##### Table of Contents

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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



(Mark
One)

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



For the quarterly period ended September 30, 2005



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 number 000-33455



ALLIANCE BANCSHARES CALIFORNIA

(Exact name of Registrant as specified in its charter)



|                                                              |  |                                       
|------------------------------------------------------------- |  | --------------------------------------
|California                                                    |  | 91-2124567                            
|(State or other jurisdictionof incorporation or organization) |  | (I.R.S. Employer IdentificationNumber)
|                                                              | 
|100 Corporate PointeCulver City, California                   |  | 90230                                 
|(Address of principal executive offices)                      |  | (Zip Code)                            



(310) 410-9281

(Registrants telephone number, including area code)



---

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



Check whether the issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing
requirements for the past 90 days. YES x NO ̈



APPLICABLE ONLY TO CORPORATE ISSUERS:



State the number of shares outstanding of each of the issuers classes of common stock,
as of the latest practicable date.



6,039,579 shares of Common
Stock as of October 31, 2005



Indicated by checkmark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): YES ̈NO x



Transitional Small Business Disclosure Format: YES ̈NO x



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##### Table of Contents



ALLIANCE BANCSHARES
CALIFORNIA



QUARTERLY REPORT ON FORM 10-QSB

FOR

THE THREE AND
NINE MONTHS ENDED SEPTEMBER 30, 2005



TABLE OF CONTENTS



|           |  |                       |  |                                                                                                      |  |         
|---------- |  | --------------------- |  | ---------------------------------------------------------------------------------------------------- |  | --------
|           |  |                       |  |                                                                                                      |  | Page No.
|Part I.    |  | Financial Information |  |                                                                                                     
|           |  |                       | 
|           |  | Item 1.               |  | Financial Statements                                                                                 |  |         
|           |  |                       | 
|           |  |                       |  | Consolidated Statements of Financial ConditionAt September 30, 2005 and December 31, 2004            |  | 3       
|           |  |                       | 
|           |  |                       |  | Consolidated Statements of OperationsFor the three and nine months ended September 30, 2005 and 2004 |  | 4       
|           |  |                       | 
|           |  |                       |  | Consolidated Statements of Cash FlowsFor the nine months ended September 30, 2005 and 2004           |  | 5       
|           |  |                       | 
|           |  |                       |  | Consolidated Statement of Shareholders EquityFor the nine months ended September 30, 2005           |  | 6       
|           |  |                       | 
|           |  |                       |  | Notes to Consolidated Financial Statements                                                           |  | 7       
|           |  |                       | 
|           |  | Item 2.               |  | Managements Discussion and Analysis or Plan of Operation                                            |  | 11      
|           |  |                       | 
|           |  | Item 3.               |  | Controls and Procedures                                                                              |  | 25      
|           |  |                      
|Part II.   |  | Other Information     |  |                                                                                                     
|           |  |                       | 
|           |  | Item 6.               |  | Exhibits                                                                                             |  | 26      
|           | 
|Signatures |  | 27                   



2



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##### Table of Contents



PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------



CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION



|                                                                                                                   |  |                   |             |                  |   |            
|------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ----------- | ---------------- | - | -----------
|                                                                                                                   |  | September 30,2005 |             | December 31,2004
|                                                                                                                   |  | (Unaudited)       |             |                 
|Assets                                                                                                             |  |                   |             |                  |   |            
|Cash and due from banks                                                                                            |  | $                 | 17,401,900  |                  | $ | 10,692,600 
|Federal funds sold                                                                                                 |  |                   | 17,645,000  |                  |   | 8,895,000  
|                                                                                                                   |  |                   |             |                  |   |            
|Total cash and cash equivalents                                                                                    |  |                   | 35,046,900  |                  |   | 19,587,600 
|                                                                                                                   |  |                   |             |                  |   |            
|Time deposits with other financial institutions                                                                    |  |                   | 5,433,900   |                  |   | 5,018,000  
|Securities held to maturity, fair market value $66,637,900 at September 30, 2005; $72,933,200 at December 31, 2004 |  |                   | 67,767,000  |                  |   | 72,782,800 
|Loans held for sale                                                                                                |  |                   | 2,329,800   |                  |   | 3,211,200  
|Loans, net of the allowance for loan losses of $5,268,400 at September 30, 2005; $3,477,900 at December 31, 2004   |  |                   | 458,964,700 |                  |   | 298,030,300
|Equipment and leasehold improvements, net                                                                          |  |                   | 3,954,300   |                  |   | 3,001,900  
|Accrued interest receivable and other assets                                                                       |  |                   | 9,983,600   |                  |   | 8,204,100  
|                                                                                                                   |  |                   |             |                  |   |            
|Total assets                                                                                                       |  | $                 | 583,480,200 |                  | $ | 409,835,900
|                                                                                                                   |  |                   |             |                  |   |            
|Liabilities and Shareholders Equity                                                                               |  |                   |             |                  |   |            
|Deposits:                                                                                                          |  |                   |             |                  |   |            
|Noninterest bearing demand                                                                                         |  | $                 | 123,741,200 |                  | $ | 88,187,000 
|Interest bearing:                                                                                                  |  |                   |             |                  |   |            
|Demand                                                                                                             |  |                   | 7,025,400   |                  |   | 5,362,200  
|Savings and money market                                                                                           |  |                   | 187,951,200 |                  |   | 146,255,600
|Certificates of deposit                                                                                            |  |                   | 181,579,800 |                  |   | 64,988,100 
|                                                                                                                   |  |                   |             |                  |   |            
|Total deposits                                                                                                     |  |                   | 500,297,600 |                  |   | 304,792,900
|                                                                                                                   |  |                   |             |                  |   |            
|Accrued interest payable and other liabilities                                                                     |  |                   | 3,033,800   |                  |   | 2,298,600  
|Federal funds purchased                                                                                            |  |                   |            |                  |   |           
|FHLB advances                                                                                                      |  |                   | 30,000,000  |                  |   | 67,000,000 
|Junior subordinated debentures                                                                                     |  |                   | 17,527,000  |                  |   | 7,217,000  
|                                                                                                                   |  |                   |             |                  |   |            
|Total liabilities                                                                                                  |  |                   | 550,858,400 |                  |   | 381,308,500
|                                                                                                                   |  |                   |             |                  |   |            
|Commitments and contingencies                                                                                      |  |                   |            |                  |   |           
|Shareholders equity:                                                                                              |  |                   |             |                  |   |            
|Serial preferred stock, no par value:                                                                              |  |                   |             |                  |   |            
|Authorized  20,000,000 shares                                                                                     |  |                   |             |                  |   |            
|7% Series A non-cumulative convertible non-voting:                                                                 |  |                   |             |                  |   |            
|Authorized and outstanding  733,050 shares at September 30, 2005 and December 31, 2004                            |  |                   | 7,697,000   |                  |   | 7,697,000  
|Common stock, no par value:                                                                                        |  |                   |             |                  |   |            
|Authorized - 20,000,000 shares                                                                                     |  |                   |             |                  |   |            
|Outstanding  6,039,579 shares at September 30, 2005 and 5,867,679 shares at December 31, 2004                     |  |                   | 6,345,900   |                  |   | 6,090,800  
|Undivided profits                                                                                                  |  |                   | 18,578,900  |                  |   | 14,739,600 
|                                                                                                                   |  |                   |             |                  |   |            
|Total shareholders equity                                                                                         |  |                   | 32,621,800  |                  |   | 28,527,400 
|                                                                                                                   |  |                   |             |                  |   |            
|Total liabilities and shareholders equity                                                                         |  | $                 | 583,480,200 |                  | $ | 409,835,900
|                                                                                                                   |  |                   |             |                  |   |            



The accompanying notes
are an integral part of these statements.



3



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##### Table of Contents

Part I. Item 1. (continued)



CONSOLIDATED STATEMENTS OF OPERATIONS



(Unaudited)



|                                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|----------------------------------------------------------- |  | -------------------------------- | ---------- | ------------------------------- | - | --------- |  | ---- | ---------- |  | - | ----------
|                                                            |  | Three Months Ended September 30, |            | Nine Months Ended September 30,
|                                                            |  | 2005                             |            | 2004                            |   | 2005      |  | 2004
|Interest income:                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Interest and fees on loans                                  |  | $                                | 9,484,700  |                                 | $ | 4,504,700 |  | $    | 23,237,400 |  | $ | 11,995,800
|Interest on time deposits with other financial institutions |  |                                  | 34,400     |                                 |   | 19,100    |  |      | 93,600     |  |   | 56,300    
|Interest on securities held to maturity                     |  |                                  | 680,700    |                                 |   | 643,600   |  |      | 2,060,400  |  |   | 1,363,400 
|Interest on federal funds sold                              |  |                                  | 197,200    |                                 |   | 87,600    |  |      | 305,400    |  |   | 222,900   
|                                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Total interest income                                       |  |                                  | 10,397,000 |                                 |   | 5,255,000 |  |      | 25,696,800 |  |   | 13,638,400
|                                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Interest expense:                                           |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Interest on deposits                                        |  |                                  | 2,945,000  |                                 |   | 964,400   |  |      | 6,475,800  |  |   | 2,447,200 
|Interest on FHLB advances                                   |  |                                  | 329,300    |                                 |   | 184,500   |  |      | 1,048,600  |  |   | 633,400   
|Interest on federal funds purchased                         |  |                                  | 2,700      |                                 |   |          |  |      | 4,500      |  |   |          
|Interest on subordinated debentures                         |  |                                  |           |                                 |   | 50,300    |  |      |           |  |   | 152,300   
|Interest on junior subordinated debentures                  |  |                                  | 250,900    |                                 |   | 88,900    |  |      | 660,400    |  |   | 253,700   
|                                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Total interest expense                                      |  |                                  | 3,527,900  |                                 |   | 1,288,100 |  |      | 8,189,300  |  |   | 3,486,600 
|                                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Net interest income                                         |  |                                  | 6,869,100  |                                 |   | 3,966,900 |  |      | 17,507,500 |  |   | 10,151,800
|Provision for loan losses                                   |  |                                  | 750,000    |                                 |   | 150,000   |  |      | 1,727,000  |  |   | 600,000   
|                                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Net interest income after provision for loan losses         |  |                                  | 6,119,100  |                                 |   | 3,816,900 |  |      | 15,780,500 |  |   | 9,551,800 
|Non-interest income:                                        |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Service charges and fees                                    |  |                                  | 217,300    |                                 |   | 256,200   |  |      | 653,000    |  |   | 785,300   
|Net gains on sales of loans held for sale                   |  |                                  | 248,400    |                                 |   | 361,200   |  |      | 546,400    |  |   | 614,100   
|Broker fees on loans                                        |  |                                  | 196,500    |                                 |   | 379,700   |  |      | 567,400    |  |   | 789,300   
|Other non-interest income                                   |  |                                  | 144,000    |                                 |   | 205,200   |  |      | 418,300    |  |   | 495,600   
|                                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Total non-interest income                                   |  |                                  | 806,200    |                                 |   | 1,202,300 |  |      | 2,185,100  |  |   | 2,684,300 
|                                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Non-interest expenses:                                      |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Salaries and related benefits                               |  |                                  | 2,110,800  |                                 |   | 1,297,800 |  |      | 5,594,700  |  |   | 3,845,800 
|Occupancy and equipment expenses                            |  |                                  | 632,700    |                                 |   | 390,000   |  |      | 1,682,400  |  |   | 1,038,900 
|Professional fees                                           |  |                                  | 194,500    |                                 |   | 91,100    |  |      | 654,800    |  |   | 369,200   
|Data processing                                             |  |                                  | 201,200    |                                 |   | 148,000   |  |      | 562,000    |  |   | 434,600   
|Other operating expenses                                    |  |                                  | 952,500    |                                 |   | 614,900   |  |      | 2,333,000  |  |   | 1,820,800 
|                                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Total non-interest expense                                  |  |                                  | 4,091,700  |                                 |   | 2,541,800 |  |      | 10,826,900 |  |   | 7,509,300 
|                                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Earnings before income tax expense                          |  |                                  | 2,833,600  |                                 |   | 2,477,400 |  |      | 7,138,700  |  |   | 4,726,800 
|Income tax expense                                          |  |                                  | 1,086,600  |                                 |   | 991,000   |  |      | 2,760,600  |  |   | 1,889,000 
|                                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Net earnings                                                |  | $                                | 1,747,000  |                                 | $ | 1,486,400 |  | $    | 4,378,100  |  | $ | 2,837,800 
|                                                            |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Earnings per common share:                                  |  |                                  |            |                                 |   |           |  |      |            |  |   |           
|Basic earnings per share                                    |  | $                                | 0.27       |                                 | $ | 0.29      |  | $    | 0.65       |  | $ | 0.59      
|Diluted earnings per share                                  |  | $                                | 0.25       |                                 | $ | 0.22      |  | $    | 0.63       |  | $ | 0.44      



The accompanying notes
are an integral part of these statements.



