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

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

| Title of each class        | Name of each exchange on which registered |
|----------------------------|-------------------------------------------|
| Common Stock, No Par Value | Nasdaq Global Market                      |

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

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IN

| Part I     |     | Page   |
|------------|----------|--------|
|       |     |   |
|       | Item 1.  |   | Business |   | 4 |
|       | Item 1A. |   | Risk Factors |   | 6 |
|       | Item 1B. |   | Unresolved Staff Comments |   | 15 |
|       | Item 2.  |   | Properties |   | 15 |
|       | Item 3.  |   | Legal Proceedings |   | 15 |
|       | Item 4.  |   | (Removed and Reserved) |   | 15 |
|       |     |   |   |   |   |
| Part II    |     |   |
|       |     |   |
|       | Item 5.  |   | Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities |   | 16 |
|       | Item 6.  |   | Selected Financial Data |   | 18 |
|       | Item 7.  |   | Management's Discussion and Analysis of Financial Condition and Results of Operations |   | 19 |
|       | Item 7A. |   | Quantitative and Qualitative Disclosure about Market Risk |   | 51 |
|       | Item 8.  |   | Consolidated Financial Statements and Supplementary Data |   | F1 |
|       | Item 9.  |   | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |   | 52 |
|       | Item 9A. |   | Controls and Procedures |   | 52 |
|       | Item 9B. |   | Other Information |   | 52 |
|       |     |   |   |   |   |
| Part III   |     |   |
|       |     |   |
|       | Item 10. |   | Directors, Executive Officers and Corporate Governance |   | 52 |
|       | Item 11. |   | Executive Compensation |   | 53 |
|       | Item 12. |   | Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters |   | 53 |
|       | Item 13. |   | Certain Relationships and Related Transactions and Director Independence |   | 53 |
|       | Item 14. |   | Principal Accounting Fees and Services |   | 53 |
|       |     |   |   |   |   |
| Part IV    |     |   |
|       |     |   |
|       | Item 15. |   | Exhibits, Financial Statement Schedules |   | 53 |
|       |     |   |   |   |   |
| Signatures |     | 56     |

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Index

| ITEM 1. | BUSINESS |
|---------|----------|

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Index

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Index

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

|   | · | We may potentially face increased regulation of our industry.  Compliance with such regulation may increase our respective costs and limit our ability to pursue business opportunities. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The process  we use to estimate losses inherent in our credit exposure requires difficult, subjective and complex judgments, including forecasts of economic conditions and how these economic conditions might impair the ability of our respective borrowers to repay their loans.  The level of uncertainty concerning economic conditions may adversely affect the accuracy of these estimates which may, in turn, impact the reliability of the process. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We could be affected by an increase in the number of clients and counterparties who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to our Bank. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In a sustained economic downturn, we may have an increase in the number of delinquencies, bankruptcies or defaults that could result in a higher level of nonperforming assets, net charge-offs and provision for loan losses. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Index

|   | · | We may experience a decrease in the demand for loans and other products and services that we offer. |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | Liquidity may be affected by an increase or decrease in the usage of unfunded commitments. |
|--------|--------|--------------------------------------------------------------------------------------------|

|   | · | We may be required to pay significantly higher FDIC premiums because market developments have significantly depleted the insurance fund of the FDIC and reduced the ratio of reserves to insured deposits. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | eliminates, effective one year after the date of enactment, the federal prohibitions on paying interest on demand deposits, thus allowing businesses to have interest-bearing checking accounts.  Depending on competitive responses, this significant change to existing law could have an adverse impact on our interest expense; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | broadens the base for FDIC insurance assessments.  Assessments will now be based on the average consolidated total assets less tangible equity capital of a financial institution; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | permanently increases the maximum amount of deposit insurance for banks, savings institutions and credit unions to $250,000 per depositor, retroactive to January 1, 2008, and noninterest-bearing transaction accounts have unlimited deposit insurance through December 31, 2013; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | requires publicly traded companies to give shareholders a non-binding vote on executive compensation and so-called “golden parachute” payments in certain circumstances; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | authorizes the SEC to promulgate rules that would allow stockholders to nominate their own candidates using a company's proxy materials, and the SEC has recently promulgated such rules; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | directs the Federal Reserve Board to promulgate rules prohibiting excessive compensation paid to bank holding company executives; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | · | creates a new Consumer Financial Protection Bureau with broad powers to supervise and enforce consumer protection laws.  The Consumer Financial Protection Bureau has broad rule-making authority for a wide range of consumer protection laws that apply to all banks and savings institutions, including the authority to prohibit “unfair, deceptive or abusive” acts and practices.  The Consumer Financial Protection Bureau has examination and enforcement authority over all banks and savings institutions with more than $10 billion in assets. Institutions with $10 billion or less in assets, like our Company, will continued to be examined for compliance with the consumer laws by their primary bank regulators. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Index

|   | · | a reduction in our ability to generate or originate revenue-producing assets as a result of compliance with heightened capital standards; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase the cost of operations due to greater regulatory oversight, supervision and examination of banks and bank holding companies, and higher deposit insurance premiums; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a limitation on our ability to raise capital through the use of trust preferred securities as these securities may no longer be included as Tier 1 capital going forward; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a limitation on our ability to expand consumer product and service offerings due to anticipated stricter consumer protection laws and regulations. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

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Index

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Index

|   | · | loan delinquencies may increase; |
|--------|--------|----------------------------------|

|   | · | problem assets and foreclosures may increase; |
|--------|--------|-----------------------------------------------|

|   | · | demand for our products and services may decline; and |
|--------|--------|-------------------------------------------------------|

|   | · | collateral for loans made by us, especially real estate, may decline in value, in turn reducing customers’ borrowing power, and reducing the value of assets and collateral associated with our existing loans. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Index

|   | · | the amount of capital we must maintain; |
|--------|--------|-----------------------------------------|

|   | · | the types of activities in which we can engage; |
|--------|--------|-------------------------------------------------|

|   | · | the types and amounts of investments we can make; |
|--------|--------|---------------------------------------------------|

|   | · | the locations of our offices; |
|--------|--------|-------------------------------|

|   | · | insurance of our deposits and the premiums paid for the insurance; and |
|--------|--------|------------------------------------------------------------------------|

|   | · | how much cash we must set aside as reserves for deposits. |
|--------|--------|-----------------------------------------------------------|

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Index

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Index

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Index

| ITEM 1B. | UNRESOLVED STAFF COMMENTS |
|----------|---------------------------|

| ITEM 2. | PROPERTIES |
|---------|------------|

| ITEM 3. | LEGAL PROCEEDINGS |
|---------|-------------------|

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

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Index

| ITEM 5. | MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
|---------|------------------------------------------------------------------------------------------------------------------|

|               |   | 2010 Quarters |   |   | 2009 Quarters |   |
|--------------------|--------|---------------|--------|--------|---------------|--------|
|               |   | Fourth        |   |   | Third         |   |   | Second |   |   | First |   |   | Fourth |   |   | Third |   |   | Second |   |   | First |   |
| Stock Price Range: |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High               |   | $             | 3.80   |   |          | $      | 3.70 |   |   | $ | 3.65 |   |   | $ | 3.15 |   |   | $ | 3.25 |   |   | $ | 2.83 |   |   | $ | 3.15 |   |   | $ | 4.02 |   |
| Low                |   |          | 2.87   |   |          |   | 2.34 |   |   |   | 2.36 |   |   |   | 2.75 |   |   |   | 2.26 |   |   |   | 1.49 |   |   |   | 2.00 |   |   |   | 1.59 |   |
|               |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Dividends   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Declared           |   | $             | 0.00   |   |          | $      | 0.00 |   |   | $ | 0.00 |   |   | $ | 0.00 |   |   | $ | 0.00 |   |   | $ | 0.00 |   |   | $ | 0.00 |   |   | $ | 0.00 |   |

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Index

| Plan Category                      |   | Number of securities to be issued upon exercise of outstanding options, warrants and rights |    |   | Weighted-average exercise price of outstanding options, warrants and rights |   |   | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |   |
|------------------------------------|--------|---------------------------------------------------------------------------------------------|---------|--------|-----------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                               |   | (a)                                                                                         |    |   | (b)                                                                         |   |   | (c)                                                                                                                                         |   |
| Plans approved by shareholders     |   |                                                                                        | 428,685 |   |                                                                        | $      | 7.15   |                                                                                                                                        |   |   | 297,850 |   |
| Plans not approved by shareholders |   |                                                                                        |    |   |                                                                        |   |   |                                                                                                                                        |   |   |   |   |
| Total                              |   |                                                                                        | 428,685 |   |                                                                        | $      | 7.15   |                                                                                                                                        |   |   | 297,850 |   |

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Index

| ITEM 6. | SELECTED FINANCIAL DATA |
|---------|-------------------------|

|                                                                         |   | Year Ended December 31,                          |    |
|------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                         |   | 2010                                             |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| INCOME STATEMENT:                                                            |   | (in thousands, except per share data and ratios) |    |
| Interest income                                                              |   | $                                                | 39,234  |   |   | $ | 40,903 |   |   | $ | 45,532 |   |   | $ | 46,841 |   |   | $ | 39,303 |   |
| Interest expense                                                             |   |                                             | 9,957   |   |   |   | 14,945 |   |   |   | 22,223 |   |   |   | 22,834 |   |   |   | 16,804 |   |
| Net interest income                                                          |   |                                             | 29,277  |   |   |   | 25,958 |   |   |   | 23,309 |   |   |   | 24,007 |   |   |   | 22,499 |   |
| Provision for loan losses                                                    |   |                                             | 8,743   |   |   |   | 18,678 |   |   |   | 5,264 |   |   |   | 1,297 |   |   |   | 489 |   |
| Net interest income after provision for loan losses                          |   |                                             | 20,534  |   |   |   | 7,280 |   |   |   | 18,045 |   |   |   | 22,710 |   |   |   | 22,010 |   |
| Non-interest income                                                          |   |                                             | 4,015   |   |   |   | 4,418 |   |   |   | 5,081 |   |   |   | 4,845 |   |   |   | 5,972 |   |
| Non-interest expenses                                                        |   |                                             | 20,991  |   |   |   | 21,479 |   |   |   | 20,516 |   |   |   | 21,000 |   |   |   | 18,832 |   |
| Income (loss) before income taxes                                            |   |                                             | 3,558   |   |   |   | (9,781 | ) |   |   | 2,610 |   |   |   | 6,555 |   |   |   | 9,150 |   |
| Provision (benefit) for income taxes                                         |   |                                             | 1,467   |   |   |   | (4,018 | ) |   |   | 1,129 |   |   |   | 2,766 |   |   |   | 3,822 |   |
| NET INCOME (LOSS)                                                            |   | $                                                | 2,091   |   |   | $ | (5,763 | ) |   | $ | 1,481 |   |   | $ | 3,789 |   |   | $ | 5,328 |   |
| Preferred stock dividends                                                    |   |                                             | 1,047   |   |   |   | 1,046 |   |   |   | 35 |   |   |   | - |   |   |   | - |   |
| NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS                          |   | $                                                | 1,044   |   |   | $ | (6,809 | ) |   | $ | 1,446 |   |   | $ | 3,789 |   |   | $ | 5,328 |   |
|                                                                         |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PER COMMON SHARE DATA:                                                       |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) per  share – Basic                             |   | $                                                | 0.18    |   |   | $ | (1.15 | ) |   | $ | 0.24 |   |   | $ | 0.65 |   |   | $ | 0.92 |   |
| Weighted average shares used in income per share calculation – Basic   |   |                                             | 5,915   |   |   |   | 5,915 |   |   |   | 5,913 |   |   |   | 5,862 |   |   |   | 5,785 |   |
| Income (loss) per  share – Diluted                           |   | $                                                | 0.18    |   |   | $ | (1.15 | ) |   | $ | 0.24 |   |   | $ | 0.63 |   |   | $ | .89 |   |
| Weighted average shares used in income per share calculation – Diluted |   |                                             | 6,833   |   |   |   | 5,915 |   |   |   | 5,941 |   |   |   | 6,022 |   |   |   | 6,001 |   |
| Book value per share                                                         |   | $                                                | 7.92    |   |   | $ | 7.74 |   |   | $ | 8.84 |   |   | $ | 8.51 |   |   | $ | 8.05 |   |
|                                                                         |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE SHEET:                                                               |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loans                                                                    |   | $                                                | 580,632 |   |   | $ | 603,440 |   |   | $ | 581,075 |   |   | $ | 539,165 |   |   | $ | 451,572 |   |
| Total assets                                                                 |   |                                             | 667,604 |   |   |   | 684,216 |   |   |   | 656,981 |   |   |   | 609,850 |   |   |   | 516,615 |   |
| Total deposits                                                               |   |                                             | 529,893 |   |   |   | 531,392 |   |   |   | 475,439 |   |   |   | 433,739 |   |   |   | 368,747 |   |
| Total liabilities                                                            |   |                                             | 605,962 |   |   |   | 623,909 |   |   |   | 590,363 |   |   |   | 559,691 |   |   |   | 469,795 |   |
| Total stockholders' equity                                                   |   |                                             | 61,642  |   |   |   | 60,307 |   |   |   | 66,618 |   |   |   | 50,159 |   |   |   | 46,820 |   |
|                                                                         |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING AND CAPITAL RATIOS:                                                |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return on average equity                                                     |   |                                             | 3.42    | % |   |   | (9.24 | )% |   |   | 2.85 | % |   |   | 7.72 | % |   |   | 11.88 | % |
| Return on average assets                                                     |   |                                             | 0.31    |   |   |   | (0.85 | ) |   |   | 0.23 |   |   |   | 0.67 |   |   |   | 1.12 |   |
| Dividend payout ratio                                                        |   |                                             | -       |   |   |   | - |   |   |   | 49.07 |   |   |   | 36.92 |   |   |   | 24.97 |   |
| Equity to assets ratio                                                       |   |                                             | 9.23    |   |   |   | 8.81 |   |   |   | 10.14 |   |   |   | 8.22 |   |   |   | 9.06 |   |
| Tier 1 leverage ratio                                                        |   |                                             | 9.08    |   |   |   | 8.81 |   |   |   | 10.28 |   |   |   | 8.39 |   |   |   | 9.21 |   |
| Tier 1 risk-based capital ratio                                              |   |                                             | 11.40   |   |   |   | 10.93 |   |   |   | 12.45 |   |   |   | 9.87 |   |   |   | 10.57 |   |
| Total risk-based capital ratio                                               |   |                                             | 14.16   |   |   |   | 12.20 |   |   |   | 13.70 |   |   |   | 10.74 |   |   |   | 11.45 |   |

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Index

| ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS |
|---------|--------------------------------------------------------------------------------------|

|   | § | The provision for loan losses declined to $8.7 million for 2010 compared to $18.7 million for 2009.  Net charge-offs declined from $12.3 million to $9.2 million. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | An increase in net interest income of $3.3 million, or 12.8%, from $26.0 million for 2009 to $29.3 million for 2010. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | § | The increase in net interest income primarily resulted from an improvement in the margin from 3.91% for 2009 to 4.5% for 2010. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | § | A slight decline in yields on interest-earning assets was more than offset by the reduction in rates paid on deposits and other borrowings which were 1.73% for 2010 compared to 2.60% for 2009. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Cost of deposits declined from 2.24% for 2009 to 1.41% for 2010. |
|--------|--------|------------------------------------------------------------------|

|   | § | Non-interest expense declined slightly to $21.0 million for 2010 from $21.5 million for 2009. |
|--------|--------|-----------------------------------------------------------------------------------------------|

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Index

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Index

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Index

|                                                                         |   | Year Ended December 31,       |   |
|------------------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                         |   | 2010 vs. 2009                 |   |   | 2009 vs. 2008 |   |
|                                                                         |   | Amount of Increase (decrease) |   |   | Percent of Increase (decrease) |   |   | Amount of Increase (decrease) |   |   | Percent of Increase (decrease) |   |
| INTEREST INCOME                                                              |   | (dollars in thousands)        |   |
| Loans                                                                        |   | $                             | (1,285 | ) |   |   | (3.3 | )% |   | $ | (3,987 | ) |   |   | (9.3 | )% |
| Investment securities                                                        |   |                          | (338   | ) |   |   | (19.4 | )% |   |   | (439 | ) |   |   | (20.1 | )% |
| Other                                                                        |   |                          | (46    | ) |   |   | (66.7 | )% |   |   | (203 | ) |   |   | (74.6 | )% |
| Total interest income                                                        |   |                          | (1,669 | ) |   |   | (4.1 | )% |   |   | (4,629 | ) |   |   | (10.2 | )% |
| INTEREST EXPENSE                                                             |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                     |   |                          | (3,643 | ) |   |   | (32.4 | )% |   |   | (5,985 | ) |   |   | (34.7 | )% |
| Other borrowings and convertible debentures                                  |   |                          | (1,345 | ) |   |   | (36.3 | )% |   |   | (1,293 | ) |   |   | (25.9 | )% |
| Total interest expense                                                       |   |                          | (4,988 | ) |   |   | (33.4 | )% |   |   | (7,278 | ) |   |   | (32.7 | )% |
| NET INTEREST INCOME                                                          |   |                          | 3,319  |   |   |   | 12.8 | % |   |   | 2,649 |   |   |   | 11.4 | % |
| Provision for loan losses                                                    |   |                          | (9,935 | ) |   |   | (53.2 | )% |   |   | 13,414 |   |   |   | 254.8 | % |
| NET INTEREST INCOME AFTER PROVISION   FOR LOAN LOSSES         |   |                          | 13,254 |   |   |   | 182.1 | % |   |   | (10,765 | ) |   |   | (59.7 | )% |
| NON-INTEREST INCOME                                                          |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other loan fees                                                              |   |                          | 72     |   |   |   | 3.8 | % |   |   | (211 | ) |   |   | (10.0 | )% |
| Gains from loan sales, net                                                   |   |                          | 104    |   |   |   | 28.7 | % |   |   | (655 | ) |   |   | (64.3 | )% |
| Document processing fees, net                                                |   |                          | (259   | ) |   |   | (32.3 | )% |   |   | 85 |   |   |   | 11.8 | % |
| Loan servicing fees, net                                                     |   |                          | (445   | ) |   |   | (57.6 | )% |   |   | 285 |   |   |   | 58.4 | % |
| Service charges                                                              |   |                          | 75     |   |   |   | 16.4 | % |   |   | 22 |   |   |   | 5.1 | % |
| Other                                                                        |   |                          | 50     |   |   |   | 38.5 | % |   |   | (189 | ) |   |   | (59.2 | )% |
| Total non-interest income                                                    |   |                          | (403   | ) |   |   | (9.1 | )% |   |   | (663 | ) |   |   | (13.0 | )% |
| NON-INTEREST EXPENSES                                                        |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                                               |   |                          | (73    | ) |   |   | (0.6 | )% |   |   | (1,494 | ) |   |   | (11.2 | )% |
| Occupancy and equipment expenses                                             |   |                          | (107   | ) |   |   | (5.1 | )% |   |   | (229 | ) |   |   | (9.8 | )% |
| FDIC assessment                                                              |   |                          | (386   | ) |   |   | (24.2 | )% |   |   | 1,227 |   |   |   | 332.5 | % |
| Professional services                                                        |   |                          | (84    | ) |   |   | (9.3 | )% |   |   | 113 |   |   |   | 14.3 | % |
| Advertising and marketing                                                    |   |                          | (43    | ) |   |   | (12.5 | )% |   |   | (77 | ) |   |   | (18.3 | )% |
| Depreciation                                                                 |   |                          | (66    | ) |   |   | (13.4 | )% |   |   | (27 | ) |   |   | (5.2 | )% |
| Loss on sale and write-down of foreclosed real estate and repossessed assets |   |                          | 536    |   |   |   | 87.2 | % |   |   | 615 |   |   |   | - |   |
| Data processing                                                              |   |                          | (83    | ) |   |   | (13.4 | )% |   |   | 79 |   |   |   | 14.6 | % |
| Other                                                                        |   |                          | (182   | ) |   |   | (6.3 | )% |   |   | 756 |   |   |   | 35.2 | % |
| Total non-interest expenses                                                  |   |                          | (488   | ) |   |   | (2.3 | )% |   |   | 963 |   |   |   | 4.7 | % |
| Income (loss) before provision for income taxes                              |   |                          | 13,339 |   |   |   |   |   |   |   | (12,391 | ) |   |   |   |   |
| Provision (benefit) for income taxes                                         |   |                          | 5,485  |   |   |   |   |   |   |   | (5,147 | ) |   |   |   |   |
| NET INCOME (LOSS)                                                            |   | $                             | 7,854  |   |   |   |   |   |   | $ | (7,244 | ) |   |   |   |   |
| Preferred stock dividends                                                    |   |                          | 1      |   |   |   |   |   |   |   | 1,011 |   |   |   |   |   |
| NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS                          |   | $                             | 7,853  |   |   |   |   |   |   | $ | (8,255 | ) |   |   |   |   |

