UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
(Mark One)

[X] ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES  EXCHANGE
    ACT OF 1934 For the fiscal year ended December 31, 2004 or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from _______________________________________ to

                                    000-50914
                            _______________________
                            (Commission File Number)

                             BRIDGE CAPITAL HOLDINGS
             ______________________________________________________
             (Exact name of registrant as specified in its charter)

           CALIFORNIA                                   80-0123855
_______________________________          _______________________________________
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)

                    55 ALMADEN BOULEVARD, SAN JOSE, CA 95113
          ____________________________________________________________
          (Address of principal executive offices, including zip code)

Registrant's telephone number, including area code:  (408) 423-8500

Securities registered pursuant to Section 12 (b) of the Act:

                                        Name of each exchange
            Title of each class          on which registered
            ___________________         _____________________
                   None                         None

 Securities registered pursuant to Section 12 (g) of the Act:

                               Title of each class
                           __________________________
                           Common Stock, no par value

     Bridge Capital  Holdings (1) has filed all reports  required to be filed by
section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months and (2) has been subject to such filing  requirements  for the past 90
days. Yes [ ] No [X] .

     Indicate by checkmark if disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     Indicate  by  checkmark  whether  registrant  is an  accelerated  filer (as
defined by in Rule 12b-2 of the Act). Yes [ ] No [X]

     The aggregate  market value of the voting stock held by  non-affiliates  of
Bridge Bank, N.A., the registrant's predecessor,  was $68,620,970 as of June 30,
2004.

     As of January 21, 2005,  Bridge Bank, N.A. had 6,097,697,  shares of common
stock outstanding.

     Documents  incorporated  by reference:  The Bank's Proxy  Statement for its
2005 Annual Meeting of Shareholders is incorporated  herein by reference in Part
III, Items 10 through 14.



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<PAGE>

FORWARD-LOOKING STATEMENTS

IN ADDITION TO THE HISTORICAL  INFORMATION,  THIS ANNUAL REPORT CONTAINS CERTAIN
FORWARD-LOOKING  INFORMATION WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS  AMENDED,  AND  WHICH  ARE  SUBJECT  TO THE "SAFE  HARBOR"  CREATED  BY THOSE
SECTIONS.  THE READER OF THIS  ANNUAL  REPORT  SHOULD  UNDERSTAND  THAT ALL SUCH
FORWARD-LOOKING  STATEMENTS ARE SUBJECT TO VARIOUS  UNCERTAINTIES AND RISKS THAT
COULD AFFECT THEIR OUTCOME. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM  THOSE  SUGGESTED  BY  SUCH  FORWARD-LOOKING  STATEMENTS.  SUCH  RISKS  AND
UNCERTAINTIES  INCLUDE,  AMONG OTHERS,  (1) COMPETITIVE  PRESSURE IN THE BANKING
INDUSTRY INCREASES  SIGNIFICANTLY;  (2) CHANGES IN THE INTEREST RATE ENVIRONMENT
REDUCES  MARGINS;  (3)  GENERAL  ECONOMIC   CONDITIONS,   EITHER  NATIONALLY  OR
REGIONALLY, ARE LESS FAVORABLE THAN EXPECTED,  RESULTING IN, AMONG OTHER THINGS,
A DETERIORATION  IN CREDIT QUALITY;  (4) CHANGES IN THE REGULATORY  ENVIRONMENT;
(5) CHANGES IN BUSINESS  CONDITIONS  AND  INFLATION;  (6) COSTS AND  EXPENSES OF
COMPLYING WITH THE INTERNAL CONTROL PROVISIONS OF THE SARBANES-OXLEY ACT AND OUR
DEGREE OF SUCCESS IN ACHIEVING  COMPLIANCE;  (7) CHANGES IN SECURITIES  MARKETS,
(8) FUTURE CREDIT LOSS EXPERIENCE;  (9) CIVIL  DISTURBANCES OR TERRORIST THREATS
OR ACTS, OR APPREHENSION  ABOUT POSSIBLE FUTURE OCCURANCES OF ACTS OF THIS TYPE;
AND (10) THE  INVOLVEMENT  OF THE  UNITED  STATES  IN WAR OR OTHER  HOSTILITIES.
THEREFORE,  THE INFORMATION IN THIS ANNUAL REPORT SHOULD BE CAREFULLY CONSIDERED
WHEN EVALUATING THE BUSINESS PROSPECTS OF THE COMPANY.

FORWARD-LOOKING  STATEMENTS ARE GENERALLY  IDENTIFIABLE BY THE USE OF TERMS SUCH
AS "BELIEVE", "EXPECT", "INTEND", "ANTICIPATE", "ESTIMATE", "PROJECT", "ASSUME,"
"PLAN," "PREDICT," "FORECAST," "IN MANAGEMENT'S OPINION," "MANAGEMENT CONSIDERS"
OR SIMILAR  EXPRESSIONS.  WHEREVER SUCH PHRASES ARE USED, SUCH STATEMENTS ARE AS
OF AND BASED UPON THE KNOWLEDGE OF MANAGEMENT,  AT THE TIME MADE AND ARE SUBJECT
TO CHANGE BY THE PASSAGE OF TIME AND/OR SUBSEQUENT  EVENTS, AND ACCORDINGLY SUCH
STATEMENTS  ARE  SUBJECT TO THE SAME RISKS AND  UNCERTAINTIES  NOTED  ABOVE WITH
RESPECT TO FORWARD-LOOKING STATEMENTS.

ALL OF THE  COMPANY'S  OPERATIONS  AND  MOST OF ITS  CUSTOMERS  ARE  LOCATED  IN
CALIFORNIA.  OTHER EVENTS, INCLUDING THOSE OF SEPTEMBER 11, 2001, HAVE INCREASED
THE  UNCERTAINTY  RELATED TO THE NATIONAL AND  CALIFORNIA  ECONOMIC  OUTLOOK AND
COULD HAVE AN EFFECT ON THE FUTURE  OPERATIONS OF THE COMPANY OR ITS  CUSTOMERS,
INCLUDING BORROWERS.  THE COMPANY DOES NOT UNDERTAKE, AND SPECIFICALLY DISCLAIMS
ANY OBLIGATION, TO UPDATE ANY FORWARD-LOOKING  STATEMENTS TO REFLECT OCCURRENCES
OR UNANTICIPATED EVENTS OR CIRCUMSTANCES AFTER THE DATE OF SUCH STATEMENTS.



                                       2
<PAGE>

                                     PART 1

ITEM 1. BUSINESS

GENERAL

         On July 26, 2000 an  Application to Obtain a National  Banking  Charter
and Federal  Deposit  Insurance was filed with the  Comptroller  of the Currency
(the  "Comptroller")  and with the Federal Deposit  Insurance  Corporation  (the
"FDIC").  The Comptroller  approved the Application on November 17, 2000 and the
FDIC approved the Bank's Application for Federal Deposit Insurance.  On December
6, 2000, the Bank's  Articles of Association and  Organizers'  Certificate  were
adopted  by the  Bank's  organizers,  which  established  the  Bank's  corporate
existence. There are no predecessors to the Bank.

         The Bank  commenced  operations  on May 14,  2001.  The Bank engages in
general commercial banking business,  and accepts checking and savings deposits,
makes  commercial,  real estate,  auto and other installment and term loans, and
provides other customary banking services. The Bank attracts the majority of its
loan and deposit  business  from the  residents  and  numerous  small and middle
market  businesses  and  professional  firms located in Santa Clara County.  Its
headquarters  office is located at 55 Almaden  Boulevard,  San Jose,  California
95113.

         In 2002, the Bank opened a full-service  branch office in Palo Alto and
established a U.S. Small Business  Administration  Lending Group that includes a
regional loan production office in Sacramento  county.  Also, it launched Bridge
Capital Finance Group, a factoring and asset-based  lending division with a loan
production  office in Santa Clara.  During the year ended December 31, 2003, the
Bank opened an office in downtown San Jose and established a U.S. Small business
Administration regional loan production office in San Diego county.

         On October 1, 2004,  Bridge  Bank,  National  Association  (the "bank")
announced  completion of a bank holding company  structure which was approved by
shareholders  at the Bank's annual  shareholders'  meeting held on May 20, 2004.
The bank holding company,  formed as a California  corporation,  is named Bridge
Capital  Holdings  (the  "company").  Information  in this report dated prior to
September 30, 2004 is for Bridge Bank, N.A.

         Bridge  Capital  Holdings  was formed for the purpose of serving as the
holding  company for Bridge Bank and is  supervised by the Board of Governors of
the Federal Reserve System.  Effective  October 1, 2004, Bridge Capital Holdings
acquired 100% of the voting shares of Bridge Bank,  National  Association.  As a
result of the transaction,  the former  shareholders of Bridge Bank received one
share of common stock of Bridge  Capital  Holdings for every one share of common
stock of Bridge Bank owned.

         Prior to the  share  exchange,  the  common  stock of the Bank had been
registered  with the Office of Comptroller  of the Currency.  As a result of the
share  exchange,  common  stock of Bridge  Capital  Holdings  is now  considered
registered with the Securities and Exchange  Commission.  Future filings will be
made with the SEC rather than the Office of the  Comptroller of the Currency and
will be available  on the SEC's  website,  HTTP://WWW.SEC.GOV  as well as on the
Company's website http://www.bridgebank.com.

