----

----

| T | 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   |   | Smaller      reporting company T |

----

----

----

TABLE 

| 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      financial statements included in this Form 10-Q should be read with      reference to Community West Bancshares’ Annual Report on Form 10-K for the      fiscal year ended December 31, 2008. |
|                                                                                                                                                                                                         |                  |   |                                                                                             |   |   |
|                                                                                                                                                                                                              | ITEM      2.          |   | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND      RESULTS OF OPERATIONS |   | 17 |
|                                                                                                                                                                                                         |                  |   |                                                                                             |   |   |
|                                                                                                                                                                                                              | ITEM      4T.         |   | CONTROLS AND PROCEDURES                                                                          |   | 28 |
|                                                                                                                                                                                                         |                  |   |                                                                                             |   |   |
| PART II.                                                                                                                                                                                                     | OTHER INFORMATION     |   |                                                                                             |
|                                                                                                                                                                                                         |                  |   |                                                                                             |   |   |
|                                                                                                                                                                                                              | ITEM      1.          |   | LEGAL PROCEEDINGS                                                                                |   | 28 |
|                                                                                                                                                                                                         |                  |   |                                                                                             |   |   |
|                                                                                                                                                                                                              | ITEM      2.          |   | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF      PROCEEDS                                 |   | 28 |
|                                                                                                                                                                                                         |                  |   |                                                                                             |   |   |
|                                                                                                                                                                                                              | ITEM      3.          |   | DEFAULTS UPON SENIOR SECURITIES                                                                  |   | 28 |
|                                                                                                                                                                                                         |                  |   |                                                                                             |   |   |
|                                                                                                                                                                                                              | ITEM      4.          |   | SUBMISSION OF MATTERS TO A VOTE OF SECURITY      HOLDERS                                         |   | 29 |
|                                                                                                                                                                                                         |                  |   |                                                                                             |   |   |
|                                                                                                                                                                                                              | ITEM      5.          |   | OTHER INFORMATION                                                                                |   | 29 |
|                                                                                                                                                                                                         |                  |   |                                                                                             |   |   |
|                                                                                                                                                                                                              | ITEM      6.          |   | EXHIBITS                                                                                         |   | 29 |
|                                                                                                                                                                                                         |                  |   |                                                                                             |   |   |
|                                                                                                                                                                                                         |                  |   |                                                                                             |   |   |
| SIGNATURES                                                                                                                                                                                                   |                  |   |

----

Table of Contents

PART 

ITEM

COMMUNITY 

|                                                                                                                                                                                                                                                             |   | September      30,2009      |    |   | December      31,2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|-----------------------|--------|
|                                                                                                                                                                                                                                                             |   | (unaudited)                 |    |   |                  |   |
| ASSETS                                                                                                                                                                                                                                                           |   | (dollars      in thousands) |    |
| Cash      and due from banks                                                                                                                                                                                                                                     |   | $                           | 5,299   |   |                  | $      | 4,151 |   |
| Federal      funds sold                                                                                                                                                                                                                                          |   |                        | 3,380   |   |                  |   | 8,102 |   |
| Cash      and cash equivalents                                                                                                                                                                                                                                   |   |                        | 8,679   |   |                  |   | 12,253 |   |
| Time      deposits in other financial institutions                                                                                                                                                                                                               |   |                        | 832     |   |                  |   | 812 |   |
| Investment      securities available-for-sale, at fair value; amortized cost of $18,306 at      September      30, 2009 and $6,871 at December 31, 2008                                                                                                          |   |                        | 18,483  |   |                  |   | 6,783 |   |
| Investment      securities held-to-maturity, at amortized cost; fair value of $22,731 at      September      30,  2009 and $31,574 at December 31, 2008                                                                                                |   |                        | 21,928  |   |                  |   | 31,192 |   |
| Federal      Home Loan Bank stock, at cost                                                                                                                                                                                                                       |   |                        | 5,660   |   |                  |   | 5,660 |   |
| Federal      Reserve Bank stock, at cost                                                                                                                                                                                                                         |   |                        | 1,129   |   |                  |   | 902 |   |
| Loans:                                                                                                                                                                                                                                                           |   |                        |    |   |                  |   |   |   |
| Loans      held for sale, at lower of cost or fair value                                                                                                                                                                                                         |   |                        | 99,611  |   |                  |   | 131,786 |   |
| Loans      held for investment, net of allowance for loan losses of $13,274 at      September 30, 2009 and $7,341 at December 31, 2008                                                                                                                           |   |                        | 493,561 |   |                  |   | 449,289 |   |
| Total      loans                                                                                                                                                                                                                                                 |   |                        | 593,172 |   |                  |   | 581,075 |   |
| Servicing      rights                                                                                                                                                                                                                                            |   |                        | 1,052   |   |                  |   | 1,161 |   |
| Other      assets acquired through foreclosure                                                                                                                                                                                                                   |   |                        | 3,281   |   |                  |   | 1,146 |   |
| Premises      and equipment, net                                                                                                                                                                                                                                 |   |                        | 3,373   |   |                  |   | 3,718 |   |
| Other      assets                                                                                                                                                                                                                                                |   |                        | 16,763  |   |                  |   | 12,279 |   |
| TOTAL      ASSETS                                                                                                                                                                                                                                                |   | $                           | 674,352 |   |                  | $      | 656,981 |   |
| LIABILITIES                                                                                                                                                                                                                                                      |   |                        |    |   |                  |   |   |   |
| Deposits:                                                                                                                                                                                                                                                        |   |                        |    |   |                  |   |   |   |
| Non-interest-bearing      demand                                                                                                                                                                                                                                 |   | $                           | 38,569  |   |                  | $      | 35,080 |   |
| Interest-bearing      demand                                                                                                                                                                                                                                     |   |                        | 160,925 |   |                  |   | 57,474 |   |
| Savings                                                                                                                                                                                                                                                          |   |                        | 16,507  |   |                  |   | 14,718 |   |
| Time      certificates                                                                                                                                                                                                                                           |   |                        | 313,696 |   |                  |   | 368,167 |   |
| Total      deposits                                                                                                                                                                                                                                              |   |                        | 529,697 |   |                  |   | 475,439 |   |
| Other      borrowings                                                                                                                                                                                                                                            |   |                        | 80,000  |   |                  |   | 110,000 |   |
| Other      liabilities                                                                                                                                                                                                                                           |   |                        | 4,331   |   |                  |   | 4,924 |   |
| Total      liabilities                                                                                                                                                                                                                                           |   |                        | 614,028 |   |                  |   | 590,363 |   |
| STOCKHOLDERS'      EQUITY                                                                                                                                                                                                                                        |   |                        |    |   |                  |   |   |   |
| Preferred      stock, no par value; 10,000,000 shares authorized; 15,600 shares issued      and outstanding of Fixed Rate Cumulative Perpetual Preferred Stock, Series      A with a liquidation preference of $1,000 per share,  net of      discount |   |                        | 14,473  |   |                  |   | 14,300 |   |
| Common      stock, no par value; 10,000,000 shares      authorized;  5,915,130 shares issued and    outstanding                                                                                                                                   |   |                        | 33,103  |   |                  |   | 33,081 |   |
| Retained      earnings                                                                                                                                                                                                                                           |   |                        | 12,644  |   |                  |   | 19,288 |   |
| Accumulated      other comprehensive income (loss), net                                                                                                                                                                                                          |   |                        | 104     |   |                  |   | (51 | ) |
| Total      stockholders' equity                                                                                                                                                                                                                                  |   |                        | 60,324  |   |                  |   | 66,618 |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                            |   | $                           | 674,352 |   |                  | $      | 656,981 |   |