----

Index

|                                                                                |   | Year Ended December 31, |   |
|-------------------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                                |   | 2010 versus 2009        |   |   | 2009 versus 2008 |   |
|                                                                                |   | Total                   |   |   | Change due to |   |   | Total |   |   | Change due to |   |
|                                                                                |   | change                  |   |   | Rate |   |   | Volume |   |   | change |   |   | Rate |   |   | Volume |   |
|                                                                                |   | (in thousands)          |   |
| Interest-earning deposits in other financial institutions (including time deposits) |   | $                       | (14    | ) |   | $ | - |   |   | $ | (14 | ) |   | $ | (4 | ) |   | $ | (7 | ) |   | $ | 3 |   |
| Federal funds sold                                                                  |   |                    | (32    | ) |   |   | (4 | ) |   |   | (28 | ) |   |   | (199 | ) |   |   | (196 | ) |   |   | (3 | ) |
| Investment securities                                                               |   |                    | (338   | ) |   |   | (318 | ) |   |   | (20 | ) |   |   | (439 | ) |   |   | (467 | ) |   |   | 28 |   |
| Loans, net                                                                          |   |                    | (1,285 | ) |   |   | (1,012 | ) |   |   | (273 | ) |   |   | (3,987 | ) |   |   | (6,001 | ) |   |   | 2,014 |   |
| Total interest-earning assets                                                       |   |                    | (1,669 | ) |   |   | (1,334 | ) |   |   | (335 | ) |   |   | (4,629 | ) |   |   | (6,671 | ) |   |   | 2,042 |   |
|                                                                                |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing demand                                                             |   |                    | 1,000  |   |   |   | (515 | ) |   |   | 1,515 |   |   |   | 976 |   |   |   | (108 | ) |   |   | 1,084 |   |
| Savings                                                                             |   |                    | (4     | ) |   |   | (65 | ) |   |   | 61 |   |   |   | (56 | ) |   |   | (105 | ) |   |   | 49 |   |
| Time certificates of deposit                                                        |   |                    | (4,639 | ) |   |   | (3,308 | ) |   |   | (1,331 | ) |   |   | (6,905 | ) |   |   | (5,879 | ) |   |   | (1,026 | ) |
| Other borrowings                                                                    |   |                    | (1,345 | ) |   |   | (303 | ) |   |   | (1,042 | ) |   |   | (1,293 | ) |   |   | (1,348 | ) |   |   | 55 |   |
| Total interest-bearing liabilities                                                  |   |                    | (4,988 | ) |   |   | (4,191 | ) |   |   | (797 | ) |   |   | (7,278 | ) |   |   | (7,440 | ) |   |   | 162 |   |
| Net interest income                                                                 |   | $                       | 3,319  |   |   | $ | 2,857 |   |   | $ | 462 |   |   | $ | 2,649 |   |   | $ | 769 |   |   | $ | 1,880 |   |

----

Index

|                |   | Year Ended December 31, |   |
|---------------------|--------|-------------------------|--------|
|                |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                |   | (dollars in thousands)  |   |
| Interest income     |   | $                       | 39,234 |   |   | $ | 40,903 |   |   | $ | 45,532 |   |
| Interest expense    |   |                    | 9,957  |   |   |   | 14,945 |   |   |   | 22,223 |   |
| Net interest income |   | $                       | 29,277 |   |   | $ | 25,958 |   |   | $ | 23,309 |   |
| Net interest margin |   |                    | 4.50   | % |   |   | 3.91 | % |   |   | 3.72 | % |

|                      |   | Allowance12/31/09 |   |   | Provision |   |   | Charge-offs    |   |   | Recoveries |   |   | Net Charge-offs |   |   | Allowance12/31/10 |   |
|---------------------------|--------|-------------------|--------|--------|-----------|--------|--------|----------------|--------|--------|------------|--------|--------|-----------------|--------|--------|-------------------|--------|
|                      |   |              |   |   |      |   |   | (in thousands) |   |   |       |   |   |            |   |   |              |   |
| Commercial real estate    |   | $                 | 2,843  |   |      | $      | 873    |           |   | $      | (1,192     | )      |   | $               | 8      |   |              | $      | (1,184 | ) |   | $ | 2,532 |   |
| Manufactured housing      |   |              | 2,255  |   |      |   | 4,072  |           |   |   | (2,202     | )      |   |            | 43     |   |              |   | (2,159 | ) |   |   | 4,168 |   |
| Commercial                |   |              | 3,448  |   |      |   | (398   | )              |   |   | (1,055     | )      |   |            | 99     |   |              |   | (956 | ) |   |   | 2,094 |   |
| SBA                       |   |              | 4,837  |   |      |   | 3,184  |           |   |   | (4,628     | )      |   |            | 360    |   |              |   | (4,268 | ) |   |   | 3,753 |   |
| Single family real estate |   |              | 143    |   |      |   | 172    |           |   |   | (186       | )      |   |            | 6      |   |              |   | (180 | ) |   |   | 135 |   |
| HELOC                     |   |              | 124    |   |      |   | 873    |           |   |   | (458       | )      |   |            | 8      |   |              |   | (450 | ) |   |   | 547 |   |
| Consumer                  |   |              | 83     |   |      |   | (33    | )              |   |   | (1         | )      |   |            | 24     |   |              |   | 23 |   |   |   | 73 |   |
| Total                     |   | $                 | 13,733 |   |      | $      | 8,743  |           |   | $      | (9,722     | )      |   | $               | 548    |   |              | $      | (9,174 | ) |   | $ | 13,302 |   |

|                      |   | Allowance12/31/08 |   |   | Provision |   |   | Charge-offs    |   |   | Recoveries |   |   | Net Charge-offs |   |   | Allowance12/31/09 |   |
|---------------------------|--------|-------------------|--------|--------|-----------|--------|--------|----------------|--------|--------|------------|--------|--------|-----------------|--------|--------|-------------------|--------|
|                      |   |              |   |   |      |   |   | (in thousands) |   |   |       |   |   |            |   |   |              |   |
| Commercial real estate    |   | $                 | 1,470  |   |      | $      | 3,345  |           |   | $      | (1,972     | )      |   | $               | -      |   |              | $      | (1,972 | ) |   | $ | 2,843 |   |
| Manufactured housing      |   |              | 1,659  |   |      |   | 2,170  |           |   |   | (1,574     | )      |   |            | -      |   |              |   | (1,574 | ) |   |   | 2,255 |   |
| Commercial                |   |              | 1,428  |   |      |   | 5,584  |           |   |   | (3,609     | )      |   |            | 45     |   |              |   | (3,564 | ) |   |   | 3,448 |   |
| SBA                       |   |              | 2,556  |   |      |   | 7,189  |           |   |   | (5,004     | )      |   |            | 96     |   |              |   | (4,908 | ) |   |   | 4,837 |   |
| Single family real estate |   |              | 113    |   |      |   | 184    |           |   |   | (161       | )      |   |            | 7      |   |              |   | (154 | ) |   |   | 143 |   |
| HELOC                     |   |              | 104    |   |      |   | 20     |           |   |   | -          |   |   |            | -      |   |              |   | - |   |   |   | 124 |   |
| Consumer                  |   |              | 11     |   |      |   | 186    |           |   |   | (117       | )      |   |            | 3      |   |              |   | (114 | ) |   |   | 83 |   |
| Total                     |   | $                 | 7,341  |   |      | $      | 18,678 |           |   | $      | (12,437    | )      |   | $               | 151    |   |              | $      | (12,286 | ) |   | $ | 13,733 |   |

----

Index

|                          |   | Year Ended December 31, |   |
|-------------------------------|--------|-------------------------|--------|
| Non-interest income           |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                          |   | (in thousands)          |   |
| Other loan fees               |   | $                       | 1,965  |   |   | $ | 1,893 |   |   | $ | 2,104 |   |
| Gains from loan sales, net    |   |                    | 467    |   |   |   | 363 |   |   |   | 1,018 |   |
| Document processing fees, net |   |                    | 544    |   |   |   | 803 |   |   |   | 718 |   |
| Loan servicing fees, net      |   |                    | 328    |   |   |   | 773 |   |   |   | 488 |   |
| Service charges               |   |                    | 531    |   |   |   | 456 |   |   |   | 434 |   |
| Other                         |   |                    | 180    |   |   |   | 130 |   |   |   | 319 |   |
| Total non-interest income     |   | $                       | 4,015  |   |   | $ | 4,418 |   |   | $ | 5,081 |   |

|                                                                         |   | Year Ended December 31, |   |
|------------------------------------------------------------------------------|--------|-------------------------|--------|
| Non-interest expenses                                                        |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                                                                         |   | (in thousands)          |   |
| Salaries and employee benefits                                               |   | $                       | 11,823 |   |   | $ | 11,896 |   |   | $ | 13,390 |   |
| Occupancy and equipment expenses                                             |   |                    | 2,005  |   |   |   | 2,112 |   |   |   | 2,341 |   |
| FDIC assessment                                                              |   |                    | 1,210  |   |   |   | 1,596 |   |   |   | 369 |   |
| Professional services                                                        |   |                    | 817    |   |   |   | 901 |   |   |   | 788 |   |
| Advertising and marketing                                                    |   |                    | 301    |   |   |   | 344 |   |   |   | 421 |   |
| Depreciation                                                                 |   |                    | 425    |   |   |   | 491 |   |   |   | 518 |   |
| Loss on sale and write-down of foreclosed real estate and repossessed assets |   |                    | 1,151  |   |   |   | 615 |   |   |   | - |   |
| Data processing                                                              |   |                    | 537    |   |   |   | 620 |   |   |   | 541 |   |
| Other                                                                        |   |                    | 2,722  |   |   |   | 2,904 |   |   |   | 2,148 |   |
| Total non-interest expenses                                                  |   | $                       | 20,991 |   |   | $ | 21,479 |   |   | $ | 20,516 |   |

----

Index

| Year Ended December 31, |   | Average Assets |    |   | Total Non-Interest Expenses |   |   | Salaries and Employee Benefits |   |   | Occupancy and Depreciation Expenses |   |   | Efficiency Ratio |   |
|-------------------------|--------|----------------|---------|--------|-----------------------------|--------|--------|--------------------------------|--------|--------|-------------------------------------|--------|--------|------------------|--------|
| (dollars in thousands)  |   |           |    |   |                        |   |   |                           |   |   |                                |   |   |             |   |
| 2010                    |   | $              | 676,776 |   |                        |   | 3.10   | %                              |   |   | 1.75                                | %      |   |             | 0.36   | % |   |   | 63 | % |
| 2009                    |   | $              | 675,672 |   |                        |   | 3.18   | %                              |   |   | 1.76                                | %      |   |             | 0.39   | % |   |   | 71 | % |
| 2008                    |   | $              | 640,993 |   |                        |   | 3.20   | %                              |   |   | 2.09                                | %      |   |             | 0.45   | % |   |   | 72 | % |

----

Index

|                                                               |   | December 31,           |    |
|--------------------------------------------------------------------|--------|------------------------|---------|
|                                                               |   | 2010                   |    |   | 2009 |   |   | 2008 |   |
|                                                               |   | Amount                 |    |   | % |   |   | Amount |   |   | % |   |   | Amount |   |   | % |   |
| ASSETS                                                             |   | (dollars in thousands) |    |
| Cash and due from banks                                            |   | $                      | 11,748  |   |   |   | 1.7 | % |   | $ | 4,949 |   |   |   | 0.7 | % |   | $ | 4,419 |   |   |   | 0.7 | % |
| Time and interest-earning deposits in other financial institutions |   |                   | 607     |   |   |   | 0.1 | % |   |   | 1,081 |   |   |   | 0.2 | % |   |   | 997 |   |   |   | 0.2 | % |
| Federal funds sold                                                 |   |                   | 1,748   |   |   |   | 0.3 | % |   |   | 10,751 |   |   |   | 1.6 | % |   |   | 11,488 |   |   |   | 1.8 | % |
| Investment securities available-for-sale                           |   |                   | 19,776  |   |   |   | 2.9 | % |   |   | 14,178 |   |   |   | 2.1 | % |   |   | 6,889 |   |   |   | 1.1 | % |
| Investment securities held-to-maturity                             |   |                   | 18,435  |   |   |   | 2.7 | % |   |   | 24,619 |   |   |   | 3.6 | % |   |   | 31,319 |   |   |   | 4.9 | % |
| Federal Reserve Bank & Federal Home Loan Bank stock            |   |                   | 6,741   |   |   |   | 1.0 | % |   |   | 6,781 |   |   |   | 1.0 | % |   |   | 6,634 |   |   |   | 1.0 | % |
| Loans held for sale, net                                           |   |                   | 90,560  |   |   |   | 13.4 | % |   |   | 100,823 |   |   |   | 14.9 | % |   |   | 120,339 |   |   |   | 18.7 | % |
| Loans held for investment, net                                     |   |                   | 499,018 |   |   |   | 73.7 | % |   |   | 493,016 |   |   |   | 73.0 | % |   |   | 442,908 |   |   |   | 69.1 | % |
| Servicing rights                                                   |   |                   | 875     |   |   |   | 0.1 | % |   |   | 1,086 |   |   |   | 0.2 | % |   |   | 1,161 |   |   |   | 0.2 | % |
| Foreclosed real estate and repossessed assets                      |   |                   | 4,745   |   |   |   | 0.7 | % |   |   | 2,496 |   |   |   | 0.4 | % |   |   | 540 |   |   |   | 0.1 | % |
| Premises and equipment, net                                        |   |                   | 3,103   |   |   |   | 0.5 | % |   |   | 3,506 |   |   |   | 0.5 | % |   |   | 3,814 |   |   |   | 0.6 | % |
| Other assets                                                       |   |                   | 19,420  |   |   |   | 2.9 | % |   |   | 12,386 |   |   |   | 1.8 | % |   |   | 10,485 |   |   |   | 1.6 | % |
| TOTAL ASSETS                                                       |   | $                      | 676,776 |   |   |   | 100.0 | % |   | $ | 675,672 |   |   |   | 100.0 | % |   | $ | 640,993 |   |   |   | 100.0 | % |
|                                                               |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                                                        |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                          |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing demand                                        |   | $                      | 39,025  |   |   |   | 5.8 | % |   | $ | 37,408 |   |   |   | 5.5 | % |   | $ | 35,618 |   |   |   | 5.5 | % |
| Interest-bearing demand                                            |   |                   | 232,540 |   |   |   | 34.3 | % |   |   | 119,923 |   |   |   | 17.8 | % |   |   | 58,893 |   |   |   | 9.2 | % |
| Savings                                                            |   |                   | 19,452  |   |   |   | 2.9 | % |   |   | 16,807 |   |   |   | 2.5 | % |   |   | 14,989 |   |   |   | 2.3 | % |
| Time certificates of $100,000 or more                              |   |                   | 173,860 |   |   |   | 25.7 | % |   |   | 149,291 |   |   |   | 22.1 | % |   |   | 88,385 |   |   |   | 13.8 | % |
| Other time certificates                                            |   |                   | 72,576  |   |   |   | 10.7 | % |   |   | 178,744 |   |   |   | 26.4 | % |   |   | 278,510 |   |   |   | 43.5 | % |
| Total deposits                                                     |   |                   | 537,453 |   |   |   | 79.4 | % |   |   | 502,173 |   |   |   | 74.3 | % |   |   | 476,395 |   |   |   | 74.3 | % |
| Other borrowings                                                   |   |                   | 76,138  |   |   |   | 11.3 | % |   |   | 109,767 |   |   |   | 16.3 | % |   |   | 108,141 |   |   |   | 16.9 | % |
| Other liabilities                                                  |   |                   | 2,053   |   |   |   | 0.3 | % |   |   | 1,379 |   |   |   | 0.2 | % |   |   | 4,562 |   |   |   | 0.7 | % |
| Total liabilities                                                  |   |                   | 615,644 |   |   |   | 91.0 | % |   |   | 613,319 |   |   |   | 90.8 | % |   |   | 589,098 |   |   |   | 91.9 | % |
| STOCKHOLDERS' EQUITY                                               |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock                                                    |   |                   | 14,668  |   |   |   | 2.2 | % |   |   | 14,407 |   |   |   | 2.1 | % |   |   | 464 |   |   |   | 0.1 | % |
| Common stock                                                       |   |                   | 33,121  |   |   |   | 4.9 | % |   |   | 33,097 |   |   |   | 4.9 | % |   |   | 31,808 |   |   |   | 4.9 | % |
| Retained earnings                                                  |   |                   | 13,161  |   |   |   | 1.9 | % |   |   | 14,763 |   |   |   | 2.2 | % |   |   | 19,630 |   |   |   | 3.1 | % |
| Accumulated other comprehensive income (loss)                      |   |                   | 182     |   |   |   | - |   |   |   | 86 |   |   |   | - |   |   |   | (7 | ) |   |   | - |   |
| Total stockholders' equity                                         |   |                   | 61,132  |   |   |   | 9.0 | % |   |   | 62,353 |   |   |   | 9.2 | % |   |   | 51,895 |   |   |   | 8.1 | % |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                   |   | $                      | 676,776 |   |   |   | 100.0 | % |   | $ | 675,672 |   |   |   | 100.0 | % |   | $ | 640,993 |   |   |   | 100.0 | % |

----

Index

|                                                                |   | Year Ended December 31, |    |
|---------------------------------------------------------------------|--------|-------------------------|---------|
| Interest-earning assets:                                            |   | 2010                    |    |   | 2009 |   |   | 2008 |   |
|                                                                |   | (dollars in thousands)  |    |
| Time and interest-earning deposits in other financial institutions: |   |                    |    |   |   |   |   |   |   |
| Average outstanding                                                 |   | $                       | 607     |   |   | $ | 1,081 |   |   | $ | 997 |   |
| Interest income                                                     |   |                    | 18      |   |   |   | 32 |   |   |   | 36 |   |
| Average yield                                                       |   |                    | 3.00    | % |   |   | 2.95 | % |   |   | 3.66 | % |
| Federal funds sold:                                                 |   |                    |    |   |   |   |   |   |   |   |   |   |
| Average outstanding                                                 |   | $                       | 1,748   |   |   | $ | 10,751 |   |   | $ | 11,488 |   |
| Interest income                                                     |   |                    | 5       |   |   |   | 37 |   |   |   | 236 |   |
| Average yield                                                       |   |                    | 0.31    | % |   |   | 0.34 | % |   |   | 2.05 | % |
| Investment securities:                                              |   |                    |    |   |   |   |   |   |   |   |   |   |
| Average outstanding                                                 |   | $                       | 44,952  |   |   | $ | 45,578 |   |   | $ | 44,841 |   |
| Interest income                                                     |   |                    | 1,402   |   |   |   | 1,740 |   |   |   | 2,179 |   |
| Average yield                                                       |   |                    | 3.12    | % |   |   | 3.82 | % |   |   | 4.86 | % |
| Gross loans:                                                        |   |                    |    |   |   |   |   |   |   |   |   |   |
| Average outstanding                                                 |   | $                       | 603,141 |   |   | $ | 605,741 |   |   | $ | 568,861 |   |
| Interest income                                                     |   |                    | 37,809  |   |   |   | 39,094 |   |   |   | 43,081 |   |
| Average yield                                                       |   |                    | 6.27    | % |   |   | 6.45 | % |   |   | 7.57 | % |
| Total interest-earning assets:                                      |   |                    |    |   |   |   |   |   |   |   |   |   |
| Average outstanding                                                 |   | $                       | 650,448 |   |   | $ | 663,151 |   |   | $ | 626,187 |   |
| Interest income                                                     |   |                    | 39,234  |   |   |   | 40,903 |   |   |   | 45,532 |   |
| Average yield                                                       |   |                    | 6.03    | % |   |   | 6.17 | % |   |   | 7.27 | % |
| Interest-bearing liabilities:                                       |   |                    |    |
| Interest-bearing demand deposits:                                   |   |                    |    |
| Average outstanding                                                 |   | $                       | 232,540 |   |   | $ | 119,923 |   |   | $ | 58,893 |   |
| Interest expense                                                    |   |                    | 3,130   |   |   |   | 2,130 |   |   |   | 1,153 |   |
| Average effective rate                                              |   |                    | 1.35    | % |   |   | 1.78 | % |   |   | 1.96 | % |
| Savings deposits:                                                   |   |                    |    |   |   |   |   |   |   |   |   |   |
| Average outstanding                                                 |   | $                       | 19,452  |   |   | $ | 16,807 |   |   | $ | 14,989 |   |
| Interest expense                                                    |   |                    | 447     |   |   |   | 451 |   |   |   | 507 |   |
| Average effective rate                                              |   |                    | 2.30    | % |   |   | 2.68 | % |   |   | 3.39 | % |
| Time certificates of deposit:                                       |   |                    |    |   |   |   |   |   |   |   |   |   |
| Average outstanding                                                 |   | $                       | 246,436 |   |   | $ | 328,035 |   |   | $ | 366,895 |   |
| Interest expense                                                    |   |                    | 4,020   |   |   |   | 8,659 |   |   |   | 15,565 |   |
| Average effective rate                                              |   |                    | 1.63    | % |   |   | 2.64 | % |   |   | 4.24 | % |
| Other borrowings:                                                   |   |                    |    |   |   |   |   |   |   |   |   |   |
| Average outstanding                                                 |   | $                       | 72,926  |   |   | $ | 109,767 |   |   | $ | 108,141 |   |
| Interest expense                                                    |   |                    | 2,071   |   |   |   | 3,705 |   |   |   | 4,998 |   |
| Average effective rate                                              |   |                    | 2.84    | % |   |   | 3.38 | % |   |   | 4.62 | % |
| Convertible debentures:                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
| Average outstanding                                                 |   | $                       | 3,212   |   |   |   | - |   |   |   | - |   |
| Interest expense                                                    |   |                    | 289     |   |   |   | - |   |   |   | - |   |
| Average effective rate                                              |   |                    | 9.00    | % |   |   | - |   |   |   | - |   |
| Total interest-bearing liabilities:                                 |   |                    |    |   |   |   |   |   |   |   |   |   |
| Average outstanding                                                 |   | $                       | 574,566 |   |   | $ | 574,532 |   |   | $ | 548,918 |   |
| Interest expense                                                    |   |                    | 9,957   |   |   |   | 14,945 |   |   |   | 22,223 |   |
| Average effective rate                                              |   |                    | 1.73    | % |   |   | 2.60 | % |   |   | 4.05 | % |
|                                                                |   |                    |    |   |   |   |   |   |   |   |   |   |
| Net interest income                                                 |   | $                       | 29,277  |   |   | $ | 25,958 |   |   | $ | 23,309 |   |
| Net interest spread                                                 |   |                    | 4.30    | % |   |   | 3.57 | % |   |   | 3.22 | % |
| Average net margin                                                  |   |                    | 4.50    | % |   |   | 3.91 | % |   |   | 3.72 | % |