4



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##### Table of Contents

Part I. Item 1. (continued)



C
ONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                    |  |                                 |              |   |      |   |             |  
|----------------------------------------------------------------------------------- |  | ------------------------------- | ------------ | - | ---- | - | ----------- | -
|                                                                                    |  | Nine months ended September 30, |             
|                                                                                    |  | 2005                            |              |   | 2004 |  
|Cash Flows from Operating Activities:                                               |  |                                 |              |   |      |   |             |  
|Net earnings                                                                        |  | $                               | 4,378,100    |   |      | $ | 2,837,800   |  
|Adjustments to reconcile net earnings to net cash provided by operating activities: |  |                                 |              |   |      |   |             |  
|Net amortization of discounts and premiums on securities held to maturity           |  |                                 | 708,600      |   |      |   | 272,100     |  
|Depreciation and amortization                                                       |  |                                 | 594,200      |   |      |   | 281,900     |  
|Provision for loan losses                                                           |  |                                 | 1,727,000    |   |      |   | 600,000     |  
|Net gains on sales of loans held for sale                                           |  |                                 | (546,400     | ) |      |   | (614,100    | )
|Proceeds from sales of loans held for sale                                          |  |                                 | 14,854,800   |   |      |   | 14,128,300  |  
|Originations of loans held for sale                                                 |  |                                 | (13,427,000  | ) |      |   | (14,819,000 | )
|(Increase) in accrued interest receivable and other assets                          |  |                                 | (1,738,400   | ) |      |   | (869,000    | )
|Increase in accrued interest payable and other liabilities                          |  |                                 | 735,200      |   |      |   | 955,000     |  
|                                                                                    |  |                                 |              |   |      |   |             |  
|Net cash provided by operating activities                                           |  |                                 | 7,286,100    |   |      |   | 2,773,000   |  
|                                                                                    |  |                                 |              |   |      |   |             |  
|Cash Flows from Investing Activities:                                               |  |                                 |              |   |      |   |             |  
|Net (increase) in:                                                                  |  |                                 |              |   |      |   |             |  
|Time deposits with other financial institutions                                     |  |                                 | (415,900     | ) |      |   | (2,233,300  | )
|Loans                                                                               |  |                                 | (162,661,400 | ) |      |   | (50,161,200 | )
|Purchase of equipment and leasehold improvements                                    |  |                                 | (1,546,600   | ) |      |   | (1,430,900  | )
|Proceeds from sale (purchase) of FHLB stock                                         |  |                                 | 268,900      |   |      |   | (69,100     | )
|Purchase of securities held to maturity                                             |  |                                 | (2,994,000   | ) |      |   | (52,883,800 | )
|Proceeds from maturities of securities held to maturity                             |  |                                 | 7,301,200    |   |      |   | 11,292,300  |  
|Investment in statutory trust                                                       |  |                                 | (310,000     | ) |      |   |            |  
|                                                                                    |  |                                 |              |   |      |   |             |  
|Net cash used in investing activities                                               |  |                                 | (160,357,800 | ) |      |   | (95,486,000 | )
|                                                                                    |  |                                 |              |   |      |   |             |  
|Cash Flows from Financing Activities:                                               |  |                                 |              |   |      |   |             |  
|Net increase (decrease) in:                                                         |  |                                 |              |   |      |   |             |  
|Demand deposits                                                                     |  |                                 | 35,554,200   |   |      |   | 22,966,900  |  
|Interest bearing demand deposits                                                    |  |                                 | 1,663,200    |   |      |   | 319,400     |  
|Savings and money market deposits                                                   |  |                                 | 41,695,600   |   |      |   | 82,262,100  |  
|Certificates of deposit                                                             |  |                                 | 116,591,700  |   |      |   | (21,347,600 | )
|Proceeds from issuance of junior subordinated debentures                            |  |                                 | 10,310,000   |   |      |   |            |  
|Payments on FHLB advances                                                           |  |                                 | (37,000,000  | ) |      |   |            |  
|Proceeds from issuance of preferred stock                                           |  |                                 |             |   |      |   | 7,697,000   |  
|Proceeds from stock options exercised                                               |  |                                 | 255,100      |   |      |   | 55,000      |  
|Dividends paid or declared on preferred stock                                       |  |                                 | (538,800     | ) |      |   | (137,700    | )
|                                                                                    |  |                                 |              |   |      |   |             |  
|Net cash provided by financing activities                                           |  |                                 | 168,531,000  |   |      |   | 91,815,100  |  
|                                                                                    |  |                                 |              |   |      |   |             |  
|Net increase (decrease) in cash and cash equivalents                                |  |                                 | 15,459,300   |   |      |   | (897,900    | )
|Cash and cash equivalents, beginning of period                                      |  |                                 | 19,587,600   |   |      |   | 35,839,000  |  
|                                                                                    |  |                                 |              |   |      |   |             |  
|Cash and cash equivalents, end of period                                            |  | $                               | 35,046,900   |   |      | $ | 34,941,100  |  
|                                                                                    |  |                                 |              |   |      |   |             |  
|Supplemental disclosure of cash flow information                                    |  |                                 |              |   |      |   |             |  
|Cash paid during the period for:                                                    |  |                                 |              |   |      |   |             |  
|Interest                                                                            |  | $                               | 7,631,400    |   |      | $ | 3,316,100   |  
|Income taxes                                                                        |  |                                 | 3,305,000    |   |      |   | 1,245,000   |  
|Supplemental disclosure of non-cash transactions                                    |  |                                 |              |   |      |   |             |  
|Non-cash financing activities:                                                      |  |                                 |              |   |      |   |             |  
|Reduction in subordinated debentures in exchange for 25,000 shares of common stock  |  | $                               |             |   |      | $ | 50,000      |  



The accompanying notes
are an integral part of these statements.



5



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##### Table of Contents

CON
SOLIDATED STATEMENT OF SHAREHOLDERS EQUITY



(Unaudited)



For the
Nine Months Ended September 30, 2005



|                                              |  |                 |  |              |           |                 |           |        |   |                  |  |   |            |   |  |   |            |  
|--------------------------------------------- |  | --------------- |  | ------------ | --------- | --------------- | --------- | ------ | - | ---------------- |  | - | ---------- | - |  | - | ---------- | -
|                                              |  | Preferred Stock |  | Common Stock |           |                 |           |        |   |                 
|                                              |  | Number ofShares |  | Amount       |           | Number ofShares |           | Amount |   | UndividedProfits |  |   | Total      |  
|Balance, December 31, 2004                    |  | 733,050         |  | $            | 7,697,000 |                 | 5,867,679 |        | $ | 6,090,800        |  | $ | 14,739,600 |   |  | $ | 28,527,400 |  
|Stock options and warrants exercised          |  |                |  |              |          |                 | 171,900   |        |   | 255,100          |  |   |           |   |  |   | 255,100    |  
|Dividends paid or declared on preferred stock |  |                |  |              |          |                 |          |        |   |                 |  |   | (538,800   | ) |  |   | (538,800   | )
|Net earnings                                  |  |                |  |              |          |                 |          |        |   |                 |  |   | 4,378,100  |   |  |   | 4,378,100  |  
|                                              |  |                 |  |              |           |                 |           |        |   |                  |  |   |            |   |  |   |            |  
|Balance, September 30, 2005                   |  | 733,050         |  | $            | 7,697,000 |                 | 6,039,579 |        | $ | 6,345,900        |  | $ | 18,578,900 |   |  | $ | 32,621,800 |  
|                                              |  |                 |  |              |           |                 |           |        |   |                  |  |   |            |   |  |   |            |  



The accompanying notes
are an integral part of this statement.



6



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##### Table of Contents

Part I. Item 1. (continued)



ALLIAN
CE BANCSHARES CALIFORNIA AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)



|1. | Nature of Business and Significant Accounting Policies
|-- | ------------------------------------------------------



Organization



The accompanying unaudited consolidated financial statements of Alliance Bancshares California and its consolidated subsidiaries (the Company)
have been prepared in accordance with the instructions to Form 10-QSB and, therefore, do not include all footnotes as would be necessary for a fair presentation of financial position, results of operations and changes in cash flows in conformity
with accounting principles generally accepted in the United States of America. However, these interim financial statements reflect all adjustments (consisting of normal recurring adjustments and accruals) which, in the opinion of the management, are
necessary for a fair presentation of the results for the interim periods presented. 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, and should be read in conjunction with, the Companys audited financial statements as of and for the year ended December 31, 2004 and the notes thereto included in the Companys Form 10-KSB filed under the
Securities Exchange Act of 1934.



The results of operations for
the three and nine months ended September 30, 2005 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2005.



The consolidated financial statements include the accounts of Alliance
Bancshares California (Bancshares), its wholly owned subsidiary, Alliance Bank (the Bank), and Lexib Realcorp, an inactive wholly owned subsidiary of the Bank. Bancshares is a bank holding company which was incorporated in
February 2000 in the State of California. The Bank is a California-chartered bank that commenced operations in 1980. The Banks deposit accounts are insured by the Federal Deposit Insurance Corporation up to the maximum amount and under the
terms allowed by federal regulations. References in these Notes to the Company refer to Bancshares and its consolidated subsidiaries. Bancshares has two other wholly owned subsidiaries, Alliance Bancshares California Capital Trust I (the
Trust I) and Alliance Bancshares California Capital Trust II (the Trust II), which were formed in 2002 and 2005, respectively, to issue trust preferred securities. FIN 46 and FASB interpretation No. 46R do not allow the
consolidation of the Trusts into the Companys consolidated financial statements. As a result, the accompanying consolidated statements of financial condition include the investment in the Trusts of $527,000 in other assets.



Use of Estimates



The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, and contingencies at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



Earnings Per Share



Basic earnings per share for each of the periods presented was computed by dividing net earnings adjusted for cash dividends paid or declared on
convertible preferred stock by the weighted average number of shares of common stock outstanding during each such period. The weighted average numbers of shares used in the basic earnings per share computations for the three and nine months ended
September 30, 2005 were 6,035,619 and 5,946,278, respectively, and for the three and nine months ended September 30, 2004 were 4,623,657 and 4,599,358, respectively. The weighted average numbers of shares used in the diluted earnings per
share computations for the three and nine months ended September 30, 2005 were 6,990,749 and 6,910,566, respectively, and for the three and nine months ended September 30, 2004 were 6,853,570 and 6,613,413.



