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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2006

OR



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

For the transition period from  to

Commission
File No.: 333-126401

FCB BANCORP

(Exact Name of Registrant as Specified in its Charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|California                                                     |  | 20-3074387                          
|(State or other jurisdiction of Incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|1100 Paseo Camarillo Camarillo, California                     |  | 93010                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(805) 484-0534

(Registrants telephone number, including area code)

Not Applicable

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer þ

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

Common Stock  As
of August 8, 2006 there were 3,277,807 shares of the issuers common stock outstanding.



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##### Table of Contents

TABLE OF CONTENTS



|                                                                                                           |  |   
|---------------------------------------------------------------------------------------------------------- |  | --
|PART I. FINANCIAL INFORMATION                                                                              |  |   
|                                                                                                           | 
|Item 1. Financial Statements                                                                               |  |   
|                                                                                                           | 
|Consolidated Balance Sheets at June 30, 2006 and December 31, 2005                                         |  | 3 
|                                                                                                           | 
|Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2006 and 2005            |  | 4 
|                                                                                                           | 
|Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2006 and 2005  |  | 5 
|                                                                                                           | 
|Consolidated Statements of Changes in Shareholders Equity for the Six Months Ended June 30, 2006 and 2005 |  | 5 
|                                                                                                           | 
|Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006 and 2005                      |  | 6 
|                                                                                                           | 
|Notes to Consolidated Financial Statements                                                                 |  | 7 
|                                                                                                           | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations              |  | 12
|                                                                                                           | 
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                                         |  | 33
|                                                                                                           | 
|Item 4. Controls and Procedures                                                                            |  | 34
|                                                                                                           | 
|PART II. OTHER INFORMATION                                                                                 |  |   
|                                                                                                           | 
|Item 1. Legal Proceedings                                                                                  |  | 34
|                                                                                                           | 
|Item 1A. Risk Factors                                                                                      |  | 34
|                                                                                                           | 
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                        |  | 34
|                                                                                                           | 
|Item 3. Defaults Upon Senior Securities                                                                    |  | 34
|                                                                                                           | 
|Item 4. Submission of Matters to a Vote of Security Holders                                                |  | 34
|                                                                                                           | 
|Item 5. Other Information                                                                                  |  | 34
|                                                                                                           | 
|Item 6. Exhibits                                                                                           |  | 34
|                                                                                                           | 
|SIGNATURES                                                                                                 |  | 35



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##### Table of Contents

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL INFORMATION

FCB BANCORP and subsidiaries

Consolidated balance sheets



|                                                                                                                                   |  |              |         |   |                  |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ---------------- | - | ------- | -
|(in thousands, except share data)                                                                                                  |  | June 30,2006 |         |   | December 31,2005 |  
|Cash and due from banks                                                                                                            |  | $            | 15,312  |   |                  | $ | 14,435  |  
|Federal funds sold                                                                                                                 |  |              | 8,900   |   |                  |   | 306     |  
|Securities available-for-sale                                                                                                      |  |              | 65,786  |   |                  |   | 73,419  |  
|Loans, net                                                                                                                         |  |              | 359,578 |   |                  |   | 338,778 |  
|Loans held for sale                                                                                                                |  |              | 11,553  |   |                  |   |        |  
|Premises and equipment, net                                                                                                        |  |              | 10,332  |   |                  |   | 10,315  |  
|Goodwill and other intangibles                                                                                                     |  |              | 16,835  |   |                  |   | 16,951  |  
|Federal Home Loan Bank stock                                                                                                       |  |              | 2,542   |   |                  |   | 2,395   |  
|Cash surrender value of life insurance                                                                                             |  |              | 10,321  |   |                  |   | 5,171   |  
|Accrued interest receivable and other assets                                                                                       |  |              | 4,633   |   |                  |   | 5,341   |  
|                                                                                                                                   |  |              |         |   |                  |   |         |  
|Total assets                                                                                                                       |  | $            | 505,792 |   |                  | $ | 467,111 |  
|                                                                                                                                   |  |              |         |   |                  |   |         |  
|Checking                                                                                                                           |  | $            | 114,793 |   |                  | $ | 112,596 |  
|Interest checking                                                                                                                  |  |              | 18,316  |   |                  |   | 23,691  |  
|Regular savings                                                                                                                    |  |              | 19,490  |   |                  |   | 22,129  |  
|Money market savings                                                                                                               |  |              | 64,713  |   |                  |   | 57,144  |  
|Certificates of deposit, under $100,000                                                                                            |  |              | 81,030  |   |                  |   | 82,770  |  
|Certificates of deposit, $100,000 and over                                                                                         |  |              | 96,993  |   |                  |   | 74,018  |  
|                                                                                                                                   |  |              |         |   |                  |   |         |  
|Total deposits                                                                                                                     |  |              | 395,335 |   |                  |   | 372,348 |  
|Federal Home Loan Bank advances                                                                                                    |  |              | 51,300  |   |                  |   | 36,319  |  
|Junior subordinated debentures                                                                                                     |  |              | 10,310  |   |                  |   | 10,310  |  
|Accrued interest payable and other liabilities                                                                                     |  |              | 1,401   |   |                  |   | 2,355   |  
|                                                                                                                                   |  |              |         |   |                  |   |         |  
|Total liabilities                                                                                                                  |  |              | 458,346 |   |                  |   | 421,332 |  
|                                                                                                                                   |  |              |         |   |                  |   |         |  
|Common stock, no par value, 10,000,000 authorized; shares issued and outstanding: 3,277,807 at June 30, 2006 and December 31,
2005 |  |              | 32,707  |   |                  |   | 32,666  |  
|Retained earnings                                                                                                                  |  |              | 16,146  |   |                  |   | 14,063  |  
|Accumulated other comprehensive loss                                                                                               |  |              | (1,407  | ) |                  |   | (950    | )
|                                                                                                                                   |  |              |         |   |                  |   |         |  
|Total shareholders equity                                                                                                         |  |              | 47,446  |   |                  |   | 45,779  |  
|                                                                                                                                   |  |              |         |   |                  |   |         |  
|Total liabilities and shareholders equity                                                                                         |  | $            | 505,792 |   |                  | $ | 467,111 |  
|                                                                                                                                   |  |              |         |   |                  |   |         |  

See accompanying notes.



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FCB BANCORP and subsidiaries

Consolidated statements of operations



|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|--------------------------------------------------- |  | -------------------------- | ----- | ------------------------ | - | ----- |  | - | ------ | - |  | - | -----
|(in thousands, except per share data)               |  | Three Months EndedJune 30, |       | Six Months EndedJune 30,
|                                                    |  | 2006                       |       | 2005                     |   | 2006  |  |   | 2005  
|Interest and fees on loans                          |  | $                          | 7,282 |                          | $ | 3,323 |  | $ | 14,151 |   |  | $ | 6,325
|Taxable interest on securities                      |  |                            | 572   |                          |   | 573   |  |   | 1,171  |   |  |   | 1,168
|Nontaxable interest on securities                   |  |                            | 103   |                          |   | 77    |  |   | 190    |   |  |   | 148  
|Interest on federal funds sold                      |  |                            | 74    |                          |   | 40    |  |   | 162    |   |  |   | 68   
|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Total interest income                               |  |                            | 8,031 |                          |   | 4,013 |  |   | 15,674 |   |  |   | 7,709
|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Interest on deposits                                |  |                            | 2,297 |                          |   | 458   |  |   | 4,273  |   |  |   | 857  
|Interest on borrowings                              |  |                            | 486   |                          |   | 196   |  |   | 915    |   |  |   | 391  
|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Total interest expense                              |  |                            | 2,783 |                          |   | 654   |  |   | 5,188  |   |  |   | 1,248
|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Net interest income                                 |  |                            | 5,248 |                          |   | 3,359 |  |   | 10,487 |   |  |   | 6,461
|Provision for loan losses                           |  |                            |      |                          |   | 122   |  |   | 153    |   |  |   | 244  
|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Net interest income after provision for loan losses |  |                            | 5,248 |                          |   | 3,237 |  |   | 10,334 |   |  |   | 6,217
|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Service charges on deposit accounts                 |  |                            | 257   |                          |   | 256   |  |   | 510    |   |  |   | 549  
|Earnings on cash surrender value of life insurance  |  |                            | 112   |                          |   | 56    |  |   | 207    |   |  |   | 111  
|Commissions on brokered loans                       |  |                            | 28    |                          |   |      |  |   | 47     |   |  |   | 55   
|Net gain on sales of loans                          |  |                            |      |                          |   | 31    |  |   | 33     |   |  |   | 78   
|Net servicing fees                                  |  |                            | 13    |                          |   | 11    |  |   | 25     |   |  |   | 21   
|Net gain (loss) on sales of securities              |  |                            |      |                          |   | 2     |  |   | (20    | ) |  |   | 2    
|Other income                                        |  |                            | 140   |                          |   | 71    |  |   | 252    |   |  |   | 127  
|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Total noninterest income                            |  |                            | 550   |                          |   | 427   |  |   | 1,054  |   |  |   | 943  
|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Salaries and employee benefits                      |  |                            | 2,296 |                          |   | 1,490 |  |   | 4,558  |   |  |   | 3,019
|Premises and equipment                              |  |                            | 616   |                          |   | 389   |  |   | 1,259  |   |  |   | 775  
|Data processing                                     |  |                            | 210   |                          |   | 138   |  |   | 370    |   |  |   | 273  
|Legal, audit, and other professional services       |  |                            | 247   |                          |   | 153   |  |   | 400    |   |  |   | 261  
|Printing, stationary, and supplies                  |  |                            | 82    |                          |   | 48    |  |   | 144    |   |  |   | 94   
|Telephone                                           |  |                            | 70    |                          |   | 36    |  |   | 140    |   |  |   | 72   
|Directors fees                                     |  |                            | 33    |                          |   | 33    |  |   | 66     |   |  |   | 66   
|Advertising and marketing                           |  |                            | 203   |                          |   | 123   |  |   | 333    |   |  |   | 210  
|Postage                                             |  |                            | 23    |                          |   | 11    |  |   | 49     |   |  |   | 29   
|Other expenses                                      |  |                            | 344   |                          |   | 229   |  |   | 728    |   |  |   | 416  
|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Total noninterest expense                           |  |                            | 4,124 |                          |   | 2,650 |  |   | 8,047  |   |  |   | 5,215
|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Income before provision for income taxes            |  |                            | 1,674 |                          |   | 1,014 |  |   | 3,341  |   |  |   | 1,945
|Provision for income taxes                          |  |                            | 601   |                          |   | 385   |  |   | 1,257  |   |  |   | 739  
|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Net income                                          |  | $                          | 1,073 |                          | $ | 629   |  | $ | 2,083  |   |  | $ | 1,206
|                                                    |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Earnings per share                                  |  |                            |       |                          |   |       |  |   |        |   |  |   |      
|Basic                                               |  | $                          | 0.33  |                          | $ | 0.29  |  | $ | 0.64   |   |  | $ | 0.56 
|Diluted                                             |  | $                          | 0.33  |                          | $ | 0.29  |  | $ | 0.63   |   |  | $ | 0.55 

See accompanying notes.



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FCB BANCORP and subsidiaries

Consolidated statements of comprehensive income



|                                                                                             |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|-------------------------------------------------------------------------------------------- |  | -------------------------- | ----- | - | ------------------------ | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|(in thousands)                                                                               |  | Three Months EndedJune 30, |       |   | Six Months EndedJune 30, |  
|                                                                                             |  | 2006                       |       |   | 2005                     |   |       | 2006 |  |   | 2005  |  
|Unrealized holding gains (losses) on securities available-for-sale arising during the period |  | $                          | (585  | ) |                          | $ | 762   |      |  | $ | (795  | ) |  | $ | (145  | )
|Reclassification adjustments for (gains) losses included in net income                       |  |                            |      |   |                          |   | (2    | )    |  |   | 20    |   |  |   | (2    | )
|                                                                                             |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|Other comprehensive income (loss), before taxes                                              |  |                            | (585  | ) |                          |   | 760   |      |  |   | (775  | ) |  |   | (147  | )
|Income tax (expense) benefit related to items of other comprehensive income                  |  |                            | 240   |   |                          |   | (312  | )    |  |   | 318   |   |  |   | 60    |  
|                                                                                             |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|Other comprehensive income (loss), net of tax                                                |  |                            | (345  | ) |                          |   | 448   |      |  |   | (457  | ) |  |   | (87   | )
|Net income                                                                                   |  |                            | 1,073 |   |                          |   | 629   |      |  |   | 2,083 |   |  |   | 1,206 |  
|                                                                                             |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|Comprehensive income                                                                         |  | $                          | 728   |   |                          | $ | 1,077 |      |  | $ | 1,626 |   |  | $ | 1,119 |  
|                                                                                             |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  

FCB BANCORP and subsidiaries

Consolidated statements of changes in shareholders equity



|                                                                   |  |                          |        |   |      |   |        |  
|------------------------------------------------------------------ |  | ------------------------ | ------ | - | ---- | - | ------ | -
|(in thousands)                                                     |  | Six Months EndedJune 30, |       
|                                                                   |  | 2006                     |        |   | 2005 |  
|Common stock                                                       |  |                          |        |   |      |   |        |  
|Common stock, beginning of period                                  |  | $                        | 32,666 |   |      | $ | 11,965 |  
|Share-based compensation                                           |  |                          | 41     |   |      |   |       |  
|                                                                   |  |                          |        |   |      |   |        |  
|Common stock, end of period                                        |  | $                        | 32,707 |   |      | $ | 11,965 |  
|                                                                   |  |                          |        |   |      |   |        |  
|Retained earnings                                                  |  |                          |        |   |      |   |        |  
|Net income                                                         |  | $                        | 2,083  |   |      | $ | 1,206  |  
|Retained earnings, beginning of period                             |  |                          | 14,063 |   |      |   | 10,839 |  
|                                                                   |  |                          |        |   |      |   |        |  
|Retained earnings, end of period                                   |  | $                        | 16,146 |   |      | $ | 12,045 |  
|                                                                   |  |                          |        |   |      |   |        |  
|Accumulated other comprehensive income (loss)                      |  |                          |        |   |      |   |        |  
|Accumulated other comprehensive income (loss)                      |  | $                        | (457   | ) |      | $ | (87    | )
|Accumulated other comprehensive income (loss), beginning of period |  |                          | (950   | ) |      |   | (259   | )
|                                                                   |  |                          |        |   |      |   |        |  
|Accumulated other comprehensive income (loss), end of period       |  | $                        | (1,407 | ) |      | $ | (346   | )
|                                                                   |  |                          |        |   |      |   |        |  

See accompanying notes.