----

Index

|          |   | December 31, |    |
|---------------|--------|--------------|---------|
|          |   | 2010         |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| In Years      |   |         |    |   |   |   |   | (in thousands) |   |   |   |   |   |   |   |
|          |   | Fixed        |    |   | Variable |   |   | Fixed |   |   | Variable |   |   | Fixed |   |   | Variable |   |   | Fixed |   |   | Variable |   |   | Fixed |   |   | Variable |   |
| Less than One |   | $            | 20,542  |   |   | $ | 62,708 |   |   | $ | 20,571 |   |   | $ | 81,132 |   |   | $ | 16,405 |   |   | $ | 78,005 |   |   | $ | 16,445 |   |   | $ | 83,356 |   |   | $ | 16,442 |   |   | $ | 76,509 |   |
| One to Five   |   |         | 85,103  |   |   |   | 121,569 |   |   |   | 87,062 |   |   |   | 130,364 |   |   |   | 87,034 |   |   |   | 82,298 |   |   |   | 79,549 |   |   |   | 67,549 |   |   |   | 65,083 |   |   |   | 50,931 |   |
| Over Five     |   |         | 81,915  |   |   |   | 222,363 |   |   |   | 111,243 |   |   |   | 187,200 |   |   |   | 137,632 |   |   |   | 187,525 |   |   |   | 129,335 |   |   |   | 167,878 |   |   |   | 103,242 |   |   |   | 144,136 |   |
| Total         |   | $            | 187,560 |   |   | $ | 406,640 |   |   | $ | 218,876 |   |   | $ | 398,696 |   |   | $ | 241,071 |   |   | $ | 347,828 |   |   | $ | 225,329 |   |   | $ | 318,783 |   |   | $ | 184,767 |   |   | $ | 271,576 |   |
|          |   |         | 31.6    | % |   |   | 68.4 | % |   |   | 35.4 | % |   |   | 64.6 | % |   |   | 40.9 | % |   |   | 59.1 | % |   |   | 41.4 | % |   |   | 58.6 | % |   |   | 40.5 | % |   |   | 59.5 | % |

----

Index

|                         |   | December 31,           |    |
|------------------------------|--------|------------------------|---------|
|                         |   | 2010                   |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                         |   | (dollars in thousands) |    |
|                         |   | Loan Balance           |    |   | Loan Balance |   |   | Loan Balance |   |   | Loan Balance |   |   | Loan Balance |   |
| Commercial                   |   | $                      | 57,369  |   |   | $ | 61,810 |   |   | $ | 74,895 |   |   | $ | 72,470 |   |   | $ | 53,725 |   |
| Commercial real estate       |   |                   | 173,906 |   |   |   | 180,688 |   |   |   | 160,540 |   |   |   | 158,670 |   |   |   | 152,113 |   |
| SBA                          |   |                   | 129,004 |   |   |   | 139,541 |   |   |   | 132,707 |   |   |   | 116,963 |   |   |   | 84,911 |   |
| Manufactured housing         |   |                   | 194,682 |   |   |   | 195,656 |   |   |   | 190,838 |   |   |   | 172,938 |   |   |   | 142,804 |   |
| Single family real estate    |   |                   | 13,722  |   |   |   | 14,793 |   |   |   | 9,765 |   |   |   | 11,482 |   |   |   | 12,343 |   |
| HELOC                        |   |                   | 20,273  |   |   |   | 17,902 |   |   |   | 15,191 |   |   |   | 8,969 |   |   |   | 7,247 |   |
| Consumer                     |   |                   | 379     |   |   |   | 286 |   |   |   | 602 |   |   |   | 1,058 |   |   |   | 1,054 |   |
| Mortgage loans held for sale |   |                   | 4,865   |   |   |   | 6,896 |   |   |   | 4,361 |   |   |   | 1,562 |   |   |   | 2,146 |   |
| Gross Loans                  |   |                   | 594,200 |   |   |   | 617,572 |   |   |   | 588,899 |   |   |   | 544,112 |   |   |   | 456,343 |   |
| Less:                        |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses    |   |                   | 13,302  |   |   |   | 13,733 |   |   |   | 7,341 |   |   |   | 4,412 |   |   |   | 3,926 |   |
| Deferred fees/costs          |   |                   | (195    | ) |   |   | (228 | ) |   |   | (326 | ) |   |   | (48 | ) |   |   | 43 |   |
| Discount on SBA loans        |   |                   | 461     |   |   |   | 627 |   |   |   | 809 |   |   |   | 583 |   |   |   | 802 |   |
| Net Loans                    |   | $                      | 580,632 |   |   | $ | 603,440 |   |   | $ | 581,075 |   |   | $ | 539,165 |   |   | $ | 451,572 |   |
| Percentage to Gross Loans:   |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                   |   |                   | 9.6     | % |   |   | 10.0 | % |   |   | 12.7 | % |   |   | 13.3 | % |   |   | 11.8 | % |
| Commercial real estate       |   |                   | 29.3    | % |   |   | 29.2 | % |   |   | 27.3 | % |   |   | 29.1 | % |   |   | 33.3 | % |
| SBA                          |   |                   | 21.7    | % |   |   | 22.6 | % |   |   | 22.5 | % |   |   | 21.5 | % |   |   | 18.6 | % |
| Manufactured housing         |   |                   | 32.8    | % |   |   | 31.7 | % |   |   | 32.4 | % |   |   | 31.8 | % |   |   | 31.3 | % |
| Single family real estate    |   |                   | 2.3     | % |   |   | 2.4 | % |   |   | 1.7 | % |   |   | 2.1 | % |   |   | 2.7 | % |
| HELOC                        |   |                   | 3.4     | % |   |   | 2.9 | % |   |   | 2.6 | % |   |   | 1.7 | % |   |   | 1.6 | % |
| Consumer                     |   |                   | 0.1     | % |   |   | 0.1 | % |   |   | 0.1 | % |   |   | 0.2 | % |   |   | 0.2 | % |
| Mortgage loans held for sale |   |                   | 0.8     | % |   |   | 1.1 | % |   |   | 0.7 | % |   |   | 0.3 | % |   |   | 0.5 | % |
|                         |   |                   | 100.0   | % |   |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |

----

Index

----

Index

|                      |   | December 31,   |   |
|---------------------------|--------|----------------|--------|
|                      |   | 2010           |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                      |   | (in thousands) |   |
| Commercial                |   | $              | 14,956 |   |   | $ | 16,065 |   |   | $ | 17,940 |   |   | $ | 21,612 |   |   | $ | 24,431 |   |
| Commercial real estate    |   |           | 3,420  |   |   |   | 6,595 |   |   |   | 4,376 |   |   |   | 8,649 |   |   |   | 18,839 |   |
| SBA                       |   |           | 815    |   |   |   | 1,133 |   |   |   | 6,526 |   |   |   | 9,453 |   |   |   | 5,508 |   |
| HELOC                     |   |           | 7,383  |   |   |   | 7,992 |   |   |   | 8,333 |   |   |   | 10,503 |   |   |   | 9,658 |   |
| Consumer                  |   |           | 40     |   |   |   | 4 |   |   |   | - |   |   |   | - |   |   |   | 4 |   |
| Standby letters of credit |   |           | 552    |   |   |   | 543 |   |   |   | 552 |   |   |   | 518 |   |   |   | 847 |   |
| Total commitments         |   | $              | 27,166 |   |   | $ | 32,332 |   |   | $ | 37,727 |   |   | $ | 50,735 |   |   | $ | 59,287 |   |

----

Index

|                                                                                                 |   | Year Ended December 31, |    |
|------------------------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                                 |   | 2010                    |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                 |   | (in thousands)          |    |
| Average gross loans, held for investment,                                                            |   | $                       | 512,581 |   |   | $ | 504,918 |   |   | $ | 448,522 |   |   | $ | 401,036 |   |   | $ | 348,161 |   |
| Gross loans at end of year, held for investment                                                      |   |                    | 511,614 |   |   |   | 514,599 |   |   |   | 456,630 |   |   |   | 433,162 |   |   |   | 379,703 |   |
|                                                                                                 |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses, beginning of year                                                         |   | $                       | 13,733  |   |   | $ | 7,341 |   |   | $ | 4,412 |   |   | $ | 3,926 |   |   | $ | 3,954 |   |
| Loans charged off:                                                                                   |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial (including SBA)                                                                           |   |                    | 5,683   |   |   |   | 8,613 |   |   |   | 1,499 |   |   |   | 775 |   |   |   | 459 |   |
| Commercial real estate                                                                               |   |                    | 1,192   |   |   |   | 1,972 |   |   |   | 263 |   |   |   | - |   |   |   | - |   |
| Manufactured housing                                                                                 |   |                    | 2,202   |   |   |   | 1,574 |   |   |   | 298 |   |   |   | - |   |   |   | - |   |
| HELOC                                                                                                |   |                    | 458     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Consumer                                                                                             |   |                    | 1       |   |   |   | 117 |   |   |   | 27 |   |   |   | - |   |   |   | - |   |
| Single family real estate                                                                            |   |                    | 186     |   |   |   | 161 |   |   |   | 372 |   |   |   | 142 |   |   |   | 341 |   |
| Total                                                                                                |   |                    | 9,722   |   |   |   | 12,437 |   |   |   | 2,459 |   |   |   | 917 |   |   |   | 800 |   |
| Recoveries of loans previously charged off                                                           |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial (including SBA)                                                                           |   |                    | 459     |   |   |   | 141 |   |   |   | 106 |   |   |   | 45 |   |   |   | 93 |   |
| Commercial real estate                                                                               |   |                    | 8       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Manufactured housing                                                                                 |   |                    | 43      |   |   |   | - |   |   |   | 2 |   |   |   | - |   |   |   | - |   |
| HELOC                                                                                                |   |                    | 8       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Consumer                                                                                             |   |                    | 24      |   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Single family real estate                                                                            |   |                    | 6       |   |   |   | 7 |   |   |   | 16 |   |   |   | 61 |   |   |   | 190 |   |
| Total                                                                                                |   |                    | 548     |   |   |   | 151 |   |   |   | 124 |   |   |   | 106 |   |   |   | 283 |   |
| Net loans charged off                                                                                |   |                    | 9,174   |   |   |   | 12,286 |   |   |   | 2,335 |   |   |   | 811 |   |   |   | 517 |   |
| Provision for loan losses                                                                            |   |                    | 8,743   |   |   |   | 18,678 |   |   |   | 5,264 |   |   |   | 1,297 |   |   |   | 489 |   |
| Allowance for loan losses, end of year                                                               |   | $                       | 13,302  |   |   | $ | 13,733 |   |   | $ | 7,341 |   |   | $ | 4,412 |   |   | $ | 3,926 |   |
| Ratios:                                                                                              |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loan charge-offs to average loans                                                                |   |                    | 1.79    | % |   |   | 2.43 | % |   |   | 0.52 | % |   |   | 0.20 | % |   |   | 0.15 | % |
| Net loan charge-offs to loans at end of period                                                       |   |                    | 1.79    | % |   |   | 2.39 | % |   |   | 0.51 | % |   |   | 0.19 | % |   |   | 0.14 | % |
| Allowance for loan losses to loans held for     investment at end of period |   |                    | 2.60    | % |   |   | 2.67 | % |   |   | 1.61 | % |   |   | 1.02 | % |   |   | 1.03 | % |
| Net loan charge-offs to allowance for loan losses at beginning of period                             |   |                    | 66.80   | % |   |   | 167.36 | % |   |   | 52.92 | % |   |   | 20.66 | % |   |   | 13.08 | % |
| Net loan charge-offs to provision for loan losses                                                    |   |                    | 104.92  | % |   |   | 65.78 | % |   |   | 44.36 | % |   |   | 62.53 | % |   |   | 105.73 | % |

----

Index

|                                    |   | December 31,           |   |
|-----------------------------------------|--------|------------------------|--------|
|                                    |   | 2010                   |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                    |   | (dollars in thousands) |   |
| Balance at end of period applicable to: |   | Amount                 |   |   | Percent of loans in each category to total loans |   |   | Amount |   |   | Percent of loans in each category to total loans |   |   | Amount |   |   | Percent of loans in each category to total loans |   |   | Amount |   |   | Percent of loans in each category to total loans |   |   | Amount |   |   | Percent of loans in each category to total loans |   |
| SBA                                     |   | $                      | 3,753  |   |   |   | 21.7 | % |   | $ | 4,837 |   |   |   | 22.6 | % |   | $ | 2,556 |   |   |   | 28.4 | % |   | $ | 1,810 |   |   |   | 26.3 | % |   | $ | 1,365 |   |   |   | 22.6 | % |
| Manufactured housing                    |   |                   | 4,168  |   |   |   | 32.8 | % |   |   | 2,255 |   |   |   | 31.7 | % |   |   | 1,659 |   |   |   | 32.4 | % |   |   | 610 |   |   |   | 31.8 | % |   |   | 786 |   |   |   | 31.3 | % |
| All other loans                         |   |                   | 5,381  |   |   |   | 45.5 | % |   |   | 6,641 |   |   |   | 45.7 | % |   |   | 3,126 |   |   |   | 39.2 | % |   |   | 1,992 |   |   |   | 41.9 | % |   |   | 1,775 |   |   |   | 46.1 | % |
| Total                                   |   | $                      | 13,302 |   |   |   | 100.0 | % |   | $ | 13,733 |   |   |   | 100.0 | % |   | $ | 7,341 |   |   |   | 100.0 | % |   | $ | 4,412 |   |   |   | 100.0 | % |   | $ | 3,926 |   |   |   | 100.0 | % |

|                                                   |   | Year Ended December 31, |   |
|--------------------------------------------------------|--------|-------------------------|--------|
|                                                   |   | 2010                    |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                   |   | (in thousands)          |   |
| Impaired loans without specific valuation allowances   |   | $                       | 13,285 |   |   | $ | 13,699 |   |   | $ | 8,043 |   |   | $ | 7,509 |   |   | $ | 754 |   |
| Impaired loans with specific valuation allowances      |   |                    | 1,703  |   |   |   | 716 |   |   |   | 523 |   |   |   | 8,992 |   |   |   | 4,454 |   |
| Specific valuation allowance related to impaired loans |   |                    | (362   | ) |   |   | (622 | ) |   |   | (151 | ) |   |   | (966 | ) |   |   | (641 | ) |
| Impaired loans, net                                    |   | $                       | 14,626 |   |   | $ | 13,793 |   |   | $ | 8,415 |   |   | $ | 15,535 |   |   | $ | 4,567 |   |
|                                                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average investment in impaired loans                   |   | $                       | 15,591 |   |   | $ | 9,058 |   |   | $ | 9,612 |   |   | $ | 9,386 |   |   | $ | 4,074 |   |

----

Index

|                                                                                   |   | Year Ended December 31, |    |
|----------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                   |   | 2010                    |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                                                   |   | (in thousands)          |    |
| Nonaccrual loans                                                                       |   | $                       | 34,950  |   |   | $ | 40,265 |   |   | $ | 28,821 |   |   | $ | 15,341 |   |   | $ | 7,417 |   |
| SBA guaranteed portion of loans included above                                         |   |                    | (22,279 | ) |   |   | (24,088 | ) |   |   | (11,918 | ) |   |   | (5,695 | ) |   |   | (4,256 | ) |
| Nonaccrual loans, net                                                                  |   | $                       | 12,671  |   |   | $ | 16,177 |   |   | $ | 16,903 |   |   | $ | 9,646 |   |   | $ | 3,161 |   |
|                                                                                   |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Troubled debt restructured loans                                                       |   | $                       | 11,088  |   |   | $ | 7,013 |   |   | $ | 5,408 |   |   | $ | 7,255 |   |   | $ | 68 |   |
| Loans 30 through 90 days past due with interest accruing                               |   | $                       | 2,586   |   |   | $ | 17,686 |   |   | $ | 11,974 |   |   | $ | 18,898 |   |   | $ | 2,463 |   |
|                                                                                   |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income recognized on impaired loans                                           |   | $                       | 381     |   |   | $ | 426 |   |   | $ | 12 |   |   | $ | 691 |   |   | $ | 242 |   |
| Interest foregone on nonaccrual loans and troubled debt restructured loans outstanding |   |                    | 2,344   |   |   |   | 2,109 |   |   |   | 1,707 |   |   |   | 904 |   |   |   | 488 |   |
| Gross interest income on impaired and nonaccrual  loans                      |   | $                       | 2,725   |   |   | $ | 2,535 |   |   | $ | 1,719 |   |   | $ | 1,595 |   |   | $ | 730 |   |

|                                                                    |   | Year Ended December 31, |   |
|-------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                    |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                                                                    |   | (in thousands)          |   |
| Balance, beginning of year                                              |   | $                       | 1,822  |   |   | $ | 1,146 |   |   | $ | 150 |   |
| Transfers to foreclosed real estate and repossessed assets              |   |                    | 11,438 |   |   |   | 5,107 |   |   |   | 1,886 |   |
| Proceeds from sale of foreclosed real estate and repossessed assets     |   |                    | (3,631 | ) |   |   | (3,816 | ) |   |   | (1,095 | ) |
| (Losses) gains on sale of foreclosed real estate and repossessed assets |   |                    | (1,151 | ) |   |   | (615 | ) |   |   | 205 |   |
| Balance, end of year                                                    |   | $                       | 8,478  |   |   | $ | 1,822 |   |   | $ | 1,146 |   |