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##### Table of Contents

Basic and diluted earnings per share for the quarters ended September 30, 2005 and 2004 are computed
as follows:



|                                                               |  |              |           |   |        |           |                 |   |     
|-------------------------------------------------------------- |  | ------------ | --------- | - | ------ | --------- | --------------- | - | ----
|Three Months Ended September 30, 2005                          |  | Net Earnings |           |   | Shares |           | Per ShareAmount
|Net earnings                                                   |  | $            | 1,747,000 |   |        |           |                 |   |     
|                                                               |  |              |           |   |        |           |                 |   |     
|Basic earnings per share:                                      |  |              |           |   |        |           |                 |   |     
|Net earnings                                                   |  | $            | 1,747,000 |   |        |           |                 |   |     
|Cash dividends paid or declared on convertible preferred stock |  |              | (134,700  | ) |        |           |                 |   |     
|                                                               |  |              |           |   |        |           |                 |   |     
|Net earnings available to common shareholders                  |  |              | 1,612,300 |   |        | 6,035,619 |                 | $ | 0.27
|Preferred stock dividend                                       |  |              | 134,700   |   |        |           |                 |   |     
|Effect of exercise of options                                  |  |              |          |   |        | 222,080   |                 |   |     
|Effect of conversion of preferred stock                        |  |              |          |   |        | 733,050   |                 |   |     
|                                                               |  |              |           |   |        |           |                 |   |     
|Diluted earnings per share:                                    |  |              |           |   |        |           |                 |   |     
|Net earnings available to common shareholders                  |  | $            | 1,747,000 |   |        | 6,990,749 |                 | $ | 0.25
|                                                               |  |              |           |   |        |           |                 |   |     



|                                                               |  |              |           |   |        |           |                 |   |     
|-------------------------------------------------------------- |  | ------------ | --------- | - | ------ | --------- | --------------- | - | ----
|Three Months Ended September 30, 2004                          |  | Net Earnings |           |   | Shares |           | Per ShareAmount
|Net earnings                                                   |  | $            | 1,486,400 |   |        |           |                 |   |     
|                                                               |  |              |           |   |        |           |                 |   |     
|Basic earnings per share:                                      |  |              |           |   |        |           |                 |   |     
|Net earnings                                                   |  | $            | 1,486,400 |   |        |           |                 |   |     
|Cash dividends paid or declared on convertible preferred stock |  |              | (137,700  | ) |        |           |                 |   |     
|                                                               |  |              |           |   |        |           |                 |   |     
|Net earnings available to common shareholders                  |  |              | 1,348,700 |   |        | 4,623,657 |                 | $ | 0.29
|Preferred stock dividend                                       |  |              | 137,700   |   |        |           |                 |   |     
|Effect of conversion of subordinated debentures                |  |              | 28,500    |   |        | 1,225,000 |                 |   |     
|Effect of exercise of options and warrants                     |  |              |          |   |        | 271,863   |                 |   |     
|Effect of conversion of preferred stock                        |  |              |          |   |        | 733,050   |                 |   |     
|                                                               |  |              |           |   |        |           |                 |   |     
|Diluted earnings per share:                                    |  |              |           |   |        |           |                 |   |     
|Net earnings available to common shareholders                  |  | $            | 1,514,900 |   |        | 6,853,570 |                 | $ | 0.22
|                                                               |  |              |           |   |        |           |                 |   |     



Basic and diluted
earnings per share for the nine months ended September 30, 2005 and 2004 are computed as follows:



|                                                               |  |              |           |   |        |           |                 |   |     
|-------------------------------------------------------------- |  | ------------ | --------- | - | ------ | --------- | --------------- | - | ----
|Nine Months Ended September 30, 2005                           |  | Net Earnings |           |   | Shares |           | Per ShareAmount
|Net earnings                                                   |  | $            | 4,378,100 |   |        |           |                 |   |     
|                                                               |  |              |           |   |        |           |                 |   |     
|Basic earnings per share:                                      |  |              |           |   |        |           |                 |   |     
|Net earnings                                                   |  | $            | 4,378,100 |   |        |           |                 |   |     
|Cash dividends paid or declared on convertible preferred stock |  |              | (538,800  | ) |        |           |                 |   |     
|                                                               |  |              |           |   |        |           |                 |   |     
|Net earnings available to common shareholders                  |  |              | 3,839,300 |   |        | 5,946,278 |                 | $ | 0.65
|Preferred stock dividend                                       |  |              | 538,800   |   |        |           |                 |   |     
|Effect of exercise of options                                  |  |              |          |   |        | 231,238   |                 |   |     
|Effect of conversion of preferred stock                        |  |              |          |   |        | 733,050   |                 |   |     
|                                                               |  |              |           |   |        |           |                 |   |     
|Diluted earnings per share:                                    |  |              |           |   |        |           |                 |   |     
|Net earnings available to common shareholders                  |  | $            | 4,378,100 |   |        | 6,910,566 |                 | $ | 0.63
|                                                               |  |              |           |   |        |           |                 |   |     



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##### Table of Contents

|                                                              |  |              |           |   |        |           |                 |   |     
|------------------------------------------------------------- |  | ------------ | --------- | - | ------ | --------- | --------------- | - | ----
|Nine Months Ended September 30, 2004                          |  | Net Earnings |           |   | Shares |           | Per ShareAmount
|Net earnings                                                  |  | $            | 2,837,800 |   |        |           |                 |   |     
|                                                              |  |              |           |   |        |           |                 |   |     
|Basic earnings per share:                                     |  |              |           |   |        |           |                 |   |     
|Net earnings                                                  |  | $            | 2,837,800 |   |        |           |                 |   |     
|Cash dividend paid or declared on convertible preferred stock |  |              | (137,700  | ) |        |           |                 |   |     
|                                                              |  |              |           |   |        |           |                 |   |     
|Net earnings available to common shareholders                 |  |              | 2,700,100 |   |        | 4,599,358 |                 | $ | 0.59
|Preferred stock dividend                                      |  |              | 137,700   |   |        |           |                 |   |     
|Effect of conversion of subordinated debentures               |  |              | 86,300    |   |        | 1,233,303 |                 |   |     
|Effect of exercise of options and warrants                    |  |              |          |   |        | 288,485   |                 |   |     
|Effect of conversion of preferred stock                       |  |              |          |   |        | 492,267   |                 |   |     
|                                                              |  |              |           |   |        |           |                 |   |     
|Diluted earnings per share:                                   |  |              |           |   |        |           |                 |   |     
|Net earnings available to common shareholders                 |  | $            | 2,924,100 |   |        | 6,613,413 |                 | $ | 0.44
|                                                              |  |              |           |   |        |           |                 |   |     



Equity Compensation
Plans



The Company accounts for stock-based awards to
employees and directors using the intrinsic value method, in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees. Accordingly, no compensation expense has been recognized in the consolidated financial
statements for employee and director stock arrangements. However, the required pro forma disclosures of the effects of all options granted on or after January 1, 1995, have been provided in accordance with Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation. SFAS 123 requires pro forma disclosures of net earnings and earnings per share as if the fair value based method of accounting for stock-based awards had
been applied. Under the fair value based method, compensation cost is recorded based on the value of the award at the grant date and is recognized over the service period. Had compensation cost for the Plan been determined based upon the fair value
of the options at the grant dates consistent with the method of SFAS 123, the Companys net earnings per share would have been reduced to the pro forma amounts indicated below:



|                                                                                                                       |  |                                  |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|---------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | --------- | - | ------------------------------- | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                                                                                       |  | Three Months Ended September 30, |           |   | Nine Months Ended September 30, |  
|                                                                                                                       |  | 2005                             |           |   | 2004                            |   |           | 2005 |  |   | 2004      |  
|Net earnings, as reported                                                                                              |  | $                                | 1,747,000 |   |                                 | $ | 1,486,400 |      |  | $ | 4,378,100 |   |  | $ | 2,837,800 |  
|Less  Total stock-based compensation expense determined under fair value method for all qualifying awards, net of tax |  |                                  | (44,100   | ) |                                 |   | (17,500   | )    |  |   | (132,300  | ) |  |   | (52,500   | )
|                                                                                                                       |  |                                  |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Pro forma net earnings                                                                                                 |  | $                                | 1,702,900 |   |                                 | $ | 1,468,900 |      |  | $ | 4,245,800 |   |  | $ | 2,785,300 |  
|                                                                                                                       |  |                                  |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Earnings per share:                                                                                                    |  |                                  |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Basic:                                                                                                                 |  |                                  |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|As reported                                                                                                            |  | $                                | 0.27      |   |                                 | $ | 0.29      |      |  | $ | 0.65      |   |  | $ | 0.59      |  
|Pro forma                                                                                                              |  | $                                | 0.26      |   |                                 | $ | 0.29      |      |  | $ | 0.62      |   |  | $ | 0.58      |  
|Diluted:                                                                                                               |  |                                  |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|As reported                                                                                                            |  | $                                | 0.25      |   |                                 | $ | 0.22      |      |  | $ | 0.63      |   |  | $ | 0.44      |  
|Pro forma                                                                                                              |  | $                                | 0.24      |   |                                 | $ | 0.22      |      |  | $ | 0.61      |   |  | $ | 0.43      |  



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##### Table of Contents

The Companys 1996 Combined Incentive and Non-Qualified Stock Option Plan (the 1996
Plan) provides for the issuance of up to 800,000 shares of the Companys common stock upon exercise of incentive and non-qualified options. The 1996 Plan provides that each option must have an exercise price not less than the fair market
value of the stock at the date of grant and have a term not to exceed ten years (five years with respect to options granted to employees holding 10% or more of the voting stock of the Company). Options vest in various increments of not less
frequently than 20% per year. The Companys 2005 Equity Incentive Plan (the 2005 Plan), which was adopted at the Companys Annual Shareholders meeting on May 27, 2005, provides for the granting of up to 450,000
shares of the Companys common stock in the form of incentive stock options, non-qualified stock options, restricted stock and/or stock appreciation rights. The 2005 Plan provides that each option or stock appreciation right must have an
exercise price not less than the fair market value of the stock at the date of grant and have a term not to exceed ten years (five years with respect to options granted to employees holding 10% or more of the voting stock of the Company). The 2005
Plan also provides that the sales price of restricted stock may not be less than the fair market value of such stock.



Recent Accounting Pronouncements



In December 2004, the Financial Accounting Standards Board (FASB) issued Statement No. 123(R) (revised 2004), Share-Based
Payments, which is a revision of Statement No. 123, Accounting for Stock-Based Compensation. Statement 123(R) supersedes Accounting Principles Board opinion No. 25, Accounting for Stock Issued to Employees,
and amends FASB Statement No. 95, Statement of Cash Flows. Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized on the balance sheet at their fair values with
a corresponding charge to expense. Pro forma disclosure will no longer be an alternative. Statement 123(R) was initially to be adopted no later than the beginning of the first interim period beginning after June 15, 2005.



In April 2005, the Securities and Exchange Commission (the SEC)
announced that it would provide for a phased-in implementation process for FASB Statement No. 123(R). The SEC would require that registrants that are small business issuers adopt Statement 123 (R)s fair value method of accounting for
share-based payments to employees at the beginning of the next fiscal year that begins after December 15, 2005. The Company does not believe the adoption of FASB Statement No. 123(R) will have a material impact on its financial statements.