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FCB BANCORP and subsidiaries

Consolidated statements of cash flows



|                                                                               |  |                          |         |   |      |   |         |  
|------------------------------------------------------------------------------ |  | ------------------------ | ------- | - | ---- | - | ------- | -
|(in thousands)                                                                 |  | Six Months EndedJune 30, |        
|                                                                               |  | 2006                     |         |   | 2005 |  
|Net income                                                                     |  | $                        | 2,083   |   |      | $ | 1,206   |  
|Adjustments to reconcile net income to net cash from operating activities:     |  |                          |         |   |      |   |         |  
|Realized gains on sale of securities and loans                                 |  |                          | (13     | ) |      |   | (80     | )
|Net amortization of premiums and discounts on securities available-for-sale    |  |                          | 22      |   |      |   | 201     |  
|Federal Home Loan Bank stock dividends                                         |  |                          | (58     | ) |      |   | (21     | )
|Provision for loan losses                                                      |  |                          | 153     |   |      |   | 244     |  
|Share-based compensation                                                       |  |                          | 41      |   |      |   |        |  
|Production of loans held for sale                                              |  |                          | (11,553 | ) |      |   |        |  
|Deferred income taxes                                                          |  |                          | 939     |   |      |   | (4      | )
|Depreciation and amortization                                                  |  |                          | 384     |   |      |   | 240     |  
|Net appreciation in cash surrender value of life insurance                     |  |                          | (207    | ) |      |   | (111    | )
|Change in accrued interest receivable and other assets                         |  |                          | 204     |   |      |   | 508     |  
|Change in accrued interest payable and other liabilities                       |  |                          | (954    | ) |      |   | 81      |  
|                                                                               |  |                          |         |   |      |   |         |  
|Net cash (used for) from operating activities                                  |  |                          | (8,959  | ) |      |   | 2,264   |  
|                                                                               |  |                          |         |   |      |   |         |  
|Net change in federal funds sold                                               |  |                          | (8,594  | ) |      |   | 340     |  
|Proceeds from maturities, calls, and paydowns of securities available-for-sale |  |                          | 7,571   |   |      |   | 7,786   |  
|Proceeds from sales of securities available-for-sale                           |  |                          | 2,998   |   |      |   | (776    | )
|Purchases of securities available-for-sale                                     |  |                          | (3,754  | ) |      |   | (3,947  | )
|Proceeds from sale of Federal Home Loan Bank stock                             |  |                          |        |   |      |   | 127     |  
|Purchases of Federal Home Loan Bank stock                                      |  |                          | (89     | ) |      |   |        |  
|Net increase in loans                                                          |  |                          | (20,920 | ) |      |   | (16,676 | )
|Purchases of premises and equipment                                            |  |                          | (401    | ) |      |   | (525    | )
|Purchases of life insurance                                                    |  |                          | (4,943  | ) |      |   |        |  
|                                                                               |  |                          |         |   |      |   |         |  
|Net cash used for investing activities                                         |  |                          | (28,132 | ) |      |   | (13,671 | )
|                                                                               |  |                          |         |   |      |   |         |  
|Net increase in deposits                                                       |  |                          | 22,987  |   |      |   | 11,278  |  
|Net change in FHLB overnight advances                                          |  |                          | 14,981  |   |      |   |        |  
|Proceeds from FHLB term advances                                               |  |                          | 10,000  |   |      |   | 2,090   |  
|Payments on FHLB term advances                                                 |  |                          | (10,000 | ) |      |   |        |  
|Share-based compensation                                                       |  |                          | (41     | ) |      |   |        |  
|                                                                               |  |                          |         |   |      |   |         |  
|Net cash from financing activities                                             |  |                          | 37,968  |   |      |   | 13,368  |  
|                                                                               |  |                          |         |   |      |   |         |  
|Change in cash and due from banks                                              |  | $                        | 877     |   |      | $ | 1,961   |  
|Cash and due from banks, beginning of period                                   |  |                          | 14,435  |   |      |   | 7,194   |  
|                                                                               |  |                          |         |   |      |   |         |  
|Cash and due from banks, end of period                                         |  | $                        | 15,312  |   |      | $ | 9,155   |  
|                                                                               |  |                          |         |   |      |   |         |  
|Supplemental cash flow information:                                            |  |                          |         |   |      |   |         |  
|Cash paid for interest                                                         |  | $                        | 1,960   |   |      | $ | 1,028   |  
|Cash paid for income taxes                                                     |  | $                        | 1,157   |   |      | $ | 708     |  
|Supplemental disclosure of noncash investing activities                        |  |                          |         |   |      |   |         |  
|Change in fair value of securities available-for-sale, net of taxes            |  | $                        | (457    | ) |      | $ | (87     | )

See accompanying notes.



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NOTE 1  BASIS OF PRESENTATION AND MANAGEMENT REPRESENTATION

Organization and nature of operations
- FCB Bancorp is a bank holding company arising from a transaction in which the shareholders of First California Bank exchanged their common stock for that of FCB Bancorp on a share-for-share basis on September 30, 2005. As a result of that
transaction First California Bank became a wholly-owned subsidiary of FCB Bancorp. FCB Bancorp and First California Bank are related entities; accordingly, the consolidated financial position and results of operations as of and for the year ended
December 31, 2005 and all other prior periods have been restated to reflect the combined entities.

The accompanying unaudited
consolidated financial statements for FCB Bancorp and subsidiaries include the parent company, FCB Bancorp (FCB), and its wholly-owned subsidiaries, First California Bank (the Bank), and SC Financial (all collectively
referred to as the Company). SC Financial is an inactive subsidiary and FCB Statutory Trust I an unconsolidated wholly-owned subsidiary, is special purpose entity formed to issue trust preferred securities and related junior subordinated
debentures. First California Bank is a commercial bank doing business primarily in Ventura, Orange and Los Angeles Counties, California.

Consolidation The consolidated financial statements include, in conformity with generally accepted accounting principles, the accounts of FCB and the Bank and exclude the accounts of FCB Statutory Trust I. All material
intercompany transactions and balances of FCB and the Bank have been eliminated.

Basis of presentation These unaudited
consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related notes for the year ended December 31, 2005. A summary of our significant accounting policies is included in the notes
that accompany the audited consolidated financial statements. These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a basis consistent with
the accounting policies reflected in the audited consolidated financial statements for the year ended December 31, 2005. They do not, however, include all of the information and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair presentation, have been included. Operating results for the interim periods presented are not
necessarily indicative of the results that may be expected for any other interim period or for the year as a whole.

Managements
estimates and assumptions  The preparation of the consolidated financial statements, in conformity with generally accepted accounting principles, requires us to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheets, and revenues and expenses for the reporting period. Actual results could differ significantly from those estimates. Significant estimations made by us primarily involve the calculation of the
allowance for loan losses, the carrying amount of goodwill and deferred tax assets or liabilities.

NOTE 2  STOCK-BASED COMPENSATION

Statement of Financial Accounting Standards (SFAS) No. 123 (Revised 2004) Share-Based Payments addresses the accounting for
transactions in which an entity exchanges its equity instruments for goods and services. We adopted this new standard on January 1, 2006.

SFAS No. 123R eliminated the ability to account for grants under our stock option plans using the intrinsic value-based method. The intrinsic value-based method recognized compensation cost as the difference between the exercise price
of each option and the market price of our stock at the date of each grant. The exercise price of each of our stock options was equal to the market price of our stock at each date of grant. Before 2006, no compensation cost was recognized.

On January 1, 2006, using the modified-prospective method in adoption, we began determining compensation costs using the fair-value
method as provided for under SFAS No. 123R. The modified-prospective method of adoption requires the recognition of compensation cost using the fair-value method for all new grants after 2005 or for any grants modified, repurchased or cancelled
after 2005. For grants prior to 2006, the modified-prospective method of adoption requires the recognition of compensation cost for the portion of grants not yet vested based on the fair-value of the grant as was disclosed in our prior year
consolidated financial statements.



7



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##### Table of Contents

We use the Black-Scholes-Merton formula to determine the fair value of our stock options using the
following estimates and assumptions. The fair value of the option at the grant date also follows.



|                        |  |            |           |   |            |   |           |            |  |   |            |   |  |   |           |  
|----------------------- |  | ---------- | --------- | - | ---------- | - | --------- | ---------- |  | - | ---------- | - |  | - | --------- | -
|                        |  | 2003 Grant |           |   | 2004 Grant |   |           | 2005 Grant |  |   | 2006 Grant |  
|Expected option term    |  |            | 6.0 years |   |            |   | 6.0 years |            |  |   | 6.0 years  |   |  |   | 5.2 years |  
|Expected volatility     |  |            | Nil       |   |            |   | Nil       |            |  |   | Nil        |   |  |   | 5.71      | %
|Expected dividend yield |  |            | 0         | % |            |   | 0         | %          |  |   | 0          | % |  |   | 0         | %
|Risk-free interest rate |  |            | 2.87      | % |            |   | 3.95      | %          |  |   | 4.50       | % |  |   | 4.59      | %
|Stock option fair value |  | $          | 1.77      |   |            | $ | 4.24      |            |  | $ | 4.92       |   |  | $ | 4.49      |  

Our only stock option plan began in 2003 and we consider our options to be plain
vanilla. None of our options have vested. We used the simplified method to determine the expected term of the 2006 stock option grant which is the average of the sum of the contractual period and the average vesting period. We
looked to our 5-year historical volatility for our expected volatility because we believe that our historical period reflects our business strategy of de novo branch expansion and acquisition and we do not anticipate at this time that our strategy
or business model will differ in the future. We used the minimum value method for options granted before 2006. We have not paid dividends for the past several years and our business strategy does not anticipate that we will do so in the
future. The risk-free rate for the contractual term of the options was based on the prevailing U.S. treasury strip rate in effect at the date of grant.

Our shareholder approved stock option plan permits the grant of up to 200,000 shares of common stock to directors, officers and key employers of FCB or the Bank. Option awards are granted with an exercise price equal
to the market price of our stock at the grant date. Option awards vest based on 3 to 5 years of continuous service and have contractual terms from 6 to 8 years.

A summary of our option activity, of which have vested for the six months ended June 30, 2006, follows:



|                              |  |         |   |  |                                |      
|----------------------------- |  | ------- | - |  | ------------------------------ | -----
|Options                       |  | Shares  |   |  | Weighted averageexercise price
|Balance, beginning of year    |  | 119,500 |   |  | $                              | 17.64
|Issued                        |  | 40,600  |   |  | $                              | 21.00
|Exercised                     |  |        |   |  |                                |     
|Cancelled, forfeited, expired |  | (3,400  | ) |  | $                              | 20.81
|                              |  |         |   |  |                                |      
|Balance, end of period        |  | 156,700 |   |  | $                              | 18.51
|                              |  |         |   |  |                                |      

The weighted average grant date fair value of options outstanding was $3.70 at the beginning of
the 2006 year and $3.90 at June 30, 2006. Compensation cost for the three and six months ended June 30, 2006 was $22,000 and $41,000, respectively. Unrecognized compensation cost at June 30, 2006 was $314,000 and the weighted average
period of unamortized cost recognition was 3.40 years.

The stock-based compensation expense determined under the fair value-based method
for the three and six months ended June 30, 2005, disclosed but not recognized, was $3,000 and $7,000, respectively, net of related tax effects. Earnings per share for the three and six months ended June 30, 2005 would not have changed had
we recognized compensation expense under the fair value-based method.



8



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##### Table of Contents

NOTE 3  SECURITIES

The amortized cost and estimated fair values of securities available-for-sale are summarized as follows:



|                                       |  |                   |        |                      |   |                       |  |   |                     |   |  |   |       
|-------------------------------------- |  | ----------------- | ------ | -------------------- | - | --------------------- |  | - | ------------------- | - |  | - | ------
|                                       |  | June 30, 2006    
|(in thousands)                         |  | AmortizedCost     |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | EstimatedFair Value
|                                       |  |                   |        |                     
|U.S. Treasury notes                    |  | $                 | 3,001  |                      | $ |                      |  | $ | (62                 | ) |  | $ | 2,939 
|U.S. agency notes                      |  |                   | 8,548  |                      |   |                      |  |   | (149                | ) |  |   | 8,399 
|U.S. agency mortgage-backed securities |  |                   | 40,715 |                      |   | 1                     |  |   | (1,793              | ) |  |   | 38,923
|Collateralized mortgage obligations    |  |                   | 4,160  |                      |   |                      |  |   | (134                | ) |  |   | 4,026 
|Municipal securities                   |  |                   | 11,753 |                      |   | 14                    |  |   | (268                | ) |  |   | 11,499
|                                       |  |                   |        |                      |   |                       |  |   |                     |   |  |   |       
|Securities available-for-sale          |  | $                 | 68,177 |                      | $ | 15                    |  | $ | (2,406              | ) |  | $ | 65,786
|                                       |  |                   |        |                      |   |                       |  |   |                     |   |  |   |       
|                                       | 
|                                       |  | December 31, 2005
|(in thousands)                         |  | AmortizedCost     |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | EstimatedFair Value
|                                       |  |                   |        |                     
|U.S. Treasury notes                    |  | $                 | 6,976  |                      | $ |                      |  | $ | (33                 | ) |  | $ | 6,943 
|U.S. agency notes                      |  |                   | 10,376 |                      |   |                      |  |   | (156                | ) |  |   | 10,220
|U.S. agency mortgage-backed securities |  |                   | 45,089 |                      |   | 1                     |  |   | (1,274              | ) |  |   | 43,816
|Collateralized mortgage obligations    |  |                   | 3,414  |                      |   | 1                     |  |   | (89                 | ) |  |   | 3,326 
|Municipal securities                   |  |                   | 9,179  |                      |   | 36                    |  |   | (101                | ) |  |   | 9,114 
|                                       |  |                   |        |                      |   |                       |  |   |                     |   |  |   |       
|Securities available-for-sale          |  | $                 | 75,034 |                      | $ | 38                    |  | $ | (1,653              | ) |  | $ | 73,419
|                                       |  |                   |        |                      |   |                       |  |   |                     |   |  |   |       

NOTE 4  LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans consist of the following:



|                            |  |                 |         |   |                     |   |         |  
|--------------------------- |  | --------------- | ------- | - | ------------------- | - | ------- | -
|(in thousands)              |  | At June 30,2006 |         |   | At December 31,2005 |  
|                            |  |                
|Commercial mortgage         |  | $               | 187,773 |   |                     | $ | 192,263 |  
|Multifamily mortgage        |  |                 | 29,999  |   |                     |   | 31,708  |  
|Construction                |  |                 | 33,212  |   |                     |   | 28,157  |  
|Commercial loans and lines  |  |                 | 58,092  |   |                     |   | 64,271  |  
|Home equity loans and lines |  |                 | 9,265   |   |                     |   | 8,689   |  
|Home mortgage               |  |                 | 43,441  |   |                     |   | 13,443  |  
|Installment & credit card   |  |                 | 2,005   |   |                     |   | 4,352   |  
|                            |  |                 |         |   |                     |   |         |  
|Total loans                 |  |                 | 363,787 |   |                     |   | 342,883 |  
|Allowance for loan losses   |  |                 | (4,209  | ) |                     |   | (4,105  | )
|                            |  |                 |         |   |                     |   |         |  
|Loans, net                  |  | $               | 359,578 |   |                     | $ | 338,778 |  
|                            |  |                 |         |   |                     |   |         |  
|Loans held for sale         |  | $               | 11,553  |   |                     | $ |        |  

At June 30, 2006, loans held for sale were $11.6 million and consist of commercial and multifamily mortgages
originated for sale into the secondary market. Loans held for sale are carried at the lower of aggregate cost or market value. Loan sale gains or losses are recorded in noninterest income based on the difference between loan sale proceeds and
carrying value.

As of June 30, 2006, loans with a carrying value of $324.7 million were included as blanket pledges of security for FHLB advances.
Most of the Companys lending activity is with customers located in Ventura, Orange and Los Angeles Counties. The Company has no significant exposure to any individual customer; however, the economic condition in Southern California could
adversely affect customers. A significant portion of our loans are collateralized by real estate; changes in the economic condition in Southern California could adversely affect the value of real estate.



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##### Table of Contents

Changes in the allowance for loan losses were as follows:



|                                        |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|--------------------------------------- |  | -------------------------- | ----- | - | ------------------------ | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|(dollars in thousands)                  |  | Three Months EndedJune 30, |       |   | Six Months EndedJune 30, |  
|                                        |  | 2006                       |       |   | 2005                     |   |       | 2006 |  |   | 2005  |  
|Beginning balance                       |  | $                          | 4,287 |   |                          | $ | 2,537 |      |  | $ | 4,105 |   |  | $ | 2,346 |  
|Provision for loan losses               |  |                            |      |   |                          |   | 122   |      |  |   | 153   |   |  |   | 244   |  
|Loans charged-off                       |  |                            | (12   | ) |                          |   | (74   | )    |  |   | (12   | ) |  |   | (74   | )
|Transfer to undisbursed commitment      |  |                            | (75   | ) |                          |   |      |      |  |   | (75   | ) |  |   |      |  
|Recoveries on loans charged-off         |  |                            | 9     |   |                          |   | 8     |      |  |   | 38    |   |  |   | 77    |  
|                                        |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|Ending balance                          |  | $                          | 4,209 |   |                          | $ | 2,593 |      |  | $ | 4,209 |   |  | $ | 2,593 |  
|                                        |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|Allowance to total loans                |  |                            |       |   |                          |   |       |      |  |   | 1.16  | % |  |   | 1.30  | %
|Accruing loans past due 90 days or more |  |                            |       |   |                          |   |       |      |  | $ | 25    |   |  | $ | 116   |  
|Nonaccrual loans                        |  |                            |       |   |                          |   |       |      |  | $ |      |   |  | $ | 2,158 |  
|Nonaccrual loans to total loans         |  |                            |       |   |                          |   |       |      |  |   |      |   |  |   | 1.08  | %

There were no nonaccrual loans at June 30, 2006 or December 31, 2005.

NOTE 5  GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill relates to the acquisition of South Coast Bancorp on September 30, 2005. At June 30, 2006 and December 31, 2005, goodwill was $16.8 million and $16.3 million, respectively. The change in goodwill represents the
finalization of estimated tax effects. No impairment loss was recognized for the periods ended June 30, 2006 and December 31, 2005.

Core deposit intangible, net of accumulated amortization, was $575,000 at June 30, 2006 and $610,000 at December 31, 2005. Amortization expense for the three and six months ended June 30, 2006 were $18,000 and $35,000,
respectively.