----

Index

|                          |   | December 31,   |   |
|-------------------------------|--------|----------------|--------|
|                          |   | 2010           |   |   | 2009 |   |   | 2008 |   |
| Available-for-sale securities |   | (in thousands) |   |
| U.S. Government agency: MBS   |   | $              | 5,678  |   |   | $ | 10,461 |   |   | $ | 5,284 |   |
| U.S. Government agency: CMO   |   |           | 17,664 |   |   |   | 7,209 |   |   |   | 1,499 |   |
| Total                         |   | $              | 23,342 |   |   | $ | 17,670 |   |   | $ | 6,783 |   |
|                          |   |           |   |   |   |   |   |   |   |   |   |   |

|                        |   | December 31,  |   |
|-----------------------------|--------|---------------|--------|
|                        |   | 2010          |   |   | 2009 |   |   | 2008 |   |
| Held-to-maturity securities |   | (in thousands |   |
| U.S. Government agency: MBS |   | $             | 16,893 |   |   | $ | 22,678 |   |   | $ | 25,750 |   |
| U.S. Government agency: CMO |   |          | -      |   |   |   | - |   |   |   | 5,442 |   |
| Total                       |   | $             | 16,893 |   |   | $ | 22,678 |   |   | $ | 31,192 |   |

|                          |   | Total Amount           |   |   | Less than One Year |   |   | One to Five Years |   |   | Five to Ten Years |   |
|-------------------------------|--------|------------------------|--------|--------|--------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
|                          |   | Amount                 |   |   | Yield              |   |   | Amount            |   |   | Yield             |   |   | Amount |   |   | Yield |   |   | Amount |   |   | Yield |   |
|                          |   | (dollars in thousands) |   |
| Available-for-sale securities |   |                   |   |   |               |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U. S. Government:             |   | $                      | 5,678  |   |               |   | 2.4    | %                 |   | $      | -                 |   |   |   | - |   |   | $ | 4,731 |   |   |   | 2.4 | % |   | $ | 947 |   |   |   | 2.3 | % |
| Agency: CMO                   |   |                   | 17,664 |   |               |   | 0.8    | %                 |   |   | 1,718             |   |   |   | 0.9 | % |   |   | 14,015 |   |   |   | 0.8 | % |   |   | 1,931 |   |   |   | 0.8 | % |
| Total                         |   | $                      | 23,342 |   |               |   | 1.2    | %                 |   | $      | 1,718             |   |   |   | 0.9 | % |   | $ | 18,746 |   |   |   | 1.2 | % |   | $ | 2,878 |   |   |   | 1.3 | % |
|                          |   |                   |   |   |               |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities   |   |                   |   |   |               |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government:              |   |                   |   |   |               |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency: MBS                   |   | $                      | 16,893 |   |               |   | 4.4    | %                 |   | $      | 62                |   |   |   | 5.0 | % |   | $ | 9,603 |   |   |   | 4.7 | % |   | $ | 7,228 |   |   |   | 4.0 | % |
| Agency: CMO                   |   |                   | -      |   |               |   | -      |              |   |   | -                 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |
| Total                         |   | $                      | 16,893 |   |               |   | 4.4    | %                 |   | $      | 62                |   |   |   | 5.0 | % |   | $ | 9,603 |   |   |   | 4.7 | % |   | $ | 7,228 |   |   |   | 4.0 | % |

----

Index

| (dollars in thousands)                |   | Total Capital          |   |   | Tier 1 Capital |   |   | Risk-Weighted Assets |   |   | Adjusted Average Assets |   |   | Total Risk-Based Capital Ratio |    |   | Tier 1 Risk-Based Capital Ratio |   |   | Tier 1 Leverage Ratio |   |
|---------------------------------------|--------|------------------------|--------|--------|----------------|--------|--------|----------------------|--------|--------|-------------------------|--------|--------|--------------------------------|---------|--------|---------------------------------|--------|--------|-----------------------|--------|
|                                  |   | (dollars in thousands) |   |
| December 31, 2010                     |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   |   |                  |   |
| CWBC (Consolidated)                   |   | $                      | 76,283 |   |           | $      | 61,385 |                 |   | $      | 538,685                 |   |   | $                              | 676,397 |   |                            |   | 14.16  | %                     |   |   | 11.40 | % |   |   | 9.08 | % |
| Capital in excess of well capitalized |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            | $      | 22,415 |                  |   | $ | 29,064 |   |   | $ | 27,565 |   |
| CWB                                   |   | $                      | 69,308 |   |           | $      | 62,494 |                 |   | $      | 538,463                 |   |   | $                              | 676,127 |   |                            |   | 12.87  | %                     |   |   | 11.61 | % |   |   | 9.24 | % |
| Capital in excess of well capitalized |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            | $      | 15,462 |                  |   | $ | 30,186 |   |   | $ | 28,688 |   |
|                                  |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   |   |                  |   |   |   |   |   |   |   |   |
| December 31, 2009                     |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   |   |                  |   |   |   |   |   |   |   |   |
| CWBC (Consolidated)                   |   | $                      | 66,984 |   |           | $      | 60,029 |                 |   | $      | 549,207                 |   |   | $                              | 681,101 |   |                            |   | 12.20  | %                     |   |   | 10.93 | % |   |   | 8.81 | % |
| Capital in excess of well capitalized |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            | $      | 12,063 |                  |   | $ | 27,077 |   |   | $ | 25,974 |   |
| CWB                                   |   | $                      | 66,175 |   |           | $      | 59,219 |                 |   | $      | 549,240                 |   |   | $                              | 681,129 |   |                            |   | 12.05  | %                     |   |   | 10.78 | % |   |   | 8.69 | % |
| Capital in excess of well capitalized |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            | $      | 11,251 |                  |   | $ | 26,265 |   |   | $ | 25,163 |   |
|                                  |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   |   |                  |   |   |   |   |   |   |   |   |
| Well capitalized ratios               |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   | 10.00  | %                     |   |   | 6.00 | % |   |   | 5.00 | % |
| Minimum capital ratios                |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   | 8.00   | %                     |   |   | 4.00 | % |   |   | 4.00 | % |

----

Index

----

Index

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

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

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

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

|                            |   | Year Ended December 31, |    |
|---------------------------------|--------|-------------------------|---------|
|                            |   | 2010                    |    |   | 2009 |   |   | 2008 |   |
|                            |   | Average Balance         |    |   | Percent of Total |   |   | Average Balance |   |   | Percentof Total |   |   | Average Balance |   |   | Percent of Total |   |
|                            |   | (dollars in thousands)  |    |
| Noninterest-bearing demand      |   | $                       | 39,025  |   |   |   | 7.3 | % |   | $ | 37,408 |   |   |   | 7.5 | % |   | $ | 35,618 |   |   |   | 7.5 | % |
| Interest-bearing demand         |   |                    | 232,540 |   |   |   | 43.3 | % |   |   | 119,923 |   |   |   | 23.9 | % |   |   | 58,893 |   |   |   | 12.4 | % |
| Savings                         |   |                    | 19,452  |   |   |   | 3.6 | % |   |   | 16,807 |   |   |   | 3.3 | % |   |   | 14,989 |   |   |   | 3.1 | % |
| TCD’s of $100,000 or more |   |                    | 173,860 |   |   |   | 32.3 | % |   |   | 174,786 |   |   |   | 34.8 | % |   |   | 88,385 |   |   |   | 18.5 | % |
| Other TCD’s               |   |                    | 72,576  |   |   |   | 13.5 | % |   |   | 153,249 |   |   |   | 30.5 | % |   |   | 278,510 |   |   |   | 58.5 | % |
| Total Deposits                  |   | $                       | 537,453 |   |   |   | 100.0 | % |   | $ | 502,173 |   |   |   | 100.0 | % |   | $ | 476,395 |   |   |   | 100.0 | % |

----

Index

|                                  |   | December 31,        |    |
|---------------------------------------|--------|---------------------|---------|
|                                  |   | 2010                |    |   | 2009 |   |
|                                  |   | TCD's over $100,000 |    |   | Other TCD’s |   |   | TCD's over $100,000 |   |   | Other TCD’s |   |
|                                  |   | (in thousands)      |    |
| Less than three months                |   | $                   | 40,958  |   |   | $ | 17,469 |   |   | $ | 44,736 |   |   | $ | 53,639 |   |
| Over three months through six months  |   |                | 20,098  |   |   |   | 9,003 |   |   |   | 30,569 |   |   |   | 29,392 |   |
| Over six months through twelve months |   |                | 29,248  |   |   |   | 9,191 |   |   |   | 36,042 |   |   |   | 13,042 |   |
| Over twelve months through five years |   |                | 72,813  |   |   |   | 12,544 |   |   |   | 62,247 |   |   |   | 15,721 |   |
| Total                                 |   | $                   | 163,117 |   |   | $ | 48,207 |   |   | $ | 173,594 |   |   | $ | 111,794 |   |

|                                       |   | Total          |    |   | < 1 Year |   |    | 1-3 Years |   |   | 3-5 Years |   |   | Over 5 Years |   |
|--------------------------------------------|--------|----------------|---------|--------|-------------|--------|---------|-----------|--------|--------|-----------|--------|--------|--------------|--------|
|                                       |   | (in thousands) |    |
| Other borrowing                            |   | $              | 72,081  |   |        | $      | 8,000   |      |   | $      | 22,000    |   |   | $            | 34,000 |   |   | $ | 8,081 |   |
| Time certificates of deposits              |   |           | 211,324 |   |        |   | 125,967 |      |   |   | 60,019    |   |   |         | 25,338 |   |   |   | - |   |
| Operating lease obligations                |   |           | 2,706   |   |        |   | 1,104   |      |   |   | 858       |   |   |         | 512    |   |   |   | 232 |   |
| Purchase obligations for service providers |   |           | 1,996   |   |        |   | 540     |      |   |   | 900       |   |   |         | 556    |   |   |   | - |   |
| Total                                      |   | $              | 288,107 |   |        | $      | 135,611 |      |   | $      | 83,777    |   |   | $            | 60,406 |   |   | $ | 8,313 |   |

----

Index

|   | § | making or acquiring loans or other extensions of credit for its own account or for the account of others |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | § | servicing loans and other extensions of credit; |
|--------|--------|-------------------------------------------------|

----

Index

|   | § | performing functions or activities that may be performed by a trust company in the manner authorized by federal or state law under certain circumstances; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | leasing personal and real property or acting as agent, broker, or adviser in leasing such property in accordance with various restrictions imposed by FRB regulations; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | acting as investment or financial advisor; |
|--------|--------|--------------------------------------------|

|   | § | providing management consulting advise under certain circumstances; |
|--------|--------|---------------------------------------------------------------------|

|   | § | providing support services, including courier services and printing and selling MICR-encoded items; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | § | acting as a principal, agent or broker for insurance under certain circumstances; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | § | making equity and debt investments in corporations or projects designed primarily to promote community welfare or jobs for residents; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | § | providing financial, banking or economic data processing and data transmission services; |
|--------|--------|------------------------------------------------------------------------------------------|

|   | § | owning, controlling or operating a savings association under certain circumstances; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | § | selling money orders, travelers’ checks and U.S. Savings Bonds; |
|--------|--------|-----------------------------------------------------------------------|

|   | § | providing securities brokerage services, related securities credit activities pursuant to Regulation T and other incidental activities; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | § | underwriting and dealing in obligations of the U.S., general obligations of states and their political subdivisions and other obligations authorized for state member banks under federal law |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the customer must obtain or provide some additional credit, property or services from or to CWB other than a loan, discount, deposit or trust services: |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the customer must obtain or provide some additional credit, property or service from or to CWBC or any subsidiaries; or |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | the customer must not obtain some other credit, property or services from competitors, except reasonable requirements to assure soundness of credit extended |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | assets (exclusive of goodwill and other intangible assets) would be 1.25 times its liabilities (exclusive of deferred taxes, deferred income and other deferred credits); and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | current assets would be at least equal to current liabilities. |
|--------|--------|----------------------------------------------------------------|

----

Index

|   | · | the creation of an independent accounting oversight board; |
|--------|--------|------------------------------------------------------------|

|   | · | auditor independence provisions that restrict non-audit services that accountants may provide to their audit clients; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | additional corporate governance and responsibility measures, including the requirement that the chief executive officer and chief financial officer of a public company certify financial statements; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuer’s securities by directors and senior officers in the twelve month period following initial publication of any financial statements that later require restatement; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase in the oversight of, and enhancement of certain requirements relating to, audit committees of public companies and how they interact with CWBC’s independent auditors; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | requirements that audit committee members must be independent and are barred from accepting consulting, advisory or other compensatory fees from the issuer; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | requirements that companies disclose whether at least one member of the audit committee is a “financial expert’ (as such term is defined by the SEC) and if not discussed, why the audit committee does not have a financial expert; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | expanded disclosure requirements for corporate insiders, including accelerated reporting of stock transactions by insiders and a prohibition on insider trading during pension blackout periods; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a prohibition on personal loans to directors and officers, except certain loans made by insured financial institutions on non-preferential terms and in compliance with other bank regulatory requirements; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | disclosure of a code of ethics and filing a Form 8-K for a change or waiver of such code; |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | a range of enhanced penalties for fraud and other violations; and |
|--------|--------|-------------------------------------------------------------------|

|   | · | expanded disclosure and certification relating to an issuer’s disclosure controls and procedures and internal controls over financial reporting. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

|                            |   | Adequately                 |   |   | Well        |   |   |   |   |   | CWBC           |   |
|---------------------------------|--------|----------------------------|--------|--------|-------------|--------|--------|--------|--------|--------|----------------|--------|
|                            |   | Capitalized                |   |   | Capitalized |   |   | CWB    |   |   | (consolidated) |   |
|                            |   | (greater than or equal to) |   |   |        |   |   |   |   |
| Total risk-based capital        |   |                       | 8.00   | %      |        |   | 10.00  | %      |   |   | 12.87          | %      |   |   | 14.16 | % |
| Tier 1 risk-based capital ratio |   |                       | 4.00   | %      |        |   | 6.00   | %      |   |   | 11.61          | %      |   |   | 11.40 | % |
| Tier 1 leverage capital ratio   |   |                       | 4.00   | %      |        |   | 5.00   | %      |   |   | 9.24           | %      |   |   | 9.08 | % |

|   | § | “well capitalized” if it has a total risk-based capital ratio of 10% or more, has a Tier 1 risk-based capital ratio of 6% or more, has a leverage capital ratio of 5% or more and is not subject to specified requirements to meet and maintain a specific capital level for any capital measure; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | “adequately capitalized” if it has a total risk-based capital ratio of 8% or more, a Tier 1 risk-based capital ratio of 4% or more and a leverage capital ratio of 4% or more (3% under certain circumstances) and does not meet the definition of “well capitalized”; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | “undercapitalized” if it has a total risk-based capital ratio that is less than 8%, a Tier 1 risk-based capital ratio that is less than 4%, or a leverage capital ratio that is less than 4% (3% under certain circumstances) |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | “significantly undercapitalized” if it has a total risk-based capital ratio that is less than 6%, a Tier 1 risk-based capital ratio that is less than 3% or a leverage capital ratio that is less than 3%; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | “critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2% |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

----

Index

|   | · | The period of the Amended Restoration Plan was extended from seven to eight years. |
|--------|--------|------------------------------------------------------------------------------------|

|   | · | The FDIC announced that it will not impose any further special assessments under the final rule it adopted in May 2009. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

----

Index

|   | · | The FDIC announced plans to maintain assessment rates at their current levels through the end of 2010.  The FDIC also immediately adopted a uniform three basis point increase in assessment rates effective January 1, 2011 to ensure that the DIF returns to 1.15% within the Amended Restoration Plan period of eight years. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The FDIC announced that, at least semi-annually following the adoption of the Amended Restoration Plan, it will update its loss and income projections for the DIF.  The FDIC also announced that it may, if necessary, adopt a new rule prior to the end of the eight-year period to increase assessment rates to return the reserve ratio to 1.15%. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Capital Group                                     | Supervisory Subgroup |
|---------------------------------------------------|----------------------|
|                                              | A                    | B | C |
| 1.     Well Capitalized  | I                    | II | III |
| 2.     Adequately Capitalized |                 |   |
| 3.     Undercapitalized       | III                  | IV |

----

Index

|  Initial Base Assessment Rates  |
|-------------------------------------------|
| Annual Rates (in basis points)            | Risk Category |
| I*                                        | II | III | IV |
| Minimum                                   | Maximum |
| 12                                        | 16 | 22 | 32 | 45 |

|  Total Base Assessment Rates  |
|-----------------------------------------|
|                                    | Risk CategoryI | Risk CategoryII | Risk CategoryIII | Risk CategoryIV |
| Initial base assessment rate            | 12 – 16 | 22 | 32 | 45 |
| Unsecured debt adjustment               | -5 – 0 | -5 – 0 | -5 – 0 | -5 – 0 |
| Secured liability adjustment            | 0 – 8 | 0 – 11 | 0 – 16 | 0 – 22.5 |
| Brokered deposit adjustment             | n/a | 0 – 10 | 0 – 10 | 0 – 10 |
| Total base assessment rate              | 7 – 24 | 17 – 43 | 27 – 58 | 40 – 77.5 |

----

Index

----

Index

----

Index

----

Index

| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK |
|----------|-----------------------------------------------------------|

| Interest Rate Sensitivity                       |   | 200 bp increase        |   |   | 200 bp decrease |   |
|-------------------------------------------------|--------|------------------------|--------|--------|-----------------|--------|
|                                            |   | 2010                   |   |   | 2009            |   |   | 2010 |   |   | 2009 |   |
|                                            |   | (dollars in thousands) |   |
| Anticipated impact over the next twelve months: |   |                   |   |   |            |   |   |   |   |   |   |   |
| Net interest income (NII)                       |   | $                      | 693    |   |            | $      | 263 |   |   | $ | - |   |   | $ | - |   |
|                                            |   |                   | 2.3    | %      |            |   | 0.9 | % |   |   | - |   |   |   | - |   |
|                                            |   |                   |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Economic value of equity (EVE)                  |   | $                      | (7,172 | )      |            | $      | (12,744 | ) |   | $ | - |   |   | $ | - |   |
|                                            |   |                   | (11.5  | %)     |            |   | (19.1 | %) |   |   | - |   |   |   | - |   |

| ITEM 8. | CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
|---------|----------------------------------------------------------|

----

Index

| ITEM 8.  | CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
|---------------|----------------------------------------------------------|

----

Index

|                                                                                                                                                                          |   | December 31,           |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                                                                                                          |   | 2010                   |    |   | 2009 |   |
|                                                                                                                                                                          |   | (dollars in thousands) |    |
| ASSETS                                                                                                                                                                        |   |                   |    |   |   |   |
| Cash and due from banks                                                                                                                                                       |   | $                      | 6,201   |   |   | $ | 4,906 |   |
| Federal funds sold                                                                                                                                                            |   |                   | 25      |   |   |   | 605 |   |
| Cash and cash equivalents                                                                                                                                                     |   |                   | 6,226   |   |   |   | 5,511 |   |
| Time deposits in other financial institutions                                                                                                                                 |   |                   | 290     |   |   |   | 640 |   |
| Investment securities available-for-sale, at fair value; amortized cost of $23,038 at December 31, 2010 and $17,367 at December 31, 2009                                      |   |                   | 23,342  |   |   |   | 17,670 |   |
| Investment securities held-to-maturity, at amortized cost; fair value of  $17,514  at December 31, 2010 and $23,538 at December 31, 2009                  |   |                   | 16,893  |   |   |   | 22,678 |   |
| Federal Home Loan Bank stock, at cost                                                                                                                                         |   |                   | 5,031   |   |   |   | 5,660 |   |
| Federal Reserve Bank stock, at cost                                                                                                                                           |   |                   | 1,322   |   |   |   | 1,322 |   |
| Loans:                                                                                                                                                                        |   |                   |    |   |   |   |   |   |
| Held for sale, at lower of cost or fair value                                                                                                                                 |   |                   | 82,320  |   |   |   | 102,574 |   |
| Held for investment, net of allowance for loan losses of $13,302 at December 31, 2010 and $13,733 at December 31, 2009                                                        |   |                   | 498,312 |   |   |   | 500,866 |   |
| Total loans                                                                                                                                                                   |   |                   | 580,632 |   |   |   | 603,440 |   |
| Servicing rights                                                                                                                                                              |   |                   | 782     |   |   |   | 998 |   |
| Foreclosed real estate and repossessed assets                                                                                                                                 |   |                   | 8,478   |   |   |   | 1,822 |   |
| Premises and equipment, net                                                                                                                                                   |   |                   | 2,915   |   |   |   | 3,279 |   |
| Other assets                                                                                                                                                                  |   |                   | 21,693  |   |   |   | 21,196 |   |
| TOTAL ASSETS                                                                                                                                                                  |   | $                      | 667,604 |   |   | $ | 684,216 |   |
|                                                                                                                                                                          |   |                   |    |   |   |   |   |   |
| LIABILITIES                                                                                                                                                                   |   |                   |    |   |   |   |   |   |
| Deposits:                                                                                                                                                                     |   |                   |    |   |   |   |   |   |
| Non-interest-bearing demand                                                                                                                                                   |   | $                      | 35,767  |   |   | $ | 37,703 |   |
| Interest-bearing demand                                                                                                                                                       |   |                   | 262,431 |   |   |   | 191,905 |   |
| Savings                                                                                                                                                                       |   |                   | 20,371  |   |   |   | 16,396 |   |
| Time certificates                                                                                                                                                             |   |                   | 211,324 |   |   |   | 285,388 |   |
| Total deposits                                                                                                                                                                |   |                   | 529,893 |   |   |   | 531,392 |   |
| Other borrowings                                                                                                                                                              |   |                   | 64,000  |   |   |   | 89,000 |   |
| Convertible debentures                                                                                                                                                        |   |                   | 8,081   |   |   |   | - |   |
| Other liabilities                                                                                                                                                             |   |                   | 3,988   |   |   |   | 3,517 |   |
| Total liabilities                                                                                                                                                             |   |                   | 605,962 |   |   |   | 623,909 |   |
| Commitments and contingencies-See Note 17                                                                                                                                     |   |                   |    |   |   |   |   |   |
| STOCKHOLDERS' EQUITY                                                                                                                                                          |   |                   |    |   |   |   |   |   |
| Preferred stock, no par value; 10,000,000 shares authorized; 15,600 shares issued and outstanding                                                                        |   |                   | 14,807  |   |   |   | 14,540 |   |
| Common stock, no par value; 10,000,000 shares authorized; 5,916,272 shares issued and outstanding at December 31, 2010 and 5,915,130 at December 31, 2009 |   |                   | 33,133  |   |   |   | 33,110 |   |
| Retained earnings                                                                                                                                                             |   |                   | 13,523  |   |   |   | 12,479 |   |
| Accumulated other comprehensive income                                                                                                                                        |   |                   | 179     |   |   |   | 178 |   |
| Total stockholders' equity                                                                                                                                                    |   |                   | 61,642  |   |   |   | 60,307 |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                              |   | $                      | 667,604 |   |   | $ | 684,216 |   |