----

Table of Contents

COMMUNITY 

|                                                              |   | Three      Months EndedSeptember      30,             |   |   | Nine      Months EndedSeptember      30, |   |
|-------------------------------------------------------------------|--------|-------------------------------------------------------|--------|--------|------------------------------------------|--------|
|                                                              |   | 2009                                                  |   |   | 2008                                     |   |   | 2009 |   |   | 2008 |   |
|                                                              |   | (dollars      in thousands, except per share amounts) |   |
| INTEREST      INCOME                                              |   |                                                  |   |   |                                     |   |   |   |   |   |   |   |
| Loans                                                             |   | $                                                     | 9,907  |   |                                     | $      | 10,691 |   |   | $ | 29,405 |   |   | $ | 32,771 |   |
| Investment      securities                                        |   |                                                  | 452    |   |                                     |   | 568 |   |   |   | 1,338 |   |   |   | 1,723 |   |
| Other                                                             |   |                                                  | 19     |   |                                     |   | 77 |   |   |   | 52 |   |   |   | 233 |   |
| Total      interest income                                        |   |                                                  | 10,378 |   |                                     |   | 11,336 |   |   |   | 30,795 |   |   |   | 34,727 |   |
| INTEREST      EXPENSE                                             |   |                                                  |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                          |   |                                                  | 2,572  |   |                                     |   | 4,341 |   |   |   | 8,870 |   |   |   | 13,165 |   |
| Other      borrowings                                             |   |                                                  | 895    |   |                                     |   | 1,221 |   |   |   | 3,017 |   |   |   | 3,824 |   |
| Total      interest expense                                       |   |                                                  | 3,467  |   |                                     |   | 5,562 |   |   |   | 11,887 |   |   |   | 16,989 |   |
| NET      INTEREST INCOME                                          |   |                                                  | 6,911  |   |                                     |   | 5,774 |   |   |   | 18,908 |   |   |   | 17,738 |   |
| Provision      for loan losses                                    |   |                                                  | 2,592  |   |                                     |   | 652 |   |   |   | 15,890 |   |   |   | 3,856 |   |
| NET      INTEREST INCOME AFTER PROVISION FOR LOAN      LOSSES     |   |                                                  | 4,319  |   |                                     |   | 5,122 |   |   |   | 3,018 |   |   |   | 13,882 |   |
| NON-INTEREST      INCOME                                          |   |                                                  |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Other      loan fees                                              |   |                                                  | 385    |   |                                     |   | 555 |   |   |   | 1,370 |   |   |   | 1,781 |   |
| Loan      servicing, net                                          |   |                                                  | 180    |   |                                     |   | 71 |   |   |   | 692 |   |   |   | 312 |   |
| Document      processing fees                                     |   |                                                  | 175    |   |                                     |   | 155 |   |   |   | 644 |   |   |   | 557 |   |
| Gains      from loan sales, net                                   |   |                                                  | 75     |   |                                     |   | 389 |   |   |   | 251 |   |   |   | 1,007 |   |
| Other                                                             |   |                                                  | 151    |   |                                     |   | 28 |   |   |   | 432 |   |   |   | 595 |   |
| Total      non-interest income                                    |   |                                                  | 966    |   |                                     |   | 1,198 |   |   |   | 3,389 |   |   |   | 4,252 |   |
| NON-INTEREST      EXPENSES                                        |   |                                                  |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Salaries      and employee benefits                               |   |                                                  | 2,756  |   |                                     |   | 3,254 |   |   |   | 9,139 |   |   |   | 10,341 |   |
| Occupancy      and equipment expenses                             |   |                                                  | 524    |   |                                     |   | 619 |   |   |   | 1,594 |   |   |   | 1,759 |   |
| FDIC      insurance assessment                                    |   |                                                  | 393    |   |                                     |   | 92 |   |   |   | 1,216 |   |   |   | 266 |   |
| Professional      services                                        |   |                                                  | 194    |   |                                     |   | 213 |   |   |   | 706 |   |   |   | 618 |   |
| Depreciation      and amortization                                |   |                                                  | 122    |   |                                     |   | 100 |   |   |   | 372 |   |   |   | 391 |   |
| Advertising      and marketing                                    |   |                                                  | 69     |   |                                     |   | 106 |   |   |   | 250 |   |   |   | 362 |   |
| Other      operating expenses                                     |   |                                                  | 1,107  |   |                                     |   | 770 |   |   |   | 3,078 |   |   |   | 1,910 |   |
| Total      non-interest expenses                                  |   |                                                  | 5,165  |   |                                     |   | 5,154 |   |   |   | 16,355 |   |   |   | 15,647 |   |
| Income      (loss) before provision for income taxes              |   |                                                  | 120    |   |                                     |   | 1,166 |   |   |   | (9,948 | ) |   |   | 2,487 |   |
| Provision      (benefit) for income taxes                         |   |                                                  | 51     |   |                                     |   | 491 |   |   |   | (4,088 | ) |   |   | 1,067 |   |
|                                                              |   |                                                  |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME (LOSS)                                            |   | $                                                     | 69     |   |                                     | $      | 675 |   |   | $ | (5,860 | ) |   | $ | 1,420 |   |
|                                                              |   |                                                  |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      stock dividends                                    |   |                                                  | 261    |   |                                     |   | - |   |   |   | 784 |   |   |   | - |   |
| NET      INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS           |   | $                                                     | (192   | )      |                                     | $      | 675 |   |   | $ | (6,644 | ) |   | $ | 1,420 |   |
|                                                              |   |                                                  |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per common share:                            |   |                                                  |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                             |   | $                                                     | (.03   | )      |                                     | $      | .11 |   |   | $ | (1.12 | ) |   | $ | .24 |   |
| Diluted                                                           |   | $                                                     | (.03   | )      |                                     | $      | .11 |   |   | $ | (1.12 | ) |   | $ | .24 |   |
| Basic      weighted average number of common shares outstanding   |   |                                                  | 5,915  |   |                                     |   | 5,915 |   |   |   | 5,915 |   |   |   | 5,912 |   |
| Diluted      weighted average number of common shares outstanding |   |                                                  | 5,915  |   |                                     |   | 5,918 |   |   |   | 5,915 |   |   |   | 5,955 |   |

----

Table of Contents

COMMUNITY 

|                                                                              |   | Preferred      Stock |   |              |                |   |   | Retained      Earnings |   |   | Accumulated      Other Comprehensive Income (Loss) |   |   | Total      Stockholders’ Equity |   |
|-----------------------------------------------------------------------------------|--------|----------------------|--------|-------------------|---------------------|--------|--------|------------------------|--------|--------|----------------------------------------------------|--------|--------|---------------------------------------|--------|
|                                                                              |   |                 |   |              |                |   |   |                   |   |   |                                               |
|                                                                              |   |                 |   | Common      Stock |                |   |   |                   |   |   |                                               |
|                                                                              |   |                 |   | Shares            |                |   | Amount |                   |   |   |                                               |   |   |                                  |
|                                                                              |   |                 |   |              | (in      thousands) |   |   |                   |   |   |                                               |   |   |                                  |   |
| BALANCES      AT JANUARY 1, 2009                                                  |   | $                    | 14,300 |              |                |   | 5,915  |                   |   | $      | 33,081                                             |   |   | $                                     | 19,288 |   |   | $ | (51 | ) |   | $ | 66,618 |   |
| Preferred      stock related costs                                                |   |                 | (26    | )                 |                |   |   |                   |   |   |                                               |   |   |                                  |   |   |   |   |   |   |   |   | (26 | ) |
| Stock      option expense, recognized in earnings                                 |   |                 |   |              |                |   |   |                   |   |   | 22                                                 |   |   |                                  |   |   |   |   |   |   |   |   | 22 |   |
| Comprehensive      income:                                                        |   |                 |   |              |                |   |   |                   |   |   |                                               |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                     |   |                 |   |              |                |   |   |                   |   |   |                                               |   |   |                                  | (5,860 | ) |   |   |   |   |   |   | (5,860 | ) |
| Change      in unrealized gain ( loss) on securities available-for-sale,      net |   |                 |   |              |                |   |   |                   |   |   |                                               |   |   |                                  |   |   |   |   | 155 |   |   |   | 155 |   |
| Comprehensive      loss                                                           |   |                 |   |              |                |   |   |                   |   |   |                                               |   |   |                                  |   |   |   |   |   |   |   |   | (5,705 | ) |
| Dividends:                                                                        |   |                 |   |              |                |   |   |                   |   |   |                                               |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Preferred                                                                         |   |                 | 199    |              |                |   |   |                   |   |   |                                               |   |   |                                  | (784   | ) |   |   |   |   |   |   | (585 | ) |
| BALANCES      AT SEPTEMBER 30, 2009                                               |   | $                    | 14,473 |              |                |   | 5,915  |                   |   | $      | 33,103                                             |   |   | $                                     | 12,644 |   |   | $ | 104 |   |   | $ | 60,324 |   |