         The Bank provides the local  business and  professional  community with
banking  services  tailored to the unique needs of the Silicon Valley.  The Bank
does not intend to offer trust services initially or for the foreseeable future,
but it will  attempt to make such  services  available  to the Bank's  customers
through correspondent institutions.  The deposits of the Bank are insured by the
FDIC, up to applicable  limits,  and the Bank is a member of the Federal Reserve
System.

         In  addition,  the  Bank  provides  some  specialized  services  to its
customers.  These services  include courier deposit services to key locations or
customers  throughout  the Bank's service area,  Small  Business  Administration
(SBA) loans,  factoring and  asset-based  loans and Internet  banking.  The Bank



                                       3
<PAGE>

reserves the right to change its business  plan at any time and no assurance can
be given that, if the Bank's proposed  business plan is followed,  it will prove
successful.

          At December 31, 2004, the Bank had total assets of approximately  $402
million,  total gross loans of $295 million and total deposits of  approximately
$352  million.  At December  31, 2004,  the Company had 80 full-time  equivalent
employees.

DEPOSITS

         The Bank  offers a wide range of deposit  accounts  designed to attract
small and medium size  commercial  businesses as well as business  professionals
and  retail  customers,  including  a  complete  line of  checking  and  savings
products,  including  passbook  savings,  "Money Market Deposit"  accounts which
require minimum balances and frequency of withdrawal limitations,  NOW accounts,
and  bundled  accounts.   Other  accounts  offered  by  the  Bank  include  term
certificates of deposit.

         Other  deposit  services  include  a  full  complement  of  convenience
oriented  services,  including  direct  payroll  and  social  security  deposit,
post-paid  bank-by-mail,  and  Internet  banking,  including  on-line  access to
account  information.  However,  at this time,  the Bank does not open  accounts
through the Internet. Any plans to offer online account opening must be approved
in advance by the  Comptroller.  No assurance can be given that, if applied for,
such approval will be obtained.

         As the Bank has no automated teller  machines,  the Bank may refund all
or portion of  transaction  charges  incurred by its  customers for their use of
another  bank's ATM.  The  majority of the Bank's  deposits  are  obtained  from
businesses located in the Bank's primary service area.

LENDING ACTIVITIES

         The Bank engages in a full range of lending  products  designed to meet
the specialized needs of its customers, including commercial lines of credit and
term  loans,   constructions   loans,   equipment  loans,  and  mortgage  loans.
Additionally,  the Bank extends  accounts  receivable,  factoring  and inventory
financing  to  qualified  customers.  Loans are also  offered  through the Small
Business Administration  guarantee loan programs, both the 7(a) and 504 programs
(described below under "Item7. Management's Discussion and Analysis of Financial
Condition   and   Results  of   Operations--FINANCIAL   CONDITION   AND  EARNING
ASSETS--Loan Portfolio").

         The Bank finances real estate construction projects,  primarily for the
construction  of owner  occupied and 1 to 4 unit  residential  developments  and
commercial buildings under $3 million in loan size.

         The Bank directs its commercial  lending  principally toward businesses
whose  demands  for credit fall within the Bank's  lending  limit.  In the event
there are customers  whose  commercial  loan demands  exceed the Bank's  lending
limits,  the Bank seeks to arrange for such loans on a participation  basis with
other financial institutions.

         The Bank also  extends  lines of credit to  individual  borrowers,  and
provides homeowner equity loans, home improvement loans, auto financing,  credit
and debit cards and overdraft/cash reserve accounts.

BUSINESS HOURS

         In order to attract loan and deposit business, the Bank maintains lobby
hours currently between 9:00 a.m. and 5:00 p.m. Monday through Friday.

         For additional  information concerning the Bank, see Selected Financial
Data under Item 6 on page 11.



                                       4
<PAGE>

COMPETITION

         The banking  business  in Santa Clara  County,  as it is  elsewhere  in
California,  is  highly  competitive,  and  each  of the  major  branch  banking
institutions  has one or more  offices  in the  Bank's  service  area.  The Bank
competes in the  marketplace for deposits and loans,  principally  against these
banks,  independent  community banks, savings and loan associations,  thrift and
loan companies, credit unions, mortgage banking companies, and non-bank
 institutions such as mutual fund companies and investment  brokerage firms that
claim a portion of the market.

         Larger banks may have a competitive advantage because of higher lending
limits  and  major  advertising  and  marketing  campaigns.  They  also  perform
services, such as trust services,  international banking, discount brokerage and
insurance  services,  which  the Bank is not  authorized  or  prepared  to offer
currently.  The Bank has made arrangements with its correspondent banks and with
others to provide such services for its customers. For borrowers requiring loans
in excess of the Bank's legal lending limit,  the Bank has offered,  and intends
to  offer  in  the  future,  such  loans  on  a  participating  basis  with  its
correspondent  banks and with other independent banks,  retaining the portion of
such loans  which is within its lending  limit.  As of December  31,  2004,  the
Bank's  unsecured  legal lending limit to a single  borrower and such borrower's
related  parties was  $7,080,000  based on  regulatory  capital of  $43,058,000.
However,  for  risk  management  purposes,  the Bank  has  established  internal
policies,  which at present provide lending limits that are less than the Bank's
legal lending limit.

         The  Bank's  business  is  concentrated  in  its  service  area,  which
primarily encompasses Santa Clara County, and also includes, to a lesser extent,
the contiguous areas of Alameda, San Mateo and Santa Cruz counties. During 2002,
the Bank  established  an SBA loan  production  office in Sacramento  county and
during 2003, a SBA loan production office in San Diego county.

         In order to compete with major  financial  institutions  in its primary
service area, the Bank uses to the fullest extent possible the flexibility  that
is accorded by its independent  status. This includes an emphasis on specialized
services,  local  promotional  activity,  and  personal  contacts  by the Bank's
officers,  directors  and  employees.  The Bank also  seeks to  provide  special
services  and  programs  for  individuals  in its primary  service  area who are
employed in the  agricultural,  professional and business fields,  such as loans
for  equipment,  furniture,  and tools of the trade or expansion of practices or
businesses.

         Banking is a business that depends on interest rate  differentials.  In
general, the difference between the interest rate paid by the Bank to obtain its
deposits and its other  borrowings and the interest rate received by the Bank on
loans extended to its customers and on securities  held in the Bank's  portfolio
comprises the major portion of the Bank's earnings.

         Commercial  banks  compete with savings and loan  associations,  credit
unions, other financial institutions and other entities for funds. For instance,
yields on corporate and government  debt securities and other  commercial  paper
affect the ability of commercial banks to attract and hold deposits.  Commercial
banks also compete for loans with savings and loan associations,  credit unions,
consumer finance companies, mortgage companies and other lending institutions.

         The  interest  rate  differentials  of  the  Bank,  and  therefore  its
earnings,  are affected not only by general economic  conditions,  both domestic
and foreign,  but also by the monetary and fiscal  policies of the United States
as set by statutes and as  implemented  by federal  agencies,  particularly  the
Federal  Reserve  Board.  This agency can and does implement  national  monetary
policy,  such as seeking to curb  inflation  and combat  recession,  by its open
market  operations in United States  government  securities,  adjustments in the
amount of interest free reserves that banks and other financial institutions are
required to maintain,  and  adjustments  to the  discount  rates  applicable  to
borrowing by banks from the Federal Reserve Board.  These  activities  influence
the growth of bank loans,  investments  and  deposits  and also affect  interest
rates charged on loans and paid on deposits.



                                       5
<PAGE>

SUPERVISION AND REGULATION


INTERSTATE BANKING

         The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "Interstate Banking Act") regulates the interstate  activities of banks and
bank holding  companies and  establishes a framework for  nationwide  interstate
banking and  branching.  Since June 1, 1997,  a bank in one state has  generally
been  permitted  to merge  with a bank in  another  state  without  the need for
explicit  state law  authorization.  However,  states  were given the ability to
prohibit  interstate  mergers  with  banks in their  own  state by  "opting-out"
(enacting state legislation  applying to all out-of-state banks prohibiting such
mergers) prior to June 1, 1997.

         Since 1995,  adequately  capitalized and managed bank holding companies
have been  permitted  to acquire  banks  located  in any  state,  subject to two
exceptions:  first,  a state may still  prohibit  bank  holding  companies  from
acquiring a bank which is less than five years old;  and second,  no  interstate
acquisition  can be consummated by a bank holding  company if the acquiror would
control more than 10% of the deposits  held by insured  depository  institutions
nationwide  or  30%  or  more  of  the  deposits  held  by  insured   depository
institutions in any state in which the target bank has branches.

         A bank may also  establish and operate de novo branches in any state in
which the bank does not maintain a branch if that state has enacted  legislation
to expressly permit all out-of-state banks to establish branches in that state.

         Among other things,  the  Interstate  Banking Act amended the Community
Reinvestment  Act to require that in the event a bank has  interstate  branches,
the  appropriate  federal  banking  regulatory  agency  must  prepare  for  that
institution a written evaluation of (i) the bank's record of CRA performance and
(ii) the bank's CRA performance in each applicable  state.  Interstate  branches
are now  prohibited  from being  used as deposit  production  offices.  Also,  a
foreign bank is permitted to establish branches in any state other than its home
state to the same extent that a bank  chartered by the foreign bank's home state
may establish such branches.

