----

----

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| California                                                     |   | 77-0446957                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |

| 445 Pine Avenue, Goleta, California      |   | 93117      |
|------------------------------------------|--------|------------|
| (Address of principal executive offices) |   | (Zip Code) |

| Large accelerated filer o                                            | Accelerated filer o         |
|----------------------------------------------------------------------|-----------------------------|
|                                                                 |                        |
| Non-accelerated filer o(Do not check if a smaller reporting company) | Smaller reporting company x |

----

----

----

| TABLE OF CONTENTS                                                                                                                                                                                                                                                                         |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                      |   |   |   |
| PART I.                                                                                                                                                                                                                                                                                   | FINANCIAL INFORMATION | PAGE |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                ITEM 1.                                                                                                                                                                                              | FINANCIAL STATEMENTS (UNAUDITED) |   |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                                                                                                                                                                                                                                                                                      |   | CONSOLIDATED BALANCE SHEETS | 3 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                                                                                                                                                                                                                                                                                      |   | CONSOLIDATED INCOME STATEMENTS | 4 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                                                                                                                                                                                                                                                                                      |   | CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY | 5 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                                                                                                                                                                                                                                                                                      |   | CONSOLIDATED STATEMENTS OF CASH FLOWS | 6 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                                                                                                                                                                                                                                                                                      |   | NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | 7 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
| The unaudited consolidated financial statements included in this Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto of Community West Bancshares included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2010 |
|                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                ITEM 2.                                                                                                                                                                                         | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 23 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                ITEM 4.                                                                                                                                                                                              | CONTROLS AND PROCEDURES | 32 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
| PART II.                                                                                                                                                                                                                                                                                  | OTHER INFORMATION |   |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                ITEM 1.                                                                                                                                                                                         | LEGAL PROCEEDINGS | 32 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                ITEM 1A.                                                                                                                                                                                             | RISK FACTORS | 32 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                ITEM 2.                                                                                                                                                                                              | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 32 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                ITEM 3.                                                                                                                                                                                              | DEFAULTS UPON SENIOR SECURITIES | 32 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                ITEM 4.                                                                                                                                                                                              | REMOVED AND RESERVED | 33 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                ITEM 5.                                                                                                                                                                                              | OTHER INFORMATION | 33 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
|                ITEM 6.                                                                                                                                                                                              | EXHIBITS | 33 |
|                                                                                                                                                                                                                                                                                      |   |   |   |
| SIGNATURES                                                                                                                                                                                                                                                                                |   |   | 34 |

----

Table of Contents

FINANCIAL 

CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                  |   | March 31,2011     |    |   | December 31,2010 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|-----------------------|--------|
|                                                                                                                                                                                  |   | (unaudited)            |    |   |                  |   |
| ASSETS                                                                                                                                                                                |   | (dollars in thousands) |    |
| Cash and due from banks                                                                                                                                                               |   | $                      | 15,239  |   |                  | $      | 6,201 |   |
| Federal funds sold                                                                                                                                                                    |   |                   | 25      |   |                  |   | 25 |   |
| Cash and cash equivalents                                                                                                                                                             |   |                   | 15,264  |   |                  |   | 6,226 |   |
| Time deposits in other financial institutions                                                                                                                                         |   |                   | 290     |   |                  |   | 290 |   |
| Investment securities available-for-sale, at fair value; amortized cost of $23,017 at March 31, 2011 and $23,038 at December 31, 2010                                                 |   |                   | 23,261  |   |                  |   | 23,342 |   |
| Investment securities held-to-maturity, at amortized cost; fair value of $16,335 at March 31, 2011 and $17,514 at December 31, 2010                                                   |   |                   | 15,767  |   |                  |   | 16,893 |   |
| Federal Home Loan Bank (FHLB) stock, at cost                                                                                                                                          |   |                   | 4,831   |   |                  |   | 5,031 |   |
| Federal Reserve Bank (FRB) stock, at cost                                                                                                                                             |   |                   | 1,322   |   |                  |   | 1,322 |   |
| Loans:                                                                                                                                                                                |   |                   |    |   |                  |   |   |   |
| Loans held for sale, at lower of cost or fair value                                                                                                                                   |   |                   | 77,440  |   |                  |   | 82,320 |   |
| Loans held for investment, net of allowance for loan losses of $13,172 at March 31, 2011 and $13,302 at December 31, 2010                                                             |   |                   | 490,255 |   |                  |   | 498,312 |   |
| Total loans                                                                                                                                                                           |   |                   | 567,695 |   |                  |   | 580,632 |   |
| Foreclosed real estate and repossessed assets                                                                                                                                         |   |                   | 9,664   |   |                  |   | 8,478 |   |
| Premises and equipment, net                                                                                                                                                           |   |                   | 2,947   |   |                  |   | 2,915 |   |
| Other assets                                                                                                                                                                          |   |                   | 24,498  |   |                  |   | 22,475 |   |
| TOTAL ASSETS                                                                                                                                                                          |   | $                      | 665,539 |   |                  | $      | 667,604 |   |
| LIABILITIES                                                                                                                                                                           |   |                   |    |   |                  |   |   |   |
| Deposits:                                                                                                                                                                             |   |                   |    |   |                  |   |   |   |
| Non-interest-bearing demand                                                                                                                                                           |   | $                      | 47,951  |   |                  | $      | 35,767 |   |
| Interest-bearing demand                                                                                                                                                               |   |                   | 280,989 |   |                  |   | 262,431 |   |
| Savings                                                                                                                                                                               |   |                   | 21,844  |   |                  |   | 20,371 |   |
| Time certificates                                                                                                                                                                     |   |                   | 176,833 |   |                  |   | 211,324 |   |
| Total deposits                                                                                                                                                                        |   |                   | 527,617 |   |                  |   | 529,893 |   |
| Other borrowings                                                                                                                                                                      |   |                   | 64,000  |   |                  |   | 64,000 |   |
| Convertible debentures                                                                                                                                                                |   |                   | 7,872   |   |                  |   | 8,081 |   |
| Other liabilities                                                                                                                                                                     |   |                   | 3,807   |   |                  |   | 3,988 |   |
| Total liabilities                                                                                                                                                                     |   |                   | 603,296 |   |                  |   | 605,962 |   |
| STOCKHOLDERS' EQUITY                                                                                                                                                                  |   |                   |    |   |                  |   |   |   |
| Preferred stock, no par value; 10,000,000 shares authorized; 15,600 shares issued and outstanding                                                                                     |   |                   | 14,874  |   |                  |   | 14,807 |   |
| Common stock, no par value; 10,000,000 shares authorized; 5,980,981 and 5,916,272 shares issued and outstanding  at March 31, 2011 and December 31, 2010, respectively |   |                   | 33,369  |   |                  |   | 33,133 |   |
| Retained earnings                                                                                                                                                                     |   |                   | 13,856  |   |                  |   | 13,523 |   |
| Accumulated other comprehensive income, net                                                                                                                                           |   |                   | 144     |   |                  |   | 179 |   |
| Total stockholders' equity                                                                                                                                                            |   |                   | 62,243  |   |                  |   | 61,642 |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                      |   | $                      | 665,539 |   |                  | $      | 667,604 |   |

----

Table of Contents

CONSOLIDATED INCOME STATEMENTS (UNAUDITED)

|                                                          |   | Three Months EndedMarch 31,    |   |
|---------------------------------------------------------------|--------|------------------------------------------|--------|
|                                                          |   | 2011                                     |   |   | 2010 |   |
|                                                          |   | (in thousands, except per share amounts) |   |
| INTEREST INCOME                                               |   |                                     |   |   |   |   |
| Loans                                                         |   | $                                        | 9,044  |   |   | $ | 9,534 |   |
| Investment securities                                         |   |                                     | 283    |   |   |   | 399 |   |
| Other                                                         |   |                                     | 3      |   |   |   | 9 |   |
| Total interest income                                         |   |                                     | 9,330  |   |   |   | 9,942 |   |
| INTEREST EXPENSE                                              |   |                                     |   |   |   |   |   |   |
| Deposits                                                      |   |                                     | 1,670  |   |   |   | 2,059 |   |
| Other borrowings and convertible debentures                   |   |                                     | 591    |   |   |   | 588 |   |
| Total interest expense                                        |   |                                     | 2,261  |   |   |   | 2,647 |   |
| NET INTEREST INCOME                                           |   |                                     | 7,069  |   |   |   | 7,295 |   |
| Provision for loan losses                                     |   |                                     | 983    |   |   |   | 3,074 |   |
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES           |   |                                     | 6,086  |   |   |   | 4,221 |   |
| NON-INTEREST INCOME                                           |   |                                     |   |   |   |   |   |   |
| Other loan fees                                               |   |                                     | 230    |   |   |   | 352 |   |
| Gains from loan sales, net                                    |   |                                     | 82     |   |   |   | 103 |   |
| Document processing fees                                      |   |                                     | 105    |   |   |   | 125 |   |
| Loan servicing, net                                           |   |                                     | 148    |   |   |   | 89 |   |
| Service charges                                               |   |                                     | 130    |   |   |   | 129 |   |
| Other                                                         |   |                                     | 43     |   |   |   | 41 |   |
| Total non-interest income                                     |   |                                     | 738    |   |   |   | 839 |   |
| NON-INTEREST EXPENSES                                         |   |                                     |   |   |   |   |   |   |
| Salaries and employee benefits                                |   |                                     | 3,109  |   |   |   | 3,008 |   |
| Occupancy and equipment expenses                              |   |                                     | 505    |   |   |   | 499 |   |
| FDIC assessment                                               |   |                                     | 302    |   |   |   | 325 |   |
| Professional services                                         |   |                                     | 215    |   |   |   | 203 |   |
| Advertising and marketing                                     |   |                                     | 70     |   |   |   | 92 |   |
| Depreciation and amortization                                 |   |                                     | 98     |   |   |   | 113 |   |
| Loss on sale of foreclosed real estate and repossessed assets |   |                                     | 459    |   |   |   | 62 |   |
| Data processing                                               |   |                                     | 127    |   |   |   | 127 |   |
| Other operating expenses                                      |   |                                     | 924    |   |   |   | 542 |   |
| Total non-interest expenses                                   |   |                                     | 5,809  |   |   |   | 4,971 |   |
| Income  before provision for income taxes           |   |                                     | 1,015  |   |   |   | 89 |   |
| Provision for income taxes                                    |   |                                     | 420    |   |   |   | 38 |   |
| NET INCOME                                                    |   | $                                        | 595    |   |   | $ | 51 |   |
|                                                          |   |                                     |   |   |   |   |   |   |
| Preferred stock dividends                                     |   |                                     | 262    |   |   |   | 262 |   |
| NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS           |   | $                                        | 333    |   |   | $ | (211 | ) |
| Earnings (loss) per common share:                             |   |                                     |   |   |   |   |   |   |
| Basic                                                         |   | $                                        | 0.06   |   |   | $ | (0.04 | ) |
| Diluted                                                       |   | $                                        | 0.05   |   |   | $ | (0.04 | ) |
| Basic weighted average number of common shares outstanding    |   |                                     | 5,960  |   |   |   | 5,915 |   |
| Diluted weighted average number of common shares outstanding  |   |                                     | 8,245  |   |   |   | 5,915 |   |