In May 2005, the FASB issued FASB No. 154,
Accounting Changes and Error Corrections. FASB No. 154 supersedes APB No. 20 and FASB No. 3. FASB No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It
establishes retrospective application as the required method for reporting a change in accounting principle. FASB No. 154 provides guidance for determining whether retrospective application of a change in accounting principle is impracticable
and for reporting a change when retrospective application is impracticable. The reporting of a correction of an error by restating previously issued financial statements is also addressed by FASB No. 154. FASB No. 154 is effective for
accounting changes and corrections of errors made in fiscal years beginning after December 31, 2005. We will adopt this pronouncement beginning in fiscal year 2006.



|2. | Allowance for Loan Losses (Allowance)
|-- | ---------------------------------------



See Provision for Loan Losses and Changes in Allowance for Loan Losses in Managements Discussion and Analysis or Plan
of Operation below for discussion regarding the adequacy of and changes in the Allowance.



|3. | Reclassifications
|-- | -----------------



Certain amounts for 2004 have been reclassified to conform to the 2005 presentation. These reclassifications had no change to net earnings or earnings per
share.



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|------- | ---------------------------------------------------------



Background



The following discussion presents information about our consolidated results of operations, financial condition, liquidity and capital resources.
Substantially all of our operations are conducted by the Bank and the Bank accounts for substantially all of our revenues and expenses. This information should be read in conjunction with our unaudited consolidated financial statements, and the
notes thereto, contained elsewhere in this Report.



References
in this report to the Company, we or us refer to Alliance Bancshares California (Bancshares) and its consolidated subsidiaries, including Alliance Bank (the Bank).



Forward-Looking Information



The statements contained herein that are not historical facts are
forward-looking statements based on managements current expectations and beliefs concerning future developments and their potential effects on the Company. These forward-looking statements involve risks and uncertainties, including the risks
and uncertainties described herein under the caption Factors Which May Affect Future Operating Results. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management, and
actual results may differ from those projected in the forward-looking statements. Statements regarding policies and procedures are not intended, and should not be interpreted to mean, that such policies and procedures will not be amended, modified
or repealed at any time in the future.



Overview



We recorded net earnings of $1.7 million ($0.27 basic and $0.25 diluted
earnings per share) for the third quarter of 2005 as compared to $1.5 million ($0.29 basic and $0.22 diluted earnings per share) for the third quarter of 2004. The increase in net earnings was primarily due to a $2.9 million increase in net interest
income offset by a $1.5 million increase non-interest expenses and a $0.6 million increase in the provision for loan losses.



For the nine months ended September 30, 2005, we generated net earnings of $4.4 million ($0.65 basic and $0.63 diluted earnings per share) as
compared to $2.8 million ($0.59 basic and $0.44 diluted earnings per share) for the same period of 2004. The improvement in earnings in 2005 was due primarily to a $7.4 million increase in net interest income offset by a $3.3 million increase
non-interest expenses and a $1.1 million increase in the provision for loan losses.



We continued to grow, with total assets increasing from $409.8 million at December 31, 2004 to $583.5 million at September 30, 2005. Net loans grew from $301.2 million at December 31, 2004 to $461.3
million at September 30, 2005. Deposits grew from $304.8 million at December 31, 2004 to $500.3 million at September 30, 2005. In the first quarter of 2005, Bancshares enhanced its regulatory capital through the issuance of
$10,310,000 of junior subordinated debentures to Alliance Bancshares California Capital Trust II, a Delaware business trust that we formed for the exclusive purpose of issuing trust preferred securities to provide additional regulatory capital (see
Regulatory Capital).



Set forth below are certain
key financial performance ratios for the periods indicated:



|                                                 |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   |       |  
|------------------------------------------------ |  | ------------------------------- | ----- | - | ------------------------------ | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                 |  | Three months endedSeptember 30, |       |   | Nine months endedSeptember 30, |  
|                                                 |  | 2005                            |       |   | 2004                           |   |       | 2005 |  |   | 2004  |  
|Return on average assets (1)                     |  |                                 | 1.23  | % |                                |   | 1.63  | %    |  |   | 1.17  | % |  |   | 1.16  | %
|Return on average shareholders equity (1)       |  |                                 | 21.50 | % |                                |   | 24.11 | %    |  |   | 18.95 | % |  |   | 18.20 | %
|Net yield on average interest earning assets (1) |  |                                 | 5.09  | % |                                |   | 4.70  | %    |  |   | 4.94  | % |  |   | 4.46  | %
|Earnings per common share:                       |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   |       |  
|Basic earnings per share                         |  | $                               | 0.27  |   |                                | $ | 0.29  |      |  | $ | 0.65  |   |  | $ | 0.59  |  
|Diluted earnings per share                       |  | $                               | 0.25  |   |                                | $ | 0.22  |      |  | $ | 0.63  |   |  | $ | 0.44  |  

---

|(1) | Annualized
|--- | ----------



11



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##### Table of Contents

RESULTS OF OPERATIONS  Three and nine months ended September 30, 2005 and 2004



Net Interest Income



We recorded interest income of $10.4 million and $25.7 million, respectively, for the three and nine months ended
September 30, 2005 as compared to $5.3 million and $13.6 million, respectively, for the three and nine months ended September 30, 2004. Interest expense totaled $3.5 million and $8.2 million, respectively, for the three and nine months
ended September 30, 2005 as compared to $1.3 million and $3.5 million, respectively, for the respective three and nine months ended September 30, 2004. The increase in interest income was due to $200.3 million and $170.1 million increases
in average interest earning assets as well as 1.47% and 1.26% increases in the weighted average yield earned on those assets for the three and nine months ended September 30, 2005. The increase in interest expense was due to $171.5 million and
$137.1 million increases in average interest bearing liabilities as well as 1.27% and 0.95% increases in the weighted average rates paid on those liabilities for the respective three and nine months ended September 30, 2005.



The increase in average interest earning assets and average interest bearing
liabilities is a result of the Companys growth through the addition of two new regional offices in 2004, the significant growth in all types of loans and favorable economic conditions. Average loans increased 81.5% and 71.9%, respectively, to
$440.1 million and $386.2 million, respectively, during the three and nine months of 2005 from $242.5 million and $224.6 million, respectively, during the three and nine months of 2004. Average interest bearing deposits increased 78.5% and 64.0%,
respectively, to $355.0 million and $295.5 million, respectively, during the three and nine months of 2005 compared to $198.9 million and $180.2 million, respectively, during the three and nine months of 2004.



The weighted average yield on interest earning assets and weighted average
cost of interest bearing liabilities increased as a result of increasing market interest rates. The Federal Reserve Board increased the prime lending rate nine times totaling 2.25% from September 2004 through September 2005. This resulted in the
weighted average prime rate increasing from 4.14% during the first nine months of 2004 to 5.93% during the three and nine months of 2005. Approximately 75% of our loans bear interest at adjustable rates tied to the prime rate.



Our interest rate spread increased from 4.10% during the third quarter 2004
to 4.30% during the third quarter 2005, and our net interest margin increased from 4.70% during the third quarter of 2004 to 5.09% during the third quarter of 2005. These increases were due to: (i) loans, our highest yielding assets,
constituting 82.1% of our average interest earning assets in the third quarter of 2005 compared to 72.2% in the third quarter of 2004 offset by certificates of deposit, which are among our highest-cost liabilities, constituting 33.3% of our average
interest-earning liabilities in the third quarter of 2005 compared to 24.4% in the third quarter of 2004; and (ii) a $28.7 million and $33.0 million, respectively, increase in net interest earning assets in the three and nine months of 2005.



The following table presents the weighted average yield on
each specified category of interest earning assets, the weighted average rate paid on each specified category of interest bearing liabilities, and the resulting interest rate spread and net interest margin for the periods indicated.



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##### Table of Contents

ANALYSIS OF NET INTEREST INCOME



|                                           |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|------------------------------------------ |  | --------------------------- | ----------- | ----------------- | ---- | ----------------------------------- |  | ---- | -------------- |  | ----------------- | ----------- | ----------------------------------- | - | --------- |  | ---- | -
|                                           |  | Quarter Ended September 30, |            
|                                           |  | 2005                        |             |                   | 2004 |                                    
|                                           |  | AverageBalance              |             | InterestInc./Exp. |      | WeightedAverageRatesEarned/Paid (1) |  |      | AverageBalance |  | InterestInc./Exp. |             | WeightedAverageRatesEarned/Paid (1) |  
|Interest earning assets:                   |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|Federal funds sold                         |  | $                           | 22,324,700  |                   | $    | 197,200                             |  | 3.50 | %              |  | $                 | 21,087,600  |                                     | $ | 87,600    |  | 1.65 | %
|Time deposits                              |  |                             | 5,582,900   |                   |      | 34,400                              |  | 2.44 | %              |  |                   | 4,653,700   |                                     |   | 19,100    |  | 1.63 | %
|Securities                                 |  |                             | 67,896,500  |                   |      | 680,700                             |  | 3.98 | %              |  |                   | 67,432,800  |                                     |   | 643,600   |  | 3.80 | %
|Loans                                      |  |                             | 440,091,700 |                   |      | 9,484,700                           |  | 8.55 | %              |  |                   | 242,462,300 |                                     |   | 4,504,700 |  | 7.39 | %
|                                           |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|Total interest-earning assets              |  |                             | 535,895,800 |                   |      | 10,397,000                          |  | 7.70 | %              |  |                   | 335,636,400 |                                     |   | 5,255,000 |  | 6.23 | %
|                                           |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|Non-interest-earning assets                |  |                             | 27,577,500  |                   |      |                                     |  |      |                |  |                   | 26,470,500  |                                     |   |           |  |      |  
|                                           |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|Total assets                               |  | $                           | 563,473,300 |                   |      |                                     |  |      |                |  | $                 | 362,106,900 |                                     |   |           |  |      |  
|                                           |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|Interest bearing liabilities:              |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|Interest-bearing demand deposits           |  | $                           | 5,993,900   |                   |      | 21,400                              |  | 1.42 | %              |  | $                 | 4,783,400   |                                     |   | 10,800    |  | 0.90 | %
|Savings and money market deposits          |  |                             | 185,478,100 |                   |      | 1,345,400                           |  | 2.88 | %              |  |                   | 145,808,700 |                                     |   | 678,100   |  | 1.85 | %
|Certificates of deposit                    |  |                             | 163,517,700 |                   |      | 1,578,200                           |  | 3.83 | %              |  |                   | 48,294,400  |                                     |   | 275,500   |  | 2.27 | %
|Federal funds purchased                    |  |                             | 270,600     |                   |      | 2,700                               |  | 3.96 | %              |  |                   |            |                                     |   |          |  |     |  
|FHLB advances                              |  |                             | 39,280,800  |                   |      | 329,300                             |  | 3.33 | %              |  |                   | 32,000,000  |                                     |   | 184,500   |  | 2.29 | %
|Subordinated debentures                    |  |                             |            |                   |      |                                    |  |     |                |  |                   | 2,450,000   |                                     |   | 50,300    |  | 8.17 | %
|Junior subordinated debentures             |  |                             | 17,527,000  |                   |      | 250,900                             |  | 5.68 | %              |  |                   | 7,217,000   |                                     |   | 88,900    |  | 4.90 | %
|                                           |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|Total interest-bearing liabilities         |  |                             | 412,068,100 |                   |      | 3,527,900                           |  | 3.40 | %              |  |                   | 240,553,500 |                                     |   | 1,288,100 |  | 2.13 | %
|                                           |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|Non-interest bearing liabilities           |  |                             | 119,175,300 |                   |      |                                     |  |      |                |  |                   | 97,030,400  |                                     |   |           |  |      |  
|                                           |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|Total liabilities                          |  |                             | 531,243,400 |                   |      |                                     |  |      |                |  |                   | 337,583,900 |                                     |   |           |  |      |  
|Shareholders equity                       |  |                             | 32,229,900  |                   |      |                                     |  |      |                |  |                   | 24,523,000  |                                     |   |           |  |      |  
|                                           |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|Total liabilities and shareholders equity |  | $                           | 563,473,300 |                   |      |                                     |  |      |                |  | $                 | 362,106,900 |                                     |   |           |  |      |  
|                                           |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|Net interest income                        |  |                             |             |                   | $    | 6,869,100                           |  |      |                |  |                   |             |                                     | $ | 3,966,900 |  |      |  
|                                           |  |                             |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |           |  |      |  
|Interest rate spread                       |  |                             |             |                   |      |                                     |  | 4.30 | %              |  |                   |             |                                     |   |           |  | 4.10 | %
|Net interest margin                        |  |                             |             |                   |      |                                     |  | 5.09 | %              |  |                   |             |                                     |   |           |  | 4.70 | %



|(1) | Annualized.
|--- | -----------



|Note: | Interest income on loans includes loan fees.
|----- | --------------------------------------------