----

Index

|                                                                         |   | Year Ended December 31,               |   |
|------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                         |   | 2010                                  |   |   | 2009 |   |   | 2008 |   |
|                                                                         |   | (in thousands, except per share data) |   |
| INTEREST INCOME                                                              |   |                                  |   |   |   |   |   |   |   |
| Loans                                                                        |   | $                                     | 37,809 |   |   | $ | 39,094 |   |   | $ | 43,081 |   |
| Investment securities                                                        |   |                                  | 1,402  |   |   |   | 1,740 |   |   |   | 2,179 |   |
| Other                                                                        |   |                                  | 23     |   |   |   | 69 |   |   |   | 272 |   |
| Total interest income                                                        |   |                                  | 39,234 |   |   |   | 40,903 |   |   |   | 45,532 |   |
| INTEREST EXPENSE                                                             |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                     |   |                                  | 7,597  |   |   |   | 11,240 |   |   |   | 17,225 |   |
| Other borrowings and convertible debentures                                  |   |                                  | 2,360  |   |   |   | 3,705 |   |   |   | 4,998 |   |
| Total interest expense                                                       |   |                                  | 9,957  |   |   |   | 14,945 |   |   |   | 22,223 |   |
| NET INTEREST INCOME                                                          |   |                                  | 29,277 |   |   |   | 25,958 |   |   |   | 23,309 |   |
| Provision for loan losses                                                    |   |                                  | 8,743  |   |   |   | 18,678 |   |   |   | 5,264 |   |
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                          |   |                                  | 20,534 |   |   |   | 7,280 |   |   |   | 18,045 |   |
| NON-INTEREST INCOME                                                          |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Other loan fees                                                              |   |                                  | 1,965  |   |   |   | 1,893 |   |   |   | 2,104 |   |
| Gains from loan sales, net                                                   |   |                                  | 467    |   |   |   | 363 |   |   |   | 1,018 |   |
| Document processing fees, net                                                |   |                                  | 544    |   |   |   | 803 |   |   |   | 718 |   |
| Service charges                                                              |   |                                  | 531    |   |   |   | 456 |   |   |   | 434 |   |
| Loan servicing fees, net                                                     |   |                                  | 328    |   |   |   | 773 |   |   |   | 488 |   |
| Other                                                                        |   |                                  | 180    |   |   |   | 130 |   |   |   | 319 |   |
| Total non-interest income                                                    |   |                                  | 4,015  |   |   |   | 4,418 |   |   |   | 5,081 |   |
| NON-INTEREST EXPENSES                                                        |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                                               |   |                                  | 11,823 |   |   |   | 11,896 |   |   |   | 13,390 |   |
| Occupancy and equipment expenses                                             |   |                                  | 2,005  |   |   |   | 2,112 |   |   |   | 2,341 |   |
| FDIC assessment                                                              |   |                                  | 1,210  |   |   |   | 1,596 |   |   |   | 369 |   |
| Professional services                                                        |   |                                  | 817    |   |   |   | 901 |   |   |   | 788 |   |
| Advertising and marketing                                                    |   |                                  | 301    |   |   |   | 344 |   |   |   | 421 |   |
| Depreciation and amortization                                                |   |                                  | 425    |   |   |   | 491 |   |   |   | 518 |   |
| Loss on sale and write-down of foreclosed real estate and repossessed assets |   |                                  | 1,151  |   |   |   | 615 |   |   |   | - |   |
| Data processing                                                              |   |                                  | 537    |   |   |   | 620 |   |   |   | 541 |   |
| Other                                                                        |   |                                  | 2,722  |   |   |   | 2,904 |   |   |   | 2,148 |   |
| Total non-interest expenses                                                  |   |                                  | 20,991 |   |   |   | 21,479 |   |   |   | 20,516 |   |
| Income (loss) before provision for income taxes                              |   |                                  | 3,558  |   |   |   | (9,781 | ) |   |   | 2,610 |   |
| Provision (benefit)  for income taxes                              |   |                                  | 1,467  |   |   |   | (4,018 | ) |   |   | 1,129 |   |
| NET INCOME (LOSS)                                                            |   | $                                     | 2,091  |   |   | $ | (5,763 | ) |   | $ | 1,481 |   |
|                                                                         |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Preferred stock dividends                                                    |   |                                  | 1,047  |   |   |   | 1,046 |   |   |   | 35 |   |
| NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS                          |   | $                                     | 1,044  |   |   | $ | (6,809 | ) |   | $ | 1,446 |   |
| Earnings (loss) per common share:                                            |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                        |   | $                                     | 0.18   |   |   | $ | (1.15 | ) |   | $ | 0.24 |   |
| Diluted                                                                      |   | $                                     | 0.18   |   |   | $ | (1.15 | ) |   | $ | 0.24 |   |
| Basic weighted average number of common shares outstanding                   |   |                                  | 5,915  |   |   |   | 5,915 |   |   |   | 5,913 |   |
| Diluted weighted average number of common shares outstanding                 |   |                                  | 6,833  |   |   |   | 5,915 |   |   |   | 5,941 |   |

----

Index

|                                                            |   |            |   |   |         |   |   |     |   |   |          |   |   | Accumulated         |   |   |   |   |
|-----------------------------------------------------------------|--------|-----------------|--------|--------|--------------|--------|--------|----------|--------|--------|---------------|--------|--------|---------------------|--------|--------|--------|--------|
|                                                            |   |            |   |   |         |   |   |     |   |   |          |   |   | Other               |   |   | Total  |   |
|                                                            |   |            |   |   | Common Stock |   |   | Retained |   |   | Comprehensive |   |   | Stockholders’ |   |
|                                                            |   | Preferred Stock |   |   | Shares       |   |   | Amount   |   |   | Earnings      |   |   |  Income (Loss) |   |   | Equity |   |
|                                                            |   | (in thousands)  |   |
| BALANCES AT                                                     |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   |
| JANUARY 1, 2008                                                 |   | $               | -      |   |         |   | 5,895  |     |   | $      | 31,636        |   |   | $                   | 18,551 |   |   | $      | (28 | ) |   | $ | 50,159 |   |
| Issuance of preferred stock                                     |   |            | 14,291 |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   | 14,291 |   |
| Issuance of common stock warrants                               |   |            |   |   |         |   |   |     |   |   | 1,159         |   |   |                |   |   |   |   |   |   |   |   | 1,159 |   |
| Exercise of stock options                                       |   |            |   |   |         |   | 20     |     |   |   | 105           |   |   |                |   |   |   |   |   |   |   |   | 105 |   |
| Stock option expense, recognized in earnings                    |   |            |   |   |         |   |   |     |   |   | 181           |   |   |                |   |   |   |   |   |   |   |   | 181 |   |
| Comprehensive income:                                           |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |
| Net income                                                      |   |            |   |   |         |   |   |     |   |   |          |   |   |                | 1,481  |   |   |   |   |   |   |   | 1,481 |   |
| Change in unrealized loss on securities available-for-sale, net |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   | (23 | ) |   |   | (23 | ) |
| Comprehensive income                                            |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   | 1,458 |   |
| Dividends paid:                                                 |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |
| Common ($0.12 per share)                                        |   |            |   |   |         |   |   |     |   |   |          |   |   |                | (709   | )      |   |   |   |   |   |   | (709 | ) |
| Preferred                                                       |   |            | 9      |   |         |   |   |     |   |   |          |   |   |                | (35    | )      |   |   |   |   |   |   | (26 | ) |
| BALANCES AT                                                     |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |
| DECEMBER 31, 2008                                               |   |            | 14,300 |   |         |   | 5,915  |     |   |   | 33,081        |   |   |                | 19,288 |   |   |   | (51 | ) |   |   | 66,618 |   |
| Preferred stock related costs                                   |   |            | (26    | )      |         |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   | (26 | ) |
| Stock option expense, recognized in earnings                    |   |            |   |   |         |   |   |     |   |   | 29            |   |   |                |   |   |   |   |   |   |   |   | 29 |   |
| Comprehensive income:                                           |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                        |   |            |   |   |         |   |   |     |   |   |          |   |   |                | (5,763 | )      |   |   |   |   |   |   | (5,763 | ) |
| Change in unrealized gain on securities available-for-sale, net |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   | 229 |   |   |   | 229 |   |
| Comprehensive loss                                              |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   | (5,534 | ) |
| Dividends on preferred                                          |   |            | 266    |   |         |   |   |     |   |   |          |   |   |                | (1,046 | )      |   |   |   |   |   |   | (780 | ) |
| BALANCES AT                                                     |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |
| DECEMBER 31, 2009                                               |   |            | 14,540 |   |         |   | 5,915  |     |   |   | 33,110        |   |   |                | 12,479 |   |   |   | 178 |   |   |   | 60,307 |   |
| Conversion of debentures into common stock                      |   |            |   |   |         |   | 1      |     |   |   | 4             |   |   |                |   |   |   |   |   |   |   |   | 4 |   |
| Stock option expense, recognized in earnings                    |   |            |   |   |         |   |   |     |   |   | 19            |   |   |                |   |   |   |   |   |   |   |   | 19 |   |
| Comprehensive income:                                           |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |
| Net income                                                      |   |            |   |   |         |   |   |     |   |   |          |   |   |                | 2,091  |   |   |   |   |   |   |   | 2,091 |   |
| Change in unrealized gain on securities available-for-sale, net |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   | 1 |   |   |   | 1 |   |
| Comprehensive income                                            |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   | 2,092 |   |
| Dividends on preferred                                          |   |            | 267    |   |         |   |   |     |   |   |          |   |   |                | (1,047 | )      |   |   |   |   |   |   | (780 | ) |
| BALANCES AT                                                     |   |            |   |   |         |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |
| DECEMBER 31, 2010                                               |   | $               | 14,807 |   |         |   | 5,916  |     |   | $      | 33,133        |   |   | $                   | 13,523 |   |   | $      | 179 |   |   | $ | 61,642 |   |

----

Index

|                                                                                     |   | Year Ended December 31, |    |
|------------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                     |   | 2010                    |    |   | 2009 |   |   | 2008 |   |
|                                                                                     |   | (in thousands)          |    |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |   |                    |    |   |   |   |   |   |   |
| Net income (loss)                                                                        |   | $                       | 2,091   |   |   | $ | (5,763 | ) |   | $ | 1,481 |   |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |   |                    |    |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                                                |   |                    | 8,743   |   |   |   | 18,678 |   |   |   | 5,264 |   |
| Depreciation and amortization                                                            |   |                    | 425     |   |   |   | 491 |   |   |   | 518 |   |
| Deferred income taxes                                                                    |   |                    | (1,071  | ) |   |   | (3,222 | ) |   |   | (1,668 | ) |
| Stock-based compensation                                                                 |   |                    | 19      |   |   |   | 29 |   |   |   | 181 |   |
| Net amortization of discounts and premiums for investment securities                     |   |                    | (146    | ) |   |   | (56 | ) |   |   | (85 | ) |
| Loss (gain) on:                                                                          |   |                    |    |   |   |   |   |   |   |   |   |   |
| Sale and write-down of foreclosed real estate and repossessed assets                     |   |                    | 1,151   |   |   |   | 615 |   |   |   | (205 | ) |
| Sale of loans held for sale                                                              |   |                    | (467    | ) |   |   | (363 | ) |   |   | (1,018 | ) |
| Loans originated for sale and principal collections, net                                 |   |                    | 2,332   |   |   |   | (2,251 | ) |   |   | (2,682 | ) |
| Changes in:                                                                              |   |                    |    |   |   |   |   |   |   |   |   |   |
| Servicing rights, net of amortization                                                    |   |                    | 216     |   |   |   | 163 |   |   |   | 45 |   |
| Other assets                                                                             |   |                    | 574     |   |   |   | (6,077 | ) |   |   | 552 |   |
| Other liabilities                                                                        |   |                    | 471     |   |   |   | (1,177 | ) |   |   | (22 | ) |
| Net cash provided by operating activities                                                |   |                    | 14,338  |   |   |   | 1,067 |   |   |   | 2,361 |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |   |                    |    |   |   |   |   |   |   |   |   |   |
| Purchase of held-to-maturity securities                                                  |   |                    | (1,521  | ) |   |   | (2,872 | ) |   |   | (12,899 | ) |
| Purchase of available-for-sale securities                                                |   |                    | (17,402 | ) |   |   | (13,433 | ) |   |   | (2,002 | ) |
| Redemptions of Federal Home Loan Bank stock                                              |   |                    | 629     |   |   |   | - |   |   |   | 375 |   |
| Purchase of Federal Reserve stock                                                        |   |                    | -       |   |   |   | (420 | ) |   |   | (90 | ) |
| Federal Home Loan Bank stock dividend                                                    |   |                    | -       |   |   |   | - |   |   |   | (301 | ) |
| Principal pay downs and maturities of available-for-sale securities                      |   |                    | 11,881  |   |   |   | 2,973 |   |   |   | 7,844 |   |
| Principal pay downs and maturities of held-to-maturity securities                        |   |                    | 7,302   |   |   |   | 11,405 |   |   |   | 7,407 |   |
| Loan originations and principal collections, net                                         |   |                    | 762     |   |   |   | (43,545 | ) |   |   | (45,360 | ) |
| Proceeds from sale of foreclosed real estate and repossessed assets                      |   |                    | 3,631   |   |   |   | 3,816 |   |   |   | 1,095 |   |
| Net increase (decrease) in time deposits in other financial institutions                 |   |                    | 350     |   |   |   | 172 |   |   |   | (34 | ) |
| Purchase of premises and equipment, net                                                  |   |                    | (61     | ) |   |   | (52 | ) |   |   | (952 | ) |
| Net cash provided by (used in) investing activities                                      |   |                    | 5,571   |   |   |   | (41,956 | ) |   |   | (44,917 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |   |                    |    |   |   |   |   |   |   |   |   |   |
| Proceeds from issuance of preferred stock and warrants on common stock                   |   |                    | -       |   |   |   | - |   |   |   | 15,450 |   |
| Preferred stock dividends                                                                |   |                    | (1,047  | ) |   |   | (1,046 | ) |   |   | (35 | ) |
| Amortization of discount on preferred stock, net of additional costs                     |   |                    | 267     |   |   |   | 240 |   |   |   | 9 |   |
| Exercise of stock options                                                                |   |                    | -       |   |   |   | - |   |   |   | 105 |   |
| Cash dividends paid on common stock                                                      |   |                    | -       |   |   |   | - |   |   |   | (709 | ) |
| Net increase (decrease)  in demand deposits and savings accounts               |   |                    | 72,565  |   |   |   | 138,732 |   |   |   | (15,889 | ) |
| Net (decrease) increase in time certificates of deposit                                  |   |                    | (74,064 | ) |   |   | (82,779 | ) |   |   | 57,589 |   |
| Proceeds from Federal Home Loan Bank and FRB advances                                    |   |                    | 39,000  |   |   |   | 130,000 |   |   |   | 33,000 |   |
| Repayment of Federal Home Loan Bank and FRB advances                                     |   |                    | (64,000 | ) |   |   | (151,000 | ) |   |   | (44,000 | ) |
| Proceeds from issuance of convertible debentures                                         |   |                    | 8,085   |   |   |   | - |   |   |   | - |   |
| Net cash (used in) provided by financing activities                                      |   |                    | (19,194 | ) |   |   | 34,147 |   |   |   | 45,520 |   |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     |   |                    | 715     |   |   |   | (6,742 | ) |   |   | 2,964 |   |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                             |   |                    | 5,511   |   |   |   | 12,253 |   |   |   | 9,289 |   |
| CASH AND CASH EQUIVALENTS, END OF YEAR                                                   |   | $                       | 6,226   |   |   | $ | 5,511 |   |   | $ | 12,253 |   |

----

Index

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

----

Index

----

Index

----

Index

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

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

|   | ·   | Volume and Trend in Delinquency |
|--------|--------------------|---------------------------------|

|   | ·   | Economic Conditions |
|--------|--------------------|---------------------|

|   | ·   | Outside Exams |
|--------|--------------------|---------------|

|   | ·   | Geographic Distance |
|--------|--------------------|---------------------|

|   | ·   | Policy and Procedures |
|--------|--------------------|-----------------------|

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

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

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

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

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

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

----

Index

| Building and improvements         | 31.5 years         |
|-----------------------------------|--------------------|
| Furniture and equipment           | 5 – 10 years |
| Electronic equipment and software | 3 – 5 years  |

----

Index

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

|                          |   |           |   |
|-------------------------------|--------|----------------|--------|
| December 31, 2010             |   | (in thousands) |   |
|                          |   |           |   |   | Gross |   |   | Gross |   |   |   |   |
|                          |   | Amortized      |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
| Available-for-sale securities |   | Cost           |   |   | Gains |   |   | Losses |   |   | Value |   |
| U.S. Government agency: MBS   |   | $              | 5,472  |   |   | $ | 206 |   |   | $ | - |   |   | $ | 5,678 |   |
| U.S. Government agency: CMO   |   |           | 17,566 |   |   |   | 102 |   |   |   | (4 | ) |   |   | 17,664 |   |
| Total                         |   | $              | 23,038 |   |   | $ | 308 |   |   | $ | (4 | ) |   | $ | 23,342 |   |
|                          |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agency: MBS   |   | $              | 16,893 |   |   | $ | 698 |   |   | $ | (77 | ) |   | $ | 17,514 |   |
| U.S. Government agency: CMO   |   |           | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                         |   | $              | 16,893 |   |   | $ | 698 |   |   | $ | (77 | ) |   | $ | 17,514 |   |

| December 31, 2009             |   | (in thousands) |   |
|-------------------------------|--------|----------------|--------|
|                          |   |           |   |   | Gross |   |   | Gross |   |   |   |   |
|                          |   | Amortized      |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
| Available-for-sale securities |   | Cost           |   |   | Gains |   |   | Losses |   |   | Value |   |
| U.S. Government agency: MBS   |   | $              | 10,175 |   |   | $ | 286 |   |   | $ | - |   |   | $ | 10,461 |   |
| U.S. Government agency: CMO   |   |           | 7,192  |   |   |   | 37 |   |   |   | (20 | ) |   |   | 7,209 |   |
| Total                         |   | $              | 17,367 |   |   | $ | 323 |   |   | $ | (20 | ) |   | $ | 17,670 |   |
|                          |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agency: MBS   |   | $              | 22,678 |   |   | $ | 891 |   |   | $ | (31 | ) |   | $ | 23,538 |   |
| U.S. Government agency: CMO   |   |           | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                         |   | $              | 22,678 |   |   | $ | 891 |   |   | $ | (31 | ) |   | $ | 23,538 |   |