----

Table of Contents

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

|                                                            |   |      |   |   |         |   |           |     |   |   | Accumulated Other |   |   | Total               |   |
|-----------------------------------------------------------------|--------|-----------|--------|--------|--------------|--------|----------------|----------|--------|--------|-------------------|--------|--------|---------------------|--------|
|                                                            |   | Preferred |   |   | Common Stock |   |           | Retained |   |   | Comprehensive     |   |   | Stockholders’ |   |
|                                                            |   | Stock     |   |   | Shares       |   |           | Amount   |   |   | Earnings          |   |   |  Income        |   |   |  Equity |   |
|                                                            |   |      |   |   |         |   | (in thousands) |     |   |   |              |   |   |                |   |   |   |   |   |   |
| BALANCES AT JANUARY 1, 2011                                     |   | $         | 14,807 |   |         |   | 5,916          |     |   | $      | 33,133            |   |   | $                   | 13,523 |   |   | $ | 179 |   |   | $ | 61,642 |   |
| Stock option expense, recognized in earnings                    |   |      |   |   |         |   |           |     |   |   | 7                 |   |   |                |   |   |   |   |   |   |   |   | 7 |   |
| Conversion of debentures                                        |   |      |   |   |         |   | 60             |     |   |   | 210               |   |   |                |   |   |   |   |   |   |   |   | 210 |   |
| Exercise of stock options                                       |   |      |   |   |         |   | 5              |     |   |   | 19                |   |   |                |   |   |   |   |   |   |   |   | 19 |   |
| Comprehensive income:                                           |   |      |   |   |         |   |           |     |   |   |              |   |   |                |   |   |   |   |   |   |   |   |   |   |
| Net income                                                      |   |      |   |   |         |   |           |     |   |   |              |   |   |                | 595    |   |   |   |   |   |   |   | 595 |   |
| Change in unrealized loss on securities available-for-sale, net |   |      |   |   |         |   |           |     |   |   |              |   |   |                |   |   |   |   | (35 | ) |   |   | (35 | ) |
| Comprehensive income                                            |   |      |   |   |         |   |           |     |   |   |              |   |   |                |   |   |   |   |   |   |   |   | 560 |   |
| Dividends on preferred stock                                    |   |      | 67     |   |         |   |           |     |   |   |              |   |   |                | (262   | ) |   |   |   |   |   |   | (195 | ) |
| BALANCES AT MARCH 31, 2011                                      |   | $         | 14,874 |   |         |   | 5,981          |     |   | $      | 33,369            |   |   | $                   | 13,856 |   |   | $ | 144 |   |   | $ | 62,243 |   |

----

Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                                              |   | Three Months EndedMarch 31, |    |
|-----------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                              |   | 2011                                  |    |   | 2010 |   |
|                                                                              |   | (in thousands)                        |    |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                             |   |                                  |    |   |   |   |
| Net income                                                                        |   | $                                     | 595     |   |   | $ | 51 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                                  |    |   |   |   |   |   |
| Provision for loan losses                                                         |   |                                  | 983     |   |   |   | 3,074 |   |
| Depreciation and amortization                                                     |   |                                  | 98      |   |   |   | 113 |   |
| Stock-based compensation                                                          |   |                                  | 7       |   |   |   | 5 |   |
| Net amortization of discounts and premiums for investment securities              |   |                                  | (22     | ) |   |   | (66 | ) |
| Loss (gain) on:                                                                   |   |                                  |    |   |   |   |   |   |
| Sale of foreclosed real estate and repossessed assets                             |   |                                  | 459     |   |   |   | 62 |   |
| Sale of  loans held for sale                                            |   |                                  | (82     | ) |   |   | (103 | ) |
| Loan originated for sale and principal collections, net                           |   |                                  | 3,171   |   |   |   | 5,795 |   |
| Changes in:                                                                       |   |                                  |    |   |   |   |   |   |
| Servicing rights, net of amortization                                             |   |                                  | 29      |   |   |   | 62 |   |
| Other assets                                                                      |   |                                  | (1,993  | ) |   |   | (145 | ) |
| Other liabilities                                                                 |   |                                  | (216    | ) |   |   | (118 | ) |
| Net cash provided by operating activities                                         |   |                                  | 3,029   |   |   |   | 8,730 |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                             |   |                                  |    |   |   |   |   |   |
| Purchase of available-for-sale securities                                         |   |                                  | (2,362  | ) |   |   | (2,204 | ) |
| Principal pay downs and maturities of available-for-sale securities               |   |                                  | 2,407   |   |   |   | 2,298 |   |
| Redemptions of Federal Home Loan Bank stock                                       |   |                                  | 200     |   |   |   | - |   |
| Principal pay downs and maturities of held-to-maturity securities                 |   |                                  | 1,125   |   |   |   | 2,571 |   |
| Loan originations and principal collections, net                                  |   |                                  | 6,396   |   |   |   | 3,893 |   |
| Proceeds from sale of foreclosed real estate and repossessed assets               |   |                                  | 824     |   |   |   | 359 |   |
| Net decrease in time deposits in other financial institutions                     |   |                                  | -       |   |   |   | 165 |   |
| Purchase of premises and equipment, net                                           |   |                                  | (130    | ) |   |   | (23 | ) |
| Net cash provided by  investing activities                              |   |                                  | 8,460   |   |   |   | 7,059 |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                             |   |                                  |    |   |   |   |   |   |
| Preferred stock dividends                                                         |   |                                  | (262    | ) |   |   | (262 | ) |
| Amortization of discount on preferred stock                                       |   |                                  | 67      |   |   |   | 67 |   |
| Exercise of  stock options                                              |   |                                  | 19      |   |   |   | - |   |
| Net increase in demand deposits and savings accounts                              |   |                                  | 32,215  |   |   |   | 34,859 |   |
| Net decrease in time certificates of deposit                                      |   |                                  | (34,490 | ) |   |   | (26,152 | ) |
| Proceeds from FHLB and FRB advances                                               |   |                                  | -       |   |   |   | 22,000 |   |
| Repayment of FHLB and the FRB advances                                            |   |                                  | -       |   |   |   | (37,000 | ) |
| Net cash used in financing activities                                             |   |                                  | (2,451  | ) |   |   | (6,488 | ) |
| NET INCREASE IN CASH AND CASH EQUIVALENTS                                         |   |                                  | 9,038   |   |   |   | 9,301 |   |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                      |   |                                  | 6,226   |   |   |   | 5,511 |   |
| CASH AND CASH EQUIVALENTS, END OF PERIOD                                          |   | $                                     | 15,264  |   |   | $ | 14,812 |   |
| Supplemental Disclosure of Cash Flow Information:                                 |   |                                  |    |   |   |   |   |   |
| Cash paid for interest                                                            |   | $                                     | 2,495   |   |   | $ | 2,380 |   |
| Cash paid for income taxes                                                        |   |                                  | 815     |   |   |   | 5 |   |
| Supplemental Disclosure of Noncash Investing Activity:                            |   |                                  |    |   |   |   |   |   |
| Transfers to foreclosed real estate and repossessed assets                        |   | $                                     | 2,469   |   |   | $ | 2,299 |   |

----

Table of Contents

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

| 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|----|--------------------------------------------|

----

Table of Contents

----

Table of Contents

|   | · | Concentrations of credit |
|--------|--------|--------------------------|

|   | · | Trends in volume, maturity, composition |
|--------|--------|-----------------------------------------|

|   | · | Volume and trend in delinquency |
|--------|--------|---------------------------------|

|   | · | Economic conditions |
|--------|--------|---------------------|

|   | · | Outside exams |
|--------|--------|---------------|

|   | · | Geographic distance |
|--------|--------|---------------------|

|   | · | Policy and procedures |
|--------|--------|-----------------------|

|   | · | Staff experience and ability |
|--------|--------|------------------------------|

|   | · | Commercial Real Estate, Commercial and SBA – Migration analysis combined with risk rating is used to determine the required allowance for all non-impaired loans.  In addition, the migration results are adjusted based upon the qualitative factors previously discussed that affect this specific portfolio category.   Reserves on impaired loans are assigned based upon the individual characteristics of the loan. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Manufactured Housing, Single Family Residential, HELOC and Consumer – The allowance is calculated on the basis of loss history and risk rating, which is primarily a function of delinquency.  In addition, the migration results are adjusted based upon the qualitative factors previously discussed that affect this specific portfolio. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|   | · | The expected future cash flows are estimated and then discounted at the effective interest rate. |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | The loan’s observable market price, if it is of a kind for which there is a secondary market. |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | The value of the underlying collateral net of selling costs.  Selling costs are estimated based on industry standards, the Bank’s actual experience, or based on actual costs incurred as appropriate.  When evaluating real estate collateral, the Bank typically uses appraisals or valuations, no more than twelve months old at time of evaluation.  When evaluating non-real estate collateral securing the loan, the Bank will use audited financial statements or appraisals no more than twelve months old.  Additionally for both real estate and non-real estate collateral, the Bank may use other sources to determine value as deemed appropriate. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