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##### Table of Contents

ANALYSIS OF NET INTEREST INCOME



|                                           |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|------------------------------------------ |  | ------------------------------- | ----------- | ----------------- | ---- | ----------------------------------- |  | ---- | -------------- |  | ----------------- | ----------- | ----------------------------------- | - | ---------- |  | ---- | -
|                                           |  | Nine Months Ended September 30, |            
|                                           |  | 2005                            |             |                   | 2004 |                                    
|                                           |  | AverageBalance                  |             | InterestInc./Exp. |      | WeightedAverageRatesEarned/Paid (1) |  |      | AverageBalance |  | InterestInc./Exp. |             | WeightedAverageRatesEarned/Paid (1) |  
|Interest earning assets:                   |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|Federal funds sold                         |  | $                               | 12,773,400  |                   | $    | 305,400                             |  | 3.20 | %              |  | $                 | 25,235,000  |                                     | $ | 222,900    |  | 1.18 | %
|Time deposits                              |  |                                 | 5,603,300   |                   |      | 93,600                              |  | 2.23 | %              |  |                   | 4,643,900   |                                     |   | 56,300     |  | 1.62 | %
|Securities                                 |  |                                 | 69,658,300  |                   |      | 2,060,400                           |  | 3.95 | %              |  |                   | 49,637,200  |                                     |   | 1,363,400  |  | 3.67 | %
|Loans                                      |  |                                 | 386,152,100 |                   |      | 23,237,400                          |  | 8.05 | %              |  |                   | 224,577,900 |                                     |   | 11,995,800 |  | 7.13 | %
|                                           |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|Total interest-earning assets              |  |                                 | 474,187,100 |                   |      | 25,696,800                          |  | 7.25 | %              |  |                   | 304,094,000 |                                     |   | 13,638,400 |  | 5.99 | %
|                                           |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|Non-interest-earning assets                |  |                                 | 26,748,800  |                   |      |                                     |  |      |                |  |                   | 21,529,700  |                                     |   |            |  |      |  
|                                           |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|Total assets                               |  | $                               | 500,935,900 |                   |      |                                     |  |      |                |  | $                 | 325,623,700 |                                     |   |            |  |      |  
|                                           |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|Interest bearing liabilities:              |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|Interest-bearing demand deposits           |  | $                               | 5,741,600   |                   |      | 54,800                              |  | 1.28 | %              |  | $                 | 4,668,300   |                                     |   | 27,100     |  | 0.78 | %
|Savings and money market deposits          |  |                                 | 170,383,400 |                   |      | 3,242,000                           |  | 2.54 | %              |  |                   | 121,317,800 |                                     |   | 1,558,300  |  | 1.72 | %
|Certificates of deposit                    |  |                                 | 119,380,700 |                   |      | 3,179,000                           |  | 3.56 | %              |  |                   | 54,222,100  |                                     |   | 861,800    |  | 2.12 | %
|Federal funds purchased                    |  |                                 | 163,800     |                   |      | 4,500                               |  | 3.67 | %              |  |                   |            |                                     |   |           |  |     |  
|FHLB advances                              |  |                                 | 46,909,200  |                   |      | 1,048,600                           |  | 2.99 | %              |  |                   | 32,000,000  |                                     |   | 633,400    |  | 2.64 | %
|Subordinated debentures                    |  |                                 |            |                   |      |                                    |  |     |                |  |                   | 2,477,700   |                                     |   | 152,300    |  | 8.21 | %
|Junior subordinated debentures             |  |                                 | 16,381,500  |                   |      | 660,400                             |  | 5.39 | %              |  |                   | 7,217,000   |                                     |   | 253,700    |  | 4.70 | %
|                                           |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|Total interest-bearing liabilities         |  |                                 | 358,960,200 |                   |      | 8,189,300                           |  | 3.05 | %              |  |                   | 221,902,900 |                                     |   | 3,486,600  |  | 2.10 | %
|                                           |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|Non-interest bearing liabilities           |  |                                 | 111,084,800 |                   |      |                                     |  |      |                |  |                   | 82,889,300  |                                     |   |            |  |      |  
|                                           |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|Total liabilities                          |  |                                 | 470,045,000 |                   |      |                                     |  |      |                |  |                   | 304,792,200 |                                     |   |            |  |      |  
|Shareholders equity                       |  |                                 | 30,890,900  |                   |      |                                     |  |      |                |  |                   | 20,831,500  |                                     |   |            |  |      |  
|                                           |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|Total liabilities and shareholders equity |  | $                               | 500,935,900 |                   |      |                                     |  |      |                |  | $                 | 325,623,700 |                                     |   |            |  |      |  
|                                           |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|Net interest income                        |  |                                 |             |                   | $    | 17,507,500                          |  |      |                |  |                   |             |                                     | $ | 10,151,800 |  |      |  
|                                           |  |                                 |             |                   |      |                                     |  |      |                |  |                   |             |                                     |   |            |  |      |  
|Interest rate spread                       |  |                                 |             |                   |      |                                     |  | 4.20 | %              |  |                   |             |                                     |   |            |  | 3.89 | %
|Net interest margin                        |  |                                 |             |                   |      |                                     |  | 4.94 | %              |  |                   |             |                                     |   |            |  | 4.46 | %



|(1) | Annualized.
|--- | -----------



Note: Interest income on loans includes loan fees.



Provision for Loan Losses



We made provisions
for loan losses of $0.8 million and $1.7 million, respectively, for the three and nine months ended September 30, 2005 as compared to provisions of $0.2 million and $0.6 million for the comparable periods of 2004.



We assess the adequacy of our allowance for loan losses (the
Allowance) each calendar quarter. Classified loans (loans assigned point values of 7  10) are assigned specific reserves based on the value of the underlying collateral. Loans that are not classified (loans assigned risk point
values of less than 7) are subdivided into pools of similar loans by loan type and are assigned reserve percentages based on the loan type. We determine the reserve percentage by also examining actual loss history for each type of loan, then
adjusting that percentage by several factors including changes in lending policies; changes in national and local economic conditions; changes in experience, ability and depth of lending management and staff; changes in trends of past due and
classified loans; changes in external factors such as competition and legal and regulatory requirements; and other relevant factors. Reserve estimates are totaled and any shortage is charged to current period operations and credited to the
Allowance.



The credit quality of our loans will be influenced
by underlying trends in the economic cycle, particularly in Southern California, and other factors, which are beyond managements control. Accordingly, no assurance can be given that we will not sustain loan losses that in any particular period
will be sizable in relation to the Allowance. Additionally, subsequent evaluation of the loan portfolio by us and by our regulators, in light of factors then prevailing, may require increases in the Allowance through charges to the provision for
loan losses.



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##### Table of Contents

Non-Interest Income



Non-interest income primarily includes service charges on deposit accounts, net gains on sales of loans and loan broker fees for referring loans to other
lenders. Non-interest income decreased by 33% for the quarter ended September 30, 2005 as compared to the same period in 2004 primarily due to the decrease in broker fees on loans and net gains on sales of loans. Non-interest income decreased
by 19% for the nine months ended September 30, 2005 as compared to the same period in 2004 primarily due to the decrease in service charges and fees as well as broker fees on loans.



The amount of gains from sales of loans and loan broker fees in any period is dependent upon the number of loans we can
originate, which in turn depends upon market conditions, interest rates, borrower and investor demand, and the availability of SBA loan programs. Thus, these gains and fees can vary substantially from period to period, and gains and fees in any
period are not indicative of gains and fees to be expected in any subsequent period.



Non-Interest Expense



Salary and related
benefits increased by 63% and 45%, respectively, from the three and nine months ended September 30, 2004 to the three and nine months ended September 30, 2005. This increase was due primarily to an increase in the number of employees in
all locations and departments due to the growth of the Company as well as additions of the new San Fernando Valley, Media District Regional, and the Real Estate Division Offices. The increase in the size and profitability of the Company also
resulted in an increase in incentive and bonus accruals for 2005. At September 30, 2005, the Company employed 94 full-time employees, compared with 70 full-time employees at September 30, 2004.



Occupancy and equipment expenses increased by 62% from the three and nine
months ended September 30, 2004 to the three and nine months ended September 30, 2005. This increase was due to increased rent expense, the amortization of leasehold improvements and the depreciation of office furniture and equipment
primarily at the new San Fernando Valley, Media District Regional, and Real Estate Division Offices.



Other professional fees increased 114% and 77%, respectively, from the three and nine months ended September 30, 2004 to the three and nine months
ended September 30, 2005 due to the increase in accounting and auditing expenses.



Data processing expenses increased 36% and 29%, respectively, from the three and nine months ended September 30, 2004 to the three and nine months ended September 30, 2005 consistent with our growth in
assets and the number of customers.



15



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##### Table of Contents

FINANCIAL CONDITION



Regulatory Capital



At September 30, 2005, Bancshares and the Banks Tier 1 capital, which is comprised of shareholders equity as modified by certain
regulatory adjustments, was $43.4 million and $49.3 million, respectively. Our regulatory capital increased since December 31, 2004 as a result of net earnings as well as proceeds from the issuance of $10,310,000 of junior subordinated
debentures of which $10 million was contributed as capital to the Bank. At September 30, 2005, Bancshares and the Bank met all applicable regulatory capital requirements and the Bank was well capitalized as defined under applicable
regulations.



The following table sets forth the regulatory
standards for well capitalized and adequately capitalized institutions and the capital ratios for Bancshares and the Bank as of the date indicated.



REGULATORY CAPITAL

September 30, 2005

(dollars in thousands)



|                                         |  |        |        |       |                             |   |        |                       |        |  |       |        |  |       |        |  |        |  
|---------------------------------------- |  | ------ | ------ | ----- | --------------------------- | - | ------ | --------------------- | ------ |  | ----- | ------ |  | ----- | ------ |  | ------ | -
|                                         |  | Actual |        |       | To Be AdequatelyCapitalized |   |        | To Be WellCapitalized |       
|                                         |  | Amount |        | Ratio |                             |   | Amount |                       | Ratio  |  |       | Amount |  | Ratio |       
|Bancshares                               |  |        |        |       |                             |   |        |                       |        |  |       |        |  |       |        |  |        |  
|Total Capital (to risk-weighted assets)  |  | $      | 55,417 |       | 10.9                        | % |        | $                     | 40,679 |  | >=8.0 | %      |  |       | N/A    |  | N/A    |  
|Tier 1 Capital (to risk-weighted assets) |  | $      | 43,385 |       | 8.5                         | % |        | $                     | 20,340 |  | >=4.0 | %      |  |       | N/A    |  | N/A    |  
|Tier 1 Capital (to average assets)       |  | $      | 43,385 |       | 7.7                         | % |        | $                     | 22,494 |  | >=4.0 | %      |  |       | N/A    |  | N/A    |  
|Bank                                     |  |        |        |       |                             |   |        |                       |        |  |       |        |  |       |        |  |        |  
|Total Capital (to risk-weighted assets)  |  | $      | 54,618 |       | 10.9                        | % |        | $                     | 40,623 |  | >=8.0 | %      |  | $     | 50,779 |  | >=10.0 | %
|Tier 1 Capital (to risk-weighted assets) |  | $      | 49,349 |       | 9.9                         | % |        | $                     | 20,312 |  | >=4.0 | %      |  | $     | 30,346 |  | >=6.0  | %
|Tier 1 Capital (to average assets)       |  | $      | 49,349 |       | 8.7                         | % |        | $                     | 22,494 |  | >=4.0 | %      |  | $     | 28,117 |  | >=5.0  | %



Liquidity and Cash Flow



Our objective in managing our liquidity is to maintain
cash flow adequate to fund our operations and meet obligations and other commitments on a timely and cost effective basis. We manage this objective through the selection of asset and liability maturity mixes. Our liquidity position is enhanced by
our ability to raise additional funds as needed through available borrowings or accessing deposits nationwide through our money desk.