----

Table of Contents

COMMUNITY 

|                                                                                        |   | Nine      Months EndedSeptember      30, |     |
|---------------------------------------------------------------------------------------------|--------|------------------------------------------|----------|
|                                                                                        |   | 2009                                     |     |   | 2008 |   |
|                                                                                        |   | (in      thousands)                      |     |
| CASH FLOWS FROM OPERATING      ACTIVITIES:                                                  |   |                                     |     |   |   |   |
| Net      (loss) income                                                                      |   | $                                        | (5,860   | ) |   | $ | 1,420 |   |
| Adjustments      to reconcile net income to net cash provided by operating      activities: |   |                                     |     |   |   |   |   |   |
| Provision      for loan losses                                                              |   |                                     | 15,890   |   |   |   | 3,856 |   |
| Depreciation      and amortization                                                          |   |                                     | 372      |   |   |   | 391 |   |
| Stock-based      compensation                                                               |   |                                     | 22       |   |   |   | 109 |   |
| Net      amortization of discounts and premiums for investment      securities              |   |                                     | (29      | ) |   |   | (59 | ) |
| (Gain)      loss on:                                                                        |   |                                     |     |   |   |   |   |   |
| Sale      of other assets acquired through foreclosure                                      |   |                                     | 288      |   |   |   | (198 | ) |
| Sale      of loans held for sale                                                            |   |                                     | (251     | ) |   |   | (1,007 | ) |
| Loan      originated for sale and principal collections, net                                |   |                                     | 3,081    |   |   |   | 354 |   |
| Changes      in:                                                                            |   |                                     |     |   |   |   |   |   |
| Servicing      rights, net of amortization                                                  |   |                                     | 109      |   |   |   | 2 |   |
| Other      assets                                                                           |   |                                     | (4,739   | ) |   |   | (904 | ) |
| Other      liabilities                                                                      |   |                                     | (438     | ) |   |   | 753 |   |
| Net      cash provided by operating activities                                              |   |                                     | 8,445    |   |   |   | 4,717 |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                  |   |                                     |     |   |   |   |   |   |
| Purchase      of held-to-maturity securities                                                |   |                                     | (1,233   | ) |   |   | (12,899 | ) |
| Purchase      of available-for-sale securities                                              |   |                                     | (13,433  | ) |   |   | - |   |
| Purchase      of Federal Home Loan Bank and Federal Reserve stock, net of      redemptions  |   |                                     | (227     | ) |   |   | 102 |   |
| Federal      Home Loan Bank stock dividends                                                 |   |                                     | -        |   |   |   | (245 | ) |
| Principal      pay downs and maturities of available-for-sale securities                    |   |                                     | 2,008    |   |   |   | 7,689 |   |
| Principal      pay downs and maturities of held-to-maturity securities                      |   |                                     | 10,515   |   |   |   | 5,631 |   |
| Loan      originations and principal collections, net                                       |   |                                     | (35,523  | ) |   |   | (27,085 | ) |
| Proceeds      from sale of other assets acquired through foreclosure                        |   |                                     | 2,274    |   |   |   | 692 |   |
| Net      (increase) decrease in time deposits in other financial      institutions          |   |                                     | (20      | ) |   |   | 118 |   |
| Purchase      of premises and equipment, net                                                |   |                                     | (27      | ) |   |   | (925 | ) |
| Net      cash used in investing activities                                                  |   |                                     | (35,666  | ) |   |   | (26,922 | ) |
| CASH FLOWS FROM FINANCING      ACTIVITIES:                                                  |   |                                     |     |   |   |   |   |   |
| Preferred      stock dividends                                                              |   |                                     | (784     | ) |   |   | - |   |
| Amortization      of discount on preferred stock, net of additional costs                   |   |                                     | 173      |   |   |   | - |   |
| Exercise      of stock options                                                              |   |                                     | -        |   |   |   | 105 |   |
| Cash      dividends paid on common stock                                                    |   |                                     | -        |   |   |   | (709 | ) |
| Net      increase (decrease)  in demand deposits and savings      accounts        |   |                                     | 108,729  |   |   |   | (20,825 | ) |
| Net      increase (decrease) in time certificates of deposit                                |   |                                     | (54,471  | ) |   |   | 69,981 |   |
| Proceeds      from Federal Home Loan Bank and FRB advances                                  |   |                                     | 88,000   |   |   |   | 9,000 |   |
| Repayment      of Federal Home Loan Bank and FRB advances                                   |   |                                     | (118,000 | ) |   |   | (29,500 | ) |
| Net      cash provided by financing activities                                              |   |                                     | 23,647   |   |   |   | 28,052 |   |
| NET      (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                   |   |                                     | (3,574   | ) |   |   | 5,847 |   |
| CASH      AND CASH EQUIVALENTS, BEGINNING OF YEAR                                           |   |                                     | 12,253   |   |   |   | 9,289 |   |
| CASH      AND CASH EQUIVALENTS, END OF PERIOD                                               |   | $                                        | 8,679    |   |   | $ | 15,136 |   |
| Supplemental      Disclosure of Cash Flow Information:                                      |   |                                     |     |   |   |   |   |   |
| Cash      paid for interest                                                                 |   | $                                        | 12,630   |   |   | $ | 14,703 |   |
| Cash      paid for income taxes                                                             |   |                                     | 86       |   |   |   | 2,538 |   |
| Supplemental      Disclosure of Noncash Investing Activity:                                 |   |                                     |     |   |   |   |   |   |
| Transfers      to other assets acquired through foreclosure                                 |   | $                                        | 4,706    |   |   | $ | 784 |   |

----

Table of Contents

COMMUNITY 

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

|   | · | SBA      – A migration analysis and various portfolio specific factors are used to      calculate the required allowance for all non-impaired loans.  In      addition, the migration results are adjusted based upon qualitative      factors.  Qualitative factors include, but are not limited to,      adjustments for existing economic conditions, past due trends and      concentration exposure.   Impaired loans are assigned a      specific reserve based upon the individual characteristics of the      loan. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Relationship      Banking – Primarily includes commercial, commercial real estate and      construction loans.  A migration analysis and various portfolio      specific factors are used to calculate the required allowance for all      non-impaired loans. In addition, the migration results are adjusted based      upon qualitative factors.  Qualitative factors include, but are      not limited to, adjustments for existing economic conditions, past due      trends and concentration exposure. Impaired loans are assigned a specific      reserve based upon the individual characteristics of the    loan. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Manufactured      Housing – The allowance is calculated on the basis of loss history and      risk rating, which is primarily a function of delinquency.  In      addition, the loss history is adjusted based upon qualitative factors      similar to those used for SBAloans. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

----

Table of Contents

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

| September 30, 2009               |   | (in      thousands) |   |
|----------------------------------|--------|---------------------|--------|
|                             |   |                |   |   | Gross |   |   | Gross |   |   |   |   |
|                             |   | Amortized           |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
| Available-for-sale    securities |   | Cost                |   |   | Gains |   |   | Losses |   |   | Value |   |
| U.S.      Government agency: MBS |   | $                   | 10,608 |   |   | $ | 202 |   |   | $ | - |   |   | $ | 10,810 |   |
| U.S.      Government agency: CMO |   |                | 7,698  |   |   |   | 18 |   |   |   | (43 | ) |   |   | 7,673 |   |
| Total                            |   | $                   | 18,306 |   |   | $ | 220 |   |   | $ | (43 | ) |   | $ | 18,483 |   |
|                             |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities      |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government agency: MBS |   | $                   | 21,928 |   |   | $ | 809 |   |   | $ | (6 | ) |   | $ | 22,731 |   |
| U.S.      Government agency: CMO |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                            |   | $                   | 21,928 |   |   | $ | 809 |   |   | $ | (6 | ) |   | $ | 22,731 |   |
|                             |   |                |   |
| December 31, 2008                |   | (in      thousands) |   |
|                             |   |                |   |   |   | Gross |   |   | Gross |   |   |   |   |   |
|                             |   | Amortized           |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
| Available-for-sale    securities |   | Cost                |   |   | Gains |   |   | Losses |   |   | Value |   |
| U.S.      Government agency: MBS |   | $                   | 5,371  |   |   | $ | 1 |   |   | $ | (88 | ) |   | $ | 5,284 |   |
| U.S.      Government agency: CMO |   |                | 1,500  |   |   |   | 3 |   |   |   | (4 | ) |   |   | 1,499 |   |
| Total                            |   | $                   | 6,871  |   |   | $ | 4 |   |   | $ | (92 | ) |   | $ | 6,783 |   |
|                             |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities      |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government agency: MBS |   | $                   | 25,750 |   |   | $ | 459 |   |   | $ | (21 | ) |   | $ | 26,188 |   |
| U.S.      Government agency: CMO |   |                | 5,442  |   |   |   | - |   |   |   | (56 | ) |   |   | 5,386 |   |
| Total                            |   | $                   | 31,192 |   |   | $ | 459 |   |   | $ | (77 | ) |   | $ | 31,574 |   |

