EXHIBIT 10.6



                           MEMORANDUM OF UNDERSTANIDNG

                                 BY AND BETWEEN

                            COMMUNITY WEST BANCSHARES
                               GOLETA, CALIFORNIA

                                     AND THE
                      FEDERAL RESERVE BANK OF SAN FRANCISCO
                            SAN FRANCISCO, CALIFORNIA


          Community West Bancshares, Goleta, California ("Bancshares"), and the
Federal Reserve Bank of San Francisco (the "Reserve Bank") as evidenced by
signatures of their duly appointed officers below, have hereby entered into this
Memorandum of Understanding (the "Memorandum"). This evidences the understanding
of Bancshares and the Reserve Bank regarding the satisfactory resolution of
certain criticisms and concerns contained in the Report of Bank Holding Company
Inspection (the "Report") conducted as of the close of business March 31, 2000.
Accordingly, Bancshares agrees to adopt the following plans, policies and
courses of action:


DIVIDENDS AND STOCK REDEMPTIONS

     1.   Bancshares shall not declare or pay any dividends without the prior
written approval of the Reserve Bank. All requests for prior approval shall be
received by the Reserve Bank at least 30 days prior to the proposed dividend
declaration date and shall contain, but not be limited to:

          (a)     information on consolidated earnings for the most recent
annual and interim period;


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          (b)     current and projected information on earnings, cash flow,
capital levels and asset quality; and

          (c)     information regarding whether the proposed dividend payment is
covered by Bancshares's operating earnings and is consistent with the Board of
Governors's Policy Statement, dated November 14, 1985, concerning the payment of
cash dividends by bank holding companies,


     2.     Within 60 days of this Memorandum, Bancshares shall submit to the
Reserve Bank an acceptable written dividend policy concerning the payment of
dividends by Bancshares that shall, at a minimum, include:

          (a)     a review of the capacity of Bancshares's operating cash flow
to accommodate any proposed dividend payment, specifically whether the proposed
dividend payment is covered by Bancshares's operating earnings; and

          (b)     a determination that the dividend payment will not place undue
pressure on the capital resources and the liquidity of Goleta National Bank and
Palomar Community Bank (collectively, the "Subsidiary Banks".)


     3.     Bancshares shall not purchase, redeem or otherwise acquire, directly
or indirectly, any of its stock without the prior written approval of the
Reserve Bank.


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CAPITAL ADEQUACY

     4.     Within 60 days of this Memorandum, Bancshares shall submit to the
Reserve Bank an acceptable written plan to maintain a sufficient capital
position for the consolidated organization. The plan shall, at a minimum,
address and consider:

          (a)     the current and future capital requirements of the Subsidiary
Banks and the consolidated organization;

          (b)     the requirements of the Capital Adequacy Guidelines for Bank
Holding Companies: Risk-Based Measure and Tier 1 Leverage Measure, Appendices A
and D of Regulation Y of the Board of Governors (12 C.F.R. Part 225, App. A and
D);

          (c)     the volume of adversely classified assets at the Subsidiary
Banks;

          (d)     anticipated levels of earnings of the Subsidiary Banks, with
particular attention to maintaining adequate loan loss reserves at the
Subsidiary Banks;

          (e)     the source and timing of additional funds that may be
necessary to fulfill the future capital needs of the consolidated organization;
and

          (f)     any capital requirements for the Subsidiary Banks under any
supervisory action.


DEBT AND DEBT SERVICE

     5.    (a)     Bancshares shall not, directly or indirectly, increase its
borrowings, incur any debt, or renew any existing debt, including, without
limitation, debt funded by account overdrafts, without the prior written
approval of the Reserve Bank.


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          (b)     All requests for prior written approval shall contain, at a
minimum, a statement regarding the purpose of the debt, increase, or renewal,
the terms of the borrowing, the planned sources for debt repayment, and an
analysis of the cash flow resources available to meet such debt repayment.

          (c)     Within 45 days of this Memorandum, Bancshares shall submit to
the Reserve Bank an acceptable written debt service/retirement plan. The plan
shall, at a minimum, address and consider:

               (i)     reduction and/or retirement of outstanding debts;

               (ii)    Bancshares's cash flow projections;

               (iii)   the Subsidiary Banks' anticipated earnings, asset
growth, capital, and dividend projections;

               (iv)    alternative sources of funds to be used to make all
necessary debt reductions;

               (v)     appropriate financial projections; and

               (vi)    the actions Bancshares will take to maintain compliance
with the terms of its debt agreements.