Deposits provide most of our funds. This relatively stable and low cost source of funds has, along with shareholders equity, provided 87% and 81%,
respectively, of our funding as a percentage of average total assets during the nine months ended September 30, 2005 and for the year ended December 31, 2004.



Secondary sources of liquidity include borrowing arrangements with the FRB and the FHLB. Borrowings from the FRB are
short-term and must be collateralized by pledged securities or loans. As a member of the FHLB system, the Bank may obtain advances from the FHLB pursuant to various credit programs offered from time to time. Credit limitations are based on the
assessment by the FHLB of the Banks creditworthiness, including an adequate level of net worth, reasonable prospects of future earnings, source of funds sufficient to meet the scheduled interest payments, lack of financial or managerial
deficiencies and other factors. Such advances may be obtained pursuant to several different credit programs, and each program has its own rates and range of maturities. Funds borrowed from the FHLB must be collateralized either by pledged securities
or by assignment of notes and may be for terms of one day to several years. As of September 30, 2005, we had $30.0 million outstanding FHLB advances and had no outstanding borrowings from the FRB.



We also have liquidity as a net seller of overnight funds. During the nine
months ended September 30, 2005, we had an average balance of $12.8 million in overnight funds sold representing 2.5% of total average assets.



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##### Table of Contents

One individual controls a number of entities which have deposit accounts with the Company. These accounts
had a balance of $50.0 million at September 30, 2005 and an average balance of $45.4 million for the first nine months of 2005. Approximately 55% of these accounts are non-interest bearing demand deposits. Some of these entities also have loans
from the Company. We monitor this relationship closely, and while we have no reason to believe the individual presently intends to close or materially reduce the balances in the Bank, should he do so, we have adequate liquidity to fund the deposit
withdrawals. However, a rapid withdrawal of these deposits would reduce our net interest income as we would have to replace these non-interest bearing demand deposits with interest-bearing deposits or other borrowings.



Cash Flow from Operating Activities



Net cash provided by operating activities for the nine months ended
September 30, 2005 increased by $4.5 million as compared to the same period in 2004 primarily due to the increase in net earnings.



Cash Flow from Investing Activities



Net cash used in investing activities for the nine months ended September 30, 2005 increased by $64.9 million as compared to the same period in 2004
primarily due to the net increase in loans.



Cash Flows from
Financing Activities



Net cash provided by financing
activities for the nine months ended September 30, 2005 increased by $76.7 million as compared to the same period in 2004 primarily due to a net increase in deposits and junior subordinated debentures offset by payments on FHLB advances.



Asset Liability Management



Based on our business, market risk is primarily limited to interest rate
risk which is the impact that changes in interest rates would have on future earnings. Our Asset Liability Committee manages interest rate risk, including interest rate sensitivity and the repricing characteristics of assets and liabilities. The
principal objective of our asset/liability management is to maximize net interest income within acceptable levels of risk established by policy. Interest rate risk is measured using financial modeling techniques, including stress tests, to measure
the impact of changes in interest rates on future earnings. Net interest income, the primary source of earnings, is affected by interest rate movements. Changes in interest rates have lesser impact the more that assets and liabilities reprice in
approximately equivalent amounts at basically the same time intervals. Imbalances in these repricing opportunities at any point in time constitute interest sensitivity gaps, which is the difference between interest sensitive assets and interest
sensitive liabilities. These static measurements do not reflect the results of any projected activity and are best used as early indicators of potential interest rate exposures.



An asset sensitive gap means an excess of interest sensitive assets over interest sensitive liabilities, whereas a liability
sensitive gap means an excess of interest sensitive liabilities over interest sensitive assets. In a changing rate environment, a mismatched gap position generally indicates that changes in the income from interest earning assets will not be
completely proportionate to changes in the cost of interest bearing liabilities, resulting in net interest income volatility. This risk can be reduced by various strategies, including the administration of liability costs and the reinvestment of
asset maturities.



17



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##### Table of Contents

The following table sets forth the distribution of rate-sensitive assets and liabilities at the date
indicated:



RATE SENSITIVITY

September 30, 2005



|                                                    |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|--------------------------------------------------- |  | ------------------ | ----------- | - | ----------------------------- | -- | ---------- | ----------------------------- |  | -- | ------------- | - |  | ----- | ----------- | - |  | - | ----------- | -
|                                                    |  | ThreeMonthsOr Less |             |   | Over ThreeThroughTwelveMonths |    |            | Over OneYearThroughFive Years |  |    | OverFiveYears |   |  | Total |            
|Assets                                              |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|Federal funds sold                                  |  | $                  | 17,645,000  |   |                               | $  |           |                               |  | $  |              |   |  | $     |            |   |  | $ | 17,645,000  |  
|Time deposits with other financial institutions     |  |                    | 1,485,600   |   |                               |    | 3,760,000  |                               |  |    | 188,300       |   |  |       |            |   |  |   | 5,433,900   |  
|Securities held to maturity                         |  |                    |            |   |                               |    | 1,509,100  |                               |  |    | 32,160,200    |   |  |       | 34,097,700  |   |  |   | 67,767,000  |  
|Loans, gross                                        |  |                    | 375,349,900 |   |                               |    | 8,246,000  |                               |  |    | 55,297,000    |   |  |       | 27,670,000  |   |  |   | 466,562,900 |  
|                                                    |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|Total rate-sensitive assets                         |  |                    | 394,480,500 |   |                               |    | 13,515,100 |                               |  |    | 87,645,500    |   |  |       | 61,767,700  |   |  |   | 557,408,800 |  
|                                                    |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|Liabilities:                                        |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|Interest bearing demand deposits                    |  | $                  | 7,025,400   |   |                               | $  |           |                               |  | $  |              |   |  | $     |            |   |  | $ | 7,025,400   |  
|Savings and money market                            |  |                    | 187,951,200 |   |                               |    |           |                               |  |    |              |   |  |       |            |   |  |   | 187,951,200 |  
|Certificates of deposit                             |  |                    | 20,431,000  |   |                               |    | 68,326,000 |                               |  |    | 92,822,800    |   |  |       |            |   |  |   | 181,579,800 |  
|FHLB advances                                       |  |                    | 5,000,000   |   |                               |    | 10,000,000 |                               |  |    | 15,000,000    |   |  |       |            |   |  |   | 30,000,000  |  
|Junior subordinated debentures                      |  |                    | 17,527,000  |   |                               |    |           |                               |  |    |              |   |  |       |            |   |  |   | 17,527,000  |  
|                                                    |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|Total rate sensitive liabilities                    |  |                    | 237,934,600 |   |                               |    | 78,326,000 |                               |  |    | 107,822,800   |   |  |       |            |   |  |   | 424,083,400 |  
|                                                    |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|Interval Gaps:                                      |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|Interest rate sensitivity gap                       |  | $                  | 156,545,900 |   |                               | ($ | 64,810,900 | )                             |  | ($ | 20,177,300    | ) |  | $     | 61,767,700  |   |  | $ | 133,325,400 |  
|                                                    |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|Rate sensitive assets to rate sensitive liabilities |  |                    | 165.8       | % |                               |    | 17.3       | %                             |  |    | 81.3          | % |  |       |            |   |  |   | 131.4       | %
|                                                    |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|Cumulative Gaps:                                    |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|Cumulative interest rate sensitivity gap            |  | $                  | 156,545,900 |   |                               | $  | 91,735,000 |                               |  | $  | 71,557,700    |   |  | $     | 133,325,400 |   |  | $ | 133,325,400 |  
|                                                    |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|Rate sensitive assets to rate sensitive liabilities |  |                    | 165.8       | % |                               |    | 129.0      | %                             |  |    | 116.9         | % |  |       | 131.4       | % |  |   | 131.4       | %
|                                                    |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  
|% of rate sensitive assets in period                |  |                    | 70.8        | % |                               |    | 73.2       | %                             |  |    | 88.9          | % |  |       | 100.0       | % |  |   | N/A         |  
|                                                    |  |                    |             |   |                               |    |            |                               |  |    |               |   |  |       |             |   |  |   |             |  



Investments in Time Deposits and
Securities



The following table provides certain
information regarding our investments in time deposits with other financial institutions at the dates indicated:



TIME DEPOSIT INVESTMENTS



|                                       |  |                    |           |                      |                   |   |            |   |                      |  |      |  
|-------------------------------------- |  | ------------------ | --------- | -------------------- | ----------------- | - | ---------- | - | -------------------- |  | ---- | -
|                                       |  | September 30, 2005 |           |                      | December 31, 2004 |  
|                                       |  | Book Value         |           | WeightedAverageYield |                   |   | Book Value |   | WeightedAverageYield | 
|Time deposits maturing:                |  |                    |           |                      |                   |   |            |   |                      |  |      |  
|Three months or less                   |  | $                  | 1,485,600 |                      | 2.73              | % |            | $ | 1,450,000            |  | 2.03 | %
|After three months but within one year |  |                    | 3,760,000 |                      | 3.57              | % |            |   | 2,479,000            |  | 2.39 | %
|After one year but within five years   |  |                    | 188,300   |                      | 4.30              | % |            |   | 1,089,000            |  | 2.75 | %
|                                       |  |                    |           |                      |                   |   |            |   |                      |  |      |  
|Total time deposits                    |  | $                  | 5,433,900 |                      | 3.37              | % |            | $ | 5,018,000            |  | 2.36 | %
|                                       |  |                    |           |                      |                   |   |            |   |                      |  |      |  



The following table
provides certain information regarding our investment securities at the dates indicated. Expected maturities will differ from contractual maturities, particularly with respect to collateralized mortgage obligations and mortgage backed securities,
because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. We had no tax-exempt securities during the nine months ended September 30, 2005 or 2004.



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INVESTMENT SECURITIES



|                                                                   |  |                    |            |                      |                   |   |            |   |                      |  |      |  
|------------------------------------------------------------------ |  | ------------------ | ---------- | -------------------- | ----------------- | - | ---------- | - | -------------------- |  | ---- | -
|                                                                   |  | September 30, 2005 |            |                      | December 31, 2004 |  
|                                                                   |  | Book Value         |            | WeightedAverageYield |                   |   | Book Value |   | WeightedAverageYield | 
|Investment securities maturing:                                    |  |                    |            |                      |                   |   |            |   |                      |  |      |  
|Within one year                                                    |  | $                  | 1,509,100  |                      | 6.88              | % |            | $ | 503,800              |  | 6.17 | %
|After one year but within five years                               |  |                    | 32,160,200 |                      | 3.96              | % |            |   | 31,750,200           |  | 3.63 | %
|Collateralized mortgage obligations and mortgage backed securities |  |                    | 34,097,700 |                      | 4.16              | % |            |   | 40,528,800           |  | 4.08 | %
|                                                                   |  |                    |            |                      |                   |   |            |   |                      |  |      |  
|Total investment securities                                        |  | $                  | 67,767,000 |                      | 4.13              | % |            | $ | 72,782,800           |  | 3.90 | %
|                                                                   |  |                    |            |                      |                   |   |            |   |                      |  |      |  



Our present strategy
is to stagger the maturities of our time deposit investments and investment securities to meet our overall liquidity requirements. At September 30, 2005, we classified all our investment securities as held to maturity as we intend to hold the
securities to maturity and have the ability to do so.