|                             |   | 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                 |   | $            | 10,810 |   |               |   | 3.2    | %                 |   | $      | -                     |   |   |   | - |   |   | $ | 3,087 |   |   |   | 3.5 | % |   | $ | 7,723 |   |   |   | 2.9 | % |
| Agency:      CMO                 |   |         | 7,673  |   |               |   | 2.2    | %                 |   |   | 722                   |   |   |   | 4.9 | % |   |   | 6,951 |   |   |   | 1.9 | % |   |   | - |   |   |   | - |   |
| Total                            |   | $            | 18,483 |   |               |   | 2.8    | %                 |   | $      | 722                   |   |   |   | 4.9 | % |   | $ | 10,038 |   |   |   | 2.38 | % |   | $ | 7,723 |   |   |   | 2.9 | % |
|                             |   |         |   |   |               |   |   |              |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities      |   |         |   |   |               |   |   |              |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government:            |   |         |   |   |               |   |   |              |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency:      MBS                 |   | $            | 21,928 |   |               |   | 5.1    | %                 |   | $      | -                     |   |   |   | - |   |   | $ | 20,704 |   |   |   | 5.1 | % |   | $ | 1,224 |   |   |   | 4.3 | % |
| Agency:      CMO                 |   |         | -      |   |               |   | -      |              |   |   | -                     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |
| Total                            |   | $            | 21,928 |   |               |   | 5.1    | %                 |   | $      | -                     |   |   |   | - |   |   | $ | 20,704 |   |   |   | 5.1 | % |   | $ | 1,224 |   |   |   | 4.3 | % |

----

Table of Contents

| September      30, 2009                |   | 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       |   |                     | 4,845  |   |                     |   | 43     |   |   |   | - |   |   |   | - |   |   |   | 4,845 |   |   |   | 43 |   |
| Total                                  |   | $                        | 4,845  |   |                     | $      | 43     |   |   | $ | - |   |   | $ | - |   |   | $ | 4,845 |   |   | $ | 43 |   |
|                                   |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities            |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government agency: MBS       |   | $                        | 1,217  |   |                     | $      | 6      |   |   | $ | - |   |   | $ | - |   |   | $ | 1,217 |   |   | $ | 6 |   |
|  U.S.      Government agency: CMO |   |                     | -      |   |                     |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                                  |   | $                        | 1,217  |   |                     | $      | 6      |   |   | $ | - |   |   | $ | - |   |   | $ | 1,217 |   |   | $ | 6 |   |

| December      31, 2008                 |   | 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       |   | $                        | 4,249  |   |                     | $      | 66     |   |   | $ | 716 |   |   | $ | 22 |   |   | $ | 4,965 |   |   | $ | 88 |   |
| U.S.      Government agency: CMO       |   |                     | -      |   |                     |   | -      |   |   |   | 1,106 |   |   |   | 4 |   |   |   | 1,106 |   |   |   | 4 |   |
| Total                                  |   | $                        | 4,249  |   |                     | $      | 66     |   |   | $ | 1,822 |   |   | $ | 26 |   |   | $ | 6,071 |   |   | $ | 92 |   |
|                                   |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities            |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government agency: MBS       |   | $                        | 4,025  |   |                     | $      | 21     |   |   | $ | - |   |   | $ | - |   |   | $ | 4,025 |   |   | $ | 21 |   |
|  U.S.      Government agency: CMO |   |                     | 5,386  |   |                     |   | 56     |   |   |   | - |   |   |   | - |   |   |   | 5,386 |   |   |   | 56 |   |
| Total                                  |   | $                        | 9,411  |   |                     | $      | 77     |   |   | $ | - |   |   | $ | - |   |   | $ | 9,411 |   |   | $ | 77 |   |

----

Table of Contents

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

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

|                                |   | September      30,  |    |   | December      31, |   |
|-------------------------------------|--------|---------------------|---------|--------|-------------------|--------|
|                                |   | 2009                |    |   | 2008              |   |
|                                |   | (in      thousands) |    |
| Commercial                          |   | $                   | 62,433  |   |              | $      | 74,895 |   |
| Real      Estate                    |   |                | 189,538 |   |              |   | 135,521 |   |
| SBA                                 |   |                | 44,444  |   |              |   | 40,066 |   |
| Manufactured      housing           |   |                | 193,165 |   |              |   | 190,838 |   |
| Other      installment              |   |                | 17,636  |   |              |   | 15,793 |   |
|                                |   |                | 507,216 |   |              |   | 457,113 |   |
| Less:                               |   |                |    |   |              |   |   |   |
| Allowance      for loan losses      |   |                | 13,274  |   |              |   | 7,341 |   |
| Deferred      fees (costs)          |   |                | (247    | )      |              |   | (284 | ) |
| Purchased      premiums             |   |                | (28     | )      |              |   | (42 | ) |
| Discount      on SBA loans          |   |                | 656     |   |              |   | 809 |   |
| Loans      held for investment, net |   | $                   | 493,561 |   |              | $      | 449,289 |   |

----

Table of Contents

|                                            |   | Three      Months EndedSeptember      30, |   |   | Nine      Months EndedSeptember      30, |   |
|-------------------------------------------------|--------|-------------------------------------------|--------|--------|------------------------------------------|--------|
|                                            |   | 2009                                      |   |   | 2008                                     |   |   | 2009 |   |   | 2008 |   |
|                                            |   | (in      thousands)                       |   |
| Balance,      beginning of period               |   | $                                         | 13,419 |   |                                     | $      | 6,423 |   |   | $ | 7,341 |   |   | $ | 4,412 |   |
|                                            |   |                                      |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Loans      charged off                          |   |                                      | (2,742 | )      |                                     |   | (588 | ) |   |   | (10,041 | ) |   |   | (1,831 | ) |
| Recoveries      on loans previously charged off |   |                                      | 5      |   |                                     |   | 12 |   |   |   | 84 |   |   |   | 62 |   |
| Net      charge-offs                            |   |                                      | (2,737 | )      |                                     |   | (576 | ) |   |   | (9,957 | ) |   |   | (1,769 | ) |
|                                            |   |                                      |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for loan losses                  |   |                                      | 2,592  |   |                                     |   | 652 |   |   |   | 15,890 |   |   |   | 3,856 |   |
| Balance,      end of period                     |   | $                                         | 13,274 |   |                                     | $      | 6,499 |   |   | $ | 13,274 |   |   | $ | 6,499 |   |

|                                                           |   | September      30,  |   |   | December      31, |   |
|----------------------------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|
|                                                           |   | 2009                |   |   | 2008              |   |
|                                                           |   | (in      thousands) |   |
| Impaired      loans                                            |   | $                   | 9,724  |   |              | $      | 8,566 |   |
| Specific      valuation allowances allocated to impaired loans |   |                | (744   | )      |              |   | (151 | ) |
| Impaired      loans, net                                       |   | $                   | 8,980  |   |              | $      | 8,415 |   |

|                                              |   | Three      Months EndedSeptember      30, |   |   | Nine      Months EndedSeptember      30, |   |
|---------------------------------------------------|--------|-------------------------------------------|--------|--------|------------------------------------------|--------|
|                                              |   | 2009                                      |   |   | 2008                                     |   |   | 2009 |   |   | 2008 |   |
|                                              |   | (in      thousands)                       |   |
| Average      investment in impaired loans         |   | $                                         | 9,518  |   |                                     | $      | 9,379 |   |   | $ | 8,107 |   |   | $ | 9,935 |   |
| Interest      income recognized on impaired loans |   |                                      | 5      |   |                                     |   | - |   |   |   | 173 |   |   |   | 83 |   |

