224         8.0%           N/A          N/A
   Tier 1capital (to risk weighted assets)          $16,281       14.1%        $ 4,612         4.0%           N/A          N/A
   Tier 1 capital (to average assets)               $16,281        9.8%        $ 6,683         4.0%           N/A          N/A
Bank:
   Total capital (to risk weighted assets)          $16,304       14.1%        $ 9,224         8.0%       $11,530         10.0%
   Tier 1capital (to risk weighted assets)          $15,181       13.2%        $ 4,612         4.0%       $ 6,918          6.0%
   Tier 1 capital (to average assets)               $15,181        9.1%        $ 6,644         4.0%       $ 8,304          5.0%
</TABLE>

         The Bank meets the "well capitalized" capital ratio measures at both
June 30, 2006 and December 31, 2005.

                                       17
<PAGE>

Liquidity

         The objective of liquidity management is to ensure continuous
availability of funds to meet the demands of depositors, investors, and
borrowers. Liquidity is primarily derived from cash, Federal Funds, and other
liquid investments. The Bank has also established borrowing lines from
correspondent banks and the Federal Home Loan Bank of San Francisco totaling
$42,200,000. Management is not aware of any future capital expenditures or other
significant demands on commitments that would severely impair liquidity.

Inflation

         The impact of inflation on a financial institution differs
significantly from that exerted on manufacturing or other commercial concerns,
primarily because its assets and liabilities are largely monetary. In general,
inflation primarily affects the Company and the Bank indirectly through its
effect on market rates of interest, and thus the ability of the Bank to attract
loan customers. Inflation affects the growth of total assets by increasing the
level of loan demand, and potentially adversely affects the Company's and the
Bank's capital adequacy because loan growth in inflationary periods can increase
at rates higher than the rate that capital grows through retention of earnings,
which the Company may generate in the future. In addition to its effects on
interest rates, inflation directly affects the Company by increasing operating
expenses. The effects of inflation were not material to the Company's results of
operations during the periods ending June 30, 2006 and 2005.

Off-Balance Sheet Items

         As of June 30, 2006 and December 31, 2005, commitments to extend credit
and letters of credit were the only financial instruments with off-balance sheet
risk. The Company has not entered into any contracts for financial derivative
instruments such as futures, swaps, options or similar instruments. Loan
commitments and letters of credit were $38,294,000 and $34,897,000 at June 30,
2006 and December 31, 2005, respectively. As a percentage of gross loans these
off-balance sheet items represent 34.8% and 41.6%, respectively.

         Certain financial institutions have elected to use special purpose
vehicles ("SPV") to dispose of problem assets. A SPV is typically a subsidiary
company with an asset and liability structure and legal status that makes its
obligations secure even if the parent corporation goes bankrupt. Under certain
circumstances, these financial institutions may exclude the problem assets from
their reported impaired and non-performing assets. The Company doesn't use those
vehicles or any other structures to dispose of problem assets.

Effects of Terrorism

         The terrorist actions on September 11, 2001 and thereafter and the
conflict with Iraq have had significant adverse effects upon the United States
economy. Whether the terrorist activities in the future and the actions of the
United States and its allies in combating terrorism on a worldwide basis will
adversely impact the Company and the extent of such impact is uncertain. Such
economic deterioration could adversely affect the Company's future results of
operations by, among other matters, reducing the demand for loans and other
products and services offered by the Bank, increasing nonperforming loans and
the amounts reserved for loan losses, and causing a decline in the Company's
stock price.

Website Access

         Information on the Company and Bank may be obtained from the Company's
website www.service1stbank.com. Copies of the annual report on Form 10-KSB,
quarterly reports on Form 10-QSB, current reports on Form 8-K, and all
amendments thereto, as well as Section 16 reports and amendments thereto, are
available free of charge on the website as soon as they are published by the SEC
through a link to the Edgar reporting system maintained by the SEC. To obtain
copies of or to view the reports on Form 10-KSB, 10-QSB, and 8-K, click on the
"Go to Service 1st Bancorp" button, then click on the "Click here to view
Service 1st Bancorp SEC Filings" link. To obtain copies of or to view Section 16
reports filed by the Company's insiders, click on the "Click here to view
Section 16 Reports" link on the above webpage.

Other Matters

         The Company filed its report on Form 8-K dated July 7, 2006 to announce
the organization of Charter Service Group, Inc. as a new wholly-owned subsidiary
of the Company. Charter will provide consulting services primarily related to
the formation of start-up (de novo) banks. It is anticipated that such
consulting services will include consultation with prospective organizers of de
novo banks related to regulatory approval, capitalization and infrastructure
requirements, among other matters.