----

Table of Contents

| 2.  | INVESTMENT SECURITIES |
|----------|-----------------------|

| March 31, 2011                |   | (in thousands) |   |
|-------------------------------|--------|----------------|--------|
|                          |   |           |   |   | Gross |   |   | Gross |   |   |   |   |
|                          |   | Amortized      |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
| Available-for-sale securities |   | Cost           |   |   | Gains |   |   | Losses |   |   | Value |   |
| U.S. Government agency: MBS   |   | $              | 5,291  |   |   | $ | 202 |   |   | $ | - |   |   | $ | 5,493 |   |
| U.S. Government agency: CMO   |   |           | 17,726 |   |   |   | 62 |   |   |   | (20 | ) |   |   | 17,768 |   |
| Total                         |   | $              | 23,017 |   |   | $ | 264 |   |   | $ | (20 | ) |   | $ | 23,261 |   |
|                          |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agency: MBS   |   | $              | 15,767 |   |   | $ | 642 |   |   | $ | (74 | ) |   | $ | 16,335 |   |
| U.S. Government agency: CMO   |   |           | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                         |   | $              | 15,767 |   |   | $ | 642 |   |   | $ | (74 | ) |   | $ | 16,335 |   |
|                          |   |           |   |
| December 31, 2010             |   | (in thousands) |   |
|                          |   |           |   |   |   | Gross |   |   | Gross |   |   |   |   |   |
|                          |   | Amortized      |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
| Available-for-sale securities |   | Cost           |   |   | Gains |   |   | Losses |   |   | Value |   |
| U.S. Government agency: MBS   |   | $              | 5,472  |   |   | $ | 206 |   |   | $ | - |   |   | $ | 5,678 |   |
| U.S. Government agency: CMO   |   |           | 17,566 |   |   |   | 102 |   |   |   | (4 | ) |   |   | 17,664 |   |
| Total                         |   | $              | 23,038 |   |   | $ | 308 |   |   | $ | (4 | ) |   | $ | 23,342 |   |
|                          |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agency: MBS   |   | $              | 16,893 |   |   | $ | 698 |   |   | $ | (77 | ) |   | $ | 17,514 |   |
| U.S. Government agency: CMO   |   |           | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                         |   | $              | 16,893 |   |   | $ | 698 |   |   | $ | (77 | ) |   | $ | 17,514 |   |

|                          |   | Total Amount |   |   | Less than One Year |   |   | One to Five Years |   |   | Five toTen Years |   |
|-------------------------------|--------|--------------|--------|--------|--------------------|--------|--------|-------------------|--------|--------|------------------|--------|
|                          |   | Amount       |   |   | Yield              |   |   | Amount            |   |   | Yield            |   |   | Amount |   |   | Yield |   |   | Amount |   |   | Yield |   |
| (dollars in thousands)        |   |
| Available-for-sale securities |   |         |   |   |               |   |   |              |   |   |             |   |   |   |   |   |   |   |   |
| U. S. Government:             |   |         |   |   |               |   |   |              |   |   |             |   |   |   |   |   |   |   |   |
| Agency: MBS                   |   | $            | 5,493  |   |               |   | 2.4    | %                 |   | $      | -                |   |   |   | - |   |   | $ | 5,422 |   |   |   | 2.4 | % |   | $ | 71 |   |   |   | 2.7 | % |
| Agency: CMO                   |   |         | 17,768 |   |               |   | 0.9    | %                 |   |   | 3,994            |   |   |   | 0.9 | % |   |   | 13,774 |   |   |   | 0.9 | % |   |   | - |   |   |   | - |   |
| Total                         |   | $            | 23,261 |   |               |   | 1.3    | %                 |   | $      | 3,994            |   |   |   | 0.9 | % |   | $ | 19,196 |   |   |   | 1.3 | % |   | $ | 71 |   |   |   | 2.7 | % |
|                          |   |         |   |   |               |   |   |              |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities   |   |         |   |   |               |   |   |              |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government:              |   |         |   |   |               |   |   |              |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency: MBS                   |   | $            | 15,767 |   |               |   | 4.4    | %                 |   | $      | 50               |   |   |   | 5.0 | % |   | $ | 8,802 |   |   |   | 4.7 | % |   | $ | 6,915 |   |   |   | 4.0 | % |
| Agency: CMO                   |   |         | -      |   |               |   | -      |              |   |   | -                |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                         |   | $            | 15,767 |   |               |   | 4.4    | %                 |   | $      | 50               |   |   |   | 5.0 | % |   | $ | 8,802 |   |   |   | 4.7 | % |   | $ | 6,915 |   |   |   | 4.0 | % |

----

Table of Contents

| March 31, 2011                |   | Less than 12 months |   |   | More than 12 months |   |   | Total  |   |
|-------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|--------|--------|
|                          |   | Fair                |   |   | Unrealized          |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                          |   | Value               |   |   | Losses              |   |   | Value  |   |   | Losses |   |   | Vale |   |   | Losses |   |
|                          |   | (in thousands)      |   |
| Available-for-sale securities |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agency: MBS   |   | $                   | -      |   |                | $      | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| U.S. Government agency: CMO   |   |                | 8,843  |   |                |   | 20     |   |   |   | - |   |   |   | - |   |   |   | 8,843 |   |   |   | 20 |   |
| Total                         |   | $                   | 8,843  |   |                | $      | 20     |   |   | $ | - |   |   | $ | - |   |   | $ | 8,843 |   |   | $ | 20 |   |
|                          |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities   |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agency: MBS   |   | $                   | 1,513  |   |                | $      | 74     |   |   | $ | - |   |   | $ | - |   |   | $ | 1,513 |   |   | $ | 74 |   |
| U.S. Government agency: CMO   |   |                | -      |   |                |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                         |   | $                   | 1,513  |   |                | $      | 74     |   |   | $ | - |   |   | $ | - |   |   | $ | 1,513 |   |   | $ | 74 |   |

| December 31, 2010             |   | Less than 12 months |   |   | More than 12 months |   |   | Total  |   |
|-------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|--------|--------|
|                          |   | Fair                |   |   | Unrealized          |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                          |   | Value               |   |   | Losses              |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
|                          |   | (in thousands)      |   |
| Available-for-sale securities |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agency: MBS   |   | $                   | -      |   |                | $      | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| U.S. Government agency: CMO   |   |                | 3,118  |   |                |   | 4      |   |   |   | - |   |   |   | - |   |   |   | 3,118 |   |   |   | 4 |   |
| Total                         |   | $                   | 3,118  |   |                | $      | 4      |   |   | $ | - |   |   | $ | - |   |   | $ | 3,118 |   |   | $ | 4 |   |
|                          |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities   |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agency: MBS   |   | $                   | 1,444  |   |                | $      | 77     |   |   | $ | - |   |   | $ | - |   |   | $ | 1,444 |   |   | $ | 77 |   |
| U.S. Government agency: CMO   |   |                | -      |   |                |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                         |   | $                   | 1,444  |   |                | $      | 77     |   |   | $ | - |   |   | $ | - |   |   | $ | 1,444 |   |   | $ | 77 |   |

| 3. | LOAN SALES AND SERVICING |
|----|--------------------------|

----

Table of Contents

| 4. | LOANS HELD FOR INVESTMENT |
|----|---------------------------|

|                           |   | March 31,      |    | December 31, |   |
|--------------------------------|--------|----------------|---------|--------------|--------|
|                           |   | 2011           |    |         | 2010   |   |
|                           |   | (in thousands) |    |
| Commercial                     |   | $              | 49,413  |         |   | $ | 57,369 |   |
| Commercial real estate         |   |           | 181,043 |         |   |   | 173,906 |   |
| SBA                            |   |           | 46,724  |         |   |   | 51,549 |   |
| Manufactured housing           |   |           | 192,920 |         |   |   | 194,682 |   |
| Single family real estate      |   |           | 12,463  |         |   |   | 13,722 |   |
| HELOC                          |   |           | 20,728  |         |   |   | 20,273 |   |
| Consumer                       |   |           | 408     |         |   |   | 379 |   |
|                           |   |           | 503,699 |         |   |   | 511,880 |   |
| Less:                          |   |           |    |         |   |   |   |   |
| Allowance for loan losses      |   |           | 13,172  |         |   |   | 13,302 |   |
| Deferred costs                 |   |           | (160    | )            |   |   | (181 | ) |
| Purchased premiums             |   |           | (12     | )            |   |   | (14 | ) |
| Discount on SBA loans          |   |           | 444     |         |   |   | 461 |   |
| Loans held for investment, net |   | $              | 490,255 |         |   | $ | 498,312 |   |

----

Table of Contents

|                      |   | 30-59 Days Past Due |   |   | 60-89 Days Past Due |   |   | Greater Than 90 Days |   |   | Total Past Due |   |   | Current |   |   | Total Financing Receivables |   |    | Recorded Investment > 90 Days and Accruing |   |
|---------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|----------------------|--------|--------|----------------|--------|--------|---------|--------|--------|-----------------------------|--------|---------|-----------------------------------------------|--------|
| (in thousands)            |   |
| Single family real estate |   | $                   | 1,530  |   |                | $      | -      |                 |   | $      | 465            |   |   | $       | 1,995  |   |                        | $      | 10,468  |                                          |   | $ | 12,463 |   |   | $ | - |   |
| Commercial real estate:   |   |                |   |   |                |   |   |                 |   |   |           |   |   |    |   |   |                        |   |    |                                          |   |   |   |   |   |   |   |   |
| Commercial real estate    |   |                | 8,372  |   |                |   | 770    |                 |   |   | 974            |   |   |    | 10,116 |   |                        |   | 102,542 |                                          |   |   | 112,658 |   |   |   | - |   |
| SBA 504 1st TD            |   |                | 1,734  |   |                |   | 331    |                 |   |   | 266            |   |   |    | 2,331  |   |                        |   | 35,876  |                                          |   |   | 38,207 |   |   |   | - |   |
| Land                      |   |                | -      |   |                |   | -      |                 |   |   | 567            |   |   |    | 567    |   |                        |   | 5,937   |                                          |   |   | 6,504 |   |   |   | - |   |
| Construction              |   |                | 8,411  |   |                |   | -      |                 |   |   | 31             |   |   |    | 8,442  |   |                        |   | 15,232  |                                          |   |   | 23,674 |   |   |   | - |   |
| Commercial loans          |   |                | 1,141  |   |                |   | 30     |                 |   |   | 436            |   |   |    | 1,607  |   |                        |   | 47,806  |                                          |   |   | 49,413 |   |   |   | - |   |
| SBA loans                 |   |                | 761    |   |                |   | 1,037  |                 |   |   | 14,749         |   |   |    | 16,547 |   |                        |   | 30,177  |                                          |   |   | 46,724 |   |   |   | - |   |
| Mfg.  housing   |   |                | 997    |   |                |   | 285    |                 |   |   | 120            |   |   |    | 1,402  |   |                        |   | 191,518 |                                          |   |   | 192,920 |   |   |   | - |   |
| HELOC                     |   |                | 30     |   |                |   | -      |                 |   |   | -              |   |   |    | 30     |   |                        |   | 20,698  |                                          |   |   | 20,728 |   |   |   | - |   |
| Consumer                  |   |                | 18     |   |                |   | -      |                 |   |   | -              |   |   |    | 18     |   |                        |   | 390     |                                          |   |   | 408 |   |   |   | - |   |
| Total                     |   | $                   | 22,994 |   |                | $      | 2,453  |                 |   | $      | 17,608         |   |   | $       | 43,055 |   |                        | $      | 460,644 |                                          |   | $ | 503,699 |   |   | $ | - |   |