NOTE 6  EARNINGS PER SHARE

Basic
earnings per share excludes dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could
occur if common shares were issued pursuant to the exercise of common stock options under the stock option plan. The following table illustrates the computations of basic and diluted earnings per share for the periods indicated:



|                                 |  |                            |       |                          |   |       |  |      |       |  |   |      
|-------------------------------- |  | -------------------------- | ----- | ------------------------ | - | ----- |  | ---- | ----- |  | - | -----
|(in thousands, except per share) |  | Three Months EndedJune 30, |       | Six Months EndedJune 30,
|                                 |  | 2006                       |       | 2005                     |   | 2006  |  | 2005
|Net income                       |  | $                          | 1,073 |                          | $ | 629   |  | $    | 2,083 |  | $ | 1,206
|Basic earnings per share         |  | $                          | 0.33  |                          | $ | 0.29  |  | $    | 0.64  |  | $ | 0.56 
|Diluted earnings per share       |  | $                          | 0.33  |                          | $ | 0.29  |  | $    | 0.63  |  | $ | 0.55 
|Basic weighted average shares    |  |                            | 3,278 |                          |   | 2,163 |  |      | 3,278 |  |   | 2,163
|Diluted weighted average shares  |  |                            | 3,298 |                          |   | 2,178 |  |      | 3,296 |  |   | 2,184



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##### Table of Contents

NOTE 7  RECENTLY ISSUED ACCOUNTING STANDARDS

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments which amends SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. SFAS 155 simplifies the accounting for certain
derivatives embedded in other financial instruments by allowing them to be accounted for as a whole if the holder elects to account for the whole instrument on a fair value basis. SFAS 155 also clarifies and amends certain other provisions of SFAS
133 and SFAS 140. SFAS 155 is effective for all financial instruments acquired, issued or subject to a remeasurement event occurring in fiscal years beginning after September 15, 2006. Earlier adoption is permitted, provided the Company has not
yet issued financial statements, including for interim periods, for that fiscal year. Management does not expect the adoption of SFAS 155 to have a material impact on the consolidated financial statements.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets which amends SFAS No. 140. SFAS 156
requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. The statement permits, but does not require, the subsequent measurement of servicing assets and servicing
liabilities at fair value. SFAS 156 is effective for fiscal years beginning after September 15, 2006. Management does not expect the adoption of SFAS 155 to have a material impact on the consolidated financial statements.

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement
No. 109 (FIN 48), which clarifies the accounting and disclosure for uncertainty in income in a companys financial statements. FIN 48 seeks to reduce the diversity in practice associated with certain aspects of the recognition and
measurement related to accounting for income taxes. FIN 48 is effective for fiscal years beginning after December 15, 2006. Management does not expect the adoption of FIN 48 to have a material impact on the consolidated financial statements.

NOTE 8  AGREEMENT AND PLAN OF MERGER

On June 15, 2006, we entered into an Agreement and Plan of Merger with National Mercantile Bancorp, the parent company of Mercantile National Bank, and First California Financial Group, or FCFG. National Mercantile will merge into FCFG, its
newly formed Delaware subsidiary, followed immediately by a merger of equals whereby we will merge with FCFG. FCFG will be the surviving entity. Pursuant to the mergers, FCB Bancorp shareholders will receive 1.7904 shares of First California common
stock for each of their shares of FCB Bancorp common stock. The merger, expected to close in the fourth quarter of 2006, is subject to customary closing conditions, regulatory approvals and approval by the shareholders of both companies.

On a pro forma basis, giving effect to the merger, at June 30, 2006, the combined company would have consolidated assets of approximately $1 billion,
with twelve full service offices and four loan production offices in Los Angeles, Orange and Ventura counties. The leadership team for the new combined company, to be called First California Financial Group, Inc. will be as follows:



|                                      |  |   |  |                                                               
|------------------------------------- |  | - |  | --------------------------------------------------------------
|President and Chief Executive Officer |  | » |  | C. G. Kum, FCB Bancorps Chief Executive Officer              
|Chief Financial Officer               |  | » |  | Romolo Santarosa, FCB Bancorps Chief Financial Officer       
|Chief Credit Officer                  |  | » |  | Robert Bartlett, National Mercantiles Chief Operating Officer
|Chief Strategy Officer                |  | » |  | David Brown, National Mercantiles Chief Financial Officer    
|Head of Commercial Banking            |  | » |  | Thomas Anthony, FCB Bancorps Chief Credit Officer            

Scott Montgomery, National Mercantiles President and Chief Executive Officer will retire
after assisting in the transition. The merger, expected to close in the fourth quarter of 2006, is subject to customary regulatory approvals and approval by the shareholders of both companies.



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##### Table of Contents

Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is designed to provide a better understanding of significant trends related to the consolidated results of operations and financial condition of FCB Bancorp and its wholly-owned subsidiaries. This discussion and
information is derived from our unaudited consolidated financial statements and related notes for the three and six months ended June 30, 2006 and 2005 and our audited consolidated financial statements and related notes for the three years
ended December 31, 2005. You should read this discussion in conjunction with those consolidated financial statements.

This discussion
contains certain forward-looking information about us, which statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. All statements other
than statements of historical fact are forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond our control. We caution readers that a number of important
factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Risks and uncertainties include, but are not limited to:



| |  |  | revenues are lower than expected;
| | - |  | ---------------------------------



| |  |  | credit quality deterioration which could cause an increase in the provision for credit losses;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | competitive pressure among depository institutions increases significantly;
| | - |  | ---------------------------------------------------------------------------



| |  |  | our ability to complete planned acquisitions, to successfully integrate acquired entities, or to achieve expected synergies and operating efficiencies within expected time-frames or
at all;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the integration of acquired businesses costs more, takes longer or is less successful than expected;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | the cost of additional capital is more than expected;
| | - |  | -----------------------------------------------------



| |  |  | a change in the interest rate environment reduces interest margins;
| | - |  | -------------------------------------------------------------------



| |  |  | asset/liability repricing risks and liquidity risks;
| | - |  | ----------------------------------------------------



| |  |  | general economic conditions, either nationally or in the market areas in which we do or anticipate doing business, are less favorable than expected;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the economic and regulatory effects of the continuing war on terrorism and other events of war, including the war in Iraq;
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | legislative or regulatory requirements or changes adversely affecting our business;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | changes in the securities markets; and
| | - |  | --------------------------------------



| |  |  | regulatory approvals for announced or future acquisitions cannot be obtained on the terms expected or on the anticipated schedule.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------

If any of these risks or uncertainties materializes, or if any of the assumptions underlying such forward-looking statements proves to be incorrect, our
results could differ materially from those expressed in, implied or projected by, such forward-looking statements. We assume no obligation to update such forward-looking statements.

Recent Development

On
June 15, 2006, we entered into an Agreement and Plan of Merger with National Mercantile Bancorp, the parent company of Mercantile National Bank and South Bay Bank, and First California Financial Group, or FCFG. National Mercantile will merge
into FCFG, its newly formed Delaware subsidiary, followed immediately by a merger of equals whereby we will merge with FCFG. FCFG will be the surviving entity. Pursuant to the mergers, FCB Bancorp shareholders will receive 1.7904 shares of First
California common stock for each of their shares of FCB Bancorp common stock. The merger, expected to close in the fourth quarter of 2006, is subject to customary closing conditions, regulatory approvals and approval by the shareholders of both
companies.



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##### Table of Contents

On a pro forma basis, giving effect to the merger, at June 30, 2006, the combined company would have
consolidated assets of approximately $1 billion, with twelve full service offices and four loan production offices in Los Angeles, Orange and Ventura counties. The leadership team for the new combined company, to be called First California Financial
Group, Inc. will be as follows:



|                                      |  |   |  |                                                               
|------------------------------------- |  | - |  | --------------------------------------------------------------
|President and Chief Executive Officer |  | » |  | C. G. Kum, FCB Bancorps Chief Executive Officer              
|                                      |  |  
|Chief Financial Officer               |  | » |  | Romolo Santarosa, FCB Bancorps Chief Financial Officer       
|                                      |  |  
|Chief Credit Officer                  |  | » |  | Robert Bartlett, National Mercantiles Chief Operating Officer
|                                      |  |  
|Chief Strategy Officer                |  | » |  | David Brown, National Mercantiles Chief Financial Officer    
|                                      |  |  
|Head of Commercial Banking            |  | » |  | Thomas Anthony, FCB Bancorps Chief Credit Officer            

Scott Montgomery, National Mercantiles President and Chief Executive Officer will retire
after assisting in the transition. The merger, expected to close in the fourth quarter of 2006, is subject to customary regulatory approvals and approval by the shareholders of both companies.

New Accounting Standard Adopted during the First Quarter of 2006

Statement of Financial Accounting Standards (SFAS) No. 123 (Revised 2004) Share-Based Payments addresses the accounting for transactions in which an
entity exchanges its equity instruments for goods and services. We adopted this new standard on January 1, 2006.

SFAS No. 123R
eliminated the ability to account for grants under our stock option plan using the intrinsic value-based method. The intrinsic value-based method recognized compensation cost as the difference between the exercise price of each option and the market
price of our stock at the date of each grant. The exercise price of each of our stock options was equal to the market price of our stock at each date of grant. Before 2006, no compensation cost was recognized.

On January 1, 2006, using the modified-prospective method of adoption, we began determining compensation costs using the fair-value method as
provided for under SFAS No. 123R. The modified-prospective method of adoption requires the recognition of compensation cost using the fair-value method for all new grants after 2005 or for any grants modified, repurchased or cancelled after
2005. For grants prior to 2006, the modified-prospective method requires the recognition of compensation cost for the portion of grants not yet vested based on the fair-value of the grant as was disclosed in our prior year consolidated financial
statements.

We used the Black-Scholes-Merton formula to determine the fair value of our stock options using the following estimates and
assumptions. The fair value of the option at the grant date also follows.



|                        |  |            |           |   |            |   |           |            |  |   |            |   |  |   |           |  
|----------------------- |  | ---------- | --------- | - | ---------- | - | --------- | ---------- |  | - | ---------- | - |  | - | --------- | -
|                        |  | 2003 Grant |           |   | 2004 Grant |   |           | 2005 Grant |  |   | 2006 Grant |  
|Expected option term    |  |            | 6.0 years |   |            |   | 6.0 years |            |  |   | 6.0 years  |   |  |   | 5.2 years |  
|Expected volatility     |  |            | Nil       |   |            |   | Nil       |            |  |   | Nil        |   |  |   | 5.71      | %
|Expected dividend yield |  |            | 0         | % |            |   | 0         | %          |  |   | 0          | % |  |   | 0         | %
|Risk-free interest rate |  |            | 2.87      | % |            |   | 3.95      | %          |  |   | 4.50       | % |  |   | 4.59      | %
|Stock option fair value |  | $          | 1.77      |   |            | $ | 4.24      |            |  | $ | 4.92       |   |  | $ | 4.49      |  

Our only stock option plan began in 2003 and we consider our options to be plain
vanilla. None of our options have vested. We used the simplified method to determine the expected term of the 2006 stock option grant which is the average of the sum of the contractual period and the average vesting period. We
looked to our 5-year historical volatility for our expected volatility because we believe that our historical period reflects our business strategy of de novo branch expansion and acquisition and we do not anticipate at this time that our strategy
or business model will differ in the future. We used the minimum value method for options granted before 2006. We have not paid dividends for the past several years and our business strategy does not anticipate that we will do so in the
future. The risk-free rate for the contractual term of the options was based on the prevailing U.S. treasury strip rate in effect at the date of grant.



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##### Table of Contents

Our shareholder approved stock option plan permits the grant of up to 200,000 shares of common stock to
directors, officers and key employers of FCB or the Bank. Option awards are granted with an exercise price equal to the market price of our stock at the grant date. Option awards vest based on 3 to 5 years of continuous service and have contractual
terms from 6 to 8 years.

A summary of our option activity, none of which have vested for the six months ended June 30, 2006 follows.



|                              |  |         |   |  |                                |      
|----------------------------- |  | ------- | - |  | ------------------------------ | -----
|Options                       |  | Shares  |   |  | Weighted averageexercise price
|Balance, beginning of year    |  | 119,500 |   |  | $                              | 17.64
|Issued                        |  | 40,600  |   |  | $                              | 21.00
|Exercised                     |  |        |   |  |                                |     
|Cancelled, forfeited, expired |  | (3,400  | ) |  | $                              | 20.81
|                              |  |         |   |  |                                |      
|Balance, end of period        |  | 156,700 |   |  | $                              | 18.51
|                              |  |         |   |  |                                |      

The weighted average remaining contractual term of options was 5.81 years at June 30, 2006.
The weighted average exercise price of options outstanding was $18.51 at June 30, 2006 and $17.64 at December 31, 2005. The weighted average fair value of options outstanding was $3.89 and $3.70 respectively at June 30, 2006 and
December 31, 2005, respectively. There were 156,700 options outstanding at June 30, 2006 and they had an intrinsic value, based on a closing market price of $22.40 on June 30, 2006, of approximately $610,000.

The weighted average grant date fair value of options outstanding was $3.70 at the beginning of the 2006 year and $3.90 at June 30, 2006. Compensation
cost for the three and six months ended June 30, 2006 was $22,000 and $41,000, respectively. Unrecognized compensation cost at June 30, 2006 was $314,000 and the weighted average period of unamortized cost recognition was 3.40 years.

The stock-based compensation expense determined under the fair value-based method for the three and six months ended June 30, 2005,
disclosed but not recognized, was $3,000 and $7,000, respectively, net of related tax effects. Earnings per share for the three and six months ended June 30, 2005 would not have changed had we recognized compensation expense under the fair
value-based method.

Critical Accounting Policies

The discussion and analysis of our consolidated results of operations and financial condition are based upon our unaudited and our audited consolidated
financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that
affect the reported amounts of assets and liabilities, income and expense, and the related disclosures of contingent assets and liabilities at the date of these consolidated financial statements. We believe these estimates and assumptions to be
reasonably accurate; however, actual results may differ from these estimates under different assumptions or circumstances. The following are our critical accounting policies.

Allowance for loan losses

An
estimate of probable losses incurred in the loan portfolio is necessary in determining the amount of the allowance for loan losses which is presented as a reduction of our loan balances. The provision for loan losses, charged to operations, is the
amount that is necessary to establish the allowance. The information used by us to make this estimate is described later in this section and in the notes to the audited consolidated financial statements. The allowance for loan losses was $4,209,000
at June 30, 2006 and was $4,105,000 at December 31, 2005.

Income taxes

An estimate of probable income tax benefits that will not be realized in future years is required in determining the necessity for a valuation allowance
for deferred tax assets. The information used by us to make this estimate is described later in this section and in the notes to the audited consolidated financial statements. Net deferred tax assets were $258,000 at June 30, 2006 and were
$730,000 at December 31, 2005; there was no valuation allowance at either period end.

Goodwill

An estimate of probable impairment loss is required in determining the carrying value of goodwill. An impairment loss is the condition that exists when
the carrying amount of goodwill exceeds its implied fair value. The information used by us to make this estimate is described later in this section and in the notes to the audited consolidated financial statements. Goodwill was $16,835,000 at
June 30, 2006 and $16,341,000 December 31, 2005; there was no impairment loss at either period end.



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Overview

FCB Bancorp is a bank holding company arising from a transaction in which the shareholders of First California Bank exchanged their common shares for that of FCB Bancorp on a share-for-share basis on September 30, 2005. As a result of
that transaction, First California Bank became a wholly-owned subsidiary of FCB Bancorp. FCB Bancorp and First California Bank are related entities; accordingly, the consolidated financial position and results of operations for the year ended
December 31, 2005 reflect the combined entities. Prior periods have been restated to reflect financial position and results of operation as if the entities had been previously consolidated.

Also, on September 30, 2005, FCB Bancorp completed its acquisition of South Coast Bancorp, Inc. and its wholly-owned subsidiaries, South Coast
Commercial Bank and SC Financial. SC Financial is an inactive subsidiary. Shareholders of South Coast Bancorp, Inc. received cash of $36.0 million in exchange for their common shares; South Coast Bancorp, Inc. was then merged with and into FCB
Bancorp.

In connection with this acquisition, FCB Bancorp issued 1,115,000 shares of common stock to accredited investors at $19.75 per
share on September 30, 2005. Net proceeds from this offering were $20.7 million. In addition, FCB Bancorp issued $10.3 million of junior subordinated debentures (commonly referred to as trust preferred securities) on September 30, 2005.
Substantially all the proceeds from these offerings were used to fund the acquisition.

The acquisition was accounted for using the
purchase method of accounting; accordingly, the December 31, 2005 consolidated financial position of the Company includes the fair value of the assets acquired and the liabilities assumed of South Coast Bancorp, Inc. The consolidated results of
operations, however, reflects only the consolidated activities after the merger was consummated on September 30, 2005.