----

Index

|                          |   | Total Amount |   |   | Less than One Year |   |   | One to Five Years |   |   | Five to Ten Years |   |
|-------------------------------|--------|--------------|--------|--------|--------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
|                          |   | Amount       |   |   | Yield              |   |   | Amount            |   |   | Yield             |   |   | Amount |   |   | Yield |   |   | Amount |   |   | Yield |   |
| (dollars in thousands)        |   |
| Available-for-sale securities |   |         |   |   |               |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U. S. Government:             |   |         |   |   |               |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency: MBS                   |   | $            | 5,678  |   |               |   | 2.4    | %                 |   | $      | -                 |   |   |   | - |   |   | $ | 4,731 |   |   |   | 2.4 | % |   | $ | 947 |   |   |   | 2.3 | % |
| Agency: CMO                   |   |         | 17,664 |   |               |   | 0.8    | %                 |   |   | 1,718             |   |   |   | 0.9 | % |   |   | 14,015 |   |   |   | 0.8 | % |   |   | 1,931 |   |   |   | 0.8 | % |
| Total                         |   | $            | 23,342 |   |               |   | 1.2    | %                 |   | $      | 1,718             |   |   |   | 0.9 | % |   | $ | 18,746 |   |   |   | 1.2 | % |   | $ | 2,878 |   |   |   | 1.3 | % |
|                          |   |         |   |   |               |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities   |   |         |   |   |               |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government:              |   |         |   |   |               |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency: MBS                   |   | $            | 16,893 |   |               |   | 4.4    | %                 |   | $      | 62                |   |   |   | 5.0 | % |   | $ | 9,603 |   |   |   | 4.7 | % |   | $ | 7,228 |   |   |   | 4.0 | % |
| Agency: CMO                   |   |         | -      |   |               |   | -      |              |   |   | -                 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |
| Total                         |   | $            | 16,893 |   |               |   | 4.4    | %                 |   | $      | 62                |   |   |   | 5.0 | % |   | $ | 9,603 |   |   |   | 4.7 | % |   | $ | 7,228 |   |   |   | 4.0 | % |

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

| December 31, 2009                 |   | Less than 12 months |   |   | More than 12 months |   |   | Total  |   |
|-----------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|--------|--------|
|                              |   | Fair                |   |   | Unrealized          |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                              |   | Value               |   |   | Losses              |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
|                              |   | (in thousands)      |   |
| Available-for-sale securities     |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agency: MBS       |   | $                   | -      |   |                | $      | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| U.S. Government agency: CMO       |   |                | 1,816  |   |                |   | 20     |   |   |   | - |   |   |   | - |   |   |   | 1,816 |   |   |   | 20 |   |
| Total                             |   | $                   | 1,816  |   |                | $      | 20     |   |   | $ | - |   |   | $ | - |   |   | $ | 1,816 |   |   | $ | 20 |   |
|                              |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity securities       |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agency: MBS       |   | $                   | 2,854  |   |                | $      | 31     |   |   | $ | - |   |   | $ | - |   |   | $ | 2,854 |   |   | $ | 31 |   |
|  U.S. Government agency: CMO |   |                | -      |   |                |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                             |   | $                   | 2,854  |   |                | $      | 31     |   |   | $ | - |   |   | $ | - |   |   | $ | 2,854 |   |   | $ | 31 |   |

----

Index

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

|                         |   | Year Ended December 31, |   |
|------------------------------|--------|-------------------------|--------|
|                         |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                         |   | (in thousands)          |   |
| Balance, beginning of year   |   | $                       | 998    |   |   | $ | 1,161 |   |   | $ | 1,206 |   |
| Additions through loan sales |   |                    | -      |   |   |   | - |   |   |   | 273 |   |
| Amortization                 |   |                    | (216   | ) |   |   | (163 | ) |   |   | (318 | ) |
| Balance, end of year         |   | $                       | 782    |   |   | $ | 998 |   |   | $ | 1,161 |   |

----

Index

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

|                                          |   | December 31,   |    |
|-----------------------------------------------|--------|----------------|---------|
|                                          |   | 2010           |    |   | 2009 |   |
|                                          |   | (in thousands) |    |
| Commercial                                    |   | $              | 57,369  |   |   | $ | 61,810 |   |
| Commercial real estate                        |   |           | 173,906 |   |   |   | 180,688 |   |
| SBA                                           |   |           | 51,549  |   |   |   | 43,863 |   |
| Manufactured housing                          |   |           | 194,682 |   |   |   | 195,656 |   |
| Single family real estate                     |   |           | 13,722  |   |   |   | 14,793 |   |
| HELOC                                         |   |           | 20,273  |   |   |   | 17,902 |   |
| Consumer                                      |   |           | 379     |   |   |   | 286 |   |
|                                          |   |           | 511,880 |   |   |   | 514,998 |   |
| Less:                                         |   |           |    |   |   |   |   |   |
| Allowance for loan losses                     |   |           | 13,302  |   |   |   | 13,733 |   |
| Deferred fees, net of costs                   |   |           | (181    | ) |   |   | (204 | ) |
| Purchased premiums                            |   |           | (14     | ) |   |   | (24 | ) |
| Discount on unguaranteed portion of SBA loans |   |           | 461     |   |   |   | 627 |   |
| Loans held for investment, net                |   | $              | 498,312 |   |   | $ | 500,866 |   |

| 2010                      |   | 30-59 Days Past Due |   |   | 60-89 Days Past Due |   |   | Greater Than 90 Days |   |   | Total Past Due |   |   | Current |   |   | Total Financing Receivables |   |    | Recorded Investment > 90 Days and Accruing |   |
|---------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|----------------------|--------|--------|----------------|--------|--------|---------|--------|--------|-----------------------------|--------|---------|-----------------------------------------------|--------|
|                      |   | (in thousands)      |   |
| Single family real estate |   | $                   | 40     |   |                | $      | 504    |                 |   | $      | 143            |   |   | $       | 687    |   |                        | $      | 13,035  |                                          |   | $ | 13,722 |   |   | $ | 143 |   |
| Commercial real estate:   |   |                |   |   |                |   |   |                 |   |   |           |   |   |    |   |   |                        |   |    |                                          |   |   |   |   |   |   |   |   |
| Commercial real estate    |   |                | 331    |   |                |   | -      |                 |   |   | 981            |   |   |    | 1,312  |   |                        |   | 103,118 |                                          |   |   | 104,430 |   |   |   | - |   |
| SBA 504 1st               |   |                | -      |   |                |   | -      |                 |   |   | 1,100          |   |   |    | 1,100  |   |                        |   | 38,267  |                                          |   |   | 39,367 |   |   |   | - |   |
| Land                      |   |                | 195    |   |                |   | -      |                 |   |   | 571            |   |   |    | 766    |   |                        |   | 5,970   |                                          |   |   | 6,736 |   |   |   | - |   |
| Construction              |   |                | -      |   |                |   | -      |                 |   |   | 49             |   |   |    | 49     |   |                        |   | 23,324  |                                          |   |   | 23,373 |   |   |   | - |   |
| Commercial loans          |   |                | 739    |   |                |   | -      |                 |   |   | 174            |   |   |    | 913    |   |                        |   | 56,456  |                                          |   |   | 57,369 |   |   |   | 34 |   |
| SBA loans                 |   |                | 2,098  |   |                |   | 910    |                 |   |   | 17,129         |   |   |    | 20,137 |   |                        |   | 31,412  |                                          |   |   | 51,549 |   |   |   | - |   |
| Mfg.  housing   |   |                | 914    |   |                |   | 318    |                 |   |   | 894            |   |   |    | 2,126  |   |                        |   | 192,556 |                                          |   |   | 194,682 |   |   |   | - |   |
| HELOC                     |   |                | -      |   |                |   | -      |                 |   |   | 2              |   |   |    | 2      |   |                        |   | 20,271  |                                          |   |   | 20,273 |   |   |   | - |   |
| Consumer                  |   |                | -      |   |                |   | -      |                 |   |   | 21             |   |   |    | 21     |   |                        |   | 358     |                                          |   |   | 379 |   |   |   | - |   |
| Total                     |   | $                   | 4,317  |   |                | $      | 1,732  |                 |   | $      | 21,064         |   |   | $       | 27,113 |   |                        | $      | 484,767 |                                          |   | $ | 511,880 |   |   | $ | 177 |   |

----

Index

|                                       |   | Year Ended December 31, |   |
|--------------------------------------------|--------|-------------------------|--------|
|                                       |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                                       |   | (in thousands)          |   |
| Balance, beginning of year                 |   | $                       | 13,733 |   |   | $ | 7,341 |   |   | $ | 4,412 |   |
|                                       |   |                    |   |   |   |   |   |   |   |   |   |   |
| Loans charged off                          |   |                    | (9,722 | ) |   |   | (12,437 | ) |   |   | (2,459 | ) |
| Recoveries on loans previously charged off |   |                    | 548    |   |   |   | 151 |   |   |   | 124 |   |
| Net charge-offs                            |   |                    | (9,174 | ) |   |   | (12,286 | ) |   |   | (2,335 | ) |
|                                       |   |                    |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                  |   |                    | 8,743  |   |   |   | 18,678 |   |   |   | 5,264 |   |
| Balance, end of year                       |   | $                       | 13,302 |   |   | $ | 13,733 |   |   | $ | 7,341 |   |

|                      |   | Allowance12/31/09    |   |   | Provision |   |   | Charge-offs |   |   | Recoveries |   |   | Net Charge-offs |   |   | Allowance12/31/10 |   |
|---------------------------|--------|----------------------|--------|--------|-----------|--------|--------|-------------|--------|--------|------------|--------|--------|-----------------|--------|--------|-------------------|--------|
|                      |   |  (in thousands) |   |
| Commercial real estate    |   | $                    | 2,843  |   |      | $      | 873    |        |   | $      | (1,192     | )      |   | $               | 8      |   |              | $      | (1,184 | ) |   | $ | 2,532 |   |
| Manufactured housing      |   |                 | 2,255  |   |      |   | 4,072  |        |   |   | (2,202     | )      |   |            | 43     |   |              |   | (2,159 | ) |   |   | 4,168 |   |
| Commercial                |   |                 | 3,448  |   |      |   | (398   | )           |   |   | (1,055     | )      |   |            | 99     |   |              |   | (956 | ) |   |   | 2,094 |   |
| SBA                       |   |                 | 4,837  |   |      |   | 3,184  |        |   |   | (4,628     | )      |   |            | 360    |   |              |   | (4,268 | ) |   |   | 3,753 |   |
| Single family real estate |   |                 | 143    |   |      |   | 172    |        |   |   | (186       | )      |   |            | 6      |   |              |   | (180 | ) |   |   | 135 |   |
| HELOC                     |   |                 | 124    |   |      |   | 873    |        |   |   | (458       | )      |   |            | 8      |   |              |   | (450 | ) |   |   | 547 |   |
| Consumer                  |   |                 | 83     |   |      |   | (33    | )           |   |   | (1         | )      |   |            | 24     |   |              |   | 23 |   |   |   | 73 |   |
| Total                     |   | $                    | 13,733 |   |      | $      | 8,743  |        |   | $      | (9,722     | )      |   | $               | 548    |   |              | $      | (9,174 | ) |   | $ | 13,302 |   |

|                                                   |   | Year Ended December 31, |   |
|--------------------------------------------------------|--------|-------------------------|--------|
|                                                   |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                                                   |   | (in thousands)          |   |
| Impaired loans without specific valuation allowances   |   | $                       | 13,285 |   |   | $ | 13,699 |   |   | $ | 8,043 |   |
| Impaired loans with specific valuation allowances      |   |                    | 1,703  |   |   |   | 716 |   |   |   | 523 |   |
| Specific valuation allowance related to impaired loans |   |                    | (362   | ) |   |   | (622 | ) |   |   | (151 | ) |
| Impaired loans, net                                    |   | $                       | 14,626 |   |   | $ | 13,793 |   |   | $ | 8,415 |   |
|                                                   |   |                    |   |   |   |   |   |   |   |   |   |   |
| Average investment in impaired loans                   |   | $                       | 15,591 |   |   | $ | 9,058 |   |   | $ | 9,612 |   |

|                                                                                   |   | Year Ended December 31, |    |
|----------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                   |   | 2010                    |    |   | 2009 |   |   | 2008 |   |
|                                                                                   |   | (in thousands)          |    |
| Nonaccrual loans                                                                       |   | $                       | 34,950  |   |   | $ | 40,265 |   |   | $ | 28,821 |   |
| SBA guaranteed portion of loans included above                                         |   |                    | (22,279 | ) |   |   | (24,088 | ) |   |   | (11,918 | ) |
| Nonaccrual loans, net                                                                  |   | $                       | 12,671  |   |   | $ | 16,177 |   |   | $ | 16,903 |   |
|                                                                                   |   |                    |    |   |   |   |   |   |   |   |   |   |
| Troubled debt restructured loans                                                       |   | $                       | 11,088  |   |   | $ | 7,013 |   |   | $ | 5,408 |   |
| Loans 30 through 90 days past due with interest accruing                               |   | $                       | 2,586   |   |   | $ | 17,686 |   |   | $ | 11,974 |   |
|                                                                                   |   |                    |    |   |   |   |   |   |   |   |   |   |
| Interest income recognized on impaired loans                                           |   | $                       | 381     |   |   | $ | 426 |   |   | $ | 12 |   |
| Interest foregone on nonaccrual loans and troubled debt restructured loans outstanding |   |                    | 2,344   |   |   |   | 2,109 |   |   |   | 1,707 |   |
| Gross interest income on impaired and nonaccrual loans                                 |   | $                       | 2,725   |   |   | $ | 2,535 |   |   | $ | 1,719 |   |

----

Index

|                      |   | (in thousands) |   |
|---------------------------|--------|----------------|--------|
| Commercial                |   | $              | 602    |   |
| Commercial real estate:   |   |           |   |   |
| Commercial real estate    |   |           | 3,226  |   |
| SBA 504 1st               |   |           | 1,612  |   |
| Land                      |   |           | 571    |   |
| Construction              |   |           | 49     |   |
| SBA                       |   |           | 4,181  |   |
| Manufactured housing      |   |           | 1,917  |   |
| Single family real estate |   |           | 461    |   |
| HELOC                     |   |           | 31     |   |
| Consumer                  |   |           | 21     |   |
| Nonaccrual loans, net     |   | $              | 12,671 |   |

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

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

----

Index

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

|                                            |   | Fair value measurements at December 31, 2009 using |   |
|-------------------------------------------------|--------|----------------------------------------------------|--------|
|                                            |   |                                               |   |   | Quoted prices in active markets for identical assets |   |   | Significant other observable inputs |   |   | Significant unobservable inputs |   |
| Description                                     |   | Total                                              |   |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
|                                            |   | (in thousands)                                     |   |
| Investment securities available-for-sale        |   | $                                                  | 17,670 |   |   | $ | - |   |   | $ | 17,670 |   |   | $ | - |   |
| Interest only strips (included in other assets) |   |                                               | 623    |   |   |   | - |   |   |   | - |   |   |   | 623 |   |
| Total                                           |   | $                                                  | 18,293 |   |   | $ | - |   |   | $ | 17,670 |   |   | $ | 623 |   |

|           |   | Fair value measurements at December 31, 2010 using |   |
|----------------|--------|---------------------------------------------------------|--------|
|           |   |                                                    |   |   | Quoted prices in active markets for identical assets |   |   | Significant other observable inputs |   |   | Significant unobservable inputs |   |
| Description    |   | Total                                                   |   |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
|           |   | (in thousands)                                          |   |
| Impaired loans |   | $                                                       | 14,626 |   |   | $ | - |   |   | $ | 13,527 |   |   | $ | 1,099 |   |

|           |   | Fair value measurements at December 31, 2009 using |   |
|----------------|--------|---------------------------------------------------------|--------|
|           |   |                                                    |   |   | Quoted prices in active markets for identical assets |   |   | Significant other observable inputs |   |   | Significant unobservable inputs |   |
| Description    |   | Total                                                   |   |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
|           |   | (in thousands)                                          |   |
| Impaired loans |   | $                                                       | 13,793 |   |   | $ | - |   |   | $ | 13,562 |   |   | $ | 231 |   |

----

Index

| 6. | PREMISES AND EQUIPMENT |
|----|------------------------|

|                                            |   | December 31,   |   |
|-------------------------------------------------|--------|----------------|--------|
|                                            |   | 2010           |   |   | 2009 |   |
|                                            |   | (in thousands) |   |
| Furniture, fixtures and equipment               |   | $              | 8,162  |   |   | $ | 8,225 |   |
| Building and land                               |   |           | 1,407  |   |   |   | 1,407 |   |
| Leasehold improvements                          |   |           | 2,461  |   |   |   | 2,436 |   |
|                                            |   |           | 12,030 |   |   |   | 12,068 |   |
| Less: accumulated depreciation and amortization |   |           | (9,115 | ) |   |   | (8,789 | ) |
| Premises and equipment, net                     |   | $              | 2,915  |   |   | $ | 3,279 |   |

|       |   | (in thousands) |   |
|------------|--------|----------------|--------|
| 2011       |   | $              | 1,104  |   |
| 2012       |   |           | 507    |   |
| 2013       |   |           | 352    |   |
| 2014       |   |           | 280    |   |
| 2015       |   |           | 231    |   |
| Thereafter |   |           | 232    |   |
| Total      |   | $              | 2,706  |   |

| 7. | DEPOSITS |
|----|----------|

|   |   | (in thousands) |    |
|--------|--------|----------------|---------|
| 2011   |   | $              | 125,967 |   |
| 2012   |   |           | 36,703  |   |
| 2013   |   |           | 23,316  |   |
| 2014   |   |           | 8,092   |   |
| 2015   |   |           | 17,246  |   |
| Total  |   | $              | 211,324 |   |

| 8. | BORROWINGS |
|----|------------|

|                                    |   | December 31, 2010      |   |
|-----------------------------------------|--------|------------------------|--------|
|                                    |   | Amount                 |   |   | Interest Rates |   |
|                                    |   | (dollars in thousands) |   |
| Due within one year                     |   | $                      | 8,000  |   |   |   | 3.31%-3.48 | % |
| After one year but within three years   |   |                   | 22,000 |   |   |   | 1.08%-3.81 | % |
| After three years but within five years |   |                   | 34,000 |   |   |   | 2.68%-2.88 | % |
| Total                                   |   | $                      | 64,000 |   |   |   | - |   |

----

Index

|                                    |   | December 31, 2009      |   |
|-----------------------------------------|--------|------------------------|--------|
|                                    |   | Amount                 |   |   | Interest  Rates |   |
|                                    |   | (dollars in thousands) |   |
| Due within one year                     |   | $                      | 24,000 |   |   |   | 4.28%-5.18 | % |
| After one year but within three years   |   |                   | 12,000 |   |   |   | 1.85%-3.48 | % |
| After three years but within five years |   |                   | 32,000 |   |   |   | 2.68%-3.81 | % |
| Total                                   |   | $                      | 68,000 |   |   |   | - |   |

|                                            |   | 2010                   |   |   | 2009   |   |
|-------------------------------------------------|--------|------------------------|--------|--------|--------|--------|
|                                            |   | (dollars in thousands) |   |
| Weighted average interest rate, end of the year |   |                   | 2.61   | %      |   |   | 3.57 | % |
| Weighted average interest rate during the year  |   |                   | 2.93   | %      |   |   | 4.04 | % |
| Average balance of advances from FHLB           |   | $                      | 70,000 |   |   | $      | 89,077 |   |
| Maximum amount outstanding at any month end     |   | $                      | 77,000 |   |   | $      | 106,000 |   |

| 9. | EARNINGS PER SHARE |
|----|--------------------|

|                                                                   |   | Year Ended December 31,               |   |
|------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                   |   | 2010                                  |   |   | 2009 |   |   | 2008 |   |
|                                                                   |   | (in thousands, except per share data) |   |
| Net income (loss)                                                      |   | $                                     | 2,091  |   |   | $ | (5,763 | ) |   | $ | 1,481 |   |
| Less: Preferred stock dividends                                        |   |                                  | 1,047  |   |   |   | 1,046 |   |   |   | 35 |   |
| Net income (loss) applicable to common shareholders                    |   | $                                     | 1,044  |   |   | $ | (6,809 | ) |   | $ | 1,446 |   |
|                                                                   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Add: Debenture interest expense and costs, net of income taxes         |   | $                                     | 176    |   |   | $ | - |   |   | $ | - |   |
| Net income for diluted calculation of earnings (loss) per common share |   | $                                     | 1,220  |   |   | $ | (6,809 | ) |   | $ | 1,446 |   |
| Basic weighted average number of common shares outstanding             |   |                                  | 5,915  |   |   |   | 5,915 |   |   |   | 5,913 |   |
| Dilutive weighted average number of common shares outstanding          |   |                                  | 6,833  |   |   |   | 5,915 |   |   |   | 5,941 |   |
| Earnings (loss) per common share:                                      |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                  |   | $                                     | 0.18   |   |   | $ | (1.15 | ) |   | $ | 0.24 |   |
| Diluted                                                                |   | $                                     | 0.18   |   |   | $ | (1.15 | ) |   | $ | 0.24 |   |