|                      |   | 30-59 Days Past Due |   |   | 60-89 Days Past Due |   |   | Greater Than 90 Days |   |   | Total Past Due |   |   | Current |   |   | Total Financing Receivables |   |    | Recorded Investment > 90 Days and Accruing |   |
|---------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|----------------------|--------|--------|----------------|--------|--------|---------|--------|--------|-----------------------------|--------|---------|-----------------------------------------------|--------|
| (in thousands)            |   |
| Single family real estate |   | $                   | 40     |   |                | $      | 504    |                 |   | $      | 143            |   |   | $       | 687    |   |                        | $      | 13,035  |                                          |   | $ | 13,722 |   |   | $ | 143 |   |
| Commercial real estate:   |   |                |   |   |                |   |   |                 |   |   |           |   |   |    |   |   |                        |   |    |                                          |   |   |   |   |   |   |   |   |
| Commercial real estate    |   |                | 331    |   |                |   | -      |                 |   |   | 981            |   |   |    | 1,312  |   |                        |   | 103,118 |                                          |   |   | 104,430 |   |   |   | - |   |
| SBA 504 1st TD            |   |                | -      |   |                |   | -      |                 |   |   | 1,100          |   |   |    | 1,100  |   |                        |   | 38,267  |                                          |   |   | 39,367 |   |   |   | - |   |
| Land                      |   |                | 195    |   |                |   | -      |                 |   |   | 571            |   |   |    | 766    |   |                        |   | 5,970   |                                          |   |   | 6,736 |   |   |   | - |   |
| Construction              |   |                | -      |   |                |   | -      |                 |   |   | 49             |   |   |    | 49     |   |                        |   | 23,324  |                                          |   |   | 23,373 |   |   |   | - |   |
| Commercial loans          |   |                | 739    |   |                |   | -      |                 |   |   | 174            |   |   |    | 913    |   |                        |   | 56,456  |                                          |   |   | 57,369 |   |   |   | 34 |   |
| SBA loans                 |   |                | 2,098  |   |                |   | 910    |                 |   |   | 17,129         |   |   |    | 20,137 |   |                        |   | 31,412  |                                          |   |   | 51,549 |   |   |   | - |   |
| Mfg.  housing   |   |                | 914    |   |                |   | 318    |                 |   |   | 894            |   |   |    | 2,126  |   |                        |   | 192,556 |                                          |   |   | 194,682 |   |   |   | - |   |
| HELOC                     |   |                | -      |   |                |   | -      |                 |   |   | 2              |   |   |    | 2      |   |                        |   | 20,271  |                                          |   |   | 20,273 |   |   |   | - |   |
| Consumer                  |   |                | -      |   |                |   | -      |                 |   |   | 21             |   |   |    | 21     |   |                        |   | 358     |                                          |   |   | 379 |   |   |   | - |   |
| Total                     |   | $                   | 4,317  |   |                | $      | 1,732  |                 |   | $      | 21,064         |   |   | $       | 27,113 |   |                        | $      | 484,767 |                                          |   | $ | 511,880 |   |   | $ | 177 |   |

----

Table of Contents

|                                       |   | Three Months Ended March 31, |   |
|--------------------------------------------|--------|------------------------------|--------|
|                                       |   | 2011                         |   |   | 2010 |   |
|                                       |   | (in thousands)               |   |
| Balance, beginning of period               |   | $                            | 13,302 |   |   | $ | 13,733 |   |
|                                       |   |                         |   |   |   |   |   |   |
| Loans charged off                          |   |                         | (1,194 | ) |   |   | (2,442 | ) |
| Recoveries on loans previously charged off |   |                         | 81     |   |   |   | 44 |   |
| Net charge-offs                            |   |                         | (1,113 | ) |   |   | (2,398 | ) |
|                                       |   |                         |   |   |   |   |   |   |
| Provision for loan losses                  |   |                         | 983    |   |   |   | 3,074 |   |
| Balance, end of period                     |   | $                            | 13,172 |   |   | $ | 14,409 |   |

|                      |   | Allowance12/31/10 |   |   | Provision |   |   | Charge-offs    |   |   | Recoveries |   |   | Net Charge-offs |   |   | Allowance3/31/11 |   |
|---------------------------|--------|-------------------|--------|--------|-----------|--------|--------|----------------|--------|--------|------------|--------|--------|-----------------|--------|--------|------------------|--------|
|                      |   |              |   |   |      |   |   | (in thousands) |   |   |       |   |   |            |   |   |             |   |
| Commercial real estate    |   | $                 | 2,532  |   |      | $      | 315    |           |   | $      | (18        | )      |   | $               | 2      |   |             | $      | (16 | ) |   | $ | 2,831 |   |
| Manufactured housing      |   |              | 4,168  |   |      |   | 368    |           |   |   | (281       | )      |   |            | 25     |   |             |   | (256 | ) |   |   | 4,280 |   |
| Commercial                |   |              | 2,094  |   |      |   | 98     |           |   |   | (322       | )      |   |            | 10     |   |             |   | (312 | ) |   |   | 1,880 |   |
| SBA                       |   |              | 3,753  |   |      |   | (48    | )              |   |   | (423       | )      |   |            | 42     |   |             |   | (381 | ) |   |   | 3,324 |   |
| Single family real estate |   |              | 135    |   |      |   | 192    |           |   |   | (150       | )      |   |            | 1      |   |             |   | (149 | ) |   |   | 178 |   |
| HELOC                     |   |              | 547    |   |      |   | 36     |           |   |   | -          |   |   |            | 1      |   |             |   | 1 |   |   |   | 584 |   |
| Consumer                  |   |              | 73     |   |      |   | 22     |           |   |   | -          |   |   |            | -      |   |             |   | - |   |   |   | 95 |   |
| Total                     |   | $                 | 13,302 |   |      | $      | 983    |           |   | $      | (1,194     | )      |   | $               | 81     |   |             | $      | (1,113 | ) |   | $ | 13,172 |   |

|                      |   | Allowance12/31/09 |   |   | Provision |   |   | Charge-offs    |   |   | Recoveries |   |   | Net Charge-offs |   |   | Allowance3/31/10 |   |
|---------------------------|--------|-------------------|--------|--------|-----------|--------|--------|----------------|--------|--------|------------|--------|--------|-----------------|--------|--------|------------------|--------|
|                      |   |              |   |   |      |   |   | (in thousands) |   |   |       |   |   |            |   |   |             |   |
| Commercial real estate    |   | $                 | 2,843  |   |      | $      | (353   | )              |   | $      | -          |   |   | $               | -      |   |             | $      | - |   |   | $ | 2,490 |   |
| Manufactured housing      |   |              | 2,255  |   |      |   | 913    |           |   |   | (462       | )      |   |            | -      |   |             |   | (462 | ) |   |   | 2,706 |   |
| Commercial                |   |              | 3,448  |   |      |   | (416   | )              |   |   | (21        | )      |   |            | 4      |   |             |   | (17 | ) |   |   | 3,015 |   |
| SBA                       |   |              | 4,837  |   |      |   | 2,355  |           |   |   | (1,680     | )      |   |            | 37     |   |             |   | (1,643 | ) |   |   | 5,549 |   |
| Single family real estate |   |              | 143    |   |      |   | 36     |           |   |   | (34        | )      |   |            | 2      |   |             |   | (32 | ) |   |   | 147 |   |
| HELOC                     |   |              | 124    |   |      |   | 499    |           |   |   | (245       | )      |   |            | -      |   |             |   | (245 | ) |   |   | 378 |   |
| Consumer                  |   |              | 83     |   |      |   | 40     |           |   |   | -          |   |   |            | 1      |   |             |   | 1 |   |   |   | 124 |   |
| Total                     |   | $                 | 13,733 |   |      | $      | 3,074  |           |   | $      | (2,442     | )      |   | $               | 44     |   |             | $      | (2,398 | ) |   | $ | 14,409 |   |