On
December 5, 2005, FCB Bancorp sold South Coast Commercial Bank to Woori America Bank pursuant to a merger transaction for a premium of $1.0 million before taxes and expenses (the Woori Merger). The net premium reduced previously
recognized goodwill that arose from our purchase of South Coast Commercial Bank on September 30, 2005. Also on December 5, 2005, in a separate but related transaction, our subsidiary, First California Bank, acquired essentially all of the
assets and liabilities of South Coast Commercial Bank, including substantially all current loan and deposit accounts. The purchase and assumption transaction closed immediately prior to the Woori Merger.



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##### Table of Contents

Results of Operations  for the three and six months ended June 30, 2006 and 2005

Net income for the second quarter of 2006 increased 71 percent to $1.1 million , or $0.33 per diluted share, compared with $0.6 million, or $0.29 per
diluted share, for the same quarter last year. The increase in diluted earnings per share was 14 percent. The change in interim results is due primarily to the acquisition completed at the end of the third quarter of 2005. The earnings per share
data for 2006 reflect the increase in outstanding weighted average shares that resulted from the issuance of 1,115,000 new shares at the end of the third quarter of 2005.

The following table presents a summary of net income.



|                                 |  |                            |       |                          |   |       |  |      |       |  |   |      
|-------------------------------- |  | -------------------------- | ----- | ------------------------ | - | ----- |  | ---- | ----- |  | - | -----
|(in thousands, except per share) |  | Three Months EndedJune 30, |       | Six Months EndedJune 30,
|                                 |  | 2006                       |       | 2005                     |   | 2006  |  | 2005
|Net income                       |  | $                          | 1,073 |                          | $ | 629   |  | $    | 2,083 |  | $ | 1,206
|Basic earnings per share         |  | $                          | 0.33  |                          | $ | 0.29  |  | $    | 0.64  |  | $ | 0.56 
|Diluted earnings per share       |  | $                          | 0.33  |                          | $ | 0.29  |  | $    | 0.63  |  | $ | 0.55 
|Basic weighted average shares    |  |                            | 3,278 |                          |   | 2,163 |  |      | 3,278 |  |   | 2,163
|Diluted weighted average shares  |  |                            | 3,298 |                          |   | 2,178 |  |      | 3,296 |  |   | 2,184

Net income for the first six months of 2006 was $2.1 million, a 73 percent increase from the same
period a year ago. Diluted earnings per share increased 15 percent to $0.63 from $0.55 from the same period last year.

Net interest
income

Net interest income for the second quarter of 2006 was $5.2 million, up 56 percent from $3.4 million for the same quarter a
year ago. Net interest income for the first six months of 2006 was $10.5 million up 62 percent from the year ago period. The increase in net interest income reflects the increase in earning assets stemming from both an increase in our business
lending and our recent acquisition. Average earning assets increased 58 percent to $429.8 million for the second quarter of 2006 from $271.7 million for the second quarter of 2005. For the first half of the year, average earning assets increased to
$424.0 million from $266.9 million.

The net interest margin (on a tax equivalent basis) for the second quarter of 2006 was 4.95% compared
with 5.02% for the same period last year. For the first six months of 2006 the net interest margin was 5.03% compared with 4.93% for the year ago period.

Average loans were $354.4 million for the second quarter of 2006 and represented 82 percent of average earning assets, compared with $190.1 million and 70 percent for the same quarter a year ago. Average loans for the
first half of 2006 were $346.9 million and represented 82 percent of average earning assets, compared with $185.3 million and 69 percent for the year ago period. The increase in average loans reflects the 2005 acquisition, the expansion of our
branch network and the success of our business strategy.

Average securities were $69.0 million for the second quarter of 2006 and
represented 16 percent of average earning assets, compared with $76.3 million and 28 percent for the same period a year ago. For the first six months of 2006, average securities were $70.0 million, or 17 percent of average earning assets, compared
with $76.7 million, or 29 percent of average earning assets for the same period a year ago.

Average deposits for the second quarter of
2006 were $385.9 million and represented 90 percent of average earning assets, compared with $236.2 million and 87 percent of average earning assets for the same quarter last year. Average deposits for the first half of 2006 were $381.5 million and
represented 90 percent of average earning assets, compared with $231.1 million and 87 percent for the year ago period. The increase in deposits reflects the 2005 acquisition, the expansion of our branch network and the success of our business
strategy. We do not accept broker certificates of deposits.

Average borrowed funds for the second quarter of 2006 were $44.1 million
compared with $31.5 million for the same period last year. For the first six months of 2006, average borrowed funds were $42.6 million, compared with $32.1 million for the same period a year ago. The increase in borrowings reflects the issuance of
$10.3 million of junior subordinated debentures at the end of the 2005 third quarter.

The following table presents average balances and
interest income or interest expense, with resulting average yield or rates on a tax equivalent basis, by earning asset or interest bearing liability category.



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|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|------------------------------------------ |  | --------------------------- | ------- | -------------- | ---- | ----------- |  | ----- | -------------- |  | -------------- | ------- | ----------- | - | ----- |  | ---- | -
|                                           |  | Three months ended June 30, |        
|                                           |  | 2006                        |         |                | 2005 |            
|(in thousands)                             |  | AverageBalance              |         | Income/Expense |      | AverageRate |  |       | AverageBalance |  | Income/Expense |         | AverageRate |  
|                                           |  |                             |         |                |      |            
|Assets                                     |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Loans:                                     |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Construction & Land                        |  | $                           | 27,419  |                | $    | 744         |  | 10.89 | %              |  | $              | 14,930  |             | $ | 357   |  | 9.59 | %
|Commercial Real Estate                     |  |                             | 221,654 |                |      | 4,453       |  | 8.06  | %              |  |                | 93,206  |             |   | 1,557 |  | 6.70 | %
|Commercial Loans                           |  |                             | 79,382  |                |      | 1,678       |  | 8.48  | %              |  |                | 67,963  |             |   | 1,211 |  | 7.15 | %
|Home Mortgage                              |  |                             | 18,706  |                |      | 257         |  | 5.51  | %              |  |                | 6,849   |             |   | 85    |  | 4.96 | %
|Home Equity                                |  |                             | 5,663   |                |      | 113         |  | 8.06  | %              |  |                | 2,980   |             |   | 48    |  | 6.52 | %
|Consumer                                   |  |                             | 1,534   |                |      | 37          |  | 9.66  | %              |  |                | 4,131   |             |   | 66    |  | 6.37 | %
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total loans                                |  |                             | 354,358 |                |      | 7,282       |  | 8.24  | %              |  |                | 190,059 |             |   | 3,323 |  | 7.01 | %
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Securities:                                |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Taxable                                    |  |                             | 58,429  |                |      | 572         |  | 3.92  | %              |  |                | 68,481  |             |   | 573   |  | 3.35 | %
|Nontaxable                                 |  |                             | 10,608  |                |      | 102         |  | 5.86  | %              |  |                | 7,813   |             |   | 78    |  | 6.04 | %
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total securities                           |  |                             | 69,037  |                |      | 674         |  | 4.22  | %              |  |                | 76,294  |             |   | 651   |  | 3.63 | %
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Federal funds sold                         |  |                             | 6,356   |                |      | 75          |  | 4.69  | %              |  |                | 5,291   |             |   | 39    |  | 3.01 | %
|Deposits with banks                        |  |                             | 51      |                |      |            |  | 2.08  | %              |  |                | 58      |             |   |      |  | 1.28 | %
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total earning assets                       |  |                             | 429,802 |                |      | 8,031       |  | 7.54  | %              |  |                | 271,703 |             |   | 4,013 |  | 5.98 | %
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Non-earning assets                         |  |                             | 50,261  |                |      |             |  |       |                |  |                | 21,114  |             |   |       |  |      |  
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total assets                               |  | $                           | 480,063 |                |      |             |  |       |                |  | $              | 292,817 |             |   |       |  |      |  
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Liabilities and shareholders equity       |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Interest bearing deposits:                 |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Interest bearing demand deposits           |  | $                           | 22,050  |                | $    | 27          |  | 0.49  | %              |  | $              | 20,438  |             | $ | 5     |  | 0.10 | %
|Savings                                    |  |                             | 78,066  |                |      | 381         |  | 1.96  | %              |  |                | 63,477  |             |   | 116   |  | 0.73 | %
|Certificates of deposit                    |  |                             | 182,823 |                |      | 1,889       |  | 4.14  | %              |  |                | 55,649  |             |   | 337   |  | 2.43 | %
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total interest bearing deposits            |  |                             | 282,939 |                |      | 2,297       |  | 3.26  | %              |  |                | 139,564 |             |   | 458   |  | 1.32 | %
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Borrowed funds:                            |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Federal funds purchased                    |  |                             | 36      |                |      | 1           |  | 6.07  | %              |  |                | 21      |             |   |      |  | 0.00 | %
|FHLB advances                              |  |                             | 33,737  |                |      | 331         |  | 3.95  | %              |  |                | 31,438  |             |   | 196   |  | 2.51 | %
|Junior subordinated debentures             |  |                             | 10,310  |                |      | 154         |  | 6.15  | %              |  |                |        |             |   |      |  |      |  
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total borrowed funds                       |  |                             | 44,083  |                |      | 486         |  | 4.42  | %              |  |                | 31,459  |             |   | 196   |  | 2.50 | %
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total interest bearing funds               |  |                             | 327,022 |                |      | 2,783       |  | 3.41  | %              |  |                | 171,023 |             |   | 654   |  | 1.53 | %
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Noninterest bearing demand deposits        |  |                             | 102,976 |                |      |             |  |       |                |  |                | 96,662  |             |   |       |  |      |  
|Other liabilities                          |  |                             | 2,721   |                |      |             |  |       |                |  |                | 1,341   |             |   |       |  |      |  
|Shareholders equity                       |  |                             | 47,344  |                |      |             |  |       |                |  |                | 23,791  |             |   |       |  |      |  
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total liabilities and shareholders equity |  | $                           | 480,063 |                |      |             |  |       |                |  | $              | 292,817 |             |   |       |  |      |  
|                                           |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Net interest income                        |  |                             |         |                | $    | 5,248       |  |       |                |  |                |         |             | $ | 3,359 |  |      |  
|Net interest margin                        |  |                             |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|(tax equivalent)                           |  |                             |         |                |      |             |  | 4.95  | %              |  |                |         |             |   |       |  | 5.02 | %



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|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|------------------------------------------ |  | ------------------------- | ------- | -------------- | ---- | ----------- |  | ----- | -------------- |  | -------------- | ------- | ----------- | - | ----- |  | ---- | -
|                                           |  | Six months ended June 30, |        
|                                           |  | 2006                      |         |                | 2005 |            
|(in thousands)                             |  | AverageBalance            |         | Income/Expense |      | AverageRate |  |       | AverageBalance |  | Income/Expense |         | AverageRate |  
|                                           |  |                           |         |                |      |            
|Assets                                     |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Loans:                                     |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Construction & Land                        |  | $                         | 27,459  |                | $    | 1,496       |  | 10.99 | %              |  | $              | 13,131  |             | $ | 611   |  | 9.39 | %
|Commercial Real Estate                     |  |                           | 219,914 |                |      | 8,747       |  | 8.02  | %              |  |                | 91,691  |             |   | 3,009 |  | 6.62 | %
|Commercial Loans                           |  |                           | 78,282  |                |      | 3,227       |  | 8.31  | %              |  |                | 67,274  |             |   | 2,321 |  | 6.96 | %
|Home Mortgage                              |  |                           | 13,477  |                |      | 375         |  | 5.60  | %              |  |                | 6,414   |             |   | 163   |  | 5.11 | %
|Home Equity                                |  |                           | 5,475   |                |      | 210         |  | 8.02  | %              |  |                | 2,753   |             |   | 89    |  | 6.50 | %
|Consumer                                   |  |                           | 2,332   |                |      | 96          |  | 8.42  | %              |  |                | 3,991   |             |   | 131   |  | 6.64 | %
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total loans                                |  |                           | 346,939 |                |      | 14,151      |  | 8.23  | %              |  |                | 185,255 |             |   | 6,325 |  | 6.88 | %
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Securities:                                |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Taxable                                    |  |                           | 60,141  |                |      | 1,171       |  | 3.89  | %              |  |                | 69,148  |             |   | 1,168 |  | 3.38 | %
|Nontaxable                                 |  |                           | 9,881   |                |      | 190         |  | 5.87  | %              |  |                | 7,572   |             |   | 148   |  | 5.97 | %
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total securities                           |  |                           | 70,022  |                |      | 1,361       |  | 4.20  | %              |  |                | 76,720  |             |   | 1,317 |  | 3.63 | %
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Federal funds sold                         |  |                           | 6,962   |                |      | 161         |  | 4.68  | %              |  |                | 4,839   |             |   | 68    |  | 2.82 | %
|Deposits with banks                        |  |                           | 52      |                |      | 1           |  | 2.94  | %              |  |                | 104     |             |   | 0     |  | 0.79 | %
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total earning assets                       |  |                           | 423,975 |                |      | 15,674      |  | 7.50  | %              |  |                | 266,918 |             |   | 7,710 |  | 5.88 | %
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Non-earning assets                         |  |                           | 39,420  |                |      |             |  |       |                |  |                | 20,960  |             |   |       |  |      |  
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total assets                               |  | $                         | 473,706 |                |      |             |  |       |                |  | $              | 287,878 |             |   |       |  |      |  
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Liabilities and shareholders equity       |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Interest bearing deposits:                 |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Interest bearing demand deposits           |  | $                         | 22,958  |                | $    | 54          |  | 0.47  | %              |  | $              | 20,563  |             | $ | 11    |  | 0.10 | %
|Savings                                    |  |                           | 78,167  |                |      | 680         |  | 1.76  | %              |  |                | 63,273  |             |   | 230   |  | 0.73 | %
|Certificates of deposit                    |  |                           | 178,786 |                |      | 3,539       |  | 3.99  | %              |  |                | 55,033  |             |   | 616   |  | 2.26 | %
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total interest bearing deposits            |  |                           | 279,911 |                |      | 4,273       |  | 3.08  | %              |  |                | 138,868 |             |   | 857   |  | 1.24 | %
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Borrowed funds:                            |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Federal funds purchased                    |  |                           | 28      |                |      | 1           |  | 5.83  | %              |  |                | 11      |             |   | 0     |  | 3.82 | %
|FHLB advances                              |  |                           | 32,277  |                |      | 607         |  | 3.80  | %              |  |                | 32,080  |             |   | 391   |  | 2.46 | %
|Junior subordinated debentures             |  |                           | 10,310  |                |      | 308         |  | 6.15  | %              |  |                |        |             |   |      |  |      |  
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total borrowed funds                       |  |                           | 42,615  |                |      | 916         |  | 4.33  | %              |  |                | 32,091  |             |   | 391   |  | 2.46 | %
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total interest bearing funds               |  |                           | 322,526 |                |      | 5,189       |  | 3.24  | %              |  |                | 170,959 |             |   | 1,248 |  | 1.47 | %
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Noninterest bearing demand deposits        |  |                           | 101,543 |                |      |             |  |       |                |  |                | 92,242  |             |   |       |  |      |  
|Other liabilities                          |  |                           | 2,293   |                |      |             |  |       |                |  |                | 1,185   |             |   |       |  |      |  
|Shareholders equity                       |  |                           | 47,344  |                |      |             |  |       |                |  |                | 23,492  |             |   |       |  |      |  
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Total liabilities and shareholders equity |  | $                         | 473,706 |                |      |             |  |       |                |  | $              | 287,878 |             |   |       |  |      |  
|                                           |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|Net interest income                        |  |                           |         |                | $    | 10,486      |  |       |                |  |                |         |             | $ | 6,461 |  |      |  
|Net interest margin                        |  |                           |         |                |      |             |  |       |                |  |                |         |             |   |       |  |      |  
|(tax equivalent)                           |  |                           |         |                |      |             |  | 5.03  | %              |  |                |         |             |   |       |  | 4.94 | %

Net interest income is affected by changes in the level and mix of average earning assets and
average interest-bearing funds. The changes between periods in these balances are referred to as balance changes. The effect on net interest income from changes in average balances is measured by multiplying the change in the average balance between
the current period and the prior period by the prior period average rate. Net interest income is also affected by changes in the average rate earned or paid on earning assets and interest-bearing funds and these are referred to as rate changes. The
effect on net interest income from changes in average rates is measured by multiplying the change in the average rate between the current period and the prior period by the prior period average



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##### Table of Contents

balance. Changes attributable to both rate and volume are allocated on a pro rata basis to the change in average volume and the change in average rate.