----

Table of Contents

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

|                                                 |   | Fair      value measurements at reporting date 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        |   | $                                                    | 18,483 |   |   | $ | - |   |   | $ | 18,483 |   |   | $ | - |   |
| Interest      only strips (included in other assets) |   |                                                 | 674    |   |   |   |   |   |   |   |   |   |   |   | 674 |   |
| Total                                                |   | $                                                    | 19,157 |   |   | $ | - |   |   | $ | 18,483 |   |   | $ | 674 |   |

|                |   | Fair      value measurements at reporting date 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 |   | $                                                    | 8,980  |   |   | $ | - |   |   | $ | 8,841 |   |   | $ | 139 |   |

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

----

Table of Contents

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

----

Table of Contents

|                                                    |   | Three      Months EndedSeptember      30,            |   |   | Nine      Months EndedSeptember      30, |   |
|---------------------------------------------------------|--------|------------------------------------------------------|--------|--------|------------------------------------------|--------|
|                                                    |   | 2009                                                 |   |   | 2008                                     |   |   | 2009 |   |   | 2008 |   |
|                                                    |   | (dollars      in thousands except per share amounts) |   |
| Basic      weighted average common shares outstanding   |   |                                                 | 5,915  |   |                                     |   | 5,915 |   |   |   | 5,915 |   |   |   | 5,912 |   |
| Dilutive      effect of options                         |   |                                                 | -      |   |                                     |   | 3 |   |   |   | - |   |   |   | 43 |   |
| Diluted      weighted average common shares outstanding |   |                                                 | 5,915  |   |                                     |   | 5,918 |   |   |   | 5,915 |   |   |   | 5,955 |   |

| 8.  | FAIR      VALUES OF FINANCIALINSTRUMENTS |
|----------|------------------------------------------|

|                                                  |   | September      30, 2009 |    |   | December      31, 2008    |   |
|-------------------------------------------------------|--------|-------------------------|---------|--------|---------------------------|--------|
|                                                  |   | Carrying      Amount    |    |   | Estimated      Fair Value |   |   | Carrying      Amount |   |   | Estimated      Fair Value |   |
|                                                  |   | (in      thousands)     |    |
| Assets:                                               |   |                    |    |   |                      |   |   |   |   |   |   |   |
| Cash      and cash equivalents                        |   | $                       | 8,679   |   |                      | $      | 8,679 |   |   | $ | 12,253 |   |   | $ | 12,253 |   |
| Time      deposits in other financial institutions    |   |                    | 832     |   |                      |   | 832 |   |   |   | 812 |   |   |   | 812 |   |
| Federal      Reserve and Federal Home Loan Bank stock |   |                    | 6,789   |   |                      |   | 6,789 |   |   |   | 6,562 |   |   |   | 6,562 |   |
| Investment      securities                            |   |                    | 40,411  |   |                      |   | 41,214 |   |   |   | 37,975 |   |   |   | 38,357 |   |
| Net      loans                                        |   |                    | 593,172 |   |                      |   | 571,199 |   |   |   | 581,075 |   |   |   | 560,532 |   |
| Liabilities:                                          |   |                    |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Deposits      (other than time deposits)              |   |                    | 216,001 |   |                      |   | 216,001 |   |   |   | 107,272 |   |   |   | 107,272 |   |
| Time      deposits                                    |   |                    | 313,696 |   |                      |   | 316,369 |   |   |   | 368,167 |   |   |   | 372,003 |   |
| Other      borrowings                                 |   |                    | 80,000  |   |                      |   | 82,013 |   |   |   | 110,000 |   |   |   | 111,797 |   |

----

Table of Contents

| 9.  | SUBSEQUENT      EVENTS |
|----------|------------------------|

----

Table of Contents

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

|   | · | The      provision for loan losses increased to $2.6 million for third quarter 2009      compared to $652,000 for the same quarter in 2008.  Charge-offs      of $2.7 million, primarily in the commercial, SBA and manufactured housing      portfolios, continued to impact the loan  portfolio. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      decline in interest income from $11.3 million for the third quarter 2008      to $10.4 million for the same period 2009 continued to reflect the target      fed funds rate which has been maintained at a range of 0% to .25% since      the reduction from 4.25% at December 31, 2007 to a range of 0% to .25% as      of December 31, 2008. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Interest      expense declined $2.1 million to $3.5 million for the third quarter 2009      compared to $5.6 million for the same period of 2008.  This      improvement resulted from a decline in rates paid on deposits and      borrowings to 2.38% for the third quarter 2009 compared to 3.96% for the      third quarter 2008. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      decline in rates paid on deposits and borrowing contributed to a continued      improvement in the margin which increased to 4.12% for the third quarter      2009 compared to 3.60% for the same period of  2008. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      strategic decision in the first quarter 2009 to discontinue SBA lending      east of the Rocky Mountains contributed to a decline in salaries and      employee benefits to $2.8 million for the third quarter 2009 from $3.3      million for the same period 2008, a reduction of  $500,000. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | An      increase of $301,000 in the FDIC assessment for third quarter 2009      compared to the same period 2008 resulting from higher assessment      rates. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|                                                               |   | Three      Months EndedSeptember      30,             |   |   | Increase      (Decrease) |   |
|--------------------------------------------------------------------|--------|-------------------------------------------------------|--------|--------|--------------------------|--------|
|                                                               |   | 2009                                                  |   |   | 2008                     |   |   |   |
|                                                               |   | (dollars      in thousands, except per share amounts) |   |
| Interest      income                                               |   | $                                                     | 10,378 |   |                     | $      | 11,336 |   |   | $ | (958 | ) |
| Interest      expense                                              |   |                                                  | 3,467  |   |                     |   | 5,562 |   |   |   | (2,095 | ) |
| Net      interest income                                           |   |                                                  | 6,911  |   |                     |   | 5,774 |   |   |   | 1,137 |   |
| Provision      for loan losses                                     |   |                                                  | 2,592  |   |                     |   | 652 |   |   |   | 1,940 |   |
| Net      interest income after provision for loan losses |   |                                                  | 4,319  |   |                     |   | 5,122 |   |   |   | (803 | ) |
| Non-interest      income                                           |   |                                                  | 966    |   |                     |   | 1,198 |   |   |   | (232 | ) |
| Non-interest      expenses                                         |   |                                                  | 5,165  |   |                     |   | 5,154 |   |   |   | 11 |   |
| Income before      provision for income taxes                 |   |                                                  | 120    |   |                     |   | 1,166 |   |   |   | (1,046 | ) |
| Provision  for      income taxes                         |   |                                                  | 51     |   |                     |   | 491 |   |   |   | (440 | ) |
| Net      income                                                    |   | $                                                     | 69     |   |                     | $      | 675 |   |   | $ | (      606 | ) |
| Preferred      stock dividends                                     |   |                                                  | 261    |   |                     |   | - |   |   |   | 261 |   |
| Net      income (loss) available to common shareholders       |   | $                                                     | (192   | )      |                     | $      | 675 |   |   | $ | (867 | ) |
| Earnings      (loss) per common share:                        |   |                                                  |   |   |                     |   |   |   |   |   |   |   |
| Basic                                                              |   | $                                                     | (.03   | )      |                     | $      | .      11 |   |   | $ | (.14 | ) |
| Diluted                                                            |   | $                                                     | (.03   | )      |                     | $      | .11 |   |   | $ | (.14 | ) |
| Dividends      per common share                                    |   | $                                                     | -      |   |                     | $      | . |   |   | $ | - |   |
| Comprehensive      income                                          |   | $                                                     | 63     |   |                     | $      | 692 |   |   | $ | (629 | ) |

|                                    |   | Three      Months EndedSeptember      30, |   |
|-----------------------------------------|--------|-------------------------------------------|--------|
|                                    |   | 2009      versus 2008                     |   |
|                                    |   | Totalchange                               |   |   | Change due to |   |
|                                    |   |                                      |   | Rate |   |   | Volume |   |
|                                    |   | (in      thousands)                       |   |
| Loans,      net                         |   | $                                         | (784   | ) |   | $ | (1,137 | ) |   | $ | 353 |   |
| Investment      securities              |   |                                      | (116   | ) |   |   | (127 | ) |   |   | 11 |   |
| Other                                   |   |                                      | (58    | ) |   |   | (57 | ) |   |   | (1 | ) |
| Total      interest-earning assets      |   |                                      | (958   | ) |   |   | (1,321 | ) |   |   | 363 |   |
|                                    |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Deposits                                |   |                                      | (1,769 | ) |   |   | (1,641 | ) |   |   | (128 | ) |
| Other      borrowings                   |   |                                      | (326   | ) |   |   | (377 | ) |   |   | 51 |   |
| Total      interest-bearing liabilities |   |                                      | (2,095 | ) |   |   | (2,018 | ) |   |   | (77 | ) |
| Net      interest income                |   | $                                         | 1,137  |   |   | $ | 697 |   |   | $ | 440 |   |