         The Caldera,  Weggeland,  and Killea California  Interstate Banking and
Branching  Act of 1995  (the  "Caldera  Weggeland  Act")  implemented  important
provisions  of  the  Interstate   Banking  Act  discussed   above  and  repealed
California's  previous  interstate banking laws, which were largely preempted by
the  Interstate  Banking Act.  (Prior  California  law  prohibited,  among other
things,  an  out-of-state  bank  holding  company  from  establishing  a de novo
California  bank except for the purpose of taking over the  deposits of a closed
bank. This restriction has been eliminated.)

         As indicated above, the Interstate Banking Act generally permits a bank
in one state to merge with a bank in another state without the need for explicit
state law authorization.  However, the Caldera Weggeland Act expressly prohibits
a foreign  (other  state) bank which does not already have a  California  branch
office from (i)  purchasing a branch office of a California  bank (as opposed to
purchasing the entire bank) and thereby  establishing a California branch office
or (ii) establishing a California branch on a de novo basis.

         The Interstate Banking Act also requires,  among other things, approval
of the state bank  supervisor  of the target  bank's  home state for  interstate
acquisitions  of banks by bank  holding  companies.  The Caldera  Weggeland  Act
authorizes  the  Commissioner  to approve such an interstate  acquisition if the
Commissioner  finds that the  transaction  is consistent  with certain  criteria
specified by law.

         The changes  effected by Interstate  Banking Act and Caldera  Weggeland
Act are expected to continue to increase competition in the environment in which
the Bank will operate to the extent that out-of-state financial institutions may



                                       6
<PAGE>

directly  or  indirectly  enter the Bank's  market  areas.  It appears  that the
Interstate  Banking Act has contributed to the accelerated  consolidation of the
banking  industry in that a number of the largest  bank  holding  companies  are
expanding into different parts of the country that were  previously  restricted.
While some large  out-of-state  banks have already entered the California market
as a result of this  legislation,  it is not  possible  to predict  the  precise
impact of this legislation on the Bank and the competitive  environment in which
it operates.

REGULATION W

         The  Federal  Reserve  has  adopted  Regulation  W  to  comprehensively
implement sections 23A and 23B of the Federal Reserve Act.


         Sections  23A and 23B and  Regulation  W limit the risks to a bank from
transactions between the bank and its affiliates and limit the ability of a bank
to transfer to its  affiliates  the benefits  arising from the bank's  access to
insured deposits,  the payment system and the discount window and other benefits
of the Federal  Reserve  system.  The statute and rule impose  quantitative  and
qualitative  limits on the  ability of a bank to extend  credit to, or engage in
certain  other  transactions  with,  an  affiliate  (and  a  nonaffiliate  if an
affiliate  benefits from the transaction).  However,  certain  transactions that
generally  do not  expose  a bank to  undue  risk or abuse  the  safety  net are
exempted from coverage under Regulation W.

         Historically,  a subsidiary  of a bank was not  considered an affiliate
for purposes of Sections  23A and 23B,  since their  activities  were limited to
activities   permissible  for  the  bank  itself.  The   Gramm-Leach-Bliley  Act
authorized   "financial   subsidiaries"   that  may  engage  in  activities  not
permissible  for  a  bank.  These  financial  subsidiaries  are  now  considered
affiliates.  Certain  transactions  between a financial  subsidiary  and another
affiliate of a bank are also covered by sections 23A and 23B under Regulation W.

Regulation W has certain exemptions, including:

     o    For  state-chartered  banks,  an exemption for  subsidiaries  lawfully
          conducting nonbank activities before issuance of the final rule.

     o    An  exemption  for  extensions  of  credit  by a bank  under a general
          purpose  credit  card where the  borrower  uses the credit to purchase
          goods or services  from an affiliate of the bank, so long as less than
          25% of the aggregate  amount of purchases  with the card are purchases
          from an affiliate of the bank (a bank that does not have  nonfinancial
          affiliates is exempt from the 25% test).

     o    An  exemption  for  loans  by a  bank  to a  third  party  secured  by
          securities issued by a mutual fund affiliate of the bank (subject to a
          number of conditions).

     o    Subject to a number of  conditions,  an exemption  that would permit a
          banking   organization  to  engage  more   expeditiously  in  internal
          reorganization transactions involving a bank's purchase of assets from
          an affiliate.

The final rule contains new  valuation  rules for a bank's  investments  in, and
acquisitions of, affiliates.

         The Federal Reserve expects  examiners and other  supervisory  staff to
review  intercompany  transactions  closely for compliance with the statutes and
Regulation W and to resolve any violations or potential violations quickly.

TYING ARRANGEMENTS AND TRANSACTIONS WITH AFFILIATED PERSONS

         A bank is prohibited  from tie-in  arrangements  in connection with any
extension of credit,  sale or lease of property or furnishing  of services.  For
example,  with some exceptions,  a bank may not condition an extension of credit
on a promise  by its  customer  to obtain  other  services  provided  by it, its



                                       7
<PAGE>

holding company or other  subsidiaries (if any), or on a promise by its customer
not to obtain other services from a competitor.

         Directors,  officers and principal  shareholders  of the Bank,  and the
companies with which they are associated, may have banking transactions with the
Bank in the  ordinary  course of  business.  Any loans and  commitments  to loan
included in these  transactions must be made in compliance with the requirements
of applicable law, on substantially the same terms, including interest rates and
collateral,  as those  prevailing at the time for comparable  transactions  with
other persons of similar creditworthiness,  and on terms not involving more than
the normal risk of collectibility or presenting other unfavorable features.

BANK HOLDING COMPANY ACT

         The Company is  registered  as a bank  holding  company  under the Bank
Holding  Company Act of 1956, as amended  ("BHCA").  As a bank holding  company,
Capital Corp is subject to examination by the FRB. Pursuant to the BHCA, Capital
Corp is also subject to  limitations  on the kinds of businesses in which it can
engage directly or through  subsidiaries.  It may, of course,  manage or control
banks.  Generally,  however,  it is prohibited,  with certain  exceptions,  from
acquiring  direct or indirect  ownership or control of more than five percent of
any class of voting shares of an entity engaged in nonbanking activities, unless
the FRB finds such  activities  to be "so  closely  related to banking" as to be
deemed "a proper  incident  thereto"  within the meaning of the BHCA.  As a bank
holding  company,  the  Company may not  acquire  more than five  percent of the
voting shares of any domestic bank without the prior  approval of (or, for "well
managed" companies, prior written notice to) the FRB.

         The  BHCA  includes  minimum  capital  requirements  for  bank  holding
companies.  See section titled  "Regulation and Supervision - Regulatory Capital
Requirements".  Regulations  and policies of the FRB also require a bank holding
company  to  serve as a source  of  financial  and  managerial  strength  to its
subsidiary  banks.  It is the FRB's  policy that a bank holding  company  should
stand ready to use available  resources to provide  adequate  capital funds to a
subsidiary  bank during  periods of financial  stress or  adversity  and that it
should maintain the financial flexibility and capital-raising capacity needed to
obtain  additional  resources for assisting the subsidiary  bank.  Under certain
conditions, the FRB may conclude that certain actions of a bank holding company,
such as the payment of a cash dividend,  would  constitute an unsafe and unsound
banking practice.

"SOURCE OF STRENGTH" POLICY

         According to FRB policy,  bank holding companies are expected to act as
a source of financial  strength to each subsidiary bank and to commit  resources
to support such subsidiary.

SECURITIES AND EXCHANGE COMMISSION FILINGS

         Under  Section 13 of the  Securities  Exchange  Act of 1934  ("Exchange
Act") and the SEC's rules,  the Company must  electronically  file  periodic and
current  reports as well as proxy  statements  with the  Securities and Exchange
Commission (the "SEC"). The Company  electronically  files the following reports
with the SEC: Form 10-K (Annual Report),  Form 10-Q (Quarterly Report), and Form
8-K (Current Report).  The Company may prepare  additional  filings as required.
The SEC maintains an Internet site, http://www.sec.gov, at which all forms filed
electronically  may be  accessed.  Our SEC  filings  are also  available  on our
website at http://www.bridgebank.com.

REGULATION OF THE BANK

         The Bank is regulated and supervised by the Comptroller of the Currency
and is subject to  periodic  examination  by the  Comptroller.  Deposits  of the
Bank's  customers  are insured by the FDIC up to the maximum  limit of $100,000,
and, as an insured bank, the Bank is subject to certain regulations of the FDIC.



                                       8
<PAGE>

As a national  bank,  the Bank is a member of the Federal  Reserve System and is
also subject to the regulations of the Federal Reserve Board (the "FRB").


         The regulations of those federal bank  regulatory  agencies govern most
aspects of the Bank's  business and  operations,  including  but not limited to,
requiring the maintenance of non-interest bearing reserves on deposits, limiting
the nature and amount of investments and loans which may be made, regulating the
issuance of securities, restricting the payment of dividends and regulating bank
expansion and bank activities.  The Bank also is subject to the requirements and
restrictions of various consumer laws and regulations.