Loans



Our present lending strategy is to attract small to mid-sized business
borrowers by offering a variety of commercial and real estate loan products and a full range of other banking services coupled with highly personalized service. We offer secured and unsecured commercial term loans and lines of credit, construction
loans for individual and tract single family homes and for commercial and multifamily properties, accounts receivable and equipment loans, SBA loans and home equity lines of credit. We often tailor our loan products to meet the specific needs of our
borrowers. Our primary lending area includes six Southern California counties: Los Angeles, Orange, Riverside, San Diego, San Bernardino and Ventura.



The following table sets forth the composition of our loan portfolio at the dates indicated:



LOAN PORTFOLIO COMPOSITION



|                                       |  |                    |             |   |                   |       |   |                   |   |             |                 |  |       |  
|-------------------------------------- |  | ------------------ | ----------- | - | ----------------- | ----- | - | ----------------- | - | ----------- | --------------- |  | ----- | -
|                                       |  | September 30, 2005 |             |   | December 31, 2004 |      
|                                       |  | AmountOutstanding  |             |   | Percent ofTotal   |       |   | AmountOutstanding |   |             | Percent ofTotal | 
|Commercial loans                       |  | $                  | 127,979,500 |   |                   | 27.4  | % |                   | $ | 81,115,000  |                 |  | 26.7  | %
|Construction loans                     |  |                    | 151,108,800 |   |                   | 32.4  |   |                   |   | 82,152,900  |                 |  | 27.1  |  
|Real estate loans                      |  |                    | 164,243,000 |   |                   | 35.2  |   |                   |   | 123,851,800 |                 |  | 40.8  |  
|Other loans                            |  |                    | 23,652,400  |   |                   | 5.0   |   |                   |   | 16,360,600  |                 |  | 5.4   |  
|                                       |  |                    |             |   |                   |       |   |                   |   |             |                 |  |       |  
|                                       |  |                    | 466,983,700 |   |                   | 100.0 | % |                   |   | 303,480,300 |                 |  | 100.0 | %
|                                       |  |                    |             |   |                   |       |   |                   |   |             |                 |  |       |  
|Less  Deferred loan fees and discount |  |                    | (2,750,600  | ) |                   |       |   |                   |   | (1,972,100  | )               |  |       |  
|Less  Allowance for loan losses       |  |                    | (5,268,400  | ) |                   |       |   |                   |   | (3,477,900  | )               |  |       |  
|                                       |  |                    |             |   |                   |       |   |                   |   |             |                 |  |       |  
|Net loans                              |  | $                  | 458,964,700 |   |                   |       |   |                   | $ | 298,030,300 |                 |  |       |  
|                                       |  |                    |             |   |                   |       |   |                   |   |             |                 |  |       |  



Our strategy has been
to diversify the construction loan portfolio and limit our level of these loans, particularly the more speculative types, as a percentage of total assets and Tier 1 capital. At September 30, 2005, our portfolio exceeded the limits established
by the Company due to a number of factors including the delay of the completion of projects due to near record rainfall in Southern California during the first part of the year. However, the Company plans to meet the concentration limits by
December 31, 2005 through loan participations, anticipated payoffs on completed projects and increases in shareholders equity. The increases in the construction loan portfolio since December 31, 2004 have occurred primarily in the
area of residential subdivision under $1.0 million, residential subdivision over $1.0 million, residential 1-4 unit non-owner occupied over $1.0 million and land development.



Non-Performing Assets



Non-performing assets consist of non-performing loans and other real estate owned. Non-performing loans are (i) loans which have been placed on
non-accrual status; (ii) loans which are contractually past due 90 days or more with respect to principal or interest, and have not been restructured or placed on non-accrual status, and are accruing interest as described below; and
(iii) troubled debt restructurings (TDRs). Other real estate owned consists of real properties securing loans on



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which we have taken title in partial or complete satisfaction of the loan. The following table sets forth information about non-performing assets at the
dates indicated:



NON-PERFORMING ASSETS



|                                        |  |                   |         |                  |   |        
|--------------------------------------- |  | ----------------- | ------- | ---------------- | - | -------
|                                        |  | September 30,2005 |         | December 31,2004
|Non-accrual loans                       |  | $                 | 191,000 |                  | $ |       
|Accruing loans past due 90 days or more |  |                   |        |                  |   |       
|Troubled debt restructuring             |  |                   | 577,700 |                  |   | 637,800
|Other real estate owned                 |  |                   |        |                  |   |       
|                                        |  |                   |         |                  |   |        
|Balance at end of period                |  | $                 | 768,700 |                  | $ | 637,800
|                                        |  |                   |         |                  |   |        



Nonperforming assets
increased from $0.6 million at December 31, 2004 to $0.8 million at September 30, 2005. The troubled debt restructuring loan at September 30, 2005 represents a commercial line of credit secured by all of the borrowers assets.
Since we have granted concessions to the borrower that we would not otherwise consider, this loan has been classified as a troubled debt restructuring effective March 31, 2004. We continue to closely monitor the loan and the collateral, and it
is possible that in the future we may further downgrade the loan, resulting in material charges to the allowance for loan losses.



Cash collections on non-performing loans totaled $139,800 during the nine months ended September 30, 2005 of which $104,800 was applied to principal
and $35,000 was recorded as interest income. Interest payments received on non-accrual loans are applied to principal unless there is no doubt as to ultimate full repayment of principal, in which case, the interest payment is recognized as interest
income. The additional interest income that would have been recorded from non-accrual loans, if the loans had not been on non-accrual status, was $205,000 for the nine months ended September 30, 2005. Interest income not recognized on
non-accrual loans reduced the net yield on earning assets by 0.2% for the three month period ended September 30, 2005.



Impaired Loans



An impaired loan is a loan which management determines is probable that we will be unable to collect all principal and interest amounts due according to
the contractual terms of the loan agreement. Impaired loans can include non-performing loans, although not all impaired loans will be non-performing loans.



We determine impaired loans by a periodic evaluation on an individual loan basis. At September 30, 2005 and December 31, 2004, we had classified
$1.6 million and $5.4 million, respectively, of our loans as impaired for which a $0.3 million reserve and $0.1 million reserve, respectively, were assigned. In the nine months ended September 30, 2005, we collected $8.8 million on impaired
loans.



Changes in Allowance for Loan Losses



The following table presents an analysis of changes in the allowance for
loan losses during the periods indicated:



CHANGES IN
ALLOWANCES FOR LOAN LOSSES



|                               |  |                                 |           |      |   |           |  
|------------------------------ |  | ------------------------------- | --------- | ---- | - | --------- | -
|                               |  | Nine months ended September 30, |          
|                               |  | 2005                            |           | 2004 |  
|Balance at beginning of period |  | $                               | 3,477,900 |      | $ | 3,030,700 |  
|Chargeoffs                    |  |                                 |          |      |   | (444,300  | )
|Recoveries                     |  |                                 | 25,300    |      |   | 69,900    |  
|                               |  |                                 |           |      |   |           |  
|Net chargeoffs                |  |                                 | 25,300    |      |   | (374,400  | )
|Additional provisions          |  |                                 | 1,727,000 |      |   | 600,000   |  
|Other additions                |  |                                 | 38,200    |      |   |          |  
|                               |  |                                 |           |      |   |           |  
|Balance at end of period       |  | $                               | 5,268,400 |      | $ | 3,256,300 |  
|                               |  |                                 |           |      |   |           |  



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Off-Balance Sheet Credit Commitments and Contingent Obligations



Commitments to extend credit are agreements to lend to a customer as long as
there is not a violation of any condition in the loan contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since we expect some commitments to expire without being drawn upon, the
total commitment amounts do not necessarily represent future loans. At September 30, 2005, we had undisbursed loan commitments of $248.7 million.



Standby letters of credit and financial guarantees are conditional commitments issued to secure the financial performance of a customer to a third party.
These are issued primarily to support public and private borrowing arrangements. The credit risk involved in issuing a letter of credit for a customer is essentially the same as that involved in extending a loan to that customer. We hold
certificates of deposit and other collateral of at least 100% of the notional amount as support for letters of credit for which we deem collateral to be necessary. At September 30, 2005, we had outstanding standby letters of credit with a
potential $3.2 million of obligations. These standby letters of credit will mature at various dates through 2006.



The Company is subject from time to time to various claims and lawsuits which arise primarily in the ordinary course of business. No material losses are
anticipated with respect to any existing matters.



Deposits



Total deposits increased from $304.8 million at December 31, 2004 to
$500.3 million at September 30, 2005. This increase was primarily due to a $35.6 million increase in noninterest bearing demand deposits, a $41.7 million increase in savings and money market deposits and a $116.6 million increase in
certificates of deposit. These increases in deposits resulted from additional emphasis on core deposits as well as a Company-wide incentive compensation program for deposit growth, which we used to fund the increase in our loan and investment
portfolios and to increase our liquidity. In addition, we obtained $54.5 million of additional certificates of deposit through our money desk, $28.8 million of additional certificates of deposit through brokers and $15.9 million of additional
certificates of deposit through the internet.



The following
table sets forth information concerning the amount of deposits from various sources at the dates indicated:



SOURCE OF DEPOSITS



|           |  |                    |             |                 |                   |   |            |   |                 |  |       |  
|---------- |  | ------------------ | ----------- | --------------- | ----------------- | - | ---------- | - | --------------- |  | ----- | -
|           |  | September 30, 2005 |             |                 | December 31, 2004 |  
|           |  | Book Value         |             | Percent ofTotal |                   |   | Book Value |   | Percent ofTotal | 
|Branches   |  | $                  | 350,834,300 |                 | 70.1              | % |            | $ | 254,481,300     |  | 83.5  | %
|Money desk |  |                    | 64,204,300  |                 | 12.8              |   |            |   | 9,719,200       |  | 3.2   |  
|Brokered   |  |                    | 69,399,300  |                 | 13.9              |   |            |   | 40,592,400      |  | 13.3  |  
|Internet   |  |                    | 15,859,700  |                 | 3.2               |   |            |   |                |  |      |  
|           |  |                    |             |                 |                   |   |            |   |                 |  |       |  
|Total      |  | $                  | 500,297,600 |                 | 100.0             | % |            | $ | 304,792,900     |  | 100.0 | %
|           |  |                    |             |                 |                   |   |            |   |                 |  |       |  



One individual
controls a number of entities which have deposit accounts with the Company. These accounts had a balance of $50.0 million at September 30, 2005 and an average balance of $45.4 million for the first nine months of 2005. Approximately 55% of
these accounts are non-interest bearing demand deposits. Some of these entities also have loans from the Company.



Our money desk attracts primarily certificates of deposit from institutional investors nationwide by telephone. We also engage brokers to place
certificates of deposit for their customers. During 2005, the certificates of deposit obtained through our money desk or deposit brokers generally had maturities ranging from one to five years. We limit the amount of money desk and broker deposits
that are scheduled to mature in any one calendar month. In addition, we have historically maintained an appropriate level of liquidity specifically to counter any concurrent deposit reduction that might occur.