----

Table of Contents

|                      |   |                    |   |   | Three      Months EndedSeptember      30, 2009 |   |
|---------------------------|--------|-------------------------|--------|--------|------------------------------------------------|--------|
|                      |   |                    |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   | (in      thousands)     |   |
|                      |   | Allowance      06/30/09 |   |   | Provision                                      |   |   | Charge-offs |   |   | Recoveries |   |   | Net      Charge-offs |   |   | Allowance      09/30/09 |   |
| Real      estate          |   | $                       | 3,143  |   |                                           | $      | (91 | ) |   | $ | (88 | ) |   | $ | 1 |   |   | $ | (87 | ) |   | $ | 2,965 |   |
| Manufactured      housing |   |                    | 2,306  |   |                                           |   | 561 |   |   |   | (649 | ) |   |   | - |   |   |   | (649 | ) |   |   | 2,218 |   |
| Commercial                |   |                    | 3,873  |   |                                           |   | 1,147 |   |   |   | (1,144 | ) |   |   | 3 |   |   |   | (1,141 | ) |   |   | 3,879 |   |
| SBA                       |   |                    | 3,907  |   |                                           |   | 960 |   |   |   | (861 | ) |   |   | - |   |   |   | (861 | ) |   |   | 4,006 |   |
| Other      installment    |   |                    | 190    |   |                                           |   | 15 |   |   |   | - |   |   |   | 1 |   |   |   | 1 |   |   |   | 206 |   |
| Total                     |   | $                       | 13,419 |   |                                           | $      | 2,592 |   |   | $ | (2,742 | ) |   | $ | 5 |   |   | $ | (2,737 | ) |   | $ | 13,274 |   |

----

Table of Contents

|                                                                |   | Nine      Months EndedSeptember      30,              |   |   | Increase      (Decrease) |   |
|---------------------------------------------------------------------|--------|-------------------------------------------------------|--------|--------|--------------------------|--------|
|                                                                |   | 2009                                                  |   |   | 2008                     |   |   |   |
|                                                                |   | (dollars      in thousands, except per share amounts) |   |
| Interest      income                                                |   | $                                                     | 30,795 |   |                     | $      | 34,727 |   |   | $ | (3,932 | ) |
| Interest      expense                                               |   |                                                  | 11,887 |   |                     |   | 16,989 |   |   |   | (5,102 | ) |
| Net      interest income                                            |   |                                                  | 18,908 |   |                     |   | 17,738 |   |   |   | 1,170 |   |
| Provision      for loan losses                                      |   |                                                  | 15,890 |   |                     |   | 3,856 |   |   |   | 12,034 |   |
| Net      interest income  after provision for loan Losses |   |                                                  | 3,018  |   |                     |   | 13,882 |   |   |   | (10,864 | ) |
| Non-interest      income                                            |   |                                                  | 3,389  |   |                     |   | 4,252 |   |   |   | (863 | ) |
| Non-interest      expenses                                          |   |                                                  | 16,355 |   |                     |   | 15,647 |   |   |   | 708 |   |
| Income      (loss)  before provision for income taxes     |   |                                                  | (9,948 | )      |                     |   | 2,487 |   |   |   | (12,435 | ) |
| Provision      (benefit)  for income taxes                |   |                                                  | (4,088 | )      |                     |   | 1,067 |   |   |   | (5,155 | ) |
| Net      income (loss)                                              |   | $                                                     | (5,860 | )      |                     | $      | 1,420 |   |   | $ | (7,280 | ) |
| Preferred      stock dividends                                      |   |                                                  | 784    |   |                     |   | - |   |   |   | 784 |   |
| Net      income (loss) available to common Shareholders             |   | $                                                     | (6,644 | )      |                     | $      | 1,420 |   |   | $ | (8,064 | ) |
| Earnings      (loss)  per common share:                   |   |                                                  |   |   |                     |   |   |   |   |   |   |   |
| Basic                                                               |   | $                                                     | (1.12  | )      |                     | $      | .24 |   |   | $ | (1.36 | ) |
| Diluted                                                             |   | $                                                     | (1.12  | )      |                     | $      | .24 |   |   | $ | (1.36 | ) |
| Dividends      per common share                                     |   | $                                                     | -      |   |                     | $      | .12 |   |   | $ | (.12 | ) |
| Comprehensive      income (loss)                                    |   | $                                                     | (5,705 | )      |                     | $      | 1,458 |   |   | $ | (7,163 | ) |

|                                    |   | Nine      Months EndedSeptember      30, |   |
|-----------------------------------------|--------|------------------------------------------|--------|
|                                    |   | 2009      versus 2008                    |   |
|                                    |   | Totalchange                              |   |   | Change due to |   |
|                                    |   |                                     |   | Rate |   |   | Volume |   |
|                                    |   | (in      thousands)                      |   |
| Loans,      net                         |   | $                                        | (3,366 | ) |   | $ | (4,930 | ) |   | $ | 1,564 |   |
| Investment      securities              |   |                                     | (385   | ) |   |   | (377 | ) |   |   | (8 | ) |
| Other                                   |   |                                     | (181   | ) |   |   | (183 | ) |   |   | 2 |   |
| Total      interest-earning assets      |   |                                     | (3,932 | ) |   |   | (5,490 | ) |   |   | 1,558 |   |
|                                    |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Deposits                                |   |                                     | (4,295 | ) |   |   | (4,389 | ) |   |   | 94 |   |
| Other      borrowings                   |   |                                     | (807   | ) |   |   | (997 | ) |   |   | 190 |   |
| Total      interest-bearing liabilities |   |                                     | (5,102 | ) |   |   | (5,386 | ) |   |   | 284 |   |
| Net      interest income                |   | $                                        | 1,170  |   |   | $ | (104 | ) |   | $ | 1,274 |   |

----

Table of Contents

|                      |   |                    |   |   | Nine      Months Ended September      30, 2009 |   |
|---------------------------|--------|-------------------------|--------|--------|------------------------------------------------|--------|
|                      |   |                    |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   | (in      thousands)     |   |
|                      |   | Allowance      12/31/08 |   |   | Provision                                      |   |   | Charge-offs |   |   | Recoveries |   |   | Net      Charge-offs |   |   | Allowance      09/30/09 |   |
| Real      estate          |   | $                       | 1,583  |   |                                           | $      | 3,469 |   |   | $ | (2,093 | ) |   | $ | 6 |   |   | $ | (2,087 | ) |   | $ | 2,965 |   |
| Manufactured      housing |   |                    | 1,659  |   |                                           |   | 1,598 |   |   |   | (1,039 | ) |   |   | - |   |   |   | (1,039 | ) |   |   | 2,218 |   |
| Commercial                |   |                    | 1,428  |   |                                           |   | 5,902 |   |   |   | (3,473 | ) |   |   | 22 |   |   |   | (3,451 | ) |   |   | 3,879 |   |
| SBA                       |   |                    | 2,556  |   |                                           |   | 4,715 |   |   |   | (3,319 | ) |   |   | 54 |   |   |   | (3,265 | ) |   |   | 4,006 |   |
| Other      installment    |   |                    | 115    |   |                                           |   | 206 |   |   |   | (117 | ) |   |   | 2 |   |   |   | (115 | ) |   |   | 206 |   |
| Total                     |   | $                       | 7,341  |   |                                           | $      | 15,890 |   |   | $ | (10,041 | ) |   | $ | 84 |   |   | $ | (9,957 | ) |   | $ | 13,274 |   |