                                       18
<PAGE>

Item 3. Controls and Procedures

         (a)      Disclosure Controls and Procedures

         An evaluation of the Company's disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) was carried out under the
supervision and with the participation of the Company's Chief Executive Officer,
Chief Financial Officer and other members of the Company's senior management as
of the end of the Company's fiscal quarter ended June 30, 2006. The Company's
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures as currently in effect are effective in
ensuring that the information required to be disclosed by the Company in the
reports it files or submits under the Exchange Act is (i) accumulated and
communicated to the Company's management (including the Chief Executive Officer
and Chief Financial Officer) to allow timely decisions regarding required
disclosure, and (ii) recorded, processed, summarized and reported within the
time periods specified in the Commission's rules and forms.

         (b)      Internal Control Over Financial Reporting

         An evaluation of any changes in the Company's internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)),
that occurred during the Company's fiscal quarter ended June 30, 2006, was
carried out under the supervision and with the participation of the Company's
Chief Executive Officer, Chief Financial Officer and other members of the
Company's senior management. The Company's Chief Executive Officer and Chief
Financial Officer concluded that no change identified in connection with such
evaluation has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.

PART II. - OTHER INFORMATION

Item 1.  Legal Proceedings

         None

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

         None

Item 3.  Defaults Upon Senior Securities

         None

Item 4.  Submission of Matters to a Vote of Security Holders

         The annual shareholder's meeting was held on May 18, 2006. The
         incumbent directors were elected as Directors for the year 2006 and
         until their successors are elected and qualified as follows:

                                                    For              Against
                                                ------------      --------------

                  Dean Andal                      1,601,445           23,843
                  John O. Brooks                  1,611,289           13,999
                  Eugene C. Gini                  1,611,289           13,999
                  Bryan R. Hyzdu                  1,611,289           13,999
                  Robert D. Lawrence, M.D.        1,611,289           13,999
                  Frances C. Mizuno               1,611,289           13,999
                  Richard R. Paulsen              1,611,289           13,999
                  Toni Marie Raymus               1,611,211           14,077
                  Michael K. Repetto              1,611,289           13,999
                  Anthony F. Souza                1,611,289           13,999
                  Albert Van Veldhuizen           1,611,289           13,999
                  Donald L. Walters               1,611,289           13,999

                                       19
<PAGE>

         Votes cast to ratify the appointment of Vavrinek, Trine, Day & co., LLP
         as independent public accountants for the 2006 fiscal year were:
         1,611,010 shares voted "For" the proposal, 2,668 shares voted "Against"
         and 11,610 "Abstained". Therefore, the proposal was approved.

Item 5. Other Information

        None

Item 6. Exhibits

                    (2.1)     Plan of Reorganization and Merger Agreement
                              (included in Annex A) incorporated by reference
                              from the Registrant's Form S-4EF, Registration No.
                              333-104244, filed with the Securities and Exchange
                              Commission on April 1, 2003.

                    (3.1)     Articles of Incorporation, as amended,
                              incorporated by reference from the Registrant's
                              Form 10-QSB for the quarterly period ended
                              September 30, 2005, filed with the Securities and
                              Exchange Commission on November 10, 2005.

                    (3.2)     Bylaws, as amended incorporated by reference from
                              the Registrant's Form 10-KSB for the year ended
                              December 31, 2004, filed with the Securities and
                              Exchange Commission on March 31, 2005.

                    (4.1)     Specimen form of certificate for Service 1st
                              Bancorp common stock incorporated by reference
                              from Registrant's Form 10-QSB for the quarterly
                              period ended September 30, 2003, filed with the
                              Securities and Exchange Commission on November 14,
                              2003.

                    (10.1)    Lease agreement dated May 3, 2002, related to 2800
                              West March Lane, Suite 120, Stockton, CA 95219
                              incorporated by reference from the Registrant's
                              Form S-4EF, Registration No. 333-104244, filed
                              with the Securities and Exchange Commission on
                              April 1, 2003.

                    (10.2)    Lease agreement dated April 13, 1999 and amendment
                              thereto dated June 17, 1999, related to 60 West
                              10th Street, Tracy, CA 95376 incorporated by
                              reference from the Registrant's Form S-4EF,
                              Registration No. 333-104244, filed with the
                              Securities and Exchange Commission on April 1,
                              2003.

                    (10.3)*   1999 Service 1st Bancorp Stock Option Plan,
                              Amendment No. 1 thereto, and related forms of
                              Incentive and Nonstatutory Stock Option Agreements
                              entered into with executive officers and directors
                              incorporated by reference from the Registrant's
                              Form S-8, Registration No. 333-107346, filed with
                              the Securities and Exchange Commission on July 25,
                              2003.

                    (10.4)    Agreement dated July 27, 1999 with BancData
                              Solutions, Inc. for service bureau and data
                              processing services incorporated by reference from
                              the Registrant's Form S-4EF, Registration No.
                              333-104244, filed with the Securities and Exchange
                              Commission on April 1, 2003.