In recent years, the interest rates on certificates of deposit obtained
through our money desk or deposit brokers generally have been lower than the interest rates then offered to local customers for certificates of deposit with comparable maturities. We believe this is due to the highly competitive nature of Southern
California market for deposits and, in particular, the difficulty smaller banks with one or few branch offices have in competing for deposits with larger banks, savings associations and credit unions with multiple offices.



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Banks that are not well capitalized under the FDIC prompt corrective action rules may not
accept brokered deposits without the prior approval of the FDIC. In addition, we believe that if we are not well capitalized, we will have greater difficulty obtaining certificates of deposit through our money desk and may have to pay
higher interest rates to continue to attract those deposits. Accordingly, the failure of the Bank to remain well capitalized could have a material adverse affect on us.



Borrowed Funds



At September 30, 2005, we had $30.0 million in advances from the FHLB which were collateralized by certain qualifying loans with a carrying value of
$117.2 million. The advances mature on various dates from 2005 through 2010. Advances totaling $15.0 million bear interest at a weighted average fixed rate of 2.56%. Advances totaling $15.0 million bear interest at a rate of the prime lending rate
less an average of 2.77% (the borrowing rate was 3.98% at September 30, 2005). Interest is payable quarterly or semiannually with principal and any accrued interest due at maturity.



In October 2002, Bancshares issued $7,217,000 of junior subordinated debentures to Alliance Bancshares California Capital
Trust I, a Delaware business trust that was formed for the exclusive purpose of issuing trust preferred securities to provide additional regulatory capital. This capital has a relatively low cost as interest payments on the debentures are deductible
for income tax purposes. The Trust purchased the debentures with the proceeds of the sale of its common trust securities to Bancshares for $217,000 and trust preferred securities for $7,000,000. The subordinated debentures and trust preferred
securities have generally identical terms, including that they mature in 2032, are redeemable at the Companys option commencing October 2007 at par, and require quarterly distributions/interest payments at a rate which adjusts quarterly at the
three month LIBOR rate plus 3.45% (the rate was 7.24% at September 30, 2005). Bancshares has unconditionally guaranteed distributions on, and payments on liquidation and redemption of, the trust preferred securities.



In February 2005, Bancshares issued $10,310,000 of junior subordinated
debentures to Alliance Bancshares California Capital Trust II, a Delaware business trust that was formed for the exclusive purpose of issuing trust preferred securities to provide additional regulatory capital. The Trust purchased the debentures
with the proceeds of the sale of its common trust securities to Bancshares for $310,000 and trust preferred securities for $10,000,000. The subordinated debentures and trust preferred securities have generally identical terms, including that they
mature in 2035, are redeemable at the Companys option commencing February 2010 at par, and require quarterly distributions/interest payments at a rate which adjusts quarterly at the three month LIBOR rate plus 1.90% (the rate was 5.77% at
September 30, 2005). Bancshares has unconditionally guaranteed distributions on, and payments on liquidation and redemption of, the trust preferred securities.



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FACTORS WHICH MAY AFFECT FUTURE OPERATING RESULTS



We face risk from changes in interest rates.



The success of our business depends, to a large extent, on our net interest income. Changes in market interest rates can
affect our net interest income by affecting the spread between our interest earning assets and interest bearing liabilities. This may be due to the different maturities of our interest earning assets and interest bearing liabilities, as well as an
increase in the general level of interest rates. Changes in market interest rates also affect, among other things:



| |  |  | Our ability to originate loans;
| | - |  | -------------------------------



| |  |  | The ability of our borrowers to make payments on their loans;
| | - |  | -------------------------------------------------------------



| |  |  | The value of our interest earning assets and our ability to realize gains from the sale of these assets;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | The average life of our interest earning assets;
| | - |  | ------------------------------------------------



| |  |  | Our ability to generate deposits instead of other available funding alternatives; and
| | - |  | -------------------------------------------------------------------------------------



| |  |  | Our ability to access the wholesale funding market.
| | - |  | ---------------------------------------------------



Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political
conditions and other factors beyond our control.



We face risk from possible
declines in the quality of our assets.



Our financial
condition depends significantly on the quality of our assets. While we have developed and implemented underwriting policies and procedures to guide us in the making of loans, compliance with these policies and procedures in making loans does not
guarantee repayment of the loans. If the level of our non-performing assets rises, our results of operations and financial condition will be affected. A borrowers ability to pay its loan in accordance with its terms can be adversely affected
by a number of factors, such as a decrease in the borrowers revenues and cash flows due to adverse changes in economic conditions or a decline in the demand for the borrowers products and/or services.



Our allowances for loan losses may be inadequate.



We establish allowances for loan losses against each segment of our loan
portfolio. At September 30, 2005, our allowance for loan losses equaled 1.12% of loans. Although we believed that we had established adequate allowances for loan losses as of September 30, 2005, the credit quality of our assets is affected
by many factors beyond our control, including local and national economic conditions, and the possible existence of facts which are not known to us which adversely affect the likelihood of repayment of various loans in our loan portfolio and
realization of the collateral upon a default. Accordingly, we can give no assurance that we will not sustain loan losses materially in excess of the allowance for loan losses. In addition, the FDIC and California Department of Financial
Institutions, as an integral part of their examination process, periodically review our allowance for loan losses and could require additional provisions for loan losses. Material future additions to the allowance for loan losses may also be
necessary due to increases in the size and changes in the composition of our loan portfolio. Increases in our provisions for loan losses would adversely affect our results of operations.



Economic conditions may worsen.



Our business is strongly influenced by economic conditions in our market area (principally Southern California) as well as regional and national economic
conditions, large budget deficits and an uncertain economy. Should the economic condition in these areas deteriorate, the financial condition of our borrowers could weaken, which could lead to higher levels of loan defaults or a decline in the value
of collateral for our loans. In addition, an unfavorable economy could reduce the demand for our loans and other products and services.



At September 30, 2005, a significant number of our loans were collateralized by real estate located in California. Because of this concentration in
California, our financial position and results of operations have been and are expected to continue to be influenced by general trends in the California economy and its real estate market. Real estate market declines may adversely affect the values
of the properties collateralizing loans. If the principal balances of our loans, together with any primary financing on the mortgaged properties, equal or exceed the value of the mortgaged properties, we could incur



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higher losses on sales of properties collateralizing foreclosed loans. In addition, California historically has been vulnerable to certain natural disaster
risks, such as earthquakes and erosion-caused mudslides, which are not typically covered by the standard hazard insurance policies maintained by borrowers. Uninsured disasters may adversely impact our ability to recover losses on properties affected
by such disasters and adversely impact our results of operations.



Our
business is very competitive.



There is intense
competition in Southern California and elsewhere in the United States for banking customers. We experience competition for loans and deposits from many sources, including credit unions, insurance companies and money market and other mutual funds, as
well as other commercial banks and savings institutions. In recent years out-of-state financial institutions have entered the California market, which has also increased competition. Many of our competitors have greater financial strength, marketing
capability and name recognition than we do, and operate on a statewide or nationwide basis. In addition, recent developments in technology and mass marketing have permitted larger companies to market loans more aggressively to our small business
customers. Such advantages may give our competitors opportunities to realize greater efficiencies and economies of scale than we can. We can provide no assurance that we will be able to compete effectively against our competition.



A significant portion of our loan portfolio consists of construction loans to developers
for tract projects and single homes for sale to unidentified buyers.



At September 30, 2005, we had outstanding construction loans to developers for tract projects and single homes for sale to unidentified buyers totaling $87.8 million, representing 19.3% of our loan portfolio, and
additional commitments for these projects in the amount of $100.0 million. These types of loans generally have greater risks than loans on completed homes, multifamily and commercial properties. A construction loan generally does not cover the full
amount of the construction costs, so the borrower must have adequate funds to pay for the balance of the project. Price increases, delays and unanticipated difficulties can materially increase these costs. Further, even if completed, there is no
assurance that the borrower will be able to sell the project on a timely or profitable basis, as these are closely related to real estate market conditions, which can fluctuate substantially between the start and completion of the project. If the
borrower defaults prior to completion of the project, the value of the project will likely be less than the outstanding loan, and we could be required to complete construction with our own funds to minimize losses on the project.



Our business is heavily regulated.



Both Bancshares, as a bank holding company, and Bank, as a California
chartered FDIC insured bank, are subject to significant governmental supervision, regulation and legislation, which is intended primarily to maintain a safe and sound banking system, to protect depositors and the FDIC insurance fund, and to
facilitate the conduct of sound monetary policy, and are not intended to protect bank and bank holding company shareholders. Statutes, regulations and regulatory policies affecting us may be changed at any time, and the interpretation of these
statutes and regulations by examining authorities also may change. We cannot assure you that future changes in applicable statutes, regulations, legislation and policies or in their interpretation will not materially adversely affect our business.



SBA loan programs may be modified or discontinued.



In recent years we have generated significant income from fees and interest
on SBA loans and gains on sales of participation interests in SBA loans. Congress or the SBA may discontinue or modify these programs at any time. Such discontinuation or modification could have a material adverse affect on our results of operations
depending on our level SBA lending at the time.



One individual controls a
large amount of deposits.



One individual controls a
number of entities which have deposit accounts with us. These accounts had a balance of $50.0 million at September 30, 2005 and an average balance of $45.4 million for the first nine months of 2005. Most of these deposits can be withdrawn upon
demand without penalty. Some of these entities also have loans from the Company. We monitor this relationship closely, and while we have no reason to believe the individual presently intends to close or materially reduce the balances in the Bank,
should he do so we have adequate liquidity to fund the deposit withdrawals. However, a rapid withdrawal of these deposits would reduce our net interest income as we would have to replace these non-interest bearing demand deposits with interest
bearing deposits or other borrowings.



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|ITEM 3. | CONTROLS AND PROCEDURES
|------- | -----------------------



The Company maintains disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) that are designed to assure that information required
to be disclosed in its Securities Exchange Act of 1934 reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and that such information is
accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.



In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures,
no matter how well designed and operated, can provide reasonable assurance only of achieving the desired control objectives, and management necessarily is required to apply its judgment in weighting the costs and benefits of possible new or
different controls and procedures. Limitations are inherent in all control systems, so no evaluation of controls can provide absolute assurance that all control issues and any fraud within the company have been detected.



As required by Exchange Act Rule 13a-15(b), as of the end of the period
covered by this report the Company, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Companys disclosure controls and procedures. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures were effective as of that date.



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.



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PART II OTHER INFORMATION



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



|     |  |                                                                                                                                                                                                                            
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Section 302 CEO Certification                                                                                                                                                                                              
|     | 
|31.2 |  | Section 302 CFO Certification                                                                                                                                                                                              
|     | 
|32.1 |  | Certificate by Curtis S. Reis, Chairman and Chief Executive Officer of the Company dated November 14, 2005 pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002                    
|     | 
|32.2 |  | Certificate by Daniel L. Erickson, Executive Vice President and Chief Financial Officer of the Company dated November 14, 2005 pursuant to 18 U.S.C. § 1350, as adopted pursuant to §
906 of the Sarbanes-Oxley Act of 2002



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SIGNATURES



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



|                        |  |  |  |                                |  |     |  |                                                     
|----------------------- |  |  |  | ------------------------------ |  | --- |  | ----------------------------------------------------
|DATE: November 14, 2005 |  |  |  | ALLIANCE BANCSHARES CALIFORNIA
|                        |  |  |  |                               
|                        |  |  |  |                                |  | By: |  | /s/    DANIEL L.
ERICKSON                           
|                        |  |  |  |                                |  |     |  | Daniel L. Erickson                                  
|                        |  |  |  |                                |  |     |  | Executive Vice President and Chief Financial Officer



27