----

Table of Contents

|                                                            |   | Three      Months EndedSeptember      30, |        |   | Nine      Months EndedSeptember      30, |   |
|-----------------------------------------------------------------|--------|------------------------------------------------|-------------|--------|------------------------------------------|--------|
|                                                            |   | 2009                                           |        |   | 2008                                     |   |   | 2009 |   |   | 2008 |   |
| Interest-earning      assets:                                   |   | (dollars      in thousands)                    |        |
| Interest-earning      deposits in other financial institutions: |   |                                           |        |   |                                     |   |   |   |   |   |   |   |
| Average      balance                                            |   | $                                              |  1,078 |   |                                     | $      | 1,016 |   |   | $ | 1,095 |   |   | $ | 1,008 |   |
| Interest      income                                            |   |                                           | 9           |   |                                     |   | 10 |   |   |   | 24 |   |   |   | 29 |   |
| Average      yield                                              |   |                                           | 3.42        | %      |                                     |   | 3.81 | % |   |   | 2.88 | % |   |   | 3.78 | % |
| Federal      funds sold:                                        |   |                                           |        |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Average      balance                                            |   | $                                              | 11,410      |   |                                     | $      | 13,315 |   |   | $ | 11,183 |   |   | $ | 11,189 |   |
| Interest      income                                            |   |                                           | 10          |   |                                     |   | 67 |   |   |   | 28 |   |   |   | 204 |   |
| Average      yield                                              |   |                                           | 0.33        | %      |                                     |   | 2.04 | % |   |   | 0.34 | % |   |   | 2.45 | % |
| Investment      securities:                                     |   |                                           |        |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Average      balance                                            |   | $                                              | 46,380      |   |                                     | $      | 45,336 |   |   | $ | 45,027 |   |   | $ | 45,310 |   |
| Interest      income                                            |   |                                           | 452         |   |                                     |   | 568 |   |   |   | 1,338 |   |   |   | 1,723 |   |
| Average      yield                                              |   |                                           | 3.86        | %      |                                     |   | 4.98 | % |   |   | 3.97 | % |   |   | 5.08 | % |
| Gross      loans:                                               |   |                                           |        |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Average      balance                                            |   | $                                              | 606,066     |   |                                     | $      | 577,682 |   |   | $ | 603,802 |   |   | $ | 565,942 |   |
| Interest      income                                            |   |                                           | 9,907       |   |                                     |   | 10,691 |   |   |   | 29,405 |   |   |   | 32,771 |   |
| Average      yield                                              |   |                                           | 6.49        | %      |                                     |   | 7.36 | % |   |   | 6.51 | % |   |   | 7.73 | % |
| Total      interest-earning assets:                             |   |                                           |        |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Average      balance                                            |   | $                                              | 664,934     |   |                                     | $      | 637,349 |   |   | $ | 661,107 |   |   | $ | 623,449 |   |
| Interest      income                                            |   |                                           | 10,378      |   |                                     |   | 11,336 |   |   |   | 30,795 |   |   |   | 34,727 |   |
| Average      yield                                              |   |                                           | 6.19        | %      |                                     |   | 7.08 | % |   |   | 6.23 | % |   |   | 7.44 | % |

|                                     |   | Three      Months EndedSeptember      30, |    |   | Nine      Months EndedSeptember      30, |   |
|------------------------------------------|--------|-------------------------------------------|---------|--------|------------------------------------------|--------|
|                                     |   | 2009                                      |    |   | 2008                                     |   |   | 2009 |   |   | 2008 |   |
| Interest-bearing      liabilities:       |   | (dollars      in thousands)               |    |
| Interest-bearing      demand deposits:   |   |                                      |    |
| Average      balance                     |   | $                                         | 135,254 |   |                                     | $      | 51,391 |   |   | $ | 99,876 |   |   | $ | 60,735 |   |
| Interest      expense                    |   |                                      | 638     |   |                                     |   | 245 |   |   |   | 1,361 |   |   |   | 922 |   |
| Average      cost of funds               |   |                                      | 1.87    | %      |                                     |   | 1.89 | % |   |   | 1.82 | % |   |   | 2.03 | % |
| Savings      deposits:                   |   |                                      |    |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Average      balance                     |   | $                                         | 16,557  |   |                                     | $      | 15,821 |   |   | $ | 17,108 |   |   | $ | 14,843 |   |
| Interest      expense                    |   |                                      | 110     |   |                                     |   | 128 |   |   |   | 344 |   |   |   | 386 |   |
| Average      cost of funds               |   |                                      | 2.64    | %      |                                     |   | 3.21 | % |   |   | 2.69 | % |   |   | 3.47 | % |
| Time      certificates of deposit:       |   |                                      |    |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Average      balance                     |   | $                                         | 314,663 |   |                                     | $      | 387,457 |   |   | $ | 339,125 |   |   | $ | 362,121 |   |
| Interest      expense                    |   |                                      | 1,824   |   |                                     |   | 3,968 |   |   |   | 7,165 |   |   |   | 11,857 |   |
| Average      cost of funds               |   |                                      | 2.30    | %      |                                     |   | 4.07 | % |   |   | 2.82 | % |   |   | 4.37 | % |
| Other      borrowings:                   |   |                                      |    |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Average      balance                     |   | $                                         | 112,005 |   |                                     | $      | 104,550 |   |   | $ | 117,077 |   |   | $ | 109,695 |   |
| Interest      expense                    |   |                                      | 895     |   |                                     |   | 1,221 |   |   |   | 3,017 |   |   |   | 3,824 |   |
| Average      cost of funds               |   |                                      | 3.17    | %      |                                     |   | 4.65 | % |   |   | 3.45 | % |   |   | 4.66 | % |
| Total      interest-bearing liabilities: |   |                                      |    |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Average      balance                     |   | $                                         | 578,479 |   |                                     | $      | 559,219 |   |   | $ | 573,186 |   |   | $ | 547,394 |   |
| Interest      expense                    |   |                                      | 3,467   |   |                                     |   | 5,562 |   |   |   | 11,887 |   |   |   | 16,989 |   |
| Average      cost of funds               |   |                                      | 2.38    | %      |                                     |   | 3.96 | % |   |   | 2.77 | % |   |   | 4.15 | % |
|                                     |   |                                      |    |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income                 |   | $                                         | 6,911   |   |                                     | $      | 5,774 |   |   | $ | 18,908 |   |   | $ | 17,738 |   |
| Net      interest spread                 |   |                                      | 3.81    | %      |                                     |   | 3.12 | % |   |   | 3.46 | % |   |   | 3.29 | % |
| Net      interest margin                 |   |                                      | 4.12    | %      |                                     |   | 3.60 | % |   |   | 3.82 | % |   |   | 3.80 | % |

----

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) |   | September      30, 2009 |    |   | December      31, 2008 |   |    | Increase      (Decrease) |   |   | Percent      of Increase (Decrease) |   |
|-----------------------------------------------------------------------------|--------|------------------------------|---------|--------|------------------------|--------|---------|--------------------------|--------|--------|-------------------------------------|--------|
|                                                                        |   |                         |    |   |                   |   |    |                     |   |   |                                |   |
| Cash      and cash equivalents                                              |   | $                            | 8,679   |   |                   | $      | 12,253  |                     |   | $      | (3,574                              | )      |   |   | (29.2 | )% |
| Investment      securities available-for-sale                               |   |                         | 18,483  |   |                   |   | 6,783   |                     |   |   | 11,700                              |   |   |   | 172.5 | % |
| Investment      securities held-to-maturity                                 |   |                         | 21,928  |   |                   |   | 31,192  |                     |   |   | (9,264                              | )      |   |   | (29.7 | )% |
| Loans-Held      for sale                                                    |   |                         | 99,611  |   |                   |   | 131,786 |                     |   |   | (32,175                             | )      |   |   | (24.4 | )% |
| Loans-Held      for investment, net                                         |   |                         | 493,561 |   |                   |   | 449,289 |                     |   |   | 44,272                              |   |   |   | 9.9 | % |
| Total      Assets                                                           |   |                         | 674,352 |   |                   |   | 656,981 |                     |   |   | 17,371                              |   |   |   | 2.6 | % |
|                                                                        |   |                         |    |   |                   |   |    |                     |   |   |                                |   |   |   |   |   |
| Total      Deposits                                                         |   |                         | 529,697 |   |                   |   | 475,439 |                     |   |   | 54,258                              |   |   |   | 11.4 | % |
| Other      borrowings                                                       |   |                         | 80,000  |   |                   |   | 110,000 |                     |   |   | (30,000                             | )      |   |   | (27.3 | )% |
|                                                                        |   |                         |    |   |                   |   |    |                     |   |   |                                |   |   |   |   |   |
| Total      Stockholders' Equity                                             |   |                         | 60,324  |   |                   |   | 66,618  |                     |   |   | (6,294                              | )      |   |   | (9.4 | )% |