----

Table of Contents

|                                                      |   | March 31, |   |   | December 31, |   |
|-----------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                                      |   | 2011           |   |   | 2010              |   |
|                                                      |   | (in thousands) |   |
| Impaired loans without specific valuation allowances      |   | $              | 29,476 |   |              | $      | 13,285 |   |
| Impaired loans with specific valuation allowances         |   |           | 2,270  |   |              |   | 1,703 |   |
| Specific valuation allowances allocated to impaired loans |   |           | (404   | )      |              |   | (362 | ) |
| Impaired loans, net                                       |   | $              | 31,342 |   |              | $      | 14,626 |   |

|                                         |   | Three Months EndedMarch 31, |   |
|----------------------------------------------|--------|---------------------------------------|--------|
|                                         |   | 2011                                  |   |   | 2010 |   |
|                                         |   | (in thousands)                        |   |
| Average investment in impaired loans         |   | $                                     | 26,139 |   |   | $ | 14,560 |   |
| Interest income recognized on impaired loans |   |                                  | 180    |   |   |   | 87 |   |

|                                                         |   | March 31,         |    |   | December 31, |   |
|--------------------------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|
|                                                         |   | 2011                   |    |   | 2010              |   |
|                                                         |   | (dollars in thousands) |    |
| Nonaccrual loans                                             |   | $                      | 41,423  |   |              | $      | 34,950 |   |
| SBA guaranteed portion of loans included above               |   |                   | (17,840 | )      |              |   | (22,279 | ) |
| Nonaccrual loans, net                                        |   | $                      | 23,583  |   |              | $      | 12,671 |   |
|                                                         |   |                   |    |   |              |   |   |   |
| Troubled debt restructured loans, gross                      |   | $                      | 15,996  |   |              | $      | 11,088 |   |
| Loans 30 through 89 days past due with interest accruing     |   | $                      | 17,080  |   |              | $      | 2,586 |   |
| Allowance for loan losses to gross loans held for investment |   |                   | 2.62    | %      |              |   | 2.60 | % |

|                      |   | March 31, 2011 |   |   | December 31, 2010 |   |
|---------------------------|--------|---------------------|--------|--------|------------------------|--------|
|                      |   | (in thousands)      |   |
| Commercial                |   | $                   | 689    |   |                   | $      | 602 |   |
| Commercial real estate:   |   |                |   |   |                   |   |   |   |
| Commercial real estate    |   |                | 7,001  |   |                   |   | 3,226 |   |
| SBA 504 1st               |   |                | 1,327  |   |                   |   | 1,612 |   |
| Land                      |   |                | 566    |   |                   |   | 571 |   |
| Construction              |   |                | 8,442  |   |                   |   | 49 |   |
| SBA                       |   |                | 3,494  |   |                   |   | 4,181 |   |
| Manufactured housing      |   |                | 1,606  |   |                   |   | 1,917 |   |
| Single family real estate |   |                | 428    |   |                   |   | 461 |   |
| HELOC                     |   |                | 30     |   |                   |   | 31 |   |
| Consumer                  |   |                | -      |   |                   |   | 21 |   |
| Nonaccrual loans, net     |   | $                   | 23,583 |   |                   | $      | 12,671 |   |

----

Table of Contents

|                      |   | Pass   |           |   | Special Mention |   |   | Substandard |   |   | Doubtful |   |   | Total  |   |
|---------------------------|--------|--------|----------------|--------|-----------------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|
|                      |   |   | (in thousands) |   |            |   |   |        |   |   |     |
| Single family real estate |   | $      | 12,035         |   |            | $      | -      |        |   | $      | 428      |   |   | $      | -      |   |   | $ | 12,463 |   |
| Commercial real estate:   |   |   |           |   |            |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Commercial real estate    |   |   | 79,556         |   |            |   | 11,236 |        |   |   | 21,866   |   |   |   | -      |   |   |   | 112,658 |   |
| SBA 504 1st               |   |   | 34,150         |   |            |   | 891    |        |   |   | 3,166    |   |   |   | -      |   |   |   | 38,207 |   |
| Land                      |   |   | 4,389          |   |            |   | 1,048  |        |   |   | 1,067    |   |   |   | -      |   |   |   | 6,504 |   |
| Construction              |   |   | 9,267          |   |            |   | 3,852  |        |   |   | 10,555   |   |   |   | -      |   |   |   | 23,674 |   |
| Commercial                |   |   | 38,122         |   |            |   | 4,726  |        |   |   | 6,479    |   |   |   | 86     |   |   |   | 49,413 |   |
| SBA                       |   |   | 21,041         |   |            |   | 780    |        |   |   | 4,270    |   |   |   | 66     |   |   |   | 26,157 |   |
| Manufactured housing      |   |   | 191,273        |   |            |   | -      |        |   |   | 1,647    |   |   |   | -      |   |   |   | 192,920 |   |
| HELOC                     |   |   | 15,430         |   |            |   | 258    |        |   |   | 5,040    |   |   |   | -      |   |   |   | 20,728 |   |
| Consumer                  |   |   | 390            |   |            |   | -      |        |   |   | 18       |   |   |   | -      |   |   |   | 408 |   |
| Total                     |   | $      | 405,653        |   |            | $      | 22,791 |        |   | $      | 54,536   |   |   | $      | 152    |   |   | $ | 483,132 |   |
| SBA guarantee             |   |   | -              |   |            |   | 531    |        |   |   | 12,876   |   |   |   | 7,160  |   |   |   | 20,567 |   |
| Total                     |   | $      | 405,653        |   |            | $      | 23,322 |        |   | $      | 67,412   |   |   | $      | 7,312  |   |   | $ | 503,699 |   |

|                      |   | Pass   |           |   | Special Mention |   |   | Substandard |   |   | Doubtful |   |   | Total  |   |
|---------------------------|--------|--------|----------------|--------|-----------------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|
|                      |   |   | (in thousands) |   |            |   |   |        |   |   |     |
| Single family real estate |   | $      | 13,261         |   |            | $      | -      |        |   | $      | 461      |   |   | $      | -      |   |   | $ | 13,722 |   |
| Commercial real estate:   |   |   |           |   |            |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Commercial real estate    |   |   | 82,058         |   |            |   | 9,520  |        |   |   | 12,852   |   |   |   | -      |   |   |   | 104,430 |   |
| SBA 504 1st               |   |   | 35,645         |   |            |   | 891    |        |   |   | 2,831    |   |   |   | -      |   |   |   | 39,367 |   |
| Land                      |   |   | 4,592          |   |            |   | 1,073  |        |   |   | 1,071    |   |   |   | -      |   |   |   | 6,736 |   |
| Construction              |   |   | 10,665         |   |            |   | 10,546 |        |   |   | 2,162    |   |   |   | -      |   |   |   | 23,373 |   |
| Commercial                |   |   | 46,825         |   |            |   | 6,961  |        |   |   | 3,494    |   |   |   | 89     |   |   |   | 57,369 |   |
| SBA                       |   |   | 21,724         |   |            |   | 511    |        |   |   | 4,898    |   |   |   | 82     |   |   |   | 27,215 |   |
| Manufactured housing      |   |   | 192,490        |   |            |   | 60     |        |   |   | 2,132    |   |   |   | -      |   |   |   | 194,682 |   |
| HELOC                     |   |   | 19,664         |   |            |   | 463    |        |   |   | 144      |   |   |   | 2      |   |   |   | 20,273 |   |
| Consumer                  |   |   | 339            |   |            |   | -      |        |   |   | 40       |   |   |   | -      |   |   |   | 379 |   |
| Total                     |   | $      | 427,263        |   |            | $      | 30,025 |        |   | $      | 30,085   |   |   | $      | 173    |   |   | $ | 487,546 |   |
| SBA guarantee             |   |   | -              |   |            |   | -      |        |   |   | 17,109   |   |   |   | 7,225  |   |   |   | 24,334 |   |
| Total                     |   | $      | 427,263        |   |            | $      | 30,025 |        |   | $      | 47,194   |   |   | $      | 7,398  |   |   | $ | 511,880 |   |

| 5. | FAIR VALUE MEASUREMENT |
|----|------------------------|

----

Table of Contents

|                                            |   | Fair value measurements at March 31, 2011 using |   |
|-------------------------------------------------|--------|-------------------------------------------------|--------|
|                                            |   |                                            |   |   | Quoted prices in active markets for identical assets |   |   | Significant other observable inputs |   |   | Significant unobservable inputs |   |
| Description                                     |   | Total                                           |   |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
|                                            |   | (in thousands)                                  |   |
| Investment securities available-for-sale        |   | $                                               | 23,261 |   |   | $ | - |   |   | $ | 23,261 |   |   | $ | - |   |
| Interest only strips (included in other assets) |   |                                            | 530    |   |   |   | - |   |   |   | - |   |   |   | 530 |   |
| Total                                           |   | $                                               | 23,791 |   |   | $ | - |   |   | $ | 23,261 |   |   | $ | 530 |   |

|                                            |   | Fair value measurements at December 31, 2010 using |   |
|-------------------------------------------------|--------|----------------------------------------------------|--------|
|                                            |   |                                               |   |   | Quoted prices in active markets for identical assets |   |   | Significant other observable inputs |   |   | Significant unobservable inputs |   |
| Description                                     |   | Total                                              |   |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
|                                            |   | (in thousands)                                     |   |
| Investment securities available-for-sale        |   | $                                                  | 23,342 |   |   | $ | - |   |   | $ | 23,342 |   |   | $ | - |   |
| Interest only strips (included in other assets) |   |                                               | 492    |   |   |   | - |   |   |   | - |   |   |   | 492 |   |
| Total                                           |   | $                                                  | 23,834 |   |   | $ | - |   |   | $ | 23,342 |   |   | $ | 492 |   |