                    (10.5)    Agreement dated February 1, 2000 with Financial
                              Marketing Services, incorporated by reference from
                              the Registrant's Form S-4EF, Registration No.
                              333-104244, filed with the Securities and Exchange
                              Commission on April 1, 2003.

                    (10.6)*   Service 1st Bank 401(k) Profit Sharing Plan and
                              Trust Summary Plan Description dated January 1,
                              2000, incorporated by reference from the
                              Registrant's Form S-4EF, Registration No.
                              333-104244, filed with the Securities and Exchange
                              Commission on April 1, 2003.

                    (10.7)    Lease agreement dated March 27, 2003, related to
                              3533 Jamison Way, Castro Valley, CA 94546,
                              incorporated by reference from the Registrant's
                              Form 10-KSB for the year ended December 31, 2003,
                              filed with the Securities and Exchange Commission
                              on March 30, 2004.

                    (10.8)*   John O. Brooks Salary Continuation Agreement dated
                              September 10, 2003, incorporated by reference from
                              the Registrant's Form 10-KSB for the year ended
                              December 31, 2003, filed with the Securities and
                              Exchange Commission on March 30, 2004.

                                       20
<PAGE>

                    (10.9)*   Bryan R. Hyzdu Salary Continuation Agreement dated
                              September 10, 2003, incorporated by reference from
                              the Registrant's Form 10-KSB for the year ended
                              December 31, 2003, filed with the Securities and
                              Exchange Commission on March 30, 2004.

                    (10.10)*  Robert E. Bloch Salary Continuation Agreement
                              dated September 10, 2003, incorporated by
                              reference from the Registrant's Form 10-KSB for
                              the year ended December 31, 2003, filed with the
                              Securities and Exchange Commission on March 30,
                              2004.

                    (10.11)*  Patrick Carman Salary Continuation Agreement dated
                              September 10, 2003, incorporated by reference from
                              the Registrant's Form 10-KSB for the year ended
                              December 31, 2003, filed with the Securities and
                              Exchange Commission on March 30, 2004.

                    (10.12)*  2004 Stock Option Plan and Forms of Incentive and
                              Nonstatutory Stock Option Agreements, incorporated
                              by reference from the Registrant's Form S-8,
                              Registration No. 333-116818, filed with the
                              Securities and Exchange Commission on June 24,
                              2004.

                    (10.13)*  John O. Brooks Employment Agreement dated July 15,
                              2004, incorporated by reference from the
                              Registrant's Form 10-QSB, for the quarterly period
                              ended September 30, 2004, filed with the
                              Securities and Exchange Commission on November 15,
                              2004.

                    (10.14)*  Bryan R. Hyzdu Employment Agreement dated July 15,
                              2004, incorporated by reference from the
                              Registrant's Form 10-QSB, for the quarterly period
                              ended September 30, 2004, filed with the
                              Securities and Exchange Commission on November 15,
                              2004.

                    (10.15)*  Robert E. Bloch Employment Agreement dated July
                              15, 2004, incorporated by reference from the
                              Registrant's Form 10-QSB, for the quarterly period
                              ended September 30, 2004, filed with the
                              Securities and Exchange Commission on November 15,
                              2004.

                    (10.16)*  Patrick Carman Employment Agreement dated July 15,
                              2004, incorporated by reference from the
                              Registrant's Form 10-QSB, for the quarterly period
                              ended September 30, 2004, filed with the
                              Securities and Exchange Commission on November 15,
                              2004.

                    (10.17)*  Shannon Reinard Employment Agreement dated July
                              15, 2004, incorporated by reference from the
                              Registrant's Form 10-QSB, for the quarterly period
                              ended September 30, 2004, filed with the
                              Securities and Exchange Commission on November 15,
                              2004.

                    (10.18)   Fiserv Solutions, Inc. Agreement dated October 7,
                              2004, for service bureau, data processing, and
                              item processing, incorporated by reference from
                              the Registrant's Form 10-KSB for the year ended
                              December 31, 2004, filed with the Securities and
                              Exchange Commission on June 30, 2005.

                    (10.19)   Lease agreement dated May 1, 2005, related to 49
                              W. 10th Street, Tracy, CA 95378, incorporated by
                              reference from the Registrant's Form 10-QSB for
                              the quarterly period ended September 30, 2005,
                              filed with the Securities and Exchange Commission
                              on November 10, 2005.

                    (10.20)   Lease agreement dated October 3, 2005, related to
                              1901 W. Kettleman Lane, Building A, Suite 1A and
                              1B, Lodi, CA 95242, incorporated by reference from
                              the Registrant's Form 10-QSB for the quarterly
                              period ended September 30, 2005, filed with the
                              Securities and Exchange Commission on November 10,
                              2005.