         Statutes,  regulations and policies  affecting the banking industry are
frequently  under  review  by  Congress  and by the  federal  and  charged  with
supervisory and examination authority over banking institutions.  Changes in the
banking and financial services industry are likely to occur in the future.  Some
of the changes  may create  opportunities  for the Bank to compete in  financial
markets  with less  regulation.  However,  these  changes  also may  create  new
competitors  in  geographic  and product  markets which have  historically  been
limited by law to insured  depository  institutions such as the Bank. Changes in
the statutes,  regulations,  or policies that affect the Bank cannot necessarily
be predicted and may have a material effect on the Bank's business and earnings.
In addition,  the regulatory agencies which have jurisdiction over the Bank have
broad discretion in exercising their supervisory powers.

         The OCC can pursue an  enforcement  action  against the Bank for unsafe
and unsound practices in conducting its business,  or for violations of any law,
rule or  regulation  or  provision,  any  consent  order  with any  agency,  any
condition  imposed in writing by the agency,  or any written  agreement with the
agency.  Enforcement  actions may include the  imposition  of a  conservator  or
receiver,  cease-and-desist  orders and written  agreements,  the termination of
insurance of deposits,  the imposition of civil money  penalties and removal and
prohibition orders against institution-affiliated parties.

         In addition to the regulation and  supervision  outlined  above,  banks
must  be  prepared  for  judicial  scrutiny  of  their  lending  and  collection
practices.  For  example,  some  banks have been  found  liable  for  exercising
remedies which their loan documents authorized upon the borrower's default. This
has occurred in cases where the exercise of those  remedies was determined to be
inconsistent  with the  previous  course  of  dealing  between  the bank and the
borrower.  As a result,  banks must  exercise  caution,  incur  expense and face
exposure to liability when dealing with delinquent loans.

         The  following   description  of  selected   statutory  and  regulatory
provisions  and proposals is not intended to be a complete  description of these
provisions or of the many laws and regulations to which the Bank is subject, and
is  qualified  in its  entirety by  reference  to the  particular  statutory  or
regulatory provisions discussed.

A.  Effect of State Law

         The laws of the State of California also affect the Bank's business and
operations.  For  example,  under 12 U.S.C.  36, as amended  by the  Riegle-Neal
Interstate  Banking and Branching  Efficiency Act of 1994,  state laws regarding
community reinvestment,  consumer protection,  fair lending and establishment of
intrastate  branches may affect the operations of national banks in states other
than their home states.  On a similar  basis,  12 U.S.C.  85 provides that state
law, in most  circumstances,  determines  the maximum  rate of interest  which a
national   bank  may  charge  on  a  loan.   As   California   law  exempts  all
state-chartered  and  national  banks from the  application  of its usury  laws,
national banks are also provided such an exemption by 12 U.S.C. 85.

B.  Interstate Banking

         The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "Interstate Banking Act") regulates the interstate  activities of banks and
bank holding  companies and  establishes a framework for  nationwide  interstate
banking and  branching.  Since June 1, 1997,  a bank in one state has  generally



                                       9
<PAGE>

been  permitted  to merge  with a bank in  another  state  without  the need for
explicit  state law  authorization.  However,  states  were given the ability to
prohibit  interstate  mergers  with  banks in their  own  state by  "opting-out"
(enacting state legislation  applying to all out-of-state banks prohibiting such
mergers) prior to June 1, 1997.

         Since 1995,  adequately  capitalized and managed bank holding companies
have been  permitted  to acquire  banks  located  in any  state,  subject to two
exceptions:  first,  a state may still  prohibit  bank  holding  companies  from
acquiring a bank which is less than five years old;  and second,  no  interstate
acquisition  can be consummated by a bank holding  company if the acquiror would
control more than 10% of the deposits  held by insured  depository  institutions
nationwide  or  30%  or  more  of  the  deposits  held  by  insured   depository
institutions in any state in which the target bank has branches.

         A bank may also  establish and operate de novo branches in any state in
which the bank does not maintain a branch if that state has enacted  legislation
to expressly permit all out-of-state banks to establish branches in that state.

         Among other things,  the  Interstate  Banking Act amended the Community
Reinvestment  Act to require that in the event a bank has  interstate  branches,
the  appropriate  federal  banking  regulatory  agency  must  prepare  for  that
institution a written evaluation of (i) the bank's record of CRA performance and
(ii) the bank's CRA performance in each applicable  state.  Interstate  branches
are now  prohibited  from being  used as deposit  production  offices.  Also,  a
foreign bank is permitted to establish branches in any state other than its home
state to the same extent that a bank  chartered by the foreign bank's home state
may establish such branches.

         The Caldera,  Weggeland,  and Killea California  Interstate Banking and
Branching  Act of 1995  (the  "Caldera  Weggeland  Act")  implemented  important
provisions  of  the  Interstate   Banking  Act  discussed   above  and  repealed
California's  previous  interstate banking laws, which were largely preempted by
the  Interstate  Banking Act.  (Prior  California  law  prohibited,  among other
things,  an  out-of-state  bank  holding  company  from  establishing  a de novo
California  bank except for the purpose of taking over the  deposits of a closed
bank. This restriction has been eliminated.)

         As indicated above, the Interstate Banking Act generally permits a bank
in one state to merge with a bank in another state without the need for explicit
state law authorization.  However, the Caldera Weggeland Act expressly prohibits
a foreign  (other  state) bank which does not already have a  California  branch
office from (i)  purchasing a branch office of a California  bank (as opposed to
purchasing the entire bank) and thereby  establishing a California branch office
or (ii) establishing a California branch on a de novo basis.

         The Interstate Banking Act also requires,  among other things, approval
of the state bank  supervisor  of the target  bank's  home state for  interstate
acquisitions  of banks by bank  holding  companies.  The Caldera  Weggeland  Act
authorizes  the  Commissioner  to approve such an interstate  acquisition if the
Commissioner  finds that the  transaction  is consistent  with certain  criteria
specified by law.



                                       10
<PAGE>

         The changes  effected by Interstate  Banking Act and Caldera  Weggeland
Act are expected to continue to increase competition in the environment in which
the Bank will operate to the extent that out-of-state financial institutions may
directly  or  indirectly  enter the Bank's  market  areas.  It appears  that the
Interstate  Banking Act has contributed to the accelerated  consolidation of the
banking  industry in that a number of the largest  bank  holding  companies  are
expanding into different parts of the country that were  previously  restricted.
While some large  out-of-state  banks have already entered the California market
as a result of this  legislation,  it is not  possible  to predict  the  precise
impact of this legislation on the Bank and the competitive  environment in which
it operates.

C.  Change in Bank Control

         The Bank  Holding  Company Act of 1956,  as amended,  and the Change in
Bank Control Act of 1978, as amended,  together with  regulations of the FRB and
the Comptroller, require that, depending on the particular circumstances, either
FRB approval must be obtained or notice must be furnished to the Comptroller and
not disapproved prior to any person or company acquiring "control" of a national
bank, such as the Bank, subject to exemptions for some transactions.  Control is
conclusively  presumed to exist if an  individual or company (i) acquires 25% or
more of any class of  voting  securities  of the bank or (ii) has the  direct or
indirect  power to direct or cause the direction of the  management and policies
of the Bank,  whether  through  ownership of voting  securities,  by contract or
otherwise; provided that no individual will be deemed to control the Bank solely
on accord of being  director,  officer  or  employee  of the  Bank.  Control  is
rebuttably  presumed to exist if a person acquires 10% or more but less than 25%
of any  class of  voting  securities  and  either  the  company  has  registered
securities  under Section 12 of the Securities  Exchange Act of 1934, as amended
(the "Exchange  Act"), or no other person will own a greater  percentage of that
class of voting securities immediately after the transaction.

D. Regulation W

         The  Federal  Reserve  has  adopted  Regulation  W  to  comprehensively
implement sections 23A and 23B of the Federal Reserve Act.


         Sections  23A and 23B and  Regulation  W limit the risks to a bank from
transactions between the bank and its affiliates and limit the ability of a bank
to transfer to its  affiliates  the benefits  arising from the bank's  access to
insured deposits,  the payment system and the discount window and other benefits
of the Federal  Reserve  system.  The statute and rule impose  quantitative  and
qualitative  limits on the  ability of a bank to extend  credit to, or engage in
certain  other  transactions  with,  an  affiliate  (and  a  nonaffiliate  if an
affiliate  benefits from the transaction).  However,  certain  transactions that
generally  do not  expose  a bank to  undue  risk or abuse  the  safety  net are
exempted from coverage under Regulation W.

         Historically,  a subsidiary  of a bank was not  considered an affiliate
for purposes of Sections  23A and 23B,  since their  activities  were limited to
activities   permissible  for  the  bank  itself.  The   Gramm-Leach-Bliley  Act
authorized   "financial   subsidiaries"   that  may  engage  in  activities  not
permissible  for  a  bank.  These  financial  subsidiaries  are  now  considered
affiliates.  Certain  transactions  between a financial  subsidiary  and another
affiliate of a bank are also covered by sections 23A and 23B under Regulation W.

Regulation W has certain exemptions, including:

     o    For  state-chartered  banks,  an exemption for  subsidiaries  lawfully
          conducting nonbank activities before issuance of the final rule.

     o    An  exemption  for  extensions  of  credit  by a bank  under a general
          purpose  credit  card where the  borrower  uses the credit to purchase
          goods or services  from an affiliate of the bank, so long as less than
          25% of the aggregate  amount of purchases  with the card are purchases
          from an affiliate of the bank (a bank that does not have  nonfinancial
          affiliates is exempt from the 25% test).