----

Table of Contents

|                                          |   | Fair value measurements at March 31, 2011 using |    |
|-----------------------------------------------|--------|-------------------------------------------------|---------|
|                                          |   |                                            |    |   | Quoted prices in active markets for identical assets |   |   | Significant other observable inputs |   |   | Significant unobservable inputs |   |
| Description                                   |   | Total                                           |    |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
|                                          |   | (in thousands)                                  |    |
| Impaired loans                                |   | $                                               | 31,342  |   |   | $ | - |   |   | $ | 26,116 |   |   | $ | 5,226 |   |
| Loans held for sale                           |   |                                            | 77,440  |   |   |   | - |   |   |   | 77,440 |   |   |   | - |   |
| Foreclosed real estate and repossessed assets |   |                                            | 9,664   |   |   |   | - |   |   |   | 9,664 |   |   |   | - |   |
| Total                                         |   | $                                               | 118,446 |   |   | $ | - |   |   | $ | 113,220 |   |   | $ | 5,226 |   |

|                                          |   | Fair value measurements at December 31, 2010 using |    |
|-----------------------------------------------|--------|----------------------------------------------------|---------|
|                                          |   |                                               |    |   | Quoted prices in active markets for identical assets |   |   | Significant other observable inputs |   |   | Significant unobservable inputs |   |
| Description                                   |   | Total                                              |    |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
|                                          |   | (in thousands)                                     |    |
| Impaired loans                                |   | $                                                  | 14,626  |   |   | $ | - |   |   | $ | 13,527 |   |   | $ | 1,099 |   |
| Loans held for sale                           |   |                                               | 82,320  |   |   |   | - |   |   |   | 82,320 |   |   |   | - |   |
| Foreclosed real estate and repossessed assets |   |                                               | 8,478   |   |   |   | - |   |   |   | 8,478 |   |   |   | - |   |
| Total                                         |   | $                                                  | 105,424 |   |   | $ | - |   |   | $ | 104,325 |   |   | $ | 1,099 |   |

| 6. | BORROWINGS |
|----|------------|

| 7. | STOCKHOLDERS’ EQUITY |
|----|----------------------------|

----

Table of Contents

| 8. | EARNINGS PER SHARE |
|----|--------------------|

|                                                                   |   | Three Months EndedMarch 31,         |   |
|------------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                   |   | 2011                                          |   |   | 2010 |   |
|                                                                   |   | (dollars in thousands, except per share data) |   |
| Net income                                                             |   | $                                             | 595    |   |   | $ | 51 |   |
| Less: Preferred stock dividends                                        |   |                                          | 262    |   |   |   | 262 |   |
| Net income (loss) applicable to common stockholders                    |   | $                                             | 333    |   |   | $ | (211 | ) |
|                                                                   |   |                                          |   |   |   |   |   |   |
| Add: Debenture interest expense and costs, net of income taxes         |   |                                          | 111    |   |   |   | - |   |
| Net income for diluted calculation of earnings (loss) per common share |   | $                                             | 444    |   |   | $ | (211 | ) |
| Basic weighted average number of common shares outstanding             |   |                                          | 5,960  |   |   |   | 5,915 |   |
| Dilutive weighted average number of common shares outstanding          |   |                                          | 8,244  |   |   |   | 5,915 |   |
| Earnings (loss) per common share:                                      |   |                                          |   |   |   |   |   |   |
| Basic                                                                  |   | $                                             | 0.06   |   |   | $ | (0.04 | ) |
| Diluted                                                                |   | $                                             | 0.05   |   |   | $ | (0.04 | ) |

| 9. | FAIR VALUES OF FINANCIAL INSTRUMENTS |
|----|--------------------------------------|

----

Table of Contents

|                                             |   | March 31, 2011  |    |   | December 31, 2010    |   |
|--------------------------------------------------|--------|-----------------|---------|--------|----------------------|--------|
|                                             |   | Carrying Amount |    |   | Estimated Fair Value |   |   | Carrying Amount |   |   | Estimated Fair Value |   |
|                                             |   | (in thousands)  |    |
| Assets:                                          |   |            |    |   |                 |   |   |   |   |   |   |   |
| Cash and cash equivalents                        |   | $               | 15,264  |   |                 | $      | 15,264 |   |   | $ | 6,226 |   |   | $ | 6,226 |   |
| Time deposits in other financial institutions    |   |            | 290     |   |                 |   | 290 |   |   |   | 290 |   |   |   | 290 |   |
| Federal Reserve and Federal Home Loan Bank stock |   |            | 6,153   |   |                 |   | 6,153 |   |   |   | 6,353 |   |   |   | 6,353 |   |
| Investment securities                            |   |            | 39,028  |   |                 |   | 39,596 |   |   |   | 40,235 |   |   |   | 40,856 |   |
| Loans                                            |   |            | 567,695 |   |                 |   | 546,068 |   |   |   | 580,632 |   |   |   | 562,508 |   |
| Liabilities:                                     |   |            |    |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Deposits (other than time deposits)              |   |            | 350,784 |   |                 |   | 350,784 |   |   |   | 318,569 |   |   |   | 318,569 |   |
| Time deposits                                    |   |            | 176,833 |   |                 |   | 179,611 |   |   |   | 211,324 |   |   |   | 214,473 |   |
| Other borrowings                                 |   |            | 71,872  |   |                 |   | 72,699 |   |   |   | 72,081 |   |   |   | 71,676 |   |

| 10. | SUBSEQUENT EVENTS |
|-----|-------------------|

----

Table of Contents

| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------|---------------------------------------------------------------------------------------|

|   | · | The provision for loan losses was $983,000 for 1Q11 compared to $3.1 million for 1Q10. |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | The decline in rates paid on funding sources contributed to a slight improvement in the margin which increased to 4.53% for 1Q11 compared to 4.48% for 1Q10. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Loss on sale and write-down of foreclosed real estate and repossessed assets increased to $459,000 for 1Q11 compared to $62,000 for 1Q10 |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Expenses related to foreclosed real estate and repossessed assets were $278,000 for 1Q11 compared to $99,000 for 1Q10. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

|   | · | An increase in nonperforming loans primarily related to one loan relationship totaling $8.5 million which is real estate secured. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|                                                |   | Three Months EndedMarch 31,            |   |   | Increase |   |
|-----------------------------------------------------|--------|--------------------------------------------------|--------|--------|----------|--------|
|                                                |   | 2011                                             |   |   | 2010     |   |   | (Decrease) |   |
|                                                |   | (dollars in thousands, except per share amounts) |   |
| Interest income                                     |   | $                                                | 9,330  |   |     | $      | 9,942 |   |   | $ | (612 | ) |
| Interest expense                                    |   |                                             | 2,261  |   |     |   | 2,647 |   |   |   | (386 | ) |
| Net interest income                                 |   |                                             | 7,069  |   |     |   | 7,295 |   |   |   | (226 | ) |
| Provision for loan losses                           |   |                                             | 983    |   |     |   | 3,074 |   |   |   | (2,091 | ) |
| Net interest income after provision for loan losses |   |                                             | 6,086  |   |     |   | 4,221 |   |   |   | 1,865 |   |
| Non-interest income                                 |   |                                             | 738    |   |     |   | 839 |   |   |   | (101 | ) |
| Non-interest expenses                               |   |                                             | 5,809  |   |     |   | 4,971 |   |   |   | 838 |   |
| Income before provision for income taxes            |   |                                             | 1,015  |   |     |   | 89 |   |   |   | 926 |   |
| Provision for income taxes                          |   |                                             | 420    |   |     |   | 38 |   |   |   | 382 |   |
| Net income                                          |   | $                                                | 595    |   |     | $      | 51 |   |   | $ | 544 |   |
| Preferred stock dividends                           |   |                                             | 262    |   |     |   | 262 |   |   |   | - |   |
| Net income (loss) applicable to common stockholders |   | $                                                | 333    |   |     | $      | (211 | ) |   | $ | 544 |   |
| Earnings (loss)  per common share:        |   |                                             |   |   |     |   |   |   |   |   |   |   |
| Basic                                               |   | $                                                | 0.06   |   |     | $      | (0.04 | ) |   | $ | 0.10 |   |
| Diluted                                             |   | $                                                | 0.05   |   |     | $      | (0.04 | ) |   | $ | 0.09 |   |
| Dividends per common share                          |   | $                                                | -      |   |     | $      | - |   |   | $ | - |   |
| Comprehensive income                                |   | $                                                | 560    |   |     | $      | 65 |   |   | $ | 495 |   |

|                               |   | Three Months EndedMarch 31, |   |
|------------------------------------|--------|---------------------------------------|--------|
|                               |   | 2011 versus 2010                      |   |
|                               |   | Total                                 |   |   | Change due to |   |
|                               |   | change                                |   |   | Rate |   |   | Volume |   |
|                               |   | (in thousands)                        |   |
| Loans, net                         |   | $                                     | (490   | ) |   | $ | (140 | ) |   | $ | (350 | ) |
| Investment securities              |   |                                  | (116   | ) |   |   | (110 | ) |   |   | (6 | ) |
| Other                              |   |                                  | (6     | ) |   |   | (1 | ) |   |   | (5 | ) |
| Total interest-earning assets      |   |                                  | (612   | ) |   |   | (251 | ) |   |   | (361 | ) |
|                               |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Deposits                           |   |                                  | (389   | ) |   |   | (295 | ) |   |   | (94 | ) |
| Other borrowings                   |   |                                  | 3      |   |   |   | 106 |   |   |   | (103 | ) |
| Total interest-bearing liabilities |   |                                  | (386   | ) |   |   | (189 | ) |   |   | (197 | ) |
| Net interest income                |   | $                                     | (226   | ) |   | $ | (62 | ) |   | $ | (164 | ) |

----

Table of Contents

|                      |   | Allowance12/31/10 |   |   | Provision |   |   | Charge-offs         |   |   | Recoveries |   |   | Net Charge-offs |   |   | Allowance3/31/11 |   |
|---------------------------|--------|-------------------|--------|--------|-----------|--------|--------|---------------------|--------|--------|------------|--------|--------|-----------------|--------|--------|------------------|--------|
|                      |   |              |   |   |      |   |   | (in thousands) |   |   |       |   |   |            |   |   |             |   |
| Commercial real estate    |   | $                 | 2,532  |   |      | $      | 315    |                |   | $      | (18        | )      |   | $               | 2      |   |             | $      | (16 | ) |   | $ | 2,831 |   |
| Manufactured housing      |   |              | 4,168  |   |      |   | 368    |                |   |   | (281       | )      |   |            | 25     |   |             |   | (256 | ) |   |   | 4,280 |   |
| Commercial                |   |              | 2,094  |   |      |   | 98     |                |   |   | (322       | )      |   |            | 10     |   |             |   | (312 | ) |   |   | 1,880 |   |
| SBA                       |   |              | 3,753  |   |      |   | (48    | )                   |   |   | (423       | )      |   |            | 42     |   |             |   | (381 | ) |   |   | 3,324 |   |
| Single family real estate |   |              | 135    |   |      |   | 192    |                |   |   | (150       | )      |   |            | 1      |   |             |   | (149 | ) |   |   | 178 |   |
| HELOC                     |   |              | 547    |   |      |   | 36     |                |   |   | -          |   |   |            | 1      |   |             |   | 1 |   |   |   | 584 |   |
| Consumer                  |   |              | 73     |   |      |   | 22     |                |   |   | -          |   |   |            | -      |   |             |   | - |   |   |   | 95 |   |
| Total                     |   | $                 | 13,302 |   |      | $      | 983    |                |   | $      | (1,194     | )      |   | $               | 81     |   |             | $      | (1,113 | ) |   | $ | 13,172 |   |