                    (10.21)   Lease agreement dated January 13, 2006, related to
                              1930 Tienda Drive, Building B, Suite 104, Lodi, CA
                              95242, incorporated by reference from Registrant's
                              Form 10-KSB for the year ended December 31, 2005,
                              filed with the Securities and Exchange Commission
                              on March 30, 2006.

                    (10.22)*  Shannon Reinard Salary Continuation Agreement
                              dated August 8, 2005, incorporated by reference
                              from Registrant's Form 10-KSB for the year ended
                              December 31, 2005, filed with the Securities and
                              Exchange Commission on March 30, 2006.

                                       21
<PAGE>

                    (10.23)*  Bryan R. Hyzdu First Amendment dated August 8,
                              2005 to Salary Continuation Agreement dated
                              September 10, 2003, incorporated by reference from
                              Registrant's Form 10-KSB for the year ended
                              December 31, 2005, filed with the Securities and
                              Exchange Commission on March 30, 2006.

                    (10.24)*  Bryan R. Hyzdu Second Amendment dated August 8,
                              2005 to Salary Continuation Agreement dated
                              September 10, 2003, incorporated by reference from
                              Registrant's Form 10-KSB for the year ended
                              December 31, 2005, filed with the Securities and
                              Exchange Commission on March 30, 2006.

                    (10.25)*  Patrick Carman First Amendment dated August 8,
                              2005 to Salary Continuation Agreement dated
                              September 10, 2003, incorporated by reference from
                              Registrant's Form 10-KSB for the year ended
                              December 31, 2005, filed with the Securities and
                              Exchange Commission on March 30, 2006.

                    (10.26)*  Patrick Carman Second Amendment dated August 8,
                              2005 to Salary Continuation Agreement dated
                              September 10, 2003, incorporated by reference from
                              Registrant's Form 10-KSB for the year ended
                              December 31, 2005, filed with the Securities and
                              Exchange Commission on March 30, 2006.

                    (10.27)*  Robert E. Bloch First Amendment dated August 8,
                              2005 to Salary Continuation Agreement dated
                              September 10, 2003, incorporated by reference from
                              Registrant's Form 10-KSB for the year ended
                              December 31, 2005, filed with the Securities and
                              Exchange Commission on March 30, 2006.

                    (10.28)*  Robert E. Bloch Second Amendment dated August 8,
                              2005 to Salary Continuation Agreement dated
                              September 10, 2003, incorporated by reference from
                              Registrant's Form 10-KSB for the year ended
                              December 31, 2005, filed with the Securities and
                              Exchange Commission on March 30, 2006.

                    (14.1)    Code of Ethics, incorporated by reference from the
                              Registrant's Form 10-KSB for the year ended
                              December 31, 2003, filed with the Securities and
                              Exchange Commission on March 30, 2004.

                    (21.1)    Registrant's only subsidiaries are Service 1st
                              Bank and Charter Services Group, Inc.

                    (31.1)    Certification of Chief Executive Officer pursuant
                              to Section 302 of the Sarbanes-Oxley Act of 2002.

                    (31.2)    Certification of Chief Financial Officer pursuant
                              to Section 302 of the Sarbanes-Oxley Act of 2002.

                    (32.1)    Certification of Service 1st Bancorp by its Chief
                              Executive Officer and Chief Financial Officer
                              pursuant to Section 906 of the Sarbanes-Oxley Act
                              of 2002.

                              *Denotes management compensatory plans or
                               arrangements.

                                       22
<PAGE>

                                   SIGNATURES

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


                                              SERVICE 1ST BANCORP

Date: August 11, 2006                         By: /s/ JOHN O. BROOKS
                                                  ------------------------------
                                                  John O. Brooks
                                                  Chief Executive Officer
                                                  (Principal Executive Officer)

Date: August 11, 2006                         By: /s/ ROBERT E. BLOCH
                                                  ------------------------------
                                                  Robert E. Bloch
                                                  Executive Vice President and
                                                  Chief financial Officer
                                                  (Principal Financial and
                                                  Accounting Officer)

                                       23
<PAGE>

                                  EXHIBIT INDEX
                                  -------------


  Exhibit                                                            Sequential
  Number                       Description                           Page Number
-----------    -------------------------------------------------     -----------
   31.1        Certification of Chief Executive Officer pursuant
               to Section 302 of the Sarbanes-Oxley Act of 2002.         25

   31.2        Certification of Chief Financial Officer pursuant
               to Section 302 of the Sarbanes-Oxley Act of 2002.         26

   32.1        Certification of Service 1st Bancorp by its Chief
               Executive Officer and Chief Financial Officer pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002.         27

                                       24