The following tables present changes in interest income and expense.



|                                 |  |                                                 |       |        |   |       |       |  |   |      
|-------------------------------- |  | ----------------------------------------------- | ----- | ------ | - | ----- | ----- |  | - | -----
|(in thousands)                   |  | Three months ended June 30,2006 to 2005 due to:
|                                 |  | Rate                                            |       | Volume |   |       | Total
|Interest income                  |  |                                                 |       |        |   |       |       |  |   |      
|Interest on loans                |  | $                                               | 1,281 |        | $ | 2,679 |       |  | $ | 3,960
|Interest on securities           |  |                                                 | 85    |        |   | (62   | )     |  |   | 23   
|Interest on Federal funds sold   |  |                                                 | 27    |        |   | 8     |       |  |   | 35   
|Interest on deposits with banks  |  |                                                 |      |        |   |      |       |  |   |     
|                                 |  |                                                 |       |        |   |       |       |  |   |      
|Total interest income            |  |                                                 | 1,393 |        |   | 2,625 |       |  |   | 4,018
|                                 |  |                                                 |       |        |   |       |       |  |   |      
|Interest expense                 |  |                                                 |       |        |   |       |       |  |   |      
|Interest bearing demand deposits |  |                                                 | 22    |        |   |      |       |  |   | 22   
|Savings                          |  |                                                 | 236   |        |   | 27    |       |  |   | 263  
|Certificates of deposit          |  |                                                 | 783   |        |   | 770   |       |  |   | 1,553
|                                 |  |                                                 |       |        |   |       |       |  |   |      
|Total interest on deposits       |  |                                                 | 1,041 |        |   | 797   |       |  |   | 1,838
|                                 |  |                                                 |       |        |   |       |       |  |   |      
|Interest on borrowings           |  |                                                 | 212   |        |   | 79    |       |  |   | 291  
|                                 |  |                                                 |       |        |   |       |       |  |   |      
|Total interest expense           |  |                                                 | 1,253 |        |   | 876   |       |  |   | 2,129
|                                 |  |                                                 |       |        |   |       |       |  |   |      
|Net interest income              |  | $                                               | 140   |        | $ | 1,749 |       |  | $ | 1,889
|                                 |  |                                                 |       |        |   |       |       |  |   |      



|                                 |  |                                               |       |        |   |       |       |  |   |      
|-------------------------------- |  | --------------------------------------------- | ----- | ------ | - | ----- | ----- |  | - | -----
|(in thousands)                   |  | Six months ended June 30,2006 to 2005 due to:
|                                 |  | Rate                                          |       | Volume |   |       | Total
|Interest income                  |  |                                               |       |        |   |       |       |  |   |      
|Interest on loans                |  | $                                             | 2,477 |        | $ | 5,349 |       |  | $ | 7,826
|Interest on securities           |  |                                               | 160   |        |   | (115  | )     |  |   | 45   
|Interest on Federal funds sold   |  |                                               | 64    |        |   | 30    |       |  |   | 94   
|Interest on deposits with banks  |  |                                               | 1     |        |   | 1     |       |  |   | 2    
|                                 |  |                                               |       |        |   |       |       |  |   |      
|Total interest income            |  |                                               | 2,702 |        |   | 5,265 |       |  |   | 7,967
|                                 |  |                                               |       |        |   |       |       |  |   |      
|Interest expense                 |  |                                               |       |        |   |       |       |  |   |      
|Interest bearing demand deposits |  |                                               | 42    |        |   | 1     |       |  |   | 43   
|Savings                          |  |                                               | 397   |        |   | 54    |       |  |   | 451  
|Certificates of deposit          |  |                                               | 1,536 |        |   | 1,387 |       |  |   | 2,923
|                                 |  |                                               |       |        |   |       |       |  |   |      
|Total interest on deposits       |  |                                               | 1,975 |        |   | 1,442 |       |  |   | 3,417
|                                 |  |                                               |       |        |   |       |       |  |   |      
|Interest on borrowings           |  |                                               | 397   |        |   | 128   |       |  |   | 525  
|                                 |  |                                               |       |        |   |       |       |  |   |      
|Total interest expense           |  |                                               | 2,372 |        |   | 1,570 |       |  |   | 3,942
|                                 |  |                                               |       |        |   |       |       |  |   |      
|Net interest income              |  | $                                             | 330   |        | $ | 3,695 |       |  | $ | 4,025
|                                 |  |                                               |       |        |   |       |       |  |   |      



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Provision for loan losses

There was no provision for loan losses for the second quarter of 2006 in light of our evaluation of the collectibility of loans and our prior loan loss
experience, among other relevant consideration. The provision for loan losses for the second quarter of 2005 was $122,000. For the first half of 2006, the provision for loan losses was $153,000 compared with $244,000 for the same period last year.

Noninterest income

Noninterest income for the second quarter of 2006 was $550,000 compared with $427,000 for the same period last year.

Service
charges, fees and other income for the second quarter of 2006 increased 21 percent to $410,000 from $338,000 for the same quarter of 2005. The increase in service charge, fees and other income reflects higher activity levels in our checking and
savings accounts from the prior quarter.

Earnings on cash surrender value of life insurance were $112,000 for the second quarter of 2006
compared with $56,000 for the second quarter of 2005. The increase in earnings reflects the purchase of $4.9 million of life insurance policies in the first quarter of 2006 to support life insurance benefits for several key employees and salary
continuation benefits for certain executives.

Gains on loan sales and commissions on brokered loans totaled $28,000 for the second quarter
of 2006 compared with $31,000 for the same period a year ago. We originate SBA 7(a) loans and sell the guaranteed portion of the loan into the secondary market for a gain. We also arrange SBA 504 and other loans for customers that are ultimately
funded by others and receive commissions for our services. The change in income reflects the change in the number and amount of loans sold or brokered in each period.

The following table presents a summary of noninterest income.



|                                         |  |                            |     |                          |   |      |  |   |       |   |  |   |    
|---------------------------------------- |  | -------------------------- | --- | ------------------------ | - | ---- |  | - | ----- | - |  | - | ---
|(in thousands)                           |  | Three Months EndedJune 30, |     | Six Months EndedJune 30,
|                                         |  | 2006                       |     | 2005                     |   | 2006 |  |   | 2005 
|Service charges on deposit accounts      |  | $                          | 257 |                          | $ | 256  |  | $ | 510   |   |  | $ | 549
|Net servicing fees                       |  |                            | 13  |                          |   | 11   |  |   | 25    |   |  |   | 21 
|Other income                             |  |                            | 140 |                          |   | 71   |  |   | 252   |   |  |   | 127
|Earnings on cash value of life insurance |  |                            | 112 |                          |   | 56   |  |   | 207   |   |  |   | 111
|                                         |  |                            |     |                          |   |      |  |   |       |   |  |   |    
|Service charges, fees and other          |  |                            | 522 |                          |   | 394  |  |   | 994   |   |  |   | 808
|Loan commissions and sales               |  |                            | 28  |                          |   | 31   |  |   | 80    |   |  |   | 133
|Gain (loss) on sales of securities       |  |                            |    |                          |   | 2    |  |   | (20   | ) |  |   | 2  
|                                         |  |                            |     |                          |   |      |  |   |       |   |  |   |    
|Total noninterest income                 |  | $                          | 550 |                          | $ | 427  |  | $ | 1,054 |   |  | $ | 943
|                                         |  |                            |     |                          |   |      |  |   |       |   |  |   |    

Noninterest income for the first half of 2006 was $1.1 million compared with $0.9 million for the
same period last year.

Service charges, fees and other income for the first six months of 2006 increased 13 percent to $787,000 from
$697,000 for the same period of 2005. The increase in service charge, fees and other income reflects higher activity levels in an checking and savings accounts from the prior year.

Earnings on cash surrender value of life insurance were $207,000 for the first half of 2006 compared with $111,000 for the first half of 2005. The
increase in earnings reflects the purchase of the life insurance policies in the first quarter of 2006.

Gains on loan sales and
commissions on brokered loans totaled $80,000 for the first six months of 2006 compared with $133,000 for the same period a year ago. The change in income reflects the change in the number and amount of loans sold or brokered in each period.



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##### Table of Contents

Noninterest expense

Noninterest expense for the second quarter of 2006 was $4.1 million up 56 percent from $2.7 million for the second quarter of 2005. The efficiency ratio
was 70.82 percent for the 2006 quarter compared with 70.03 percent for the same period in 2005.

Noninterest expense for the first half of
2006 was $8.0 million compared with $5.2 million for the same period last year. The efficiency ratio for the first six months of 2006 was 69.30 percent compared with 70.46 percent a year ago.

The increase in operating expenses from the year ago periods reflects the growth in our business and the acquisition completed on September 30,
2005. We have pursued a growth strategy through de novo branching. This requires us to recruit and hire personnel and lease or build facilities to operate and house the new branch. These expenses are incurred prior to the opening of the branch and
generally are in excess of the income from the branch when it commences operations. The increase in salaries and benefits expense and premises and equipment expense reflects this growth strategy. Our Simi Valley branch opened December 2004 in a
temporary location and relocated in November 2005 to our newly built branch office on the site of the new Simi Valley Towne Center. In addition, we opened in the first quarter of 2006 a new loan production office in Sherman Oaks and have added
lending and credit administration personnel. Notwithstanding the increase in operating expenses, the efficiency ratio for the first half of 2006 improved over the efficiency ratio for the same period a year ago.

The following table presents a summary of noninterest expense.



|                                    |  |                            |       |   |                           |   |       |      |  |   |       |   |  |   |       |  
|----------------------------------- |  | -------------------------- | ----- | - | ------------------------- | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|(in thousands)                      |  | Three Months EndedJune 30, |       |   | Six Months Ended June 30, |  
|                                    |  | 2006                       |       |   | 2005                      |   |       | 2006 |  |   | 2005  |  
|Salaries and benefits               |  | $                          | 2,296 |   |                           | $ | 1,490 |      |  | $ | 4,558 |   |  | $ | 3,019 |  
|Premises and equipment              |  |                            | 616   |   |                           |   | 389   |      |  |   | 1,259 |   |  |   | 775   |  
|Data processing                     |  |                            | 210   |   |                           |   | 138   |      |  |   | 370   |   |  |   | 273   |  
|Legal, audit and other professional |  |                            | 247   |   |                           |   | 153   |      |  |   | 400   |   |  |   | 261   |  
|Printing, stationary and supplies   |  |                            | 82    |   |                           |   | 48    |      |  |   | 144   |   |  |   | 94    |  
|Telephone                           |  |                            | 70    |   |                           |   | 36    |      |  |   | 140   |   |  |   | 72    |  
|Directors fees                     |  |                            | 33    |   |                           |   | 33    |      |  |   | 66    |   |  |   | 66    |  
|Advertising and marketing           |  |                            | 203   |   |                           |   | 123   |      |  |   | 333   |   |  |   | 210   |  
|Postage                             |  |                            | 23    |   |                           |   | 11    |      |  |   | 49    |   |  |   | 29    |  
|Other expense                       |  |                            | 344   |   |                           |   | 229   |      |  |   | 728   |   |  |   | 416   |  
|                                    |  |                            |       |   |                           |   |       |      |  |   |       |   |  |   |       |  
|Total noninterest expenses          |  | $                          | 4,124 |   |                           | $ | 2,650 |      |  | $ | 8,047 |   |  | $ | 5,215 |  
|                                    |  |                            |       |   |                           |   |       |      |  |   |       |   |  |   |       |  
|Efficiency ratio                    |  |                            | 70.82 | % |                           |   | 70.03 | %    |  |   | 69.30 | % |  |   | 70.46 | %

The efficiency ratio is computed by dividing noninterest expense less amortization by net interest
income and noninterest income less realized gains and losses on sale of securities. The ratio is a measurement of the amount of revenue that is utilized to meet overhead expenses.

Income taxes

The provision
for income taxes was $1.3 million for the first six months of 2006 compared with $0.7 million for the same period of 2005. The effective tax rate for 2006 was 37.6 percent compared with 38.0 percent for the same period a year ago. The effective tax
rate was less than the combined statutory tax rate as a result of excluding from taxable income interest on municipal securities and the earnings on the cash surrender value of life insurance.



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##### Table of Contents

Financial Position  June 30, 2006 compared with December 31, 2005

Lending and credit risk

We
provide a variety of loan and credit-related products and services to meet the needs of borrowers primarily located in the California counties of Ventura, Orange and Los Angeles. Business loans, represented by commercial real estate loans,
commercial loans and construction loans comprise the largest portion of the loan portfolio. Consumer, or personal loans, represented by home mortgage, home equity and installment loans comprise a smaller portion of the loan portfolio.

Credit risk is the risk to earnings or capital arising from an obligors failure to meet the terms of any contract with us or otherwise to perform
as agreed. Credit risk is found in all activities in which success depends on counterparty, issuer, or borrower performance. Credit risk is present any time funds are extended, committed, invested, or otherwise exposed through actual or implied
contractual agreements, whether reflected on or off the balance sheet.

All categories of loans present credit risk. Major risk factors
applicable to all loan categories include changes in international, national and local economic conditions such as interest rates, inflation, unemployment levels, consumer and business confidence and the supply and demand for goods and services.

Commercial real estate loans rely upon the cash flow originating from the underlying real property. Commercial real estate is a cyclical
industry that is affected not only by general economic conditions but also by local supply and demand. In the office sector, the demand for office space is highly dependent on employment levels. In the retail sector, the demand for retail space and
the levels of retail rents are affected by consumer spending and confidence. The industrial sector has exposure to the level of exports, defense spending and inventory levels. Vacancy rates, location, and other factors affect the amount rental
income for commercial property. Tenants may relocate, fail to honor their lease or go out of business. In the multifamily residential sector the demand for apartments is heavily influenced by the affordability of ownership housing, employment
conditions and the vacancy of existing inventory. Population growth or decline and changing demographics, such as increases in the level of immigrants or retirees, are also factors influencing the multifamily residential sector.

Construction loans provide developers or owners with funds to build or improve properties that will ultimately be sold or leased. Construction loans are
generally considered to involve a higher degree of risk than other loan categories because they rely upon the developers or owners ability to complete the project within specified cost and time limits. Cost overruns can cause the project
cost to exceed the project sales price or exceed the amount of the committed permanent funding. Construction projects also can be delayed for a number of reasons such as poor weather, material or labor shortages, labor difficulties, or substandard
work that must be redone to pass inspection.

Commercial loans rely upon the cash flow originating from the underlying business activity of
the enterprise. The manufacture, distribution or sale of goods or sale of services are not only affected by general economic conditions but also by the ability of the enterprises management to adjust to local supply and demand conditions,
maintain good labor, vendor and customer relationships, as well as market, price and sell their goods or services for a profit. Customer demand for goods and services of the enterprise may change because of competition or obsolescence.

Home mortgages and home equity loans and lines of credit are secured by first or second trust deeds on a borrowers real estate property,
typically their principal residence. These loans are dependant on a persons ability to regularly pay the principal and interest due on the loan and, secondarily, on the value of real estate property that serves as collateral for the loan. Home
mortgages are generally considered to involve a lower degree of risk than other loan categories because of the relationship of the loan amount to the value of the residential real estate and a persons reluctance to forego their principal place
of residence. Home real estate values however are not only affected by general economic conditions but also on local supply and demand. Installment loans and credit card lines are also dependant on a persons ability to regularly pay principal
and interest on a loan; however, these loans generally are not secured by collateral or, if they are secured, the collateral value can rapidly decline as is the case for automobiles. A persons ability to service debt is highly dependant upon
their continued employment or financial stability. Job loss, divorce, illness, bankruptcy are just a few of the risks that may affect a persons ability to service their debt.

Since the risks in each category of loan changes based on a number of factors, it is not possible to state whether a particular type of lending carries
with it a greater or lesser degree of risk at any specific time in the economic cycle. In a stabilized economic environment it is generally considered that home mortgage loans have the least risk, followed by home equity loans, multifamily property
loans, commercial property loans, commercial loans and lines and finally construction loans. However, this ordering may vary from time to time and the degree of risk from the credits with the least risk to those with the highest risk profile may
expand or contract with the general economy.



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We manage credit risk through Board approved policies and procedures. These policies are reviewed and
approved at least annually by the Directors. Lending policies provide us with a framework for consistent loan underwriting and a basis for sound credit decisions. Lending policies specify, among other things, the parameters for the type or purpose
of the loan, the required debt service coverage and the required collateral requirements. Credit limits are also established and certain loans require approval by the Directors Loan Committee. The Directors Audit Committee also engages a
third party to perform a credit review of the loan portfolio to ensure compliance with policies and assist in the evaluation of the credit risk inherent in the loan portfolio.