|                      |   | Allowance12/31/09 |   |   | Provision |   |   | Charge-offs         |   |   | Recoveries |   |   | Net Charge-offs |   |   | Allowance3/31/10 |   |
|---------------------------|--------|-------------------|--------|--------|-----------|--------|--------|---------------------|--------|--------|------------|--------|--------|-----------------|--------|--------|------------------|--------|
|                      |   |              |   |   |      |   |   | (in thousands) |   |   |       |   |   |            |   |   |             |   |
| Commercial real estate    |   | $                 | 2,843  |   |      | $      | (353   | )                   |   | $      | -          |   |   | $               | -      |   |             | $      | - |   |   | $ | 2,490 |   |
| Manufactured housing      |   |              | 2,255  |   |      |   | 913    |                |   |   | (462       | )      |   |            | -      |   |             |   | (462 | ) |   |   | 2,706 |   |
| Commercial                |   |              | 3,448  |   |      |   | (416   | )                   |   |   | (21        | )      |   |            | 4      |   |             |   | (17 | ) |   |   | 3,015 |   |
| SBA                       |   |              | 4,837  |   |      |   | 2,355  |                |   |   | (1,680     | )      |   |            | 37     |   |             |   | (1,643 | ) |   |   | 5,549 |   |
| Single family real estate |   |              | 143    |   |      |   | 36     |                |   |   | (34        | )      |   |            | 2      |   |             |   | (32 | ) |   |   | 147 |   |
| HELOC                     |   |              | 124    |   |      |   | 499    |                |   |   | (245       | )      |   |            | -      |   |             |   | (245 | ) |   |   | 378 |   |
| Consumer                  |   |              | 83     |   |      |   | 40     |                |   |   | -          |   |   |            | 1      |   |             |   | 1 |   |   |   | 124 |   |
| Total                     |   | $                 | 13,733 |   |      | $      | 3,074  |                |   | $      | (2,442     | )      |   | $               | 44     |   |             | $      | (2,398 | ) |   | $ | 14,409 |   |

----

Table of Contents

|                                                       |   | Three MonthsEnded March 31, |    |
|------------------------------------------------------------|--------|-----------------------------|---------|
|                                                       |   | 2011                        |    |   | 2010 |   |
| Interest-earning assets:                                   |   | (dollars in thousands)      |    |
| Interest-earning deposits in other financial institutions: |   |                        |    |   |   |   |
| Average balance                                            |   | $                           | 333     |   |   | $ | 819 |   |
| Interest income                                            |   |                        | 2       |   |   |   | 6 |   |
| Average yield                                              |   |                        | 2.44    | % |   |   | 2.95 | % |
| Federal funds sold:                                        |   |                        |    |   |   |   |   |   |
| Average balance                                            |   | $                           | 919     |   |   | $ | 4,217 |   |
| Interest income                                            |   |                        | 1       |   |   |   | 3 |   |
| Average yield                                              |   |                        | 0.30    | % |   |   | 0.31 | % |
| Investment securities:                                     |   |                        |    |   |   |   |   |   |
| Average balance                                            |   | $                           | 44,758  |   |   | $ | 45,766 |   |
| Interest income                                            |   |                        | 283     |   |   |   | 399 |   |
| Average yield                                              |   |                        | 2.56    | % |   |   | 3.54 | % |
| Gross loans:                                               |   |                        |    |   |   |   |   |   |
| Average balance                                            |   | $                           | 587,193 |   |   | $ | 610,137 |   |
| Interest income                                            |   |                        | 9,044   |   |   |   | 9,534 |   |
| Average yield                                              |   |                        | 6.25    | % |   |   | 6.34 | % |
| Total interest-earning assets:                             |   |                        |    |   |   |   |   |   |
| Average balance                                            |   | $                           | 633,203 |   |   | $ | 660,939 |   |
| Interest income                                            |   |                        | 9,330   |   |   |   | 9,942 |   |
| Average yield                                              |   |                        | 5.98    | % |   |   | 6.10 | % |
| Interest-bearing liabilities:                              |   |                        |    |
| Interest-bearing demand deposits:                          |   |                        |    |   |   |   |   |   |
| Average balance                                            |   | $                           | 274,485 |   |   | $ | 204,944 |   |
| Interest expense                                           |   |                        | 800     |   |   |   | 808 |   |
| Average cost of funds                                      |   |                        | 1.18    | % |   |   | 1.60 | % |
| Savings deposits:                                          |   |                        |    |   |   |   |   |   |
| Average balance                                            |   | $                           | 20,743  |   |   | $ | 17,992 |   |
| Interest expense                                           |   |                        | 108     |   |   |   | 108 |   |
| Average cost of funds                                      |   |                        | 2.12    | % |   |   | 2.43 | % |
| Time certificates of deposit:                              |   |                        |    |   |   |   |   |   |
| Average balance                                            |   | $                           | 193,229 |   |   | $ | 272,171 |   |
| Interest expense                                           |   |                        | 762     |   |   |   | 1,143 |   |
| Average cost of funds                                      |   |                        | 1.60    | % |   |   | 1.70 | % |
| Convertible debentures:                                    |   |                        |    |   |   |   |   |   |
| Average balance                                            |   | $                           | 7,930   |   |   | $ | - |   |
| Interest expense                                           |   |                        | 176     |   |   |   | - |   |
| Average cost of funds                                      |   |                        | 9.00    | % |   |   | - |   |
| Other borrowings:                                          |   |                        |    |   |   |   |   |   |
| Average balance                                            |   | $                           | 64,000  |   |   | $ | 84,489 |   |
| Interest expense                                           |   |                        | 415     |   |   |   | 588 |   |
| Average cost of funds                                      |   |                        | 2.63    | % |   |   | 2.82 | % |
| Total interest-bearing liabilities:                        |   |                        |    |   |   |   |   |   |
| Average balance                                            |   | $                           | 560,387 |   |   | $ | 579,596 |   |
| Interest expense                                           |   |                        | 2,261   |   |   |   | 2,647 |   |
| Average cost of funds                                      |   |                        | 1.64    | % |   |   | 1.85 | % |
|                                                       |   |                        |    |   |   |   |   |   |
| Net interest income                                        |   | $                           | 7,069   |   |   | $ | 7,295 |   |
| Net interest spread                                        |   |                        | 4.34    | % |   |   | 4.25 | % |
| Average net margin                                         |   |                        | 4.53    | % |   |   | 4.48 | % |

----

Table of Contents

|   | · | Average yields and rates are derived by dividing interest income by the average balances of interest-earning assets and by dividing interest expense by the average balances of interest-bearing liabilities for the periods indicated.  Amounts outstanding are averages of daily balances during the applicable periods. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Nonaccrual loans are included in the average balance of loans outstanding. |
|--------|--------|----------------------------------------------------------------------------|

|   | · | Net interest income is the difference between the interest and fees earned on loans and investments and the interest expense paid on deposits and other liabilities.  The amount by which interest income will exceed interest expense depends on the volume or balance of earning assets compared to the volume or balance of interest-bearing deposits and liabilities and the interest rate earned on those interest-earning assets compared to the interest rate paid on those interest-bearing liabilities. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Net interest margin is net interest income expressed as a percentage of average earning assets.  It is used to measure the difference between the average rate of interest earned on assets and the average rate of interest that must be paid on liabilities used to fund those assets.  To maintain its net interest margin, the Company must manage the relationship between interest earned and paid. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   Selected balance sheet accounts(dollars in thousands) |   | March 31,2011 |    |   | December 31,2010 |   |    | Increase (Decrease) |   |   | Percent of Increase (Decrease) |   |
|-------------------------------------------------------------------|--------|--------------------|---------|--------|-----------------------|--------|---------|---------------------|--------|--------|--------------------------------|--------|
|                                                              |   |               |    |   |                  |   |    |                |   |   |                           |   |
| Cash and cash equivalents                                         |   | $                  | 15,264  |   |                  | $      | 6,226   |                |   | $      | 9,038                          |   |   |   | 145.2 | % |
| Investment securities available-for-sale                          |   |               | 23,261  |   |                  |   | 23,342  |                |   |   | (81                            | )      |   |   | (0.3 | )% |
| Investment securities held-to-maturity                            |   |               | 15,767  |   |                  |   | 16,893  |                |   |   | (1,126                         | )      |   |   | (6.7 | )% |
| Loans-Held for sale                                               |   |               | 77,440  |   |                  |   | 82,320  |                |   |   | (4,880                         | )      |   |   | (5.9 | )% |
| Loans-Held for investment, net                                    |   |               | 490,255 |   |                  |   | 498,312 |                |   |   | (8,057                         | )      |   |   | (1.6 | )% |
| Total Assets                                                      |   |               | 665,539 |   |                  |   | 667,604 |                |   |   | (2,065                         | )      |   |   | (0.3 | )% |
|                                                              |   |               |    |   |                  |   |    |                |   |   |                           |   |   |   |   |   |
| Total Deposits                                                    |   |               | 527,617 |   |                  |   | 529,893 |                |   |   | (2,276                         | )      |   |   | (0.4 | )% |
| Other borrowings and convertible debentures                       |   |               | 71,872  |   |                  |   | 72,081  |                |   |   | (209                           | )      |   |   | (0.3 | )% |
|                                                              |   |               |    |   |                  |   |    |                |   |   |                           |   |   |   |   |   |
| Total Stockholders' Equity                                        |   |               | 62,243  |   |                  |   | 61,642  |                |   |   | 601                            |   |   |   | 1.0 | % |