----

Index

| 10. | STOCK-BASED COMPENSATION |
|-----|--------------------------|

|                     |   | Year Ended December 31, |   |
|--------------------------|--------|-------------------------|--------|
|                     |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
| Annual dividend yield    |   |                    | -      |   |   |   | 1.0 | % |   |   | 0.9 | % |
| Expected volatility      |   |                    | 61.4   | % |   |   | 48.0 | % |   |   | 29.6 | % |
| Risk free interest rate  |   |                    | 2.7    | % |   |   | 2.9 | % |   |   | 3.1 | % |
| Expected life (in years) |   |                    | 6.3    |   |   |   | 6.8 |   |   |   | 6.4 |   |

| 11. | STOCKHOLDERS’ EQUITY |
|-----|----------------------------|

----

Index

|                                         |   | Year Ended December 31,          |   |
|----------------------------------------------|--------|---------------------------------------|--------|
|                                         |   | 2010 Option Shares                    |   |   | 2010 Weighted Average  Exercise Price |   |   | 2009 Option Shares |   |   | 2009 Weighted Average Exercise Price |   |   | 2008 Option Shares |   |   | 2008 Weighted Average Exercise Price |   |
|                                         |   | (in thousands, except per share data) |   |
| Total options as of January 1,          |   |                                  | 460    |   |   | $ | 7.29 |   |   |   | 460 |   |   | $ | 8.14 |   |   |   | 462 |   |   | $ | 8.63 |   |
| Granted                                      |   |                                  | 24     |   |   |   | 3.33 |   |   |   | 44 |   |   |   | 2.70 |   |   |   | 87 |   |   |   | 5.58 |   |
| Canceled                                     |   |                                  | (55    | ) |   |   | 6.69 |   |   |   | (44 | ) |   |   | 11.46 |   |   |   | (69 | ) |   |   | 9.15 |   |
| Exercised                                    |   |                                  | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (20 | ) |   |   | 5.12 |   |
| Total options at December 31,           |   |                                  | 429    |   |   | $ | 7.15 |   |   |   | 460 |   |   | $ | 7.30 |   |   |   | 460 |   |   | $ | 8.14 |   |
| Total vested options as of December 31, |   |                                  | 338    |   |   | $ | 7.50 |   |   |   | 355 |   |   | $ | 7.35 |   |   |   | 343 |   |   | $ | 7.36 |   |

|                                              |   | Year Ended December 31,          |   |
|---------------------------------------------------|--------|---------------------------------------|--------|
|                                              |   | 2010                                  |   |   | 2009 |   |   | 2008 |   |
|                                              |   | (in thousands, except per share data) |   |
| Intrinsic value of options exercised              |   | $                                     | -      |   |   | $ | - |   |   | $ | 72 |   |
| Cash received from the exercise of options        |   |                                  | -      |   |   |   | - |   |   |   | 105 |   |
| Weighted-average grant-date fair value of options |   |                                  | -      |   |   |   | - |   |   |   | 2.44 |   |

----

Index

| Unvested Stock Option Shares                      |                                   | Number of Option Shares |   |   | Weighted-Average Grant-Date Fair Value |   |
|---------------------------------------------------|----------------------------------------|-------------------------|--------|--------|----------------------------------------|--------|
|                                              |                                   |                    |   |   |                                   |   |
|                                              | ( in thousands, except per share data) |                    |
| Unvested stock options at January 1, 2010         |                                   |                    | 105    |   |                                   | $      | 2.44 |   |
| Granted                                           |                                   |                    | 24     |   |                                   |   | 1.99 |   |
| Vested                                            |                                   |                    | (29    | )      |                                   |   | 2.94 |   |
| Forfeited                                         |                                   |                    | (9     | )      |                                   |   | 2.12 |   |
| Total unvested stock options at December 31, 2010 |                                   |                    | 91     |   |                                   | $      | 2.20 |   |

| 12. | INCOME TAXES |
|-----|--------------|

|                                       |   | Year Ended December 31, |   |
|--------------------------------------------|--------|-------------------------|--------|
|                                       |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                                       |   | (in thousands)          |   |
| Current:                                   |   |                    |   |   |   |   |   |   |   |
| Federal                                    |   | $                       | 1,873  |   |   | $ | (830 | ) |   | $ | 2,017 |   |
| State                                      |   |                    | 665    |   |   |   | 34 |   |   |   | 780 |   |
|                                       |   |                    | 2,538  |   |   |   | (796 | ) |   |   | 2,797 |   |
| Deferred:                                  |   |                    |   |   |   |   |   |   |   |   |   |   |
| Federal                                    |   |                    | (792   | ) |   |   | (2,130 | ) |   |   | (1,186 | ) |
| State                                      |   |                    | (279   | ) |   |   | (1,092 | ) |   |   | (482 | ) |
|                                       |   |                    | (1,071 | ) |   |   | (3,222 | ) |   |   | (1,668 | ) |
| Total provision (benefit) for income taxes |   | $                       | 1,467  |   |   | $ | (4,018 | ) |   | $ | 1,129 |   |

|                                        |   | Year Ended December 31, |   |
|---------------------------------------------|--------|-------------------------|--------|
|                                        |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
| Federal income tax at statutory rate        |   |                    | 34.0   | % |   |   | 34.0 | % |   |   | 34.0 | % |
| State franchise tax, net of federal benefit |   |                    | 7.2    |   |   |   | 7.2 |   |   |   | 7.2 |   |
| Other                                       |   |                    | -      |   |   |   | (0.1 | ) |   |   | 2.1 |   |
|                                        |   |                    | 41.2   | % |   |   | 41.1 | % |   |   | 43.3 | % |

|                      |   | 2010           |   |   | 2009   |   |
|---------------------------|--------|----------------|--------|--------|--------|--------|
| Deferred tax assets:      |   | (in thousands) |   |
| Allowance for loan losses |   | $              | 5,802  |   |   | $      | 4,892 |   |
| Depreciation              |   |           | 82     |   |   |   | 78 |   |
| Other                     |   |           | 903    |   |   |   | 967 |   |
|                      |   |           | 6,787  |   |   |   | 5,937 |   |
| Deferred tax liabilities: |   |           |   |   |   |   |   |   |
| Deferred state taxes      |   |           | (347   | )      |   |   | (479 | ) |
| Other                     |   |           | (508   | )      |   |   | (598 | ) |
|                      |   |           | (855   | )      |   |   | (1,077 | ) |
| Net deferred taxes        |   | $              | 5,932  |   |   | $      | 4,860 |   |

----

Index

| 13. | SUPPLEMENTAL DISCLOSURE TO THE CONSOLIDATED FINANCIAL STATEMENTS |
|-----|------------------------------------------------------------------|

|                                                       |   | Year Ended December 31, |   |
|------------------------------------------------------------|--------|-------------------------|--------|
|                                                       |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                                                       |   | (in thousands)          |   |
| Supplemental Disclosure of Cash Flow Information:          |   |                    |   |   |   |   |   |   |   |
| Cash paid for interest                                     |   | $                       | 10,079 |   |   | $ | 16,218 |   |   | $ | 20,325 |   |
| Cash paid for income taxes                                 |   |                    | 841    |   |   |   | 86 |   |   |   | 2,573 |   |
| Supplemental Disclosure of Noncash Investing Activity:     |   |                    |   |   |   |   |   |   |   |   |   |   |
| Transfers to foreclosed real estate and repossessed assets |   |                    | 11,438 |   |   |   | 5,107 |   |   |   | 1,886 |   |

| 14. | EMPLOYEE BENEFIT PLAN |
|-----|-----------------------|

| 15. | FAIR VALUES OF FINANCIAL INSTRUMENTS |
|-----|--------------------------------------|

|                                             |   | December 31,    |    |
|--------------------------------------------------|--------|-----------------|---------|
|                                             |   | 2010            |    |   | 2009 |   |
|                                             |   | Carrying Amount |    |   | Estimated Fair Value |   |   | Carrying Amount |   |   | Estimated Fair Value |   |
|                                             |   | (in thousands)  |    |
| Assets:                                          |   |            |    |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                        |   | $               | 6,226   |   |   | $ | 6,226 |   |   | $ | 5,511 |   |   | $ | 5,511 |   |
| Time deposits in other financial institutions    |   |            | 290     |   |   |   | 290 |   |   |   | 640 |   |   |   | 640 |   |
| Federal Reserve and Federal Home Loan Bank stock |   |            | 6,353   |   |   |   | 6,353 |   |   |   | 6,982 |   |   |   | 6,982 |   |
| Investment securities                            |   |            | 40,235  |   |   |   | 40,856 |   |   |   | 40,348 |   |   |   | 41,208 |   |
| Loans                                            |   |            | 580,632 |   |   |   | 562,508 |   |   |   | 603,440 |   |   |   | 576,125 |   |
| Liabilities:                                     |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits (other than time deposits)              |   |            | 318,569 |   |   |   | 318,569 |   |   |   | 246,004 |   |   |   | 246,004 |   |
| Time deposits                                    |   |            | 211,324 |   |   |   | 214,473 |   |   |   | 285,388 |   |   |   | 287,806 |   |
| Other borrowings                                 |   |            | 72,081  |   |   |   | 71,676 |   |   |   | 89,000 |   |   |   | 89,751 |   |

----

Index

| 16.  | REGULATORY MATTERS |
|-----------|--------------------|

----

Index

| (dollars in thousands)                |   | Total Capital          |   |   | Tier 1 Capital |   |   | Risk-Weighted Assets |   |   | Adjusted Average Assets |   |   | Total Risk-Based Capital Ratio |    |   | Tier 1 Risk-Based Capital Ratio |   |   | Tier 1 Leverage Ratio |   |
|---------------------------------------|--------|------------------------|--------|--------|----------------|--------|--------|----------------------|--------|--------|-------------------------|--------|--------|--------------------------------|---------|--------|---------------------------------|--------|--------|-----------------------|--------|
|                                  |   | (dollars in thousands) |   |
| December 31, 2010                     |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   |   |                  |   |
| CWBC (Consolidated)                   |   | $                      | 76,283 |   |           | $      | 61,385 |                 |   | $      | 538,685                 |   |   | $                              | 676,397 |   |                            |   | 14.16  | %                     |   |   | 11.40 | % |   |   | 9.08 | % |
| Capital in excess of well capitalized |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            | $      | 22,415 |                  |   | $ | 29,064 |   |   | $ | 27,565 |   |
| CWB                                   |   |                   | 69,308 |   |           |   | 62,494 |                 |   |   | 538,463                 |   |   |                           | 676,127 |   |                            |   | 12.87  | %                     |   |   | 11.61 | % |   |   | 9.24 | % |
| Capital in excess of well capitalized |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            | $      | 15,462 |                  |   | $ | 30,186 |   |   | $ | 28,688 |   |
|                                  |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   |   |                  |   |   |   |   |   |   |   |   |
| December 31, 2009                     |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   |   |                  |   |   |   |   |   |   |   |   |
| CWBC (Consolidated)                   |   | $                      | 66,984 |   |           | $      | 60,029 |                 |   | $      | 549,207                 |   |   | $                              | 681,101 |   |                            |   | 12.20  | %                     |   |   | 10.93 | % |   |   | 8.81 | % |
| Capital in excess of well capitalized |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            | $      | 12,063 |                  |   | $ | 27,077 |   |   | $ | 25,974 |   |
| CWB                                   |   |                   | 66,175 |   |           |   | 59,219 |                 |   |   | 549,240                 |   |   |                           | 681,129 |   |                            |   | 12.05  | %                     |   |   | 10.78 | % |   |   | 8.69 | % |
| Capital in excess of well capitalized |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            | $      | 11,251 |                  |   | $ | 26,265 |   |   | $ | 25,163 |   |
|                                  |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   |   |                  |   |   |   |   |   |   |   |   |
| Well capitalized ratios               |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   | 10.00  | %                     |   |   | 6.00 | % |   |   | 5.00 | % |
| Minimum capital ratios                |   |                   |   |   |           |   |   |                 |   |   |                    |   |   |                           |    |   |                            |   | 8.00   | %                     |   |   | 4.00 | % |   |   | 4.00 | % |

| 17. | COMMITMENTS AND CONTINGENCIES |
|-----|-------------------------------|

----

Index

| 18. | SUBSEQUENT EVENTS |
|-----|-------------------|

----

Index

| 19. | COMMUNITY WEST BANCSHARES FINANCIAL STATEMENTS – CONSOLIDATION |
|-----|----------------------------------------------------------------------|

|                                               |   | CWB            |    |   | CWBC   |   |   | Eliminations |   |   | Consolidated |   |
|----------------------------------------------------|--------|----------------|---------|--------|--------|--------|--------|--------------|--------|--------|--------------|--------|
| Assets                                             |   | (in thousands) |    |
| Cash, due from banks and interest-earning deposits |   | $              | 6,516   |   |   | $      | 6,899  |         |   | $      | (6,899)a     |   |   | $ | 6,516 |   |
| FHLB and FRB stock                                 |   |           | 6,353   |   |   |   | -      |         |   |   | -            |   |   |   | 6,353 |   |
| Investments                                        |   |           | 40,235  |   |   |   | -      |         |   |   | -            |   |   |   | 40,235 |   |
| Total loans                                        |   |           | 580,632 |   |   |   | -      |         |   |   | -            |   |   |   | 580,632 |   |
| Foreclosed real estate and repossessed assets      |   |           | 8,478   |   |   |   | -      |         |   |   | -            |   |   |   | 8,478 |   |
| Premises and equipment, net                        |   |           | 2,915   |   |   |   | -      |         |   |   | -            |   |   |   | 2,915 |   |
| Other assets                                       |   |           | 22,000  |   |   |   | 475    |         |   |   | -            |   |   |   | 22,475 |   |
| Investment in subsidiary                           |   |           | -       |   |   |   | 62,572 |         |   |   | (62,572)b    |   |   |   | - |   |
| Due from parent/sub                                |   |           | 82      |   |   |   | -      |         |   |   | (82)c        |   |   |   | - |   |
| Total assets                                       |   | $              | 667,211 |   |   | $      | 69,946 |         |   | $      | (69,553      | )      |   | $ | 667,604 |   |
|                                               |   |           |    |   |   |   |   |         |   |   |         |   |   |   |   |   |
| Liabilities                                        |   |           |    |   |   |   |   |         |   |   |         |   |   |   |   |   |
| Deposits                                           |   | $              | 536,792 |   |   | $      | -      |         |   | $      | (6,899)a     |   |   | $ | 529,893 |   |
| Other borrowings                                   |   |           | 64,000  |   |   |   | 8,081  |         |   |   | -            |   |   |   | 72,081 |   |
| Other liabilities                                  |   |           | 3,668   |   |   |   | 320    |         |   |   | -            |   |   |   | 3,988 |   |
| Due to parent/sub                                  |   |           | -       |   |   |   | 82     |         |   |   | (82)c        |   |   |   | - |   |
| Total liabilities                                  |   |           | 604,460 |   |   |   | 8,483  |         |   |   | (6,981       | )      |   |   | 605,962 |   |
| Stockholders’ equity                         |   |           |    |   |   |   |   |         |   |   |         |   |   |   |   |   |
| Preferred Stock                                    |   |           | -       |   |   |   | 14,807 |         |   |   | -            |   |   |   | 14,807 |   |
| Common Stock                                       |   |           | 44,769  |   |   |   | 33,134 |         |   |   | (44,769) b   |   |   |   | 33,134 |   |
| Accumulated other comprehensive income             |   |           | 179     |   |   |   | -      |         |   |   | -            |   |   |   | 179 |   |
| Retained earnings                                  |   |           | 17,803  |   |   |   | 13,522 |         |   |   | (17,803)b    |   |   |   | 13,522 |   |
| Total stockholders’ equity                   |   |           | 62,751  |   |   |   | 61,463 |         |   |   | (62,572      | )      |   |   | 61,642 |   |
| Total liabilities and stockholders’ equity   |   | $              | 667,211 |   |   | $      | 69,946 |         |   | $      | (69,553      | )      |   | $ | 667,604 |   |

|                                                |   | CWB            |   |   | CWBC   |   |   | Eliminations |   |   | Consolidated |   |
|-----------------------------------------------------|--------|----------------|--------|--------|--------|--------|--------|--------------|--------|--------|--------------|--------|
|                                                |   | (in thousands) |   |
| Interest income                                     |   | $              | 39,234 |   |   | $      | 40     |         |   | $      | (40)d        |   |   | $ | 39,234 |   |
| Interest Expense                                    |   |           | 9,708  |   |   |   | 289    |         |   |   | (40)d        |   |   |   | 9,957 |   |
| Net interest income                                 |   |           | 29,526 |   |   |   | (249   | )            |   |   | -            |   |   |   | 29,277 |   |
| Provision for loan losses                           |   |           | 8,743  |   |   |   | -      |         |   |   | -            |   |   |   | 8,743 |   |
| Net Interest Income after provision for loan losses |   |           | 20,783 |   |   |   | (249   | )            |   |   | -            |   |   |   | 20,534 |   |
| Equity in undistributed subsidiary net income       |   |           | -      |   |   |   | 2,553  |         |   |   | (2,553)e     |   |   |   | - |   |
| Non- interest income                                |   |           | 4,015  |   |   |   | -      |         |   |   | -            |   |   |   | 4,015 |   |
| Non-interest expenses                               |   |           | 20,468 |   |   |   | 523    |         |   |   | -            |   |   |   | 20,991 |   |
| Income before income taxes                          |   |           | 4,330  |   |   |   | 1,781  |         |   |   | (2,553       | )      |   |   | 3,558 |   |
| Provision (benefit) for income taxes                |   |           | 1,777  |   |   |   | (310   | )            |   |   | -            |   |   |   | 1,467 |   |
| Net income                                          |   | $              | 2,553  |   |   | $      | 2,091  |         |   | $      | (2,553       | )      |   | $ | 2,091 |   |

----

----

Index

| 20. | COMMUNITY WEST BANCSHARES FINANCIAL STATEMENTS (PARENT COMPANY ONLY) |
|-----|----------------------------------------------------------------------|

|                                       |   | December 31,   |   |
|--------------------------------------------|--------|----------------|--------|
| Balance Sheets                             |   | 2010           |   |   | 2009 |   |
| Assets                                     |   | (in thousands) |   |
| Cash and equivalents                       |   | $              | 6,899  |   |   | $ | 977 |   |
| Investment in subsidiary                   |   |           | 62,572 |   |   |   | 59,319 |   |
| Other assets                               |   |           | 475    |   |   |   | 2 |   |
| Total assets                               |   | $              | 69,946 |   |   | $ | 60,298 |   |
|                                       |   |           |   |   |   |   |   |   |
| Liabilities and stockholders’ equity |   |           |   |   |   |   |   |   |
| Convertible debentures                     |   | $              | 8,081  |   |   | $ | - |   |
| Other liabilities                          |   |           | 402    |   |   |   | 169 |   |
| Total  liabilities               |   |           | 8,483  |   |   |   | 169 |   |
| Preferred stock                            |   |           | 14,807 |   |   |   | 14,540 |   |
| Common stock                               |   |           | 33,133 |   |   |   | 33,110 |   |
| Retained earnings                          |   |           | 13,523 |   |   |   | 12,479 |   |
| Total stockholders’ equity           |   |           | 61,463 |   |   |   | 60,129 |   |
| Total liabilities and stockholders' equity |   | $              | 69,946 |   |   | $ | 60,298 |   |

|                                                                      |   | Year Ended December 31, |   |
|---------------------------------------------------------------------------|--------|-------------------------|--------|
| Income Statements                                                         |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                                                                      |   | (in thousands)          |   |
| Total income                                                              |   | $                       | 40     |   |   | $ | 39 |   |   | $ | - |   |
| Total expense                                                             |   |                    | 812    |   |   |   | 124 |   |   |   | 432 |   |
| Equity in undistributed subsidiaries: Net income (loss) from subsidiaries |   |                    | 2,553  |   |   |   | (5,701 | ) |   |   | 1,791 |   |
| Income (loss)  before  income tax provision           |   |                    | 1,781  |   |   |   | (5,786 | ) |   |   | 1,359 |   |
| Benefit for income taxes                                                  |   |                    | (310   | ) |   |   | (23 | ) |   |   | (122 | ) |
| Net income (loss)                                                         |   | $                       | 2,091  |   |   | $ | (5,763 | ) |   | $ | 1,481 |   |
| Preferred stock dividends                                                 |   |                    | 1,047  |   |   |   | 1,046 |   |   |   | 35 |   |
| Net income (loss) applicable to common stockholders                       |   | $                       | 1,044  |   |   | $ | (6,809 | ) |   | $ | 1,446 |   |