|                                       |   | September      30, 2009 |    |   | December      31, 2008 |   |    | Increase      (Decrease) |   |   | Percent      of Increase (Decrease) |   |
|--------------------------------------------|--------|------------------------------|---------|--------|------------------------|--------|---------|--------------------------|--------|--------|-------------------------------------|--------|
|                                       |   | (dollars      in thousands)  |    |   |                   |   |
| Non-interest-bearing      deposits         |   | $                            | 38,569  |   |                   | $      | 35,080  |                     |   | $      | 3,489                               |   |   |   | 9.9 | % |
| Interest-bearing      deposits             |   |                         | 160,925 |   |                   |   | 57,474  |                     |   |   | 103,451                             |   |   |   | 180.0 | % |
| Savings                                    |   |                         | 16,507  |   |                   |   | 14,718  |                     |   |   | 1,789                               |   |   |   | 12.2 | % |
| Time      certificates of $100,000 or more |   |                         | 175,629 |   |                   |   | 138,330 |                     |   |   | 37,299                              |   |   |   | 27.0 | % |
| Other      time certificates               |   |                         | 138,067 |   |                   |   | 229,837 |                     |   |   | (91,770                             | )      |   |   | (39.9 | )% |
| Total      deposits                        |   | $                            | 529,697 |   |                   | $      | 475,439 |                     |   | $      | 54,258                              |   |   |   | 11.4 | % |

----

Table of Contents

|                                                           |   | September      30,  |   |   | December      31, |   |
|----------------------------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|
|                                                           |   | 2009                |   |   | 2008              |   |
|                                                           |   | (in      thousands) |   |
| Impaired      loans                                            |   | $                   | 9,724  |   |              | $      | 8,566 |   |
| Specific      valuation allowances allocated to impaired loans |   |                | (744   | )      |              |   | (151 | ) |
| Impaired      loans, net                                       |   | $                   | 8,980  |   |              | $      | 8,415 |   |

|                                                              |   | September      30,          |    |   | December      31, |   |
|-------------------------------------------------------------------|--------|-----------------------------|---------|--------|-------------------|--------|
|                                                              |   | 2009                        |    |   | 2008              |   |
|                                                              |   | (dollars      in thousands) |    |
| Nonaccrual      loans                                             |   | $                           | 39,133  |   |              | $      | 28,821 |   |
| SBA      guaranteed portion of loans included above               |   |                        | (21,363 | )      |              |   | (11,918 | ) |
| Nonaccrual      loans, net                                        |   | $                           | 17,770  |   |              | $      | 16,903 |   |
|                                                              |   |                        |    |   |              |   |   |   |
| Troubled      debt restructured loans, gross                      |   | $                           | 6,006   |   |              | $      | 5,408 |   |
| Loans      30 through 89 days past due with interest accruing     |   | $                           | 12,679  |   |              | $      | 11,974 |   |
| Allowance      for loan losses to gross loans held-for-investment |   |                        | 2.62    | %      |              |   | 1.61 | % |

|                                              |   | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|---------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|
|                                              |   | 2009                                      |   |                                     | 2008   |   |   | 2009 |   |   | 2008 |   |
|                                              |   | (in      thousands)                       |   |
| Average      investment in impaired loans         |   | $                                         | 9,518  |                                     |   | $ | 9,379 |   |   | $ | 8,107 |   |   | $ | 9,935 |   |
| Interest      income recognized on impaired loans |   |                                      | 5      |                                     |   |   | - |   |   |   | 173 |   |   |   | 83 |   |

| 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 rateincreases. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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      securitized and manufactured housing loans and its mortgage-backed      investment securities. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

----

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)                |   |
| September      30, 2009                    |   |               |   |   |                |   |   |                      |   |   |                         |   |   |                                |    |   |                                 |   |   |
| CWBC      (Consolidated)                   |   | $                  | 66,928 |   |                | $      | 60,114 |                      |   | $      | 538,111                      |   |   | $                                   | 676,520 |   |                                 |   | 12.44  | %                          |   |   | 11.17 | % |   |   | 8.89 | % |
| Capital      in excess of well capitalized |   |               |   |   |                |   |   |                      |   |   |                         |   |   |                                |    |   |                                 | $      | 13,117 |                       |   | $ | 27,827 |   |   | $ | 26,288 |   |
| CWB                                        |   |               | 65,921 |   |                |   | 59,107 |                      |   |   | 538,136                      |   |   |                                | 676,540 |   |                                 |   | 12.25  | %                          |   |   | 10.98 | % |   |   | 8.74 | % |
| Capital      in excess of well capitalized |   |               |   |   |                |   |   |                      |   |   |                         |   |   |                                |    |   |                                 | $      | 12,107 |                       |   | $ | 26,819 |   |   | $ | 25,280 |   |
|                                       |   |               |   |   |                |   |   |                      |   |   |                         |   |   |                                |    |   |                                 |   |   |                       |   |   |   |   |   |   |   |   |
| December      31, 2008                     |   |               |   |   |                |   |   |                      |   |   |                         |   |   |                                |    |   |                                 |   |   |                       |   |   |   |   |   |   |   |   |
| CWBC      (Consolidated)                   |   | $                  | 73,245 |   |                | $      | 66,553 |                      |   | $      | 534,628                      |   |   | $                                   | 647,413 |   |                                 |   | 13.70  | %                          |   |   | 12.45 | % |   |   | 10.28 | % |
| Capital      in excess of well capitalized |   |               |   |   |                |   |   |                      |   |   |                         |   |   |                                |    |   |                                 | $      | 19,782 |                       |   | $ | 34,475 |   |   | $ | 34,182 |   |
| CWB                                        |   |               | 60,597 |   |                |   | 53,904 |                      |   |   | 534,655                      |   |   |                                | 647,432 |   |                                 |   | 11.33  | %                          |   |   | 10.08 | % |   |   | 8.33 | % |
| Capital      in excess of well capitalized |   |               |   |   |                |   |   |                      |   |   |                         |   |   |                                |    |   |                                 | $      | 7,132  |                       |   | $ | 21,825 |   |   | $ | 21,532 |   |
|                                       |   |               |   |   |                |   |   |                      |   |   |                         |   |   |                                |    |   |                                 |   |   |                       |   |   |   |   |   |   |   |   |
| 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 4T.  | CONTROLS      AND PROCEDURES |
|----------------|------------------------------|

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

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

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

----

Table of Contents

| ITEM      4. | SUBMISSION OF MATTERS      TO A VOTE OF SECURITYHOLDERS |
|--------------|---------------------------------------------------------|

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

| 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. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | * | This      certification is furnished to, but shall not be deemed filed with, the      Commission.  This certification shall not be deemed to be      incorporated by reference into any filing under the Securities Act of 1933      or the Securities Exchange Act of 1934, except to the extent that the      Company specifically incorporates it by  reference. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

SIGNATURES

|                         |   | COMMUNITY      WEST BANCSHARES                  |
|------------------------------|--------|-------------------------------------------------|
|                         |   | (Registrant)                                    |
|                         |   |                                            |
|                         |   |                                            |
| Date:      November 13, 2009 |   | /s/Charles G.Baltuskonis                        |
|                         |   | Charles      G. Baltuskonis                     |
|                         |   | Executive      Vice President and               |
|                         |   | Chief      Financial Officer                    |
|                         |   |                                            |
|                         |   | On      Behalf of Registrant and as             |
|                         |   | Principal      Financial and Accounting Officer |

----

Table of Contents

| ExhibitNumber |   | Description      of Document                                                                                                                                                                                                                              |
|---------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                                                                                                                                                                      |
| 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. |

----