----

Table of Contents

|                                  |   | March 31, 2011 |    |   | December 31,2010 |   |    | Increase (Decrease) |   |   | Percent of Increase (Decrease) |   |
|---------------------------------------|--------|--------------------------|---------|--------|-----------------------|--------|---------|---------------------|--------|--------|--------------------------------|--------|
|                                  |   | (dollars in thousands)   |    |   |                  |   |
| Non-interest-bearing deposits         |   | $                        | 47,951  |   |                  | $      | 35,767  |                |   | $      | 12,184                         |   |   |   | 34.1 | % |
| Interest-bearing deposits             |   |                     | 280,989 |   |                  |   | 262,431 |                |   |   | 18,558                         |   |   |   | 7.1 | % |
| Savings                               |   |                     | 21,844  |   |                  |   | 20,371  |                |   |   | 1,473                          |   |   |   | 7.2 | % |
| Time certificates of $100,000 or more |   |                     | 137,423 |   |                  |   | 163,117 |                |   |   | (25,694                        | )      |   |   | (15.8 | )% |
| Other time certificates               |   |                     | 39,410  |   |                  |   | 48,207  |                |   |   | (8,797                         | )      |   |   | (18.2 | )% |
| Total deposits                        |   | $                        | 527,617 |   |                  | $      | 529,893 |                |   | $      | (2,276                         | )      |   |   | (0.4 | )% |

|                                                      |   | March 31, |   |   | December 31, |   |
|-----------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                                      |   | 2011           |   |   | 2010              |   |
|                                                      |   | (in thousands) |   |
| Impaired loans without specific valuation allowances      |   | $              | 29,476 |   |              | $      | 13,285 |   |
| Impaired loans with specific valuation allowances         |   |           | 2,270  |   |              |   | 1,703 |   |
| Specific valuation allowances allocated to impaired loans |   |           | (404   | )      |              |   | (362 | ) |
| Impaired loans, net                                       |   | $              | 31,342 |   |              | $      | 14,626 |   |

|                                         |   | Three Months EndedMarch 31, |   |
|----------------------------------------------|--------|---------------------------------------|--------|
|                                         |   | 2011                                  |   |   | 2010 |   |
|                                         |   | (in thousands)                        |   |
| Average investment in impaired loans         |   | $                                     | 26,139 |   |   | $ | 14,560 |   |
| Interest income recognized on impaired loans |   |                                  | 180    |   |   |   | 87 |   |

----

Table of Contents

|                                                         |   | March 31,         |    |   | December 31, |   |
|--------------------------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|
|                                                         |   | 2011                   |    |   | 2010              |   |
|                                                         |   | (dollars in thousands) |    |
| Nonaccrual loans                                             |   | $                      | 41,423  |   |              | $      | 34,950 |   |
| SBA guaranteed portion of loans included above               |   |                   | (17,840 | )      |              |   | (22,279 | ) |
| Nonaccrual loans, net                                        |   | $                      | 23,583  |   |              | $      | 12,671 |   |
|                                                         |   |                   |    |   |              |   |   |   |
| Troubled debt restructured loans, gross                      |   | $                      | 15,996  |   |              | $      | 11,088 |   |
| Loans 30 through 89 days past due with interest accruing     |   | $                      | 17,080  |   |              | $      | 2,586 |   |
| Allowance for loan losses to gross loans held for investment |   |                   | 2.62    | %      |              |   | 2.60 | % |

| Liquidity and Capital Resources |
|---------------------------------|

----

Table of Contents

|   | · | Lag Risk – lag risk results from the inherent timing difference between the repricing of the Company’s adjustable rate assets and liabilities.  For instance, certain loans tied to the prime rate index may only reprice on a quarterly basis.  However, at a community bank such as CWB, when rates are rising, funding sources tend to reprice more slowly than the loans.  Therefore, for CWB, the effect of this timing difference is generally favorable during a period of rising interest rates and unfavorable during a period of declining interest rates.  This lag can produce some short-term volatility, particularly in times of numerous prime rate changes. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Repricing Risk – repricing risk is caused by the mismatch in the maturities / repricing periods between interest-earning assets and interest-bearing liabilities.  If CWB was perfectly matched, the net interest margin would expand during rising rate periods and contract during falling rate periods.  This is so since loans tend to reprice more quickly than do funding sources.  Typically, since CWB is somewhat asset sensitive, this would also tend to expand the net interest margin during times of interest rate increases.  However, the margin relationship is somewhat dependent on the shape of the yield curve. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Basis Risk – item pricing tied to different indices may tend to react differently, however, all CWB’s variable products are priced off the prime rate. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Prepayment Risk – prepayment risk results from borrowers paying down / off their loans prior to maturity.  Prepayments on fixed-rate products increase in falling interest rate environments and decrease in rising interest rate environments.  Since a majority of CWB’s loan originations are adjustable rate and set based on prime, and there is little lag time on the reset, CWB does not experience significant prepayments.  However, CWB does have more prepayment risk on its manufactured housing loans and its mortgage-backed investment securities. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

| (dollars in thousands)                |   | Total Capital |   |   | Tier 1 Capital |   |   | Risk-Weighted Assets |   |   | Adjusted Average Assets |   |   | Total Risk-Based Capital Ratio |    |   | Tier 1 Risk-Based Capital Ratio |   |   | Tier 1 Leverage Ratio |   |
|---------------------------------------|--------|---------------|--------|--------|----------------|--------|--------|----------------------|--------|--------|-------------------------|--------|--------|--------------------------------|---------|--------|---------------------------------|--------|--------|-----------------------|--------|
| (dollars in thousands)                |   |
| March 31, 2011                        |   |          |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   |   |
| CWBC (Consolidated)                   |   | $             | 76,659 |   |           | $      | 62,023 |                 |   | $      | 534,462                 |   |   | $                              | 672,428 |   |                            |   | 14.34  | %                     |   |   | 11.60 | % |   |   | 9.22 | % |
| Capital in excess of well capitalized |   |          |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            | $      | 23,213 |                  |   | $ | 29,955 |   |   | $ | 28,402 |   |
| CWB                                   |   | $             | 70,006 |   |           | $      | 63,246 |                 |   | $      | 534,178                 |   |   | $                              | 672,155 |   |                            |   | 13.11  | %                     |   |   | 11.84 | % |   |   | 9.41 | % |
| Capital in excess of well capitalized |   |          |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            | $      | 16,588 |                  |   | $ | 31,195 |   |   | $ | 29,638 |   |
|                                  |   |          |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   |   |                  |   |   |   |   |   |   |   |   |
| December 31, 2010                     |   |          |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   |   |                  |   |   |   |   |   |   |   |   |
| CWBC (Consolidated)                   |   | $             | 76,283 |   |           | $      | 61,385 |                 |   | $      | 538,685                 |   |   | $                              | 676,397 |   |                            |   | 14.16  | %                     |   |   | 11.40 | % |   |   | 9.08 | % |
| Capital in excess of well capitalized |   |          |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            | $      | 22,415 |                  |   | $ | 29,064 |   |   | $ | 27,565 |   |
| CWB                                   |   | $             | 69,308 |   |           | $      | 62,494 |                 |   | $      | 538,463                 |   |   | $                              | 676,127 |   |                            |   | 12.87  | %                     |   |   | 11.61 | % |   |   | 9.24 | % |
| Capital in excess of well capitalized |   |          |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            | $      | 15,462 |                  |   | $ | 30,186 |   |   | $ | 28,688 |   |
|                                  |   |          |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   |   |                  |   |   |   |   |   |   |   |   |
| Well capitalized ratios               |   |          |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   | 10.00  | %                     |   |   | 6.00 | % |   |   | 5.00 | % |
| Minimum capital ratios                |   |          |   |   |           |   |   |                 |   |   |                    |   |   |                           |    | 8.00   | %                               |   |   | 4.00                  | %      |   |   | 4.00 | % |

----

Table of Contents

| Supervision and Regulation |
|----------------------------|

| ITEM 4. | CONTROLS AND PROCEDURES |
|---------|-------------------------|

| ITEM 1. | LEGAL PROCEEDINGS |
|---------|-------------------|

| ITEM 1A.  | RISK FACTORS |
|----------------|--------------|

| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
|---------|-------------------------------------------------------------|

| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
|---------|---------------------------------|

----

Table of Contents

| ITEM 4. | REMOVED AND RESERVED |
|---------|----------------------|

| ITEM 5. | OTHER INFORMATION |
|---------|-------------------|

|   | (a) | On May 9, 2011, Richard M. Favor, Executive Vice President and Chief Credit Officer, notified the Company that he would resign, effective May 20, 2011, to pursue another business opportunity.  The Company announced that, effective upon Mr. Favor’s resignation, Mark J. Mediate, Senior Vice President, will discharge the position duties until a permanent replacement is named.  Mr. Mediate, age 44, has been the Director of the Bank’s Special Assets’ group since September 2010.  He worked from June 2009 to September 2010 as a Managing Consultant for Society Consulting Group, a firm that manages loan portfolio services for banks.  From December 2006 to June 2009, Mr. Mediate was Executive Vice President, Chief Lending Officer and Chief Credit Officer of Metropolitan Bancorp.  Mr. Mediate was a Senior Vice President, Town & Country Bank, from June 2005 to December 2006, and was responsible for loan production and supervision of other lenders. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM 6. | EXHIBITS |
|---------|----------|

| 31.1   | Certification of Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) or Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification of Chief Financial Officer of the Registrant pursuant to Rule 13a-14(a) or Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1* | Certification of Chief Executive Officer and Chief Financial Officer of the Registrant pursuant to Rule 13a-14(b) or Rule 15d-14(b), promulgated under the Securities Exchange Act of 1934, as Amended, and 18 U.S.C. 1350. |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

SIGNATURES

|               | COMMUNITY WEST BANCSHARES          |
|--------------------|------------------------------------|
|               | (Registrant)                       |
|               |                               |
| Date: May 13, 2011 | /s/ Charles G. Baltuskonis         |
|               | Charles G. Baltuskonis             |
|               | Executive Vice President and       |
|               | Chief Financial Officer            |
|               |                               |
|               | On Behalf of Registrant and as     |
|               | Principal Financial and Accounting |

----

Table of Contents

| 31.1 | Certification of Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) or Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification of Chief Financial Officer of the Registrant pursuant to Rule 13a-14(a) or Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1*  | Certification of Chief Executive Officer and Chief Financial Officer of the Registrant pursuant to  Rule 13a-14(b) or Rule 15d-14(b), promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C.1350. |
|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----