                                       11
<PAGE>


     o    An  exemption  for  loans  by a  bank  to a  third  party  secured  by
          securities issued by a mutual fund affiliate of the bank (subject to a
          number of conditions).

     o    Subject to a number of  conditions,  an exemption  that would permit a
          banking   organization  to  engage  more   expeditiously  in  internal
          reorganization transactions involving a bank's purchase of assets from
          an affiliate.

The final rule contains new  valuation  rules for a bank's  investments  in, and
acquisitions of, affiliates.

         The Federal Reserve expects  examiners and other  supervisory  staff to
review  intercompany  transactions  closely for compliance with the statutes and
Regulation W and to resolve any violations or potential violations quickly.

E.  Tying Arrangements and Transactions with Affiliated Persons

         A bank is prohibited  from tie-in  arrangements  in connection with any
extension of credit,  sale or lease of property or furnishing  of services.  For
example,  with some exceptions,  a bank may not condition an extension of credit
on a promise  by its  customer  to obtain  other  services  provided  by it, its
holding company or other  subsidiaries (if any), or on a promise by its customer
not to obtain other services from a competitor.

         Directors,  officers and principal  shareholders  of the Bank,  and the
companies with which they are associated, may have banking transactions with the
Bank in the  ordinary  course of  business.  Any loans and  commitments  to loan
included in these  transactions must be made in compliance with the requirements
of applicable law, on substantially the same terms, including interest rates and
collateral,  as those  prevailing at the time for comparable  transactions  with
other persons of similar creditworthiness,  and on terms not involving more than
the normal risk of collectibility or presenting other unfavorable features.

F.  Capital Adequacy Requirements

         The Bank is  subject  to the  Comptroller  's  capital  guidelines  and
regulations  governing capital adequacy for national banks.  Additional  capital
requirements  may be imposed on banks based on market risk.  The FDIC requires a
Tier 1  capital1/  ratio to total  assets  ratio of 8% for new banks  during the
first three years of operation.


         After the first three years of operations,  the Comptroller  requires a
minimum  leverage  ratio of 3% of Tier 1 capital to total  assets  for  national
banks that have received the highest  composite  regulatory rating (a regulatory
measurement of capital, assets, management,  earnings, liquidity and sensitivity
to risk) and that are not anticipating or experiencing  any significant  growth.
All other institutions will be required to maintain a leverage ratio of at least
100 to 200 basis points above the 3% minimum.

         The Comptroller's regulations also require national banks to maintain a
minimum ratio of  qualifying  total  capital to  risk-weighted  assets of 8.00%.
Risk-based capital ratios are calculated with reference to risk-weighted assets,
including  both on and  off-balance  sheet  exposures,  which are  multiplied by
certain risk  weights  assigned by the  Comptroller  to those  assets.  At least
one-half of the qualifying capital must be in the form of Tier 1 capital.

         The risk-based capital ratio focuses principally on broad categories of
credit risk,  and may not take into account many other factors that can affect a
bank's  financial  condition.  These factors include overall  interest rate risk
exposure;  liquidity,  funding  and  market  risks;  the  quality  and  level of
earnings;   concentrations   of  credit  risk;   certain   risks   arising  from


__________________

1/ Tier 1 capital is generally  defined as the sum of the core capital  elements
less goodwill and certain  intangibles.  The following items are defined as core
capital elements: (i) common stockholders' equity; (ii) qualifying noncumulative
perpetual  preferred stock and related surplus;  and (iii) minority interests in
the equity accounts of consolidated subsidiaries.


                                       12
<PAGE>

nontraditional   activities;   the  quality  of  loans  and   investments;   the
effectiveness of loan and investment policies;  and management's overall ability
to monitor  and  control  financial  and  operating  risks,  including  the risk
presented  by  concentrations  of  credit  and  nontraditional  activities.  The
Comptroller has addressed many of these areas in related rule-making  proposals.
In addition to  evaluating  capital  ratios,  an overall  assessment  of capital
adequacy  must  take  account  of each of  these  other  factors  including,  in
particular,  the level and severity of problem and adversely  classified assets.
For this reason, the final supervisory judgment on a bank's capital adequacy may
differ  significantly  from the conclusions  that might be drawn solely from the
absolute level of the bank's  risk-based  capital  ratio.  The  Comptroller  has
stated that banks generally are expected to operate above the minimum risk-based
capital ratio. Banks contemplating significant expansion plans, as well as those
institutions  with  high or  inordinate  levels  of risk,  should  hold  capital
consistent with the level and nature of the risks to which they are exposed.

         Further,  the  banking  agencies  have  adopted  modifications  to  the
risk-based  capital  regulations  to include  standards  for interest  rate risk
exposures.  Interest  rate risk is the  exposure of a bank's  current and future
earnings and equity  capital  arising from  movements in interest  rates.  While
interest rate risk is inherent in a bank's role as a financial intermediary,  it
introduces  volatility to bank  earnings and to the economic  value of the bank.
The banking agencies have addressed this problem by implementing  changes to the
capital standards to include a bank's exposure to declines in the economic value
of its  capital  due to changes in  interest  rates as a factor that the banking
agencies  consider  in  evaluating  an  institution's  capital  adequacy.   Bank
examiners  consider a bank's historical  financial  performance and its earnings
exposure to interest rate movements as well as  qualitative  factors such as the
adequacy of a bank's internal interest rate risk management.

         Finally,  institutions with significant trading activities must measure
and hold capital for exposure to general  market risk arising from  fluctuations
in interest rates,  equity prices,  foreign  exchange rates and commodity prices
and exposure to specific risk associated  with debt and equity  positions in the
trading portfolio.  General market risk refers to changes in the market value of
on-balance-sheet  assets and off-balance-sheet items resulting from broad market
movements.  Specific  market  risk  refers to  changes  in the  market  value of
individual  positions  due to  factors  other than broad  market  movements  and
includes such risks as the credit risk of an instrument's issuer. The additional
capital  requirements  apply to institutions with trading assets and liabilities
equal to 10% or more of total assets or trading  activity of $1 billion or more.
The federal banking  agencies may apply the market risk regulations on a case by
case basis to institutions not meeting the eligibility criteria if necessary for
safety and soundness reasons.

         The  federal  banking  agencies  will  evaluate an  institution  in its
periodic  examination on the degree to which changes in interest rates,  foreign
exchange  rates,  commodity  prices  or equity  prices  can  affect a  financial
institution's  earnings or  capital.  In  addition,  the  agencies  focus in the
examination on an  institution's  ability to monitor and manage its market risk,
and will  provide  management  with a clearer  and more  focused  indication  of
supervisory concerns in this area.

         Under certain  circumstances,  the  Comptroller  may determine that the
capital ratios for a national bank must be maintained at levels which are higher
than the minimum levels required by the  guidelines.  A national bank which does
not achieve and maintain  required  capital levels may be subject to supervisory
action by the Comptroller  through the issuance of a capital directive to ensure
the maintenance of required capital levels. In addition, the Bank is required to
meet certain  guidelines of the  Comptroller  concerning  the  maintenance of an
adequate allowance for loan and lease losses.

         The  federal  banking   agencies,   including  the  OCC,  have  adopted
regulations  implementing a system of prompt corrective action under the Federal
Deposit  Insurance  Corporation  Improvement  Act  ("FDICIA").  The  regulations
establish five capital categories with the following characteristics:  (1) "Well
capitalized,"  consisting of institutions with a total risk-based  capital ratio
of 10% or  greater,  a Tier 1  risk-based  capital  ratio of 6% or greater and a
leverage  ratio of 5% or  greater  and which are not  operating  under an order,
written agreement,  capital directive or prompt corrective action directive; (2)
"Adequately  capitalized,"  consisting of institutions  with a total  risk-based



                                       13
<PAGE>

capital ratio of 8% or greater, a Tier 1 risk-based capital of 4% or greater and
a leverage  ratio of 4% or  greater  and which do not meet the  definition  of a
"well   capitalized"   institution;   (3)   "Undercapitalized,"   consisting  of
institutions  with a total  risk-based  capital  ratio of less than 8%, a Tier 1
risk-based  capital ratio of less than 4%, or a leverage  ratio of less than 4%;
(4)  "Significantly  undercapitalized,"  consisting of institutions with a total
risk-based  capital ratio of less than 6%, a Tier 1 risk-based  capital ratio of
less  than  3%,  or a  leverage  ratio  of less  than  3%;  and (5)  "Critically
undercapitalized," consisting of institutions with a ratio of tangible equity to
total assets that is equal to or less than 2%.

         The  regulations   establish   procedures  for  the  classification  of
financial  institutions within the capital categories,  for filing and reviewing
capital  restoration plans required under the regulations,  and for the issuance
of directives by the appropriate  regulatory  agency,  among other matters.  See
"SUPERVISION AND REGULATION -- Prompt Corrective Action."

         The appropriate federal banking agency, after notice and an opportunity
for a hearing, is authorized to treat a well capitalized, adequately capitalized
or  undercapitalized  insured  depository  institution  as  if it  had  a  lower
capital-based  classification  if it is in an unsafe and  unsound  condition  or
engaging in an unsafe and unsound  practice.  Thus,  an  adequately  capitalized
institution  can be subjected  to the  restrictions  (described  below) that are
imposed on  undercapitalized  institutions  (provided that a capital restoration
plan cannot be required of the institution), and an undercapitalized institution
can be  subjected to the  restrictions  (also  described  below)  applicable  to
significantly  undercapitalized institutions. See "SUPERVISION AND REGULATION --
Prompt Corrective Action."