COMPLIANCE

     6.     (a)     Bancshares shall immediately take all necessary steps
consistent with sound banking practices to eliminate and/or correct the
violations of sections 23A and 23B of the Federal Reserve Act (12 U.S.C 371c and
371c-l) set forth in the most recent Report.


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          (b)     Bancshares shall not engage, directly or indirectly, in any
violation or in any activity resulting in a violation of section 23A or 23B of
the Federal Reserve Act.

          (c)     Within 60 days of this Memorandum, Bancshares shall submit to
the Reserve Bank an acceptable written compliance program designed to ensure
Bancshares's compliance with all applicable laws, rules, and regulations. The
program shall, at a minimum, (i) provide for the appointment of an individual as
a compliance officer responsible for coordinating and monitoring compliance with
the program; (ii) describe in detail the steps management will take to provide
adequate oversight of the consolidated organization's compliance policies and
procedures; and (iii) provide for compliance training for appropriate personnel.


INTERNAL CONTROLS AND REGULATORY REPORTING

     7.     Within 60 days of this Memorandum, Bancshares shall submit to the
Reserve Bank acceptable written policies and procedures designed to strengthen
and maintain Bancshares' records, systems, and internal controls. These policies
and procedures shall include, without limitation:

          (a)     corrective steps to address criticisms set forth in the
Report, including, but not limited to, criticisms of loans and investments and
intercompany tax allocations between Bancshares and the Subsidiary Banks; and

          (b)     corrective steps to ensure that all regulatory reports and
financial statements required to be filed with, and submitted to, the Federal
Reserve System by Bancshares are filed and submitted to the Reserve Bank and the
Board of Governors in a timely manner and


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accurately reflect the condition of Bancshares and the consolidated organization
as of the date of the report or statement.


BOARD OVERSIGHT

     8.     Within 60 days of this Memorandum, Bancshares shall submit to the
Reserve Bank an acceptable written plan designed to enhance management
information systems and the board of directors' supervision of the operations
and management of the consolidated organization. At a minimum, the plan shall
address, consider and include;

          (a)     the steps that the board of directors will take to establish
and maintain effective supervision of the consolidated organization's senior
management, major operations and activities, and prevent funding practices that
jeopardize the welfare of the Subsidiary Banks or the consolidated organization;

          (b)     the responsibilities of the board of directors for defining,
approving, implementing, and monitoring the corrective actions required by this
Memorandum; and

          (c)     a description of the detailed information that will be
provided to the board of directors.


STRATEGIC PLAN

     9.     (a)     Within 60 days of this Memorandum, Bancshares shall submit
to the Reserve Bank a written consolidated strategic plan for corporate
development and operational strategy for the year 2001, including any new or
expanded activities. The plan shall, at a minimum, address and consider:


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               (i)     identification of the methods or procedures by which the
board of directors of Bancshares will oversee the activities, policies and
practices of the Subsidiary Banks;

               (ii)    identification of the means by which the consolidated
organization will seek to improve its operating performance; and

               (iii)   Bancshares's financial performance objectives,
including projections for cash flow, earnings, capital and asset growth or
reduction.


          (b)     A written strategic plan for each calendar year subsequent to
2001 shall be submitted to the Reserve Bank by January 3lst of such calendar
year.


AUDIT

     10.     Within 60 days of this Memorandum, Bancshares shall submit to the
Reserve Bank an acceptable written plan to address the weaknesses contained in
the Report concerning the audit program. The plan shall, at a minimum, address,
consider and include:

          (a)     staffing of the audit committee, including the guidelines and
designation of resources to ensure that internal audits for the consolidated
organization are completed as scheduled and that audits are performed for all
areas that have been designated as warranting follow-up attention;

          (b)     audit coverage, including the development of standardized
audit reports and workpapers, as well as the procedures for specific review,
follow-up and implementation of corrective action that is responsive to audit
findings;

          (c)     frequency of audit committee meetings;


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          (d)     reporting and review of audit findings pertaining to the
Subsidiary Banks and the parent; and

          (e)     annual review and approval by the board of directors of the
audit plan and program for the consolidated organization.