Loans

Total loans, excluding
loans held for sale increased 6 percent, or $20.9 million, to $363.8 million at June 30, 2006 from $342.9 million at December 31, 2005. Purchases of adjustable rate home mortgage loans account for most of the increase.

The following table presents the portfolio of loans.



|                            |  |                 |         |   |                     |   |         |  
|--------------------------- |  | --------------- | ------- | - | ------------------- | - | ------- | -
|(in thousands)              |  | At June 30,2006 |         |   | At December 31,2005 |  
|                            |  |                
|Commercial mortgage         |  | $               | 187,773 |   |                     | $ | 192,263 |  
|Multifamily mortgage        |  |                 | 29,999  |   |                     |   | 31,708  |  
|Construction                |  |                 | 33,212  |   |                     |   | 28,157  |  
|Commercial loans and lines  |  |                 | 58,092  |   |                     |   | 64,271  |  
|Home equity loans and lines |  |                 | 9,265   |   |                     |   | 8,689   |  
|Home mortgage               |  |                 | 43,441  |   |                     |   | 13,443  |  
|Installment & credit card   |  |                 | 2,005   |   |                     |   | 4,352   |  
|                            |  |                 |         |   |                     |   |         |  
|Total loans                 |  |                 | 363,787 |   |                     |   | 342,883 |  
|Allowance for loan losses   |  |                 | (4,209  | ) |                     |   | (4,105  | )
|                            |  |                 |         |   |                     |   |         |  
|Loans, net                  |  | $               | 359,578 |   |                     | $ | 338,778 |  
|                            |  |                 |         |   |                     |   |         |  
|Loans held for sale         |  | $               | 11,553  |   |                     | $ |        |  

The loan categories above are derived from bank regulatory reporting standards for loans secured
by real estate; however, a portion of the mortgage loans above are loans that we consider to be a commercial loan for which we have taken real estate collateral as additional support or from an abundance of caution. In these instances we are not
looking to the real property as its primary source of repayment, but rather as a secondary or tertiary source of repayment.

Commercial
mortgage loans, the largest segment of our portfolio, were 52 percent of total loans at June 30, 2006, down from 56 percent at December 31, 2005. Commercial mortgage loans are collateralized by many different commercial property types. Our
top three categories have been office, industrial, and retail, representing approximately 80 percent of commercial mortgage loans. In addition, most of our commercial property lending is in Ventura, Orange and Los Angeles Counties.

Commercial mortgage loans are underwritten with a maximum loan-to-value of 70 percent and a minimum debt service coverage ratio of 1.25. These criteria
may become more stringent depending on the type of property. We focus on cash flow; consequently, regardless of the value of the collateral, the commercial real estate project must provide sufficient cash flow, or alternatively the principals must
supplement the project with other cash flow, to service the debt. We generally require the principals to guarantee the loan. We also stress-test commercial mortgage loans to determine the potential affect changes in interest rates,
vacancy rates, and lease or rent rates would have on the cash flow of the project. Additionally, at least on an annual basis, we require updates on the cash flow of the project and, where practicable, we visit the properties.

Multifamily residential mortgage loans were 8 percent of total loans at June 30, 2006 compared with 9 percent at December 31, 2005. Multifamily
mortgage loans are collateralized by apartments mostly located in our tri-county market area. Multifamily mortgage loans are underwritten in a fashion similar to commercial mortgage loans described above.

Commercial loans represent the next largest category of loans and were 16 percent of total loans at June 30, 2006 compared with 19 percent at
December 31, 2005. Commercial loans are made for the purpose of providing working capital, equipment purchases and business expansion. Commercial loans may be unsecured or secured by assets such as equipment, inventory, accounts receivables,
and



23



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real property. Personal guarantees of the business owner may also be present. Additionally, these loans may also have partial guarantees from the U.S. Small
Business Administration (SBA) or other federal or state agencies. The commercial loan portfolio is made up of broadly diversified business sectors with the largest sectors in real estate/construction, finance and insurance, healthcare,
manufacturing and professional services.

Commercial loans are underwritten with maturities not to exceed seven years and we generally
require the loan to be fully amortized within the term of the loan. Traditional working capital lines are underwritten for a 12 month period and have a 30-day out-of-debt requirement. Accounts receivable and inventory financing revolving lines of
credit have an annual maturity date, a maximum advance rate, and an annual field audit for lines of $200,000 or more. Field audits are performed by third-party vendors. The maximum advance rate for accounts receivable is 75 percent and the maximum
advance rate for eligible inventory is 25 percent.

We also have a portfolio of higher-yielding, asset-based loans that involves us
purchasing customer invoices on a recourse basis. This product is called Cash Flow Maximizer (CFM). Using software, technical and marketing support provided by a third-party vendor, we are able to purchase customer invoices,
with full recourse, at a discount and pay the customer 98.5 to 95.0 percent of the face value of the invoice. The amount is repaid, generally in 30 to 45 days, by the merchant remitting payment of the invoice directly to us. The discount is
recognized in income at the time of purchase. We further reduce the purchase amount to the customer by an average of 10 percent of the face value of the invoice; setting aside this reserve amount in a restricted interest-bearing savings account held
by us to cover any losses on any purchase. Additionally, as part of our normal analysis of the adequacy of our allowance for loan losses, we allocate approximately one percent to outstanding CFM balances. As of June 30, 2006 , there were 20
active accounts with outstanding balances of $8.2 million. At December 31, 2005, there were also 20 active accounts with outstanding balances of $8.7 million. CFM is included in the commercial loan category in the loan distribution table.

Construction loans represent 9 percent of total loans at June 30, 2006 compared with 8 percent at December 31, 2005.
Construction loans represent single-family and commercial building projects and are approximately evenly divided between the two types. Construction loans are typically short term, with maturities ranging from 12 to 18 months. For commercial
projects, we have a maximum loan-to-value requirement of 70 percent of the FIRREA conforming appraised value. For residential projects, the maximum loan-to-value ranges from 80 percent on loans under $500,000 to 70 percent on loans of $1,000,000 or
more. We require the borrower to provide in cash at least 20 percent of the cost of the project. At the borrowers expense, we use a third party vendor for funds control, lien releases and inspections. In addition, we regularly monitor the
marketplace and the economy for evidence of deterioration in real estate values.

The following table presents the scheduled maturities of
fixed and adjustable rate loans.



|                                      |  |                 |        |                            |   |                 |  |       |         |  |   |        
|------------------------------------- |  | --------------- | ------ | -------------------------- | - | --------------- |  | ----- | ------- |  | - | -------
|                                      |  | June 30, 2006  
|(in thousands)                        |  | One yearor less |        | After oneyear tofive years |   | After fiveyears |  | Total
|                                      |  |                 |        |                           
|Fixed rate loan                       |  |                 |        |                            |   |                 |  |       |         |  |   |        
|Commercial mortgage                   |  | $               | 72     |                            | $ | 4,638           |  | $     | 88      |  | $ | 4,798  
|Multifamily mortgage                  |  |                 |       |                            |   |                |  |       | 6,682   |  |   | 6,682  
|Commercial loans and lines            |  |                 | 8,505  |                            |   | 2,818           |  |       |        |  |   | 11,323 
|Construction                          |  |                 | 1,974  |                            |   |                |  |       |        |  |   | 1,974  
|Home equity loans                     |  |                 |       |                            |   |                |  |       |        |  |   |       
|Home mortgage                         |  |                 |       |                            |   |                |  |       | 3,621   |  |   | 3,621  
|Installment & credit card             |  |                 | 68     |                            |   | 275             |  |       |        |  |   | 343    
|                                      |  |                 |        |                            |   |                 |  |       |         |  |   |        
|Total fixed rate loan maturities      |  |                 | 10,619 |                            |   | 7,731           |  |       | 10,391  |  |   | 28,741 
|                                      |  |                 |        |                            |   |                 |  |       |         |  |   |        
|Adjustable rate loan                  |  |                 |        |                            |   |                 |  |       |         |  |   |        
|Commercial mortgage                   |  |                 | 9,787  |                            |   | 24,463          |  |       | 149,708 |  |   | 183,958
|Multifamily mortgage                  |  |                 | 1,016  |                            |   | 1,895           |  |       | 18,927  |  |   | 21,838 
|Commercial loans and lines            |  |                 | 31,365 |                            |   | 10,804          |  |       | 4,950   |  |   | 47,119 
|Construction                          |  |                 | 30,984 |                            |   | 243             |  |       |        |  |   | 31,227 
|Home equity loans                     |  |                 | 1,997  |                            |   | 1,060           |  |       | 6,203   |  |   | 9,260  
|Home mortgage                         |  |                 | 1,442  |                            |   | 3,660           |  |       | 34,882  |  |   | 39,984 
|Installment & credit card             |  |                 | 922    |                            |   | 57              |  |       | 681     |  |   | 1,660  
|                                      |  |                 |        |                            |   |                 |  |       |         |  |   |        
|Total adjustable rate loan maturities |  |                 | 77,513 |                            |   | 42,182          |  |       | 215,351 |  |   | 335,046
|                                      |  |                 |        |                            |   |                 |  |       |         |  |   |        
|Total maturities                      |  | $               | 88,132 |                            | $ | 49,913          |  | $     | 225,742 |  | $ | 363,787
|                                      |  |                 |        |                            |   |                 |  |       |         |  |   |        



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##### Table of Contents

|                                      |  |                   |         |                            |   |                 |  |       |        |  |   |        
|------------------------------------- |  | ----------------- | ------- | -------------------------- | - | --------------- |  | ----- | ------ |  | - | -------
|                                      |  | December 31, 2005
|(in thousands)                        |  | One yearor less   |         | After oneyear tofive years |   | After fiveyears |  | Total
|                                      |  |                   |         |                           
|Fixed rate loan                       |  |                   |         |                            |   |                 |  |       |        |  |   |        
|Commercial real estate                |  | $                 | 3,574   |                            | $ | 9,039           |  | $     | 9,311  |  | $ | 21,924 
|Commercial loans and lines            |  |                   | 620     |                            |   | 2,340           |  |       | 508    |  |   | 3,468  
|Construction                          |  |                   |        |                            |   |                |  |       |       |  |   |       
|Consumer                              |  |                   | 184     |                            |   | 345             |  |       |       |  |   | 529    
|Other                                 |  |                   |        |                            |   |                |  |       | 3,882  |  |   | 3,882  
|                                      |  |                   |         |                            |   |                 |  |       |        |  |   |        
|Total fixed rate loan maturities      |  |                   | 4,378   |                            |   | 11,724          |  |       | 13,701 |  |   | 29,803 
|                                      |  |                   |         |                            |   |                 |  |       |        |  |   |        
|Adjustable rate loan                  |  |                   |         |                            |   |                 |  |       |        |  |   |        
|Commercial real estate                |  |                   | 166,701 |                            |   | 30,575          |  |       | 1,300  |  |   | 198,576
|Commercial loans and lines            |  |                   | 69,777  |                            |   | 5,202           |  |       |       |  |   | 74,979 
|Construction                          |  |                   | 26,859  |                            |   |                |  |       |       |  |   | 26,859 
|Consumer                              |  |                   | 3,514   |                            |   | 426             |  |       |       |  |   | 3,940  
|Other                                 |  |                   | 5,582   |                            |   | 3,143           |  |       |       |  |   | 8,725  
|                                      |  |                   |         |                            |   |                 |  |       |        |  |   |        
|Total adjustable rate loan maturities |  |                   | 272,434 |                            |   | 39,346          |  |       | 1,300  |  |   | 313,079
|                                      |  |                   |         |                            |   |                 |  |       |        |  |   |        
|Total maturities                      |  | $                 | 276,812 |                            | $ | 51,070          |  | $     | 15,001 |  | $ | 342,883
|                                      |  |                   |         |                            |   |                 |  |       |        |  |   |        

Allowance for Loan Losses

We maintain an allowance for loan losses to provide for inherent losses in the loan portfolio. Additions to the allowance are established through a
provision charged to expense. All loans which are judged to be uncollectible are charged against the allowance while any recoveries are credited to the allowance. It is our policy to charge off any known losses at the time of determination. Any
unsecured loan more than 90 days delinquent in payment of principal or interest and not in the process of collection is charged off in total. Secured loans are evaluated on a case by case basis to determine the ultimate loss potential to us
subsequent to the liquidation of collateral. In those cases where we are inadequately protected, a charge off will be made to reduce the loan balance to a level equal to the liquidation value of the collateral.

Our loan policy provides procedures designed to evaluate and assess the risk factors associated with our loan portfolio, to enable us to assess such risk
factors prior to granting new loans and to evaluate the sufficiency of the allowance for loan losses. We conduct an assessment of the allowance on a monthly basis and undertake a more critical evaluation quarterly. At the time of the monthly review,
the Board of Directors will examine and formally approve the adequacy of the allowance. The quarterly evaluation includes an assessment of the following factors: any external loan review and any regulatory examination, estimated potential loss
exposure on each pool of loans, concentrations of credit, value of collateral, the level of delinquency and non-accruals, trends in the portfolio volume, effects of any changes in the lending policies and procedures, changes in lending personnel,
present economic conditions at the local, state and national level, the amount of undisbursed off-balance sheet commitments, and a migration analysis of historical losses and recoveries for the prior eight quarters.

The following table presents the allowance for loan losses.



|                                        |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|--------------------------------------- |  | -------------------------- | ----- | - | ------------------------ | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|(in thousands)                          |  | Three Months EndedJune 30, |       |   | Six Months EndedJune 30, |  
|                                        |  | 2006                       |       |   | 2005                     |   |       | 2006 |  |   | 2005  |  
|Beginning balance                       |  | $                          | 4,287 |   |                          | $ | 2,537 |      |  | $ | 4,105 |   |  | $ | 2,346 |  
|Provision for loan losses               |  |                            |      |   |                          |   | 122   |      |  |   | 153   |   |  |   | 244   |  
|Loans charged-off                       |  |                            | (12   | ) |                          |   | (74   | )    |  |   | (12   | ) |  |   | (74   | )
|Transfer to undisbursed commitment      |  |                            | (75   | ) |                          |   |      |      |  |   | (75   | ) |  |   |      |  
|Recoveries on loans charged-off         |  |                            | 9     |   |                          |   | 8     |      |  |   | 38    |   |  |   | 77    |  
|                                        |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|Ending balance                          |  | $                          | 4,209 |   |                          | $ | 2,593 |      |  | $ | 4,209 |   |  | $ | 2,593 |  
|                                        |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|Allowance to loans                      |  |                            |       |   |                          |   |       |      |  |   | 1.16  | % |  |   | 1.30  | %
|Accruing loans past due 90 days or more |  |                            |       |   |                          |   |       |      |  | $ | 25    |   |  | $ | 116   |  
|Nonaccrual loans                        |  |                            |       |   |                          |   |       |      |  | $ |      |   |  | $ | 2,158 |  
|Nonaccrual loans to loans               |  |                            |       |   |                          |   |       |      |  |   |      |   |  |   | 1.08  | %



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##### Table of Contents

The allowance for losses on undisbursed commitments was $275,000 at June 30, 2006 compared with
$200,000 at December 31, 2005. There have been no charges to the allowance since its inception. The allowance for losses on undisbursed commitments is included as an other liability category on the balance sheet.

The following table presents the allocation of the allowance to each loan category and the percentage relationship of loans in each category to total
loans.



|                            |  |               |       |                                          |                   |   |        |   |                                          |  |     |  
|--------------------------- |  | ------------- | ----- | ---------------------------------------- | ----------------- | - | ------ | - | ---------------------------------------- |  | --- | -
|                            |  | June 30, 2006 |       |                                          | December 31, 2005 |  
|(in thousands)              |  | Amount        |       | Percent ofLoans inCategory toTotal Loans |                   |   | Amount |   | Percent ofLoans inCategory toTotal loans | 
|                            |  |               |       |                                         
|Commercial mortgage         |  | $             | 1,184 |                                          | 51                | % |        | $ | 1,273                                    |  | 39  | %
|Mulitfamily mortgage        |  |               | 150   |                                          | 8                 | % |        |   | 159                                      |  | 5   | %
|Commercial loans            |  |               | 1,013 |                                          | 9                 | % |        |   | 1,062                                    |  | 32  | %
|Construction loans          |  |               | 762   |                                          | 16                | % |        |   | 620                                      |  | 19  | %
|Home equity loans           |  |               | 46    |                                          | 3                 | % |        |   | 43                                       |  | 1   | %
|Home mortgage               |  |               | 217   |                                          | 12                | % |        |   | 67                                       |  | 2   | %
|Installment and credit card |  |               | 47    |                                          | 1                 | % |        |   | 60                                       |  | 2   | %
|                            |  |               |       |                                          |                   |   |        |   |                                          |  |     |  
|Subtotal                    |  | $             | 3,419 |                                          |                   |   |        | $ | 3,284                                    |  |     |  
|Unallocated                 |  |               | 790   |                                          |                   |   |        |   | 821                                      |  |     |  
|                            |  |               |       |                                          |                   |   |        |   |                                          |  |     |  
|Total                       |  | $             | 4,209 |                                          | 100               | % |        | $ | 4,105                                    |  | 100 | %
|                            |  |               |       |                                          |                   |   |        |   |                                          |  |     |  

The allocation presented above should not be interpreted as an indication that charges to the
allowance will be incurred in these amounts or proportions. The amounts attributed to each loan category are based on the analysis described above.