         An insured depository  institution  cannot make a capital  distribution
(as broadly defined to include, among other things,  dividends,  redemptions and
other  repurchases of stock),  or pay  management  fees to any person or persons
that control the  institution,  if it would be  undercapitalized  following  the
distribution. However, a federal banking agency may (after consultation with the
FDIC) permit an insured depository institution to repurchase,  redeem, retire or
otherwise  acquire its shares if (i) the action is taken in connection  with the
issuance of additional  shares or obligations  in at least an equivalent  amount
and (ii) the action  will  reduce the  institution's  financial  obligations  or
otherwise improve its financial  condition.  An undercapitalized  institution is
generally  prohibited  from  increasing  its average total  assets,  and is also
generally  prohibited from making  acquisitions,  establishing new branches,  or
engaging  in  any  new  line  of  business  except  under  an  accepted  capital
restoration  plan or with the  approval  of the  FDIC.  In  addition,  a federal
banking  agency  has  authority  with  respect  to  undercapitalized  depository
institutions  to take any of the  actions  it is  required  to or may take  with
respect to a significantly  undercapitalized institution (as described below) if
it  determines  "that those  actions are  necessary to carry out the purpose" of
FDICIA.

         The  federal  banking  agencies  have  adopted  a joint  agency  policy
statement to provide  guidance on managing  interest  rate risk.  The  statement
indicates  that the adequacy and  effectiveness  of a bank's  interest rate risk
management  process and the level of its interest  rate  exposures  are critical
factors in the agencies'  evaluation of the bank's capital  adequacy.  If a bank
has  material  weaknesses  in its risk  management  process  or high  levels  of
exposure relative to its capital, the agencies will direct it to take corrective
action.  These  directives  may include  recommendations  or directions to raise
additional  capital,   strengthen  management   expertise,   improve  management
information  and  measurement  systems,  or  reduce  levels of  exposure,  or to
undertake some combination of these actions.

         The federal  banking  agencies have also issued an  interagency  policy
statement that,  among other things,  establishes  benchmark ratios of loan loss
reserves to specified classified assets. The benchmark established by the policy
statement is the sum of (a) 100% of assets  classified  loss;  (b) 50% of assets
classified doubtful; (c) 15% of assets classified substandard; and (d) estimated
credit  losses on other  assets  over the  upcoming  12 months.  This  amount is
neither a "floor" nor a "safe harbor" level for an  institution's  allowance for
loan losses.

At  December  31,  2004,  the  Bank  is in  compliance  with  the  Comptroller's
risk-based  and  leverage  ratios.  See  Footnote  14 to  the  Bank's  Financial
Statements included under Item 8. of this Annual Report.



                                       14
<PAGE>

G.  Payment of Dividends

         The  ability of the  Company to make  dividend  payments  is subject to
statutory and regulatory restrictions. FDIC policies generally preclude dividend
payments  during the first three years of operation,  allow cash dividends to be
paid only from net  operating  income,  and do not permit  dividends  to be paid
until an appropriate  allowance for loans and lease losses has been  established
and overall capital is adequate. The FDIC requires that a depository institution
maintain a Tier 1 capital  to assets  ratio of not less than 8% during the first
three years of operation.  See  "SUPERVISION  AND REGULATION - Capital  Adequacy
Requirements."

         After the first three years of operations,  the Board of Directors of a
national bank may declare the payment of dividends  depending upon the earnings,
financial condition and cash needs of the bank and general business  conditions.
A national bank may not pay dividends  from its capital.  All dividends  must be
paid out of net profits then on hand,  after  deducting  losses and bad debts. A
national bank is further  prohibited  from declaring a dividend on its shares of
common stock until its surplus fund equals the amount of capital  stock or until
10% of the  bank's  net  profits  of the  preceding  half  year  in the  case of
quarterly or semiannual  dividends,  or the preceding two consecutive  half-year
periods in the case of an annual dividend,  are transferred to the surplus fund.
The approval of the  Comptroller is required for the payment of dividends if the
total of all  dividends  declared by the bank in any calendar  year would exceed
the total of its net profits of that year combined with its retained net profits
of the two preceding years, less any required transfers to surplus or a fund for
the retirement of any preferred stock.

         In  addition  to the  above  requirements,  guidelines  adopted  by the
Comptroller  set forth  factors which are to be considered by a national bank in
determining the payment of dividends.  A national bank, in assessing the payment
of dividends,  is to evaluate the bank's capital position, its maintenance of an
adequate  allowance for loan and lease losses, and the need to revise or develop
a comprehensive capital plan.

         The  Comptroller  also has broad  authority to prohibit a national bank
from engaging in banking  practices  which it considers to be unsafe or unsound.
It is possible,  depending upon the financial  condition of the national bank in
question and other factors,  that the Comptroller may assert that the payment of
dividends or other payments by a bank is considered an unsafe or unsound banking
practice and therefore, implement corrective action to address such a practice.

         Accordingly,  the future  payment of cash dividends by the Company will
not only depend upon the Bank's  earnings during any fiscal period but will also
depend upon the assessment of its Board of Directors of capital requirements and
other factors,  including dividend guidelines and the maintenance of an adequate
allowance for loan and lease losses.

H.  Community Reinvestment Act

         Under the Community  Reinvestment Act ("CRA") regulations,  the federal
banking agencies  determine a bank's CRA rating by evaluating its performance on
lending,  service and  investment  tests,  with the lending  test being the most
important. The tests are applied in an "assessment context" that is developed by
the agency for the particular  institution.  The  assessment  context takes into
account  demographic data about the community,  the community's  characteristics
and needs,  the  institution's  capacities and  constraints,  the  institution's
product offerings and business  strategy,  the institution's  prior performance,
and data on similarly  situated lenders.  Since the assessment  context for each
bank is developed by the bank  regulatory  agencies,  a particular bank does not
know  until it is  examined  whether  its CRA  programs  and  efforts  have been
sufficient.

         Institutions,  like the Bank,  with $250  million or more in assets are
required to compile and report data on their  lending  activities to measure the
performance of their loan portfolio. Some of this data is already required under
other laws,  such as the Equal Credit  Opportunity  Act.  Institutions  have the
option of being evaluated for CRA purposes in relation to their own pre-approved
strategic  plan.  A  strategic  plan  must  be  submitted  to the  institution's



                                       15
<PAGE>

regulator  three months  before its  effective  date and must be  published  for
public comment.

I.  Audit Requirements

         Depository  institutions are required to have an annual  examination of
their financial records.  Depository  institutions with assets greater than $500
million  are  required  to have  annual,  independent  audits and to prepare all
financial   statements  in  compliance   with  generally   accepted   accounting
principles.  Depository  institutions  are also required to have an  independent
audit  committee  comprised  entirely of outside  directors,  independent of the
institution's management.

         The Bank's  accounting  and reporting  policies  conform with generally
accepted  accounting  principles  and the  practices  prevalent  in the  banking
industry.

J.  Insurance Premiums and Assessments

         The FDIC has authority to impose a special assessment on members of the
Bank  Insurance  Fund (the  "BIF")  to  insure  that  there  will be  sufficient
assessment  income for  repayment of BIF  obligations  and for any other purpose
which it deems necessary.  The FDIC is authorized to set semi-annual  assessment
rates for BIF members at levels  sufficient  to maintain the BIF's reserve ratio
to a designated  level of 1.25% of insured  deposits.  Congress  has  considered
various proposals to merge the BIF with the Savings  Association  Insurance Fund
or otherwise to require banks to  contribute to the insurance  funds for savings
associations.  Adoption of any of these  proposals  might  increase  the cost of
deposit insurance for all banks, including the Bank.

         Under FDICIA,  the FDIC has developed a risk-based  assessment  system,
which provides that the assessment  rate for an insured  depository  institution
will  vary  according  to the  level  of risk  incurred  in its  activities.  An
institution's  risk  category  is based upon  whether  the  institution  is well
capitalized,  adequately capitalized or less than adequately  capitalized.  Each
insured  depository  institution  is  also  to  be  assigned  to  one  of  three
"supervisory   subgroups":   Subgroup  A  institutions  are  financially   sound
institutions  with  a  few  minor   weaknesses;   Subgroup  B  institutions  are
institutions that demonstrate  weaknesses which, if not corrected,  could result
in significant  deterioration;  and Subgroup C institutions are institutions for
which  there is a  substantial  probability  that the FDIC will suffer a loss in
connection with the institution  unless effective action is taken to correct the
areas of weakness.  The FDIC assigns each BIF member  institution an annual FDIC
assessment rate on BIF insured deposits.

K.  Prompt Corrective Action

         The FDIC has authority:  (a) to request that an  institution's  primary
regulatory  agency (in the case of the Bank,  the OCC) take  enforcement  action
against it based upon an examination by the FDIC or the agency, (b) if no action
is taken within 60 days and the FDIC  determines  that the  institution is in an
unsafe and unsound  condition  or that failure to take the action will result in
continuance  of unsafe and  unsound  practices,  to order  that  action be taken
against the institution,  and (c) to exercise this  enforcement  authority under
"exigent  circumstances"  merely upon notification to the institution's  primary
regulatory  agency.  This authority gives the FDIC the same  enforcement  powers
with respect to any  institution  and its  subsidiaries  and  affiliates  as the
primary regulatory agency has with respect to those entities.