----

Index

|                                                                      |   | Year Ended December 31, |   |
|---------------------------------------------------------------------------|--------|-------------------------|--------|
| Statements of Cash Flows                                                  |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                                                                      |   | (in thousands)          |   |
| Cash flows from operating activities:                                     |   |                    |   |   |   |   |   |   |   |
| Net income (loss)                                                         |   | $                       | 2,091  |   |   | $ | (5,763 | ) |   | $ | 1,481 |   |
|                                                                      |   |                    |   |   |   |   |   |   |   |   |   |   |
| Adjustments to reconcile net income to cash used in operating activities: |   |                    |   |   |   |   |   |   |   |   |   |   |
| Equity in undistributed (income)  loss from subsidiaries        |   |                    | (2,553 | ) |   |   | 5,701 |   |   |   | (1,791 | ) |
| Stock-based compensation                                                  |   |                    | 19     |   |   |   | 29 |   |   |   | 181 |   |
| Net change in other liabilities                                           |   |                    | 233    |   |   |   | (49 | ) |   |   | 90 |   |
| Net change in other assets                                                |   |                    | (473   | ) |   |   | 119 |   |   |   | 91 |   |
| Net cash (used in) provided by operating activities                       |   |                    | (683   | ) |   |   | 37 |   |   |   | 52 |   |
| Cash flows from investing activities:                                     |   |                    |   |   |   |   |   |   |   |   |   |   |
| Investments in subsidiaries                                               |   |                    | (700   | ) |   |   | (11,000 | ) |   |   | (5,000 | ) |
| Net cash used in investing activities                                     |   |                    | (700   | ) |   |   | (11,000 | ) |   |   | (5,000 | ) |
| Cash flows from financing activities:                                     |   |                    |   |   |   |   |   |   |   |   |   |   |
| Proceeds from issuance of preferred stock                                 |   |                    | -      |   |   |   | - |   |   |   | 15,450 |   |
| Preferred stock dividend                                                  |   |                    | (1,047 | ) |   |   | (1,046 | ) |   |   | (35 | ) |
| Amortization of discount on preferred stock                               |   |                    | 267    |   |   |   | 240 |   |   |   | 9 |   |
| Proceeds from issuance of convertible debentures                          |   |                    | 8,085  |   |   |   | - |   |   |   | - |   |
| Proceeds from issuance of common stock                                    |   |                    | -      |   |   |   | - |   |   |   | 105 |   |
| Cash dividend payments to shareholders                                    |   |                    | -      |   |   |   | - |   |   |   | (709 | ) |
| Net cash provided by (used in) financing activities                       |   |                    | 7,305  |   |   |   | (806 | ) |   |   | 14,820 |   |
| Net increase (decrease) in cash and cash equivalents                      |   |                    | 5,922  |   |   |   | (11,769 | ) |   |   | 9,872 |   |
| Cash and cash equivalents at beginning of year                            |   |                    | 977    |   |   |   | 12,746 |   |   |   | 2,874 |   |
| Cash and cash equivalents, at end of year                                 |   | $                       | 6,899  |   |   | $ | 977 |   |   | $ | 12,746 |   |

| 21. | QUARTERLY FINANCIAL DATA (unaudited) |
|-----|--------------------------------------|

|                                                           |   | Year Ended December 31, 2010      |   |
|----------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                           |   | Q4                                |   |   | Q3 |   |   | Q2 |   |   | Q1 |   |   | Totals |   |
|                                                           |   | (in thousands, except share data) |   |
| Interest income                                                |   | $                                 | 9,862  |   |   | $ | 9,727 |   |   | $ | 9,703 |   |   | $ | 9,942 |   |   | $ | 39,234 |   |
| Interest expense                                               |   |                              | 2,419  |   |   |   | 2,419 |   |   |   | 2,472 |   |   |   | 2,647 |   |   |   | 9,957 |   |
| Net interest income                                            |   |                              | 7,443  |   |   |   | 7,308 |   |   |   | 7,231 |   |   |   | 7,295 |   |   |   | 29,277 |   |
| Provision for loan losses                                      |   |                              | 1,279  |   |   |   | 1,518 |   |   |   | 2,872 |   |   |   | 3,074 |   |   |   | 8,743 |   |
| Net interest income after provision for loan losses            |   |                              | 6,164  |   |   |   | 5,790 |   |   |   | 4,359 |   |   |   | 4,221 |   |   |   | 20,534 |   |
| Non-interest income                                            |   |                              | 1,220  |   |   |   | 1,023 |   |   |   | 933 |   |   |   | 839 |   |   |   | 4,015 |   |
| Non-interest expenses                                          |   |                              | 5,588  |   |   |   | 5,035 |   |   |   | 5,397 |   |   |   | 4,971 |   |   |   | 20,991 |   |
| Income (loss) before income taxes                              |   |                              | 1,796  |   |   |   | 1,778 |   |   |   | (105 | ) |   |   | 89 |   |   |   | 3,558 |   |
| Provision (benefit) for income taxes                           |   |                              | 739    |   |   |   | 733 |   |   |   | (43 | ) |   |   | 38 |   |   |   | 1,467 |   |
| NET INCOME (LOSS)                                              |   |                              | 1,057  |   |   |   | 1,045 |   |   |   | (62 | ) |   |   | 51 |   |   |   | 2,091 |   |
|                                                           |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock dividends                                      |   |                              | 262    |   |   |   | 261 |   |   |   | 262 |   |   |   | 262 |   |   |   | 1,047 |   |
| NET INCOME (LOSS)  APPLICABLE TO COMMON STOCKHOLDERS |   | $                                 | 795    |   |   | $ | 784 |   |   | $ | (324 | ) |   | $ | (211 | ) |   | $ | 1,044 |   |
| Earnings (loss) per common share:                              |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                          |   | $                                 | 0.13   |   |   | $ | 0.13 |   |   | $ | (0.05 | ) |   | $ | (0.04 | ) |   | $ | 0.18 |   |
| Diluted                                                        |   |                              | 0.11   |   |   |   | 0.12 |   |   |   | (0.05 | ) |   |   | (0.04 | ) |   |   | 0.18 |   |
| Cash dividends per common share                                |   |                              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Weighted average common shares:                                |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                          |   |                              | 5,915  |   |   |   | 5,915 |   |   |   | 5,915 |   |   |   | 5,915 |   |   |   | 5,915 |   |
| Diluted                                                        |   |                              | 8,226  |   |   |   | 7,246 |   |   |   | 5,915 |   |   |   | 5,915 |   |   |   | 6,833 |   |

----

Index

|                                                           |   | Year Ended December 31, 2009          |   |
|----------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                           |   | Q4                                    |   |   | Q3 |   |   | Q2 |   |   | Q1 |   |   | Totals |   |
|                                                           |   | (in thousands, except per share data) |   |
| Interest income                                                |   | $                                     | 10,108 |   |   | $ | 10,378 |   |   | $ | 10,200 |   |   | $ | 10,217 |   |   | $ | 40,903 |   |
| Interest expense                                               |   |                                  | 3,058  |   |   |   | 3,467 |   |   |   | 3,966 |   |   |   | 4,454 |   |   |   | 14,945 |   |
| Net interest income                                            |   |                                  | 7,050  |   |   |   | 6,911 |   |   |   | 6,234 |   |   |   | 5,763 |   |   |   | 25,958 |   |
| Provision for loan losses                                      |   |                                  | 2,788  |   |   |   | 2,592 |   |   |   | 743 |   |   |   | 12,555 |   |   |   | 18,678 |   |
| Net interest income (loss) after provision for loan losses     |   |                                  | 4,262  |   |   |   | 4,319 |   |   |   | 5,491 |   |   |   | (6,792 | ) |   |   | 7,280 |   |
| Non-interest income                                            |   |                                  | 1,029  |   |   |   | 966 |   |   |   | 1,255 |   |   |   | 1,168 |   |   |   | 4,418 |   |
| Non-interest expenses                                          |   |                                  | 5,124  |   |   |   | 5,165 |   |   |   | 5,383 |   |   |   | 5,807 |   |   |   | 21,479 |   |
| Income (loss) before income taxes                              |   |                                  | 167    |   |   |   | 120 |   |   |   | 1,363 |   |   |   | (11,431 | ) |   |   | (9,781 | ) |
| Provision (benefit) for income taxes                           |   |                                  | 70     |   |   |   | 51 |   |   |   | 563 |   |   |   | (4,702 | ) |   |   | (4,018 | ) |
| NET INCOME (LOSS)                                              |   |                                  | 97     |   |   |   | 69 |   |   |   | 800 |   |   |   | (6,729 | ) |   |   | (5,763 | ) |
|                                                           |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock dividends                                      |   |                                  | 262    |   |   |   | 261 |   |   |   | 262 |   |   |   | 261 |   |   |   | 1,046 |   |
| NET (LOSS)  INCOME APPLICABLE TO COMMON STOCKHOLDERS |   | $                                     | (165   | ) |   | $ | (192 | ) |   | $ | 538 |   |   | $ | (6,990 | ) |   | $ | (6,809 | ) |
| (Loss) earnings per common share:                              |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                          |   | $                                     | (0.03  | ) |   | $ | (0.03 | ) |   | $ | 0.09 |   |   | $ | (1.18 | ) |   | $ | (1.15 | ) |
| Diluted                                                        |   |                                  | (0.03  | ) |   |   | (0.03 | ) |   |   | 0.09 |   |   |   | (1.18 | ) |   |   | (1.15 | ) |
| Cash dividends per common share                                |   |                                  | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Weighted average common shares:                                |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                          |   |                                  | 5,915  |   |   |   | 5,915 |   |   |   | 5,915 |   |   |   | 5,915 |   |   |   | 5,915 |   |
| Diluted                                                        |   |                                  | 5,915  |   |   |   | 5,915 |   |   |   | 5,915 |   |   |   | 5,915 |   |   |   | 5,915 |   |
|                                                           |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Index

| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
|---------|--------------------------------------------------------------------------------------|

| ITEM 9A. | CONTROLS AND PROCEDURES |
|----------|-------------------------|

| ITEM 9B. | OTHER INFORMATION |
|----------|-------------------|

| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
|----------|--------------------------------------------------------|

----

Index

| ITEM 11. | EXECUTIVE COMPENSATION |
|----------|------------------------|

| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS |
|----------|------------------------------------------------------------------------------------------------|

| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
|----------|--------------------------------------------------------------------------|

| ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
|----------|----------------------------------------|

| ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
|----------|-----------------------------------------|

| Report of Independent Registered Public Accounting Firm                                                           | F-1 |
|-------------------------------------------------------------------------------------------------------------------|-----|
| Consolidated Balance Sheets as of December 31, 2010 and 2009                                                      | F-2 |
| Consolidated Income Statements for each of the three years in the period ended December 31, 2010                  | F-3 |
| Consolidated Statements of Stockholders' Equity for each of the three years in the period ended December 31, 2010 | F-4 |
| Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2010           | F-5 |
| Notes to Consolidated Financial Statements                                                                        | F-6 |

----

Index

| 3.1    |   | Articles of Incorporation (3)                                                                                                                                                                                                        |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2    |   | Amended and Restated Articles of Incorporation (11)                                                                                                                                                                                  |
| 3.3    |   | Bylaws (3)                                                                                                                                                                                                                           |
| 3.4    |   | Certificate of Amendment of Bylaws (11)                                                                                                                                                                                              |
| 3.5    |   | Certificate of Determination of Fixed Rate Cumulative Perpetual Preferred Stock, Series A (11)                                                                                                                                       |
| 4.1    |   | Common Stock Certificate (2)                                                                                                                                                                                                         |
| 4.2    |   | Warrant to Purchase 521,158 shares of Common Stock, dated December 19, 2008, issued to the United States Department of the Treasury (12)                                                                                             |
| 4.3    |   | Form of Debenture (13)                                                                                                                                                                                                               |
| 4.4    |   | Form of Subscription Certificate (13)                                                                                                                                                                                                |
| 10.1*  |   | 1997 Stock Option Plan and Form of Stock Option Agreement (1)                                                                                                                                                                        |
| 10.3*  |   | Salary Continuation Agreement between Goleta National Bank and Llewellyn Stone, President and CEO (3)                                                                                                                                |
| 10.9   |   | Indemnification Agreement between the Company and Lynda Nahra, dated December 20, 2001 (4)                                                                                                                                           |
| 10.17  |   | Indemnification Agreement between the Company and Charles G. Baltuskonis, dated March 18, 2003 (5)                                                                                                                                   |
| 10.21  |   | Assistant Secretary’s Certificate of Adoption of Amendment No. 1 to Community West Bancshares 1997 Stock Option Plan (6)                                                                                                       |
| 10.22* |   | Community West Bancshares 2006 Stock Option Plan (7)                                                                                                                                                                                 |
| 10.23* |   | Community West Bancshares 2006 Stock Option Plan form of Stock Option Agreement (7)                                                                                                                                                  |
| 10.24* |   | Employment and Confidentiality Agreement date January 1, 2007 among Community West Bank, Community West Bancshares and Lynda J. Nahra (8)                                                                                            |
| 10.25* |   | Employment and Confidentiality Agreement date July 1, 2007 among Community West Bank, Community West Bancshares and Charles G. Baltuskonis (9)                                                                                       |
| 10.27* |   | Employment and Confidentiality Agreement, dated September 5, 2008, among Community West Bank, Community West Bancshares and Richard M. Favor (10)                                                                                    |
| 10.28  |   | Letter Agreement, dated December 19, 2008, between Community West Bancshares and the United States Department of the Treasury, and the Securities Purchase Agreement - Standard Terms attached thereto and incorporated therein (12) |
| 10.29  |   | Letter Agreement, dated December 19, 2008, between Community West Bancshares and the United States Department of the Treasury regarding the Number of Director Positions (12)                                                        |
| 10.30* |   | Agreement, dated December 19, 2008, between Community West Bancshares and Lynda Nahra regarding modifications to Benefit Plans (12)                                                                                                  |
| 10.31* |   | Agreement, dated December 19, 2008, between Community West Bancshares and Charles Baltuskonis regarding modifications to Benefit Plans (12)                                                                                          |
| 10.32* |   | Agreement, dated December 19, 2008, between Community West Bancshares and Richard Favor regarding modifications to Benefit Plans (12)                                                                                                |
| 10.33  |   | Waiver of Lynda Nahra, dated December 19, 2008, waiving claims against Community West Bancshares and the United States Department of the Treasury as a result of modifications to Benefit Plans (12)                                 |

----

Index

| 10.34 |   | Waiver of Charles Baltuskonis, dated December 19, 2008, waiving claims against Community West Bancshares and the United States Department of the Treasury as a result of modifications to Benefit Plans (12) |
|-------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.35 |   | Waiver of Richard Favor, dated December 19, 2008, waiving claims against Community West Bancshares and the United States Department of the Treasury as a result of modifications to Benefit Plans (12)       |
| 21    |   | Subsidiaries of the Registrant (7)                                                                                                                                                                           |
| 23.1  |   | Consent of Ernst & Young LLP **                                                                                                                                                                          |
| 31.1  |   | Certification of the Chief Executive Officer **                                                                                                                                                              |
| 31.2  |   | Certification of the Chief Financial Officer**                                                                                                                                                               |
| 32.1  |   | Certification pursuant to 18 U.S.C. Section 1350 **                                                                                                                                                          |
| 99.1  |   | Certification of Principal Executive Officer Pursuant to Section III(b)(4) of the Emergency Economic Stabilization Act of 2008 ***                                                                           |
| 99.2  |   | Certification of Principal Financial Officer Pursuant to Section III(b)(4) of the Emergency Economic Stabilization Act of 2008 ***                                                                           |

----

|   | (1)  | Incorporated by reference from the Registrant's Registration Statement on Form S-8 filed with the Commission on December 31, 1997.                                                   |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (2)  | Incorporated by reference from the Registrant's Amendment to Registration Statement on Form 8-A filed with the Commission on March 12, 1998.                                         |
|   | (3)  | Incorporated by reference from the Registrant's Annual Report on Form 10-K filed with the Commission on March 26, 1998.                                                              |
|   | (4)  | Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001 filed by the Registrant with the Commission on April 16, 2002. |
|   | (5)  | Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002 filed with the Commission on March 31, 2003.                   |
|   | (6)  | Incorporated by reference from the Registrant’s Registration Statement on Form S-8 (File No 333-129898) filed with the Commission on November 22, 2005.                        |
|   | (7)  | Incorporated by reference from Registrant’s Annual Report on Form 10-K for the year ended December 31, 2006 filed with the Commission on March 26, 2007.                       |
|   | (8)  | Incorporated by reference from the Registrant’s Form 8-K filed with the Commission on February 28, 2007                                                                        |
|   | (9)  | Incorporated by reference from the Registrant’s Form 8-K filed with the Commission on July 2, 2007                                                                             |
|   | (10) | Incorporated by reference from Registrant’s Form 8-K filed with the Commission on September 10, 2008                                                                           |
|   | (11) | Incorporated by reference from the Registrant’s Form 8-K filed with the Commission on December 18, 2008                                                                        |
|   | (12) | Incorporated by reference from the Registrant’s Form 8-K filed with the Commission on December 24, 2008                                                                        |
|   | (13) | Incorporated by reference from the Registrant's Amendment No. 2 to Registration Statement on Form S-1 filed with the Commission on April 30, 2010.                                   |
|   | *    | Indicates a management contract or compensatory plan or arrangement.                                                                                                                 |
|   | **   | Filed herewith.                                                                                                                                                                      |

----

Index

IG

|                 | COMMUNITY WEST BANCSHARES |
|----------------------|---------------------------|
|                 | (Registrant)              |
|                 |                      |   |
| Date: March 24, 2011 | By:                       | /s/ William R. Peeples |
|                 |                      | William R. Peeples |
|                 |                      | Chairman of the Board |

| Signature                  |   | Title                                        |   | Date           |
|----------------------------|--------|----------------------------------------------|--------|----------------|
|                       |   |                                         |   |           |
| /s/ William R. Peeples     |   | Director and                                 |   | March 24, 2011 |
| William R. Peeples         |   | Chairman of the Board                        |   |           |
|                       |   |                                         |   |           |
| /s/ Charles G. Baltuskonis |   | Executive Vice President and                 |   | March 24, 2011 |
| Charles G. Baltuskonis     |   | Chief Financial Officer                      |   |           |
|                       |   | (Principal Financial and Accounting Officer) |   |           |
|                       |   |                                         |   |           |
| /s/ Robert H. Bartlein     |   | Director                                     |   | March 24, 2011 |
| Robert H. Bartlein         |   |                                         |   |           |
|                       |   |                                         |   |           |
| /s/ Jean W. Blois          |   | Director                                     |   | March 24, 2011 |
| Jean W. Blois              |   |                                         |   |           |
|                       |   |                                         |   |           |
| /s/ John D. Illgen         |   | Director and Secretary                       |   | March 24, 2011 |
| John D. Illgen             |   | of the Board                                 |   |           |
|                       |   |                                         |   |           |
| /s/ Lynda J. Nahra         |   | Director, President and                      |   | March 24, 2011 |
| Lynda J. Nahra             |   | Chief Executive Officer                      |   |           |
|                       |   | (Principal Executive Officer)                |   |           |
|                       |   |                                         |   |           |
| /s/ James R. Sims Jr.      |   | Director                                     |   | March 24, 2011 |
| James R. Sims Jr.          |   |                                         |   |           |
|                       |   |                                         |   |           |
| /s/ Kirk B. Stovesand      |   | Director                                     |   | March 24, 2011 |
| Kirk B. Stovesand          |   |                                         |   |           |
|                       |   |                                         |   |           |
| /s/ C. Richard Whiston     |   | Director                                     |   | March 24, 2011 |
| C Richard Whiston          |   |                                         |   |           |

----