DIRECTORS AND OFFICERS

     11.    During the term of this Memorandum, or as otherwise required by
law, Bancshares shall comply with the provisions of section 32 of the FDI Act
(12 U.S.C. 1831i) and Subpart H of Regulation Y of the Board of Governors (12
C.F.R. Part 225, Subpart H) with respect to the appointment of any new directors
or the hiring or promotion of any senior executive officers as defined in
Regulation O of the Board of Governors (12 C.F.R. Part 215).


     12.     Bancshares shall not increase director fees without the prior
approval of the Reserve Bank.


APPROVAL OF PLANS, POLICIES AND PROCEDURES

     13.     The plans, programs, policies and procedures required by paragraphs
2, 4, 5(c), 6(c), 7, 8 and 10 hereof shall be submitted to the Reserve Bank for
review and approval. Acceptable plans, programs, policies and procedures shall
be submitted within the time periods set forth in this Memorandum. Bancshares
shall adopt all plans, programs, policies, and procedures within 10 days of
receipt of approval from the Reserve Bank and then shall fully comply with them.
During the term of this Memorandum, the approved plans, programs,


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policies, and procedures shall not be amended or rescinded without the prior
written approval of the Reserve Bank.


PROGRESS REPORTS

     14.     Within 30 days after the end of each calendar quarter (December 31,
March 31, June 30, and September 30) following the date of this Memorandum,
Bancshares shall furnish to the Reserve Bank written progress reports detailing
the form and manner of all actions taken to secure compliance with this
Memorandum and the results thereof. Such reports may be discontinued when the
corrections required by this Memorandum have been accomplished and the Reserve
Bank has, in writing, released Bancshares from making further reports.


     15.     Bancshares shall submit to the Reserve Bank a copy of all written
progress reports submitted by GNB to the Office of the Comptroller of the
Currency (the "OCC") pursuant to any supervisory agreement or order entered into
between GNB and the OCC.

COMMUNICATIONS

     16.   All communications regarding this Memorandum shall be sent to:

           (a)     Mr. Philip Ryan
                   Assistant Vice President
                   Federal Reserve Bank of San Francisco
                   101 Market Street, MS 970
                   San Francisco, CA 94105

           (b)     Mr. Llewellyn Stone
                   President and Chief Executive Officer
                   Community West Bancshares
                   455 Pine Avenue
                   Goleta, CA 93117


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EFFECT AND TERM OF MEMORANDUM

     17.     The provisions of this Memorandum shall be binding upon Bancshares
and its institution-affiliated parties, in their capacities as such, and their
successors and assigns.


     18.     Each provision of this Memorandum shall remain effective and
enforceable until stayed, modified, terminated or suspended by the Reserve Bank.


     19.     Notwithstanding any provision of this Memorandum to the contrary,
the Reserve Bank may, in its sole discretion, grant written extensions of time
to Bancshares to comply with any provision of this Memorandum.


     20.     The provisions of this Memorandum shall not bar, estop or otherwise
prevent the Board of Governors, the Reserve Bank or any federal or state agency
or department from taking any other action affecting Bancshares or any of its
current or former institution-affiliated parties.


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     22.     IN WITNESS WHEREOF, the parties have caused this Memorandum to be
executed as of this 22nd day of February, 2001.


Community West Bancshares, Inc.     Federal Reserve Bank of San Francisco



By: /s/ Michael Alexander           By:
    -----------------------             ------------------------
    Michael Alexander                   Philip Ryan
    Chairman                            Assistant Vice President

     Each of the undersigned directors of Bancshares acknowledges having read
the foregoing Memorandum and approves of the consent thereto by Bancshares.


/s/  Mounir R. Ashamalla           /s/  Robert H. Bartlein
-----------------------------      -----------------------------
Mounir R. Ashamalla                 Robert H. Bartlein


/s/  Jean W. Blois
-----------------------------      -----------------------------
Jean W. Blois                      John D. Illgen


/s/  Lynda Nahra                   /s/  Michel Nellis
-----------------------------      -----------------------------
Lynda Nahra                        Michel Nellis


/s/  William R. Peeples            /s/  Richard Sanborn
-----------------------------      -----------------------------
William R. Peeples                 Richard Sanborn


                                   /s/  Llewellyn W. Stone
-----------------------------      -----------------------------
James R. Sims Jr.                  Llewellyn W. Stone


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