         An  undercapitalized  institution  is required to submit an  acceptable
capital restoration plan to its primary federal bank regulatory agency. The plan
must  specify  (a) the steps  the  institution  will  take to become  adequately
capitalized,  (b) the  capital  levels to be  attained  each  year,  (c) how the
institution will comply with any regulatory sanctions then in effect against the
institution  and (d) the types and levels of activities in which the institution
will engage. The banking agency may not accept a capital restoration plan unless



                                       16
<PAGE>

the agency determines,  among other things, that the plan "is based on realistic
assumptions,  and is likely to succeed in restoring the  institution's  capital"
and "would not  appreciably  increase the risk . . . to which the institution is
exposed." A requisite element of an acceptable  capital  restoration plan for an
undercapitalized  institution is a guaranty by its parent  holding  company that
the institution will comply with the capital  restoration  plan.  Liability with
respect to this guaranty is limited to the lesser of (i) 5% of the institution's
assets  at the  time  when it  becomes  undercapitalized  and  (ii)  the  amount
necessary to bring the  institution  into  capital  compliance  with  applicable
capital  standards as of the time when the institution  fails to comply with the
plan.  The  guaranty   liability  is  limited  to  companies   controlling   the
undercapitalized  institution and does not affect other affiliates. In the event
of a bank  holding  company's  bankruptcy,  any  commitment  by the bank holding
company  to a federal  bank  regulatory  agency to  maintain  the  capital  of a
subsidiary  bank will be assumed  by the  bankruptcy  trustee  and  entitled  to
priority of payment over the claims of other creditors, including the holders of
the company's long-term debt.

         FDICIA provides that the  appropriate  federal  regulatory  agency must
require   an   insured    depository    institution    that   is   significantly
undercapitalized,  or that is  undercapitalized  and  either  fails to submit an
acceptable capital restoration plan within the time period allowed by regulation
or fails in any  material  respect  to  implement  a  capital  restoration  plan
accepted by the appropriate  federal banking agency,  to take one or more of the
following  actions:  (a) sell enough shares,  including voting shares, to become
adequately  capitalized;  (b) merge with (or be sold to) another institution (or
holding  company),  but only if grounds exist for  appointing a  conservator  or
receiver;  (c) restrict specified transactions with banking affiliates as if the
"sister  bank"  exception  to the  requirements  of Section  23A of the  Federal
Reserve Act did not exist;  (d)  otherwise  restrict  transactions  with bank or
nonbank  affiliates;  (e) restrict  interest rates that the institution  pays on
deposits to "prevailing rates" in the institution's "region"; (f) restrict asset
growth or reduce total assets; (g) alter,  reduce or terminate  activities;  (h)
hold a new election of directors;  (i) dismiss any director or senior  executive
officer  who  held  office  for  more  than  180  days  immediately  before  the
institution became  undercapitalized,  provided that in requiring dismissal of a
director or senior  executive  officer,  the agency must comply with  procedural
requirements,  including the  opportunity for an appeal in which the director or
officer will have the burden of proving his or her value to the institution; (j)
employ "qualified" senior executive officers;  (k) cease accepting deposits from
correspondent depository institutions; (l) divest nondepository affiliates which
pose a danger to the  institution;  (m) be divested by a parent holding company;
and (n) take any other action which the agency determines would better carry out
the purposes of the prompt corrective action provisions.

         In addition to the foregoing  sanctions,  without the prior approval of
the  appropriate  federal  banking  agency,  a  significantly   undercapitalized
institution  may not pay any bonus to any senior  executive  officer or increase
the rate of  compensation  for a senior  executive  officer  without  regulatory
approval.  If an undercapitalized  institution has failed to submit or implement
an acceptable capital restoration plan the appropriate federal banking agency is
not permitted to approve the payment of a bonus to a senior executive officer.

         Not  later  than  90  days  after  an  institution  becomes  critically
undercapitalized,  the institution's primary federal bank regulatory agency must
appoint a receiver or a conservator,  unless the agency, with the concurrence of
the  FDIC,  determines  that  the  purposes  of  the  prompt  corrective  action
provisions  would be better served by another course of action.  Any alternative
determination  must be  documented  by the agency and  reassessed  on a periodic
basis.  Notwithstanding  the foregoing,  a receiver must be appointed  after 270
days unless the FDIC  determines that the institution has positive net worth, is
in compliance  with a capital  plan,  is profitable or has a sustainable  upward
trend in earnings,  and is reducing its ratio of  non-performing  loans to total
loans,  and unless the head of the  appropriate  federal  banking agency and the
chairperson of the FDIC certify that the  institution is viable and not expected
to fail.

         The  FDIC  is  required,  by  regulation  or  order,  to  restrict  the
activities of critically  undercapitalized  institutions.  The restrictions must
include  prohibitions on the  institution's  doing any of the following  without
prior FDIC approval:  entering into any material  transactions  not in the usual
course of  business,  extending  credit  for any highly  leveraged  transaction;
engaging in any "covered  transaction" (as defined in Section 23A of the Federal



                                       17
<PAGE>

Reserve Act) with an affiliate;  paying "excessive compensation or bonuses"; and
paying  interest  on  "new or  renewed  liabilities"  that  would  increase  the
institution's  average  cost  of  funds  to  a  level  significantly   exceeding
prevailing rates in the market.

L.  Potential Enforcement Actions; Supervisory Agreements

         Under  federal  law,  national  banks and their  institution-affiliated
parties  may be the  subject  of  potential  enforcement  actions by the OCC for
unsafe and unsound practices in conducting their  businesses,  or for violations
of any law, rule or regulation or provision,  any consent order with any agency,
any condition imposed in writing by the agency or any written agreement with the
agency.  Enforcement  actions may include the  imposition  of a  conservator  or
receiver,  cease-and-desist  orders and written  agreements,  the termination of
insurance of deposits,  the imposition of civil money  penalties and removal and
prohibition orders against institution-affiliated parties.


M.  Sarbanes-Oxley Act

         The Sarbanes-Oxley Act of 2002 implements  legislative reforms intended
 to address  corporate and accounting fraud. In addition to the establishment an
 accounting   oversight   board  to  enforce   auditing,   quality  control  and
 independence  standards,  the bill  restricts  provision  of both  auditing and
 consulting  services by accounting firms. To ensure auditor  independence,  any
 non-audit  services being provided to an audit client require  pre-approval  by
 the company's audit committee members. In addition,  the audit partners must be
 rotated.  The  Act  requires  chief  executive  officers  and  chief  financial
 officers,  or their equivalent,  to certify to the accuracy of periodic reports
 filed with the SEC,  subject to civil and criminal  penalties if they knowingly
 or willfully violate this  certification  requirement.  In addition,  under the
 Act, legal counsel will be required to report evidence of a material  violation
 of the securities  laws or a breach of fiduciary duty by a company to its chief
 executive  officer or its chief legal  officer,  and, if such  officer does not
 appropriately  respond, to report such evidence to the audit committee or other
 similar committee of the board of directors or the board itself.

         Longer  prison  terms  and  increased   penalties  apply  to  corporate
executives who violate federal  securities laws, the period during which certain
types of suits can be brought against a company or its officers is extended, and
bonuses issued to top executives  prior to restatement of a company's  financial
statements are subject to disgorgement if such  restatement was due to corporate
misconduct.   Executives  are  also   prohibited  from  insider  trading  during
retirement  plan  "blackout"  periods,  and  loans  to  company  executives  are
restricted.  The Act  accelerates  the time  frame  for  disclosures  by  public
companies,  as they must  immediately  disclose  any  material  changes in their
financial  condition or operations.  Directors and executive  officers must also
provide  information  for most changes in  ownership  in a company's  securities
within two business days of the change.

         The Act also  prohibits  any  officer or  director  of a company or any
other person acting under their direction from taking any action to fraudulently
influence,  coerce,  manipulate or mislead any  independent  public or certified
accountant  engaged in the audit of the company's  financial  statements for the
purpose of rendering the financial statement's  materially  misleading.  The Act
requires the SEC to prescribe rules requiring  inclusion of an internal  control
report and  assessment by management  in the annual report to  stockholders.  In
addition, the Act requires that each financial report required to be prepared in
accordance with (or reconciled to) accounting  principles  generally accepted in
the  United  States of  America  and filed  with the SEC  reflect  all  material
correcting  adjustments that are identified by a "registered  public  accounting
firm" in accordance with accounting  principles generally accepted in the United
States of America and the rules and regulations of the SEC.

         A company's  chief executive  officer and chief  financial  officer are
each required to certify that the Company's  quarterly and annual reports do not
contain  any  untrue  statement  of a  material  fact.  The rules  have  several
requirements, including having these officers certify that: they are responsible
for establishing,  maintaining and regularly evaluating the effectiveness of the
Bank's  internal  controls;  they have made  certain  disclosures  to the Bank's



                                       18
<PAGE>

auditors and the audit  committee of the Board of Directors  about the company's
internal controls; and they have included information in the Company's quarterly
and  annual  reports  about  their   evaluation  and  whether  there  have  been
significant  changes in the Bank's  internal  controls or in other  factors that
could significantly affect internal controls subsequent to the evaluation.