Investing, funding and liquidity risk

Liquidity risk is the risk to earnings or capital arising from the inability
to meet obligations when they come due without incurring unacceptable losses. Liquidity risk includes the inability to manage unplanned decreases or changes in funding sources as well as the failure to recognize or address changes in market
conditions that affect the ability to liquidate assets quickly and with minimal loss in value.

We manage liquidity risk through Board
approved policies and procedures. These policies are reviewed and approved at least annually by the Directors. Liquidity risk policies provide us with a framework for consistent evaluation of risk and establish risk tolerance parameters.
Managements Asset and Liability Committee meets regularly to evaluate liquidity risk, review and establish deposit interest rates, review loan and deposit in-flows and out-flows and reports quarterly to the Directors Funds Management
Committee on compliance with policies. The Directors Audit Committee also engages a third party to perform a review of managements asset and liability practices to ensure compliance with policies.

We enjoy a large base of core deposits (representing checking, savings and small balance certificates of deposit). At June 30, 2006 core deposits
totaled $298.3 million, the same as at December 31, 2005. Core deposits represent a significant low-cost source of funds that support our lending activities and represent a key part of our funding strategy. We seek and stress the importance of
both loan and deposit relationships with customers in our business plans.

Alternative funding sources include large balance certificates
of deposits, federal funds purchased from other institutions, and borrowings.



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##### Table of Contents

Large balance certificates of deposits are not central to our funding strategy; however, we have
participated in the State of California time deposit program, which began in 1977, for several years. The time deposit program is one element of a pooled investment account managed by the State Treasurer for the benefit of the State of California
and all participating local agencies. The pooled investment account had approximately $60 billion in investments of which approximately $7 billion represented time deposits placed at various financial institutions. At June 30, 2006, State of
California time deposits placed with us, with original maturities of three and six months, were $30.0 million compared with $18.0 million at December 31, 2005. The increase in these deposits was used to off-set the anticipated non-renewal of
certificates of deposits acquired in the business combination. We believe that the State Treasurer will continue this program; we also believe that we have the ability to establish large balance certificates of deposit rates that will enable us to
attract, replace, or retain those deposits accepted in our local market area if it becomes necessary under a modified funding strategy.

We, as a member of the FHLB, have access to borrowing arrangements with a maximum available borrowing of approximately $166.1 million. Borrowings under these arrangements are collateralized with our FHLB stock as well as with our loans and
securities. As of June 30, 2006, we had borrowings outstanding with the FHLB of $51.3 million compared with $36.3 million as of December 31, 2005. The increase in borrowings was used to support loan growth.

In addition, we have lines of credit with three other financial institutions providing for federal funds facilities up to a maximum of $14.0 million. The
lines of credit support short-term liquidity needs and cannot be used for more than 15 consecutive days. These lines are unsecured, have no formal maturity date and can be revoked at any time by the granting institutions. There were no borrowings
under these lines of credit at June 30, 2006.

We also maintain a secured borrowing facility of $800,000 with the Federal Reserve Bank
of San Francisco. There were no borrowings under this facility at June 30, 2006.

Federal funds sold to other institutions provide an
immediate source of liquidity. The securities portfolio also provides a source of liquidity through the periodic remittance of interest and principal. Federal funds sold were $8.9 million at June 30, 2006 compared with $0.3 million at
December 31, 2005.

Securities

We purchase securities to generate interest income and to assist in the management of liquidity risk. Securities are classified as available-for-sale for accounting purposes and, as such, are recorded at
their fair or market values in the balance sheet. Fair values are based on quoted market prices. Changes in the fair value of securities (that is, unrealized holding gains or losses) are reported as other comprehensive income, net of tax
and carried as accumulated comprehensive income or loss within shareholders equity until realized. Securities were $65.8 million at June 30, 2006 compared with $73.4 million at December 31, 2005.



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##### Table of Contents

The following table presents securities, at amortized cost, by maturity distribution and weighted average
yield.



|                                       |  |                  |       |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  
|-------------------------------------- |  | ---------------- | ----- | - | -------------------------- | - | ------ | --------------------------- |  | - | ------------- | - |  | ----- | ----- | - |  | - | ------ | -
|                                       |  | At June 30, 2006 |      
|(in thousands)                         |  | One year orless  |       |   | After oneyear to fiveyears |   |        | After fiveyears to tenyears |  |   | Over tenyears |   |  | Total |      
|                                       |  |                  |       |   |                           
|Maturity distribution                  |  |                  |       |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  
|U.S. Treasury notes                    |  | $                | 1,499 |   |                            | $ | 1,502  |                             |  | $ |              |   |  | $     |      |   |  | $ | 3,001  |  
|U.S. agency notes                      |  |                  | 5,498 |   |                            |   | 3,049  |                             |  |   |              |   |  |       |      |   |  |   | 8,547  |  
|U.S. agency mortgage-backed securities |  |                  |      |   |                            |   | 35,997 |                             |  |   | 3,602         |   |  |       | 1,117 |   |  |   | 40,716 |  
|Collateralized mortgage obligations    |  |                  |      |   |                            |   | 987    |                             |  |   | 3,173         |   |  |       |      |   |  |   | 4,160  |  
|Municipal securities                   |  |                  | 100   |   |                            |   | 674    |                             |  |   | 4,662         |   |  |       | 6,317 |   |  |   | 11,753 |  
|                                       |  |                  |       |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  
|Total                                  |  | $                | 7,097 |   |                            | $ | 42,209 |                             |  | $ | 11,437        |   |  | $     | 7,434 |   |  | $ | 68,177 |  
|                                       |  |                  |       |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  
|Weighted average yield                 |  |                  |       |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  
|U.S. Treasury notes                    |  |                  | 2.59  | % |                            |   | 3.10   | %                           |  |   |              |   |  |       |      |   |  |   | 2.85   | %
|U.S. agency notes                      |  |                  | 3.36  | % |                            |   | 3.29   | %                           |  |   |              |   |  |       |      |   |  |   | 3.34   | %
|U.S. agency mortgage-backed securities |  |                  |      |   |                            |   | 3.87   | %                           |  |   | 4.77          | % |  |       | 5.89  | % |  |   | 4.00   | %
|Collateralized mortgage obligations    |  |                  |      |   |                            |   | 4.93   | %                           |  |   | 4.81          | % |  |       |      |   |  |   | 4.84   | %
|Municipal securities                   |  |                  | 8.03  | % |                            |   | 5.74   | %                           |  |   | 5.35          | % |  |       | 6.05  | % |  |   | 5.77   | %
|                                       |  |                  |       |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  
|Total                                  |  |                  | 3.26  | % |                            |   | 3.99   | %                           |  |   | 5.02          | % |  |       | 6.02  | % |  |   | 4.23   | %
|                                       |  |                  |       |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  



|                                       |  |                      |        |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  
|-------------------------------------- |  | -------------------- | ------ | - | -------------------------- | - | ------ | --------------------------- |  | - | ------------- | - |  | ----- | ----- | - |  | - | ------ | -
|                                       |  | At December 31, 2005 |       
|(in thousands)                         |  | One year orless      |        |   | After oneyear to fiveyears |   |        | After fiveyears to tenyears |  |   | Over tenyears |   |  | Total |      
|                                       |  |                      |        |   |                           
|Maturity distribution                  |  |                      |        |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  
|U.S. Treasury notes                    |  | $                    | 4,524  |   |                            | $ | 2,452  |                             |  | $ |              |   |  | $     |      |   |  | $ | 6,976  |  
|U.S. agency notes                      |  |                      | 5,779  |   |                            |   | 4,597  |                             |  |   |              |   |  |       |      |   |  |   | 10,376 |  
|U.S. agency mortgage-backed securities |  |                      |       |   |                            |   | 41,053 |                             |  |   | 2,810         |   |  |       | 1,226 |   |  |   | 45,089 |  
|Collateralized mortgage obligations    |  |                      |       |   |                            |   |       |                             |  |   | 3,414         |   |  |       |      |   |  |   | 3,414  |  
|State and municipal securities         |  |                      | 100    |   |                            |   | 679    |                             |  |   | 3,525         |   |  |       | 4,875 |   |  |   | 9,179  |  
|                                       |  |                      |        |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  
|Total                                  |  | $                    | 10,403 |   |                            | $ | 48,781 |                             |  | $ | 9,749         |   |  | $     | 6,101 |   |  | $ | 75,034 |  
|                                       |  |                      |        |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  
|Weighted average yield                 |  |                      |        |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  
|U.S. Treasury notes                    |  |                      | 3.11   | % |                            |   | 4.19   | %                           |  |   |              |   |  |       |      |   |  |   | 3.50   | %
|U.S. agency notes                      |  |                      | 3.25   | % |                            |   | 3.50   | %                           |  |   |              |   |  |       |      |   |  |   | 3.36   | %
|U.S. agency mortgage-backed securities |  |                      |       |   |                            |   | 3.74   | %                           |  |   | 4.64          | % |  |       | 5.41  | % |  |   | 3.84   | %
|Collateralized mortgage obligations    |  |                      |       |   |                            |   |       |                             |  |   | 4.79          | % |  |       |      |   |  |   | 4.79   | %
|State and municipal securities         |  |                      | 8.03   | % |                            |   | 5.69   | %                           |  |   | 5.45          | % |  |       | 6.00  | % |  |   | 5.79   | %
|                                       |  |                      |        |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  
|Total                                  |  |                      | 3.24   | % |                            |   | 3.77   | %                           |  |   | 4.99          | % |  |       | 5.88  | % |  |   | 4.03   | %
|                                       |  |                      |        |   |                            |   |        |                             |  |   |               |   |  |       |       |   |  |   |        |  

Securities, at amortized cost, declined to $68.2 million, or 9 percent, at June 30, 2006 from
$75.0 million at December 31, 2005. The change in securities reflects the principal pay-downs on mortgage-backed securities and the sale of a U. S. Treasury securities.

Net unrealized holding losses at June 30, 2006 and December 31, 2005 were $2.4 million and $1.6 million, respectively. As a percentage of
securities, at amortized cost, unrealized holding losses were 3.51 percent and 2.20 percent at the end of each respective period. Securities are comprised largely of U.S. government agency obligations, mortgage-backed securities and California
municipal general obligation bonds. We have evaluated the unrealized losses of these securities and determined, as of June 30, 2006, that they were temporary and were related to the fluctuation in market interest rates since purchase.



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##### Table of Contents

Deposits

We primarily accept deposits of small businesses located principally in Ventura, Orange and Los Angeles Counties. Core deposits (representing checking, savings and small balance certificates of deposit (balances under
$100,000)) totaled $298.3 million at June 30, 2006, the same as at December 31, 2005. Core deposits represent a significant low-cost source of funds that support our lending activities.

The following tables present the average balance and the average rate paid on each deposit category for the periods indicated.



|                                    |  |                                   |         |      |      |   |                |   |         |  |      |  
|----------------------------------- |  | --------------------------------- | ------- | ---- | ---- | - | -------------- | - | ------- |  | ---- | -
|                                    |  | For the six months ended June 30, |        
|                                    |  | 2006                              |         |      | 2005 |  
|(dollars in thousands)              |  | AverageBalance                    |         | Rate |      |   | AverageBalance |   | Rate    | 
|                                    |  |                                   |         |     
|Core deposits                       |  |                                   |         |      |      |   |                |   |         |  |      |  
|Noninterest bearing demand deposits |  | $                                 | 101,543 |      |      |   |                | $ | 92,242  |  |      |  
|Interest checking                   |  |                                   | 22,958  |      | 0.47 | % |                |   | 20,563  |  | 0.10 | %
|Savings accounts                    |  |                                   | 78,168  |      | 1.76 | % |                |   | 63,273  |  | 0.73 | %
|Time deposits less than $100,000    |  |                                   | 100,559 |      | 3.45 | % |                |   | 30,023  |  | 2.17 | %
|                                    |  |                                   |         |      |      |   |                |   |         |  |      |  
|Total core deposits                 |  |                                   | 303,228 |      | 2.45 | % |                |   | 206,101 |  | 1.00 | %
|                                    |  |                                   |         |      |      |   |                |   |         |  |      |  
|Noncore deposits                    |  |                                   |         |      |      |   |                |   |         |  |      |  
|Time deposits of $100,000 or more   |  |                                   | 78,227  |      | 4.78 | % |                |   | 25,010  |  | 2.36 | %
|                                    |  |                                   |         |      |      |   |                |   |         |  |      |  
|Total core and noncore deposits     |  | $                                 | 381,455 |      | 2.26 | % |                | $ | 231,111 |  | 1.24 | %
|                                    |  |                                   |         |      |      |   |                |   |         |  |      |  

Large balance certificates of deposits (balances of $100,000 or more) totaled $97.0 million at
June 30, 2006, up from $74.0 million at December 31, 2005. A portion of these large balance time deposits represent deposits placed by the State of California with the Bank. The remainder represent time deposits accepted from customers in
our market area. State of California time deposits represent $12.0 million of the increase since year end; time deposits from customers in our market area represent the remaining increase of $11.0 million. There were no broker deposits during or as
of any period presented.

The following table presents the maturity of large balance certificates of deposits for the periods indicated.



|                                     |  |               |        |            |                   |   |        |   |            |  |     |  
|------------------------------------ |  | ------------- | ------ | ---------- | ----------------- | - | ------ | - | ---------- |  | --- | -
|(in thousands)                       |  | June 30, 2006 |        |            | December 31, 2005 |  
|                                     |  | Amount        |        | Percentage |                   |   | Amount |   | Percentage | 
|Three months or less                 |  | $             | 54,425 |            | 56                | % |        | $ | 28,960     |  | 39  | %
|Over three months through six months |  |               | 9,470  |            | 10                | % |        |   | 19,947     |  | 27  | %
|Over six months through one year     |  |               | 23,725 |            | 24                | % |        |   | 9,358      |  | 13  | %
|Over one year                        |  |               | 9,374  |            | 10                | % |        |   | 15,753     |  | 21  | %
|                                     |  |               |        |            |                   |   |        |   |            |  |     |  
|Total                                |  | $             | 96,993 |            | 100               | % |        | $ | 74,018     |  | 100 | %
|                                     |  |               |        |            |                   |   |        |   |            |  |     |  

Borrowings

First California Bank is a member of the FHLB. Membership allows us to borrow, approximately $166.1 million at June 30, 2006, to meet funding needs
and otherwise assist in the management of liquidity risk. Borrowings with the FHLB are collateralized with our investment in FHLB stock as well as with loans or securities from time to time. At June 30, 2006, our investment in FHLB stock
totaled $2.5 million compared with $2.4 million at December 31, 2005. The change in the amount of FHLB coincides with the change in the amount of borrowings.



29



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The following table presents the amounts and weighted average interest rate of FHLB advances.



|                                                              |  |                                |        |                               |                             |   |                                |   |                               |  |      |  
|------------------------------------------------------------- |  | ------------------------------ | ------ | ----------------------------- | --------------------------- | - | ------------------------------ | - | ----------------------------- |  | ---- | -
|                                                              |  | Six Months EndedJune 30, 2006  |        |                               | Year EndedDecember 31, 2005 |  
|(in thousands)                                                |  | Federal Home LoanBank Advances |        | Weighted averageinterest rate |                             |   | Federal Home LoanBank Advances |   | Weighted averageinterest rate | 
|                                                              |  |                                |        |                               |                             |   |                                |   |                               |  |      |  
|Amount outstanding at end of period                           |  | $                              | 51,300 |                               | 4.38                        | % |                                | $ | 36,319                        |  | 3.70 | %
|Maximum amount outstanding at any month-end during the period |  | $                              | 51,300 |                               | 4.38                        | % |                                | $ | 47,566                        |  | 3.39 | %
|Average amount outstanding during the period                  |  | $                              | 32,276 |                               | 4.81                        | % |                                | $ | 35,202                        |  | 3.71 | %

The following table presents the maturities for FHLB advances at June 30,
2006.



|                   |  |        |        |              |      |                               |      |  
|------------------ |  | ------ | ------ | ------------ | ---- | ----------------------------- | ---- | -
|(in thousands)     |  | Amount |        | MaturityYear |      | Weighted AverageInterest Rate |     
|                   |  |        |       
|Overnight advances |  | $      | 25,000 |              | 2006 |                               | 5.41 | %
|Term advances      |  |        | 8,050  |              | 2006 |                               | 3.70 | %
|Term advances      |  |        | 10,750 |              | 2007 |                               | 4.16 | %
|Term advances      |  |        | 6,000  |              | 2008 |                               | 4.87 | %
|Term advances      |  |        | 1,500  |              | 2009 |                               | 5.16 | %
|                   |  |        |        |              |      |                               |      |  
|                   |  | $      | 51,300 |              |      |                               |      |  
|                   |  |        |        |              |      |                               |      |  

Capital resources

The Board of Directors recognizes that a strong capital position is vital to growth, continued profitability, and depositor and investor confidence. The
policy of the Board of Directors is to maintain sufficient capital at not less than the well-capitalized thresholds established by banking regulators. We have not paid cash or stock dividends since 2001.

The following tables present the capital amounts and ratios of FCB Bancorp with a comparison to the minimum ratios for the periods indicated.



30



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|                                        |  |        |  |       |                              |  |        |  |       |      |  
|--------------------------------------- |  | ------ |  | ----- | ---------------------------- |  | ------ |  | ----- | ---- | -
|(in thousands)                          |  | Actual |  |       | For CapitalAdequacy Purposes | 
|                                        |  | Amount |  | Ratio |                              |  | Amount |  | Ratio |     
|June 30, 2006                           |  |        |  |       |                              |  |        |  |       |      |  
|Total capital(to risk weighted assets)  |  | 46,389 |  | 11.66 | %                            |  | 31,827 |  | 3     | 8.00 | %
|Tier I capital(to risk weighted assets) |  | 41,905 |  | 10.53 | %                            |  | 15,918 |  | 3     | 4.00 | %
|Tier I capital(to average assets)       |  | 41,905 |  | 8.56  | %                            |  | 14,686 |  | 3     | 3.00 | %
|                                        |  |       
|                                        |  | Actual |  |       | For CapitalAdequacy Purposes | 
|                                        |  | Amount |  | Ratio |                              |  | Amount |  | Ratio |     
|December 31, 2005                       |  |        |  |       |                              |  |        |  |       |      |  
|Total capital(to risk weighted assets)  |  | 44,545 |  | 11.74 | %                            |  | 30,352 |  | 3     | 8.00 | %
|Tier I capital(to risk weighted assets) |  | 40,239 |  | 10.60 | %                            |  | 15,181 |  | 3     | 4.00 | %
|Tier I capital(to average assets)       |  | 40,239 |  | 8.69  | %                            |  | 13,889 |  | 3     | 3.00 | %

The following tables present the capital amounts and ratios of First California Bank with a
comparison to the minimum ratios for the periods indicated.



|                                        |  |        |  |       |                              |  |        |                                                              |       |      |   |        |        |       |   |       |  
|--------------------------------------- |  | ------ |  | ----- | ---------------------------- |  | ------ | ------------------------------------------------------------ | ----- | ---- | - | ------ | ------ | ----- | - | ----- | -
|(in thousands)                          |  | Actual |  |       | For CapitalAdequacy Purposes |  |        | To be WellCapitalized UnderPrompt CorrectiveAction Provision |      
|                                        |  | Amount |  | Ratio |                              |  | Amount |                                                              | Ratio |      |   | Amount |        | Ratio |  
|June 30, 2006                           |  |        |  |       |                              |  |        |                                                              |       |      |   |        |        |       |   |       |  
|Total capital(to risk weighted assets)  |  | 45,799 |  | 11.51 | %                            |  | 31,832 |                                                              | 3     | 8.00 | % |        | 39,791 |       | 3 | 10.00 | %
|Tier I capital(to risk weighted assets) |  | 41,315 |  | 10.38 | %                            |  | 15,921 |                                                              | 3     | 4.00 | % |        | 23,882 |       | 3 | 6.00  | %
|Tier I capital(to average assets)       |  | 41,315 |  | 8.92  | %                            |  | 18,527 |                                                              | 3     | 4.00 | % |        | 23,159 |       | 3 | 5.00  | %
|                                        |  |        | 
|                                        |  | Actual |  |       | For CapitalAdequacy Purposes |  |        | To be WellCapitalized UnderPrompt CorrectiveAction Provision |      
|                                        |  | Amount |  | Ratio |                              |  | Amount |                                                              | Ratio |      |   | Amount |        | Ratio |  
|December 31, 2005                       |  |        |  |       |                              |  |        |                                                              |       |      |   |        |        |       |   |       |  
|Total capital(to risk weighted assets)  |  | 43,900 |  | 11.62 | %                            |  | 30,224 |                                                              | 3     | 8.00 | % |        | 37,780 |       | 3 | 10.00 | %
|Tier I capital(to risk weighted assets) |  | 39,595 |  | 10.48 | %                            |  | 15,113 |                                                              | 3     | 4.00 | % |        | 22,669 |       | 3 | 6.00  | %
|Tier I capital(to average assets)       |  | 39,595 |  | 8.88  | %                            |  | 17,836 |                                                              | 3     | 4.00 | % |        | 22,294 |       | 3 | 5.00  | %

Dividends declared by the Bank to FCB in any calendar year may not, without the approval of state
banking regulators, exceed the lesser of the Banks retained earnings or the sum of net income for the three previous years less dividend paid. At June 30, 2006, the Bank had approximately $2.7 million available for dividends under these
restrictions.

Commitments, Contingent Liabilities, Contractual Obligations and Off-Balance Sheet Arrangements

In the normal course of business, we make commitments to extend credit or issues letters of credit to customers. These commitments generally are not
recognized in the balance sheet. These commitments do involve, to varying degrees, elements of credit



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risk; however, we use the same credit policies and procedures as we do for on-balance sheet credit facilities. Commitments to extend credit totaled $72.5
million at June 30, 2006, compared with $79.1 million at December 31, 2005. Commercial and standby letters of credit were $471,000 and $427,000 at June 30, 2006 and December 31, 2005, respectively.

The following is a schedule of our current contractual obligations by maturity and/or payment due date.



|                               |  |                   |        |                  |   |                   |  |                       |       |       |   |        |  |   |       
|------------------------------ |  | ----------------- | ------ | ---------------- | - | ----------------- |  | --------------------- | ----- | ----- | - | ------ |  | - | ------
|                               |  | June 30, 2006    
|(in thousands)                 |  | Less ThanOne Year |        | One toThreeYears |   | Three toFiveYears |  | GreaterThan FiveYears |       | Total
|                               |  |                   |        |                  |  
|FHLB overnight advances        |  | $                 | 25,000 |                  | $ |                  |  | $                     |      |       | $ |       |  | $ | 25,000
|FHLB term advances             |  |                   | 14,100 |                  |   | 12,200            |  |                       |      |       |   |       |  |   | 26,300
|Salary continuation benefits   |  |                   |       |                  |   |                  |  |                       |      |       |   | 361    |  |   | 361   
|Director post-service award    |  |                   |       |                  |   | 92                |  |                       |      |       |   |       |  |   | 92    
|Junior subordinated debentures |  |                   |       |                  |   |                  |  |                       |      |       |   | 10,310 |  |   | 10,310
|Operating lease obligations    |  |                   | 740    |                  |   | 1,456             |  |                       | 1,152 |       |   | 3,022  |  |   | 6,370 
|                               |  |                   |        |                  |   |                   |  |                       |       |       |   |        |  |   |       
|Total                          |  | $                 | 39,840 |                  | $ | 13,748            |  | $                     | 1,152 |       | $ | 13,693 |  | $ | 68,433
|                               |  |                   |        |                  |   |                   |  |                       |       |       |   |        |  |   |       



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|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

Interest rate risk

Interest rate risk is the risk to earnings or capital arising from movements in interest rates.
Interest rate risk arises from differences between the timing of rate changes and the timing of cash flows (re-pricing risk), from changing the rate relationships among different yield curves affecting bank activities (basis risk), from changing
rate relationships across the spectrum of maturities (yield curve risk), and from interest-related options embedded in loans and products (options risk).

We manage interest risk through Board approved policies and procedures. These policies are reviewed and approved at least annually by the Directors. Interest rate risk policies provide management with a framework for
consistent evaluation of risk (a modified-gap analysis, an earnings-at-risk analysis and an economic value of equity analysis) and establish risk tolerance parameters. Managements Asset and Liability Committee meets regularly to evaluate
interest rate risk, engages a third party to assist in the measurement and evaluation of risk and reports quarterly to the Directors Funds Management Committee on compliance with policies. The Directors Audit Committee also engages a
third party to perform a review of managements asset and liability practices to ensure compliance with policies.

Our funding sources
are dominated by checking and savings accounts, which either have no interest rate or are re-priced infrequently. Our loan portfolio is dominated by loans that use the Wall Street Journal prime rate as an index. Our securities portfolio is comprised
chiefly of U.S. Agency mortgage-backed securities that are either fixed rate, adjustable or a hybrid. This composition produces a balance sheet that is generally asset-sensitive, that is as the general level of interest rates rise, net interest
income generally increases and as the general level of interest rates fall, net interest income generally decreases.

We focus on the net
re-pricing imbalances in the cumulative 1 year gap and the Board has established a policy of plus or minus 15 percent. The Board also has established a policy of plus or minus 30 percent for the cumulative 5 year gap. No policies have been
established for the cumulative 3 month gap or the gap beyond 5 years. The 1 year gap ratio and the 5 year gap ratio are within policy at June 30, 2006.

The following table presents earning assets and interest bearing funds by re-pricing intervals:



|                                                 |  |                                     |         |   |              |   |         |           |  |   |           |   |  |       |         |   |  |   |        
|------------------------------------------------ |  | ----------------------------------- | ------- | - | ------------ | - | ------- | --------- |  | - | --------- | - |  | ----- | ------- | - |  | - | -------
|                                                 |  | June 30, 2006 By repricing interval
|(in thousands)                                   |  | 0-3Months                           |         |   | 4 - 12Months |   |         | 1-5 Years |  |   | > 5 Years |   |  | Total
|Loans                                            |  | $                                   | 197,919 |   |              | $ | 42,956  |           |  | $ | 123,937   |   |  | $     | 10,528  |   |  | $ | 375,340
|Securities                                       |  |                                     | 6,154   |   |              |   | 11,630  |           |  |   | 27,988    |   |  |       | 20,014  |   |  |   | 65,786 
|Federal funds sold                               |  |                                     | 8,900   |   |              |   |        |           |  |   |           |   |  |       |         |   |  |   | 8,900  
|                                                 |  |                                     |         |   |              |   |         |           |  |   |           |   |  |       |         |   |  |   |        
|Total earning assets                             |  |                                     | 212,973 |   |              |   | 54,586  |           |  |   | 151,925   |   |  |       | 30,542  |   |  |   | 450,026
|                                                 |  |                                     |         |   |              |   |         |           |  |   |           |   |  |       |         |   |  |   |        
|Deposits                                         |  |                                     | 119,571 |   |              |   | 122,193 |           |  |   | 38,777    |   |  |       |        |   |  |   | 280,542
|Junior subordinated debentures                   |  |                                     |         |   |              |   |         |           |  |   |          |   |  |       | 10,310  |   |  |   | 10,310 
|Borrowings                                       |  |                                     | 30,300  |   |              |   | 8,800   |           |  |   | 12,200    |   |  |       |        |   |  |   | 51,300 
|                                                 |  |                                     |         |   |              |   |         |           |  |   |           |   |  |       |         |   |  |   |        
|Total deposits and borrowings                    |  |                                     | 149,871 |   |              |   | 130,993 |           |  |   | 50,977    |   |  |       | 10,310  |   |  |   | 342,152
|                                                 |  |                                     |         |   |              |   |         |           |  |   |           |   |  |       |         |   |  |   |        
|Interest rate sensitivity gap                    |  | $                                   | 63,102  |   |              | $ | (76,407 | )         |  | $ | 100,947   |   |  | $     | 20,232  |   |  | $ | 107,874
|                                                 |  |                                     |         |   |              |   |         |           |  |   |           |   |  |       |         |   |  |   |        
|Cumulative gap                                   |  | $                                   | 63,102  |   |              | $ | (13,306 | )         |  | $ | 87,642    |   |  | $     | 107,874 |   |  |   |        
|                                                 |  |                                     |         |   |              |   |         |           |  |   |           |   |  |       |         |   |  |   |        
|Cumulative gap as a percentage of earning assets |  |                                     | 14.02   | % |              |   | -2.96   | %         |  |   | 19.47     | % |  |       | 23.97   | % |  |   |        
|                                                 |  |                                     |         |   |              |   |         |           |  |   |           |   |  |       |         |   |  |   |        



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Item 4. Controls and Procedures



| | (a) | Evaluation of Disclosure Controls and Procedures: An evaluation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities
Exchange Act of 1934) was carried out under the supervision and with the participation of the Companys Chief Executive Officer, Chief Financial Officer and several other members of the Companys senior management as of the end of the
period covered by this report. The Companys Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures as currently in effect are effective in ensuring that the information required
to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934 is (i) accumulated and communicated to the Companys management (including the Chief Executive Officer and Chief Financial Officer)
in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Changes in Internal Controls: There was no change in the Companys internal control over financial reporting during the Companys most recently completed fiscal
quarter that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

PART II

OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

None



|Item 1A. | Risk factors
|-------- | ------------

There have been no material changes to FCB
Bancorps risk factors previously disclosed under the caption Risk Factors on page 16 of FCB Bancorps Form 10-K filed with the SEC on March 30, 2006, covering the fiscal year ended December 31, 2005.



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

None



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None



|Item 4. | Submission of Matters to a Vote of Security Holders:
|------- | ----------------------------------------------------

None



|Item 5. | Other information
|------- | -----------------

None



|Item 6. | Exhibits
|------- | --------

Exhibit Index:



|     |  |                                                                                                                                                                                                                                                       
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1  |  | Agreement and Plan of Merger, dated as of June 15, 2006, among National Mercantile Bancorp, FCB Bancorp and First California Financial Group, Inc. (Incorporated by reference to the Current
Report on Form 8-K filed by FCB Bancorp on June 21, 2006)
|     | 
|10.1 |  | Salary Continuation Agreement, dated May 11, 2006, with Romolo Santarosa (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 filed by FCB
Bancorp)                                                   
|     | 
|10.2 |  | Split Dollar Agreement, dated May 11, 2006, with Romolo Santarosa (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 filed by FCB
Bancorp)                                                          
|     | 
|10.3 |  | 409A Amendment to the First California Bank Salary Continuation Agreement for Chong Guk Kim (Incorporated by reference to the Current Report on Form 8-K filed by FCB Bancorp on June 7,
2006)                                                        
|     | 
|10.4 |  | 409A Amendment to the First California Bank Salary Continuation Agreement for Thomas E. Anthony (Incorporated by reference to the Current Report on Form 8-K filed by FCB Bancorp on June 7,
2006)                                                    
|     | 
|10.5 |  | Form of Voting Agreement, dated as of June 15, 2006, between FCB Bancorp and certain shareholders of National Mercantile Bancorp (Incorporated by reference to the Current Report on Form 8-K
filed by FCB Bancorp on June 21, 2006)                  
|     | 
|10.6 |  | Employment Agreement, dated as of June 15, 2006, between C. G. Kum and First California Financial Group, Inc. (Incorporated by reference to the Current Report on Form 8-K filed by FCB Bancorp
on June 21, 2006)                                     
|     | 
|31.1 |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                    
|     | 
|31.2 |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                    
|     | 
|32.1 |  | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                    
|     | 
|32.2 |  | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                    



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SIGNATURES

Pursuant to the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized:



|                                                     |  |  |  |                
|---------------------------------------------------- |  |  |  | ---------------
|FCB BANCORP                                          |  |  |  |                
|                                                     |  | 
|/s/ C. G. Kum                                        |  |  |  | August 14, 2006
|C. G. Kum                                            |  |  |  |                
|President and Chief Executive Officer                |  |  |  |                
|                                                     |  | 
|/s/ Romolo Santarosa                                 |  |  |  | August 14, 2006
|Romolo Santarosa                                     |  |  |  |                
|Executive Vice President and Chief Financial Officer |  |  |  |                



35