N.  USA PATRIOT Act

         In the wake of the tragic  events of  September  11th,  on October  26,
2001, the President  signed the Uniting and  Strengthening  America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act
of 2001.  Under the USA  PATRIOT  Act,  financial  institutions  are  subject to
prohibitions against specified financial  transactions and account relationships
as well as enhanced due  diligence and "know your  customer"  standards in their
dealings with foreign financial institutions and foreign customers. For example,
the enhanced due diligence policies,  procedures, and controls generally require
financial institutions to take reasonable steps:

     o    To conduct enhanced scrutiny of account relationships to guard against
          money laundering and report any suspicious transaction;

     o    To ascertain the identity of the nominal and beneficial owners of, and
          the source of funds  deposited  into,  each account as needed to guard
          against money laundering and report any suspicious transactions;

     o    To  ascertain  for any  foreign  bank,  the  shares  of which  are not
          publicly  traded,  the identity of the owners of the foreign bank, and
          the nature and extent of the  ownership  interest  of each such owner;
          and

     o    To ascertain whether any foreign bank provides  correspondent accounts
          to other foreign banks and, if so, the identity of those foreign banks
          and related due diligence information.

         Under the USA PATRIOT Act,  financial  institutions were given 180 days
from enactment to establish anti-money laundering programs.  The USA PATRIOT Act
sets forth minimum standards for these programs, including:

     o    The development of internal policies, procedures, and controls;

     o    The designation of a compliance officer;

     o    An ongoing employee training program; and

     o    An independent audit function to test the programs.

         The Bank has adopted  comprehensive  policies and procedures to address
the  requirements of the USA PATRIOT Act, and management  believes that the Bank
is currently in compliance with the Act.

O.  Gramm-Leach-Bliley Act

         The  Gramm-Leach-Bliley  Act  eliminated  many  of  the  barriers  that
separated  the  insurance,  securities  and banking  industries  since the Great
Depression.  The  Gramm-Leach-Bliley  Act is the result of a decade of debate in
the Congress  regarding a  fundamental  reformation  of the  nation's  financial
system. The law is subdivided into seven titles, by functional area.

The major provisions of the Gramm-Leach-Bliley Act are:

FINANCIAL  HOLDING  COMPANIES  AND FINANCIAL  ACTIVITIES.  Title I establishes a
comprehensive framework to permit affiliations among commercial banks, insurance
companies,  securities  firms, and other financial service providers by revising
and expanding the BHC Act framework to permit a holding company system to engage
in a full range of financial  activities  through  qualification as a new entity
known as a financial holding company.



                                       19
<PAGE>


Activities permissible for financial subsidiaries of national banks include, but
are not  limited  to, the  following:  (a)  Lending,  exchanging,  transferring,
investing  for  others,  or  safeguarding  money or  securities;  (b)  Insuring,
guaranteeing,  or indemnifying against loss, harm, damage, illness,  disability,
or death, or providing and issuing annuities, and acting as principal, agent, or
broker for purposes of the  foregoing,  in any State;  (c) Providing  financial,
investment,  or economic  advisory  services,  including  advising an investment
company; (d) Issuing or selling instruments  representing  interests in pools of
assets  permissible for a bank to hold directly;  and (e) Underwriting,  dealing
in, or making a market in securities.

SECURITIES ACTIVITIES.  Title II narrows the exemptions from the securities laws
previously enjoyed by banks.

INSURANCE ACTIVITIES. Title III restates the proposition that the states are the
functional  regulators  for all  insurance  activities,  including the insurance
activities of  federally-chartered  banks,  and bars the states from prohibiting
insurance activities by depository institutions.

PRIVACY.  Under Title V, federal banking regulators were required to adopt rules
that have  limited  the  ability of banks and other  financial  institutions  to
disclose non-public  information about consumers to nonaffiliated third parties.
These  limitations  require  disclosure of privacy policies to consumers and, in
some  circumstances,  allow consumers to prevent  disclosure of certain personal
information  to  a  nonaffiliated  third  party.  Under  the  rules,   financial
institutions must provide:

     *    initial notices to customers about their privacy policies,  describing
          the  conditions  under  which  they may  disclose  nonpublic  personal
          information to nonaffiliated third parties and affiliates;

     *    annual notices of their privacy policies to current customers; and

     *    a  reasonable  method for  customers  to "opt out" of  disclosures  to
          nonaffiliated third parties.

SAFEGUARDING  CONFIDENTIAL CUSTOMER INFORMATION.  Under Title V, federal banking
regulators  were required to adopt rules  requiring  financial  institutions  to
implement  a program  to  protect  confidential  customer  information,  and the
federal   banking   agencies  have  adopted   guidelines   requiring   financial
institutions to establish an information security program.

         The Bank  implemented a security  program  appropriate  to its size and
complexity and the nature and scope of its operations  prior to the July 1, 2001
effective date of the regulatory  guidelines,  and since initial  implementation
has, as necessary updated and improved that program.

COMMUNITY REINVESTMENT ACT SUNSHINE  REQUIREMENTS.  The federal banking agencies
have adopted regulations implementing Section 711 of Title VII, the CRA Sunshine
Requirements.  The regulations require  nongovernmental  entities or persons and
insured  depository  institutions  and  affiliates  that are  parties to written
agreements  made in connection  with the  fulfillment of the  institution's  CRA
obligations to make available to the public and the federal  banking  agencies a
copy of each  agreement.  The Bank is not a party to any agreement that would be
the subject of reporting pursuant to the CRA Sunshine Requirements.

         The   Bank   intends   to   comply   with   all   provisions   of   the
Gramm-Leach-Bliley   Act  and  all  implementing   regulations  as  they  become
effective.

M. Fair Credit Reporting

         In 1970, the U. S. Congress the Fair Credit  Reporting Act (the "FCRA")
in  order  to  ensure  the  confidentiality,   accuracy,  relevancy  and  proper
utilization of consumer  credit report  information.  Under the framework of the
FCRA,  the United  States has developed a highly  advanced and efficient  credit
reporting  system.  The  information  contained  in that broad system is used by
financial institutions,  retailers and other creditors of every size in making a
wide variety of decisions regarding financial transactions.  Employers,  and law
enforcement  agencies have also made wide use of the  information  collected and
maintained  in  databases  made  possible  by the FCRA.  The FCRA  affirmatively



                                       20
<PAGE>

preempts  state law in a number of areas,  including  the  ability  of  entities
affiliated by common  ownership to share and exchange  information  freely,  the
requirements  on credit  bureaus to  reinvestigate  the  contents  of reports in
response to consumer  complaints,  among others.  By its terms,  the  preemption
provision of the FCRA will terminate as of December 31, 2003. Termination of the
preemption  provisions  could  significantly  impact the ability of the existing
credit bureau system to continue operating.

         The Bank may incur  additional  costs,  and be  required  to  implement
additional  costly  procedures  and  systems  in the event  that the  preemption
provisions of the FCRA  terminate at the end of 2003, and  California,  or other
states,  adopts  legislation  that  would  have the  effect of  prohibiting  the
continued  sharing of  information  such as that  currently  collected by credit
bureaus  throughout  the United States.  The  likelihood of the FCRA  preemption
provisions  terminating by their terms,  and of the adoption of such restrictive
provisions by state legislatures, cannot be estimated at this time.

O.  Consumer Laws and Regulations

         In  addition  to the  other  laws  and  regulations  discussed  in this
Offering Circular,  the Bank must also comply with consumer laws and regulations
that are designed to protect  consumers in  transactions  with banks.  While the
list is not exhaustive,  these laws and regulations include the Truth in Lending
Act, the Truth in Savings Act, the Electronic  Funds Transfer Act, the Expedited
Funds  Availability Act, the Equal Credit  Opportunity Act, and the Fair Housing
Act, among others.  These laws and regulations  mandate disclosure  requirements
and regulate the manner in which financial institutions must deal with customers
when taking  deposits or making loans.  The Bank must comply with the applicable
provisions of these  consumer  protection  laws and  regulations  as part of its
ongoing regulatory compliance and customer relations efforts.

P.  Exposure to and Management of Risk

         The federal banking agencies  examine banks and bank holding  companies
with respect to their  exposure to and  management  of different  categories  of
risk.  Categories  of  risk  identified  by the  agencies  include  legal  risk,
operational  risk,  market risk,  credit risk,  interest rate risk,  price risk,
foreign exchange risk, transaction risk, compliance risk, strategic risk, credit
risk, liquidity risk, and reputation risk. This examination approach causes bank
regulators to focus on risk management procedures,  rather than simply examining
every asset and  transaction.  This  approach  supplements  rather than replaces
existing  rating  systems based on the evaluation of an  institution's  capital,
assets, management, earnings and liquidity. It is not clear what effect, if any,
this examination approach will have on the Bank.

Q.  Money Laundering Control Act

         The Money  Laundering  Control Act of 1986  provides  sanctions for the
failure  to  report  high  levels  of  cash   deposits  to  non-bank   financial
institutions. Federal banking regulators possess the power to revoke the charter
or appoint a  conservator  for any  institution  convicted of money  laundering.
Offending  state-chartered banks could lose their federal deposit insurance, and
bank officers  could face lifetime bans from working in financial  institutions.
The Community  Development Act, which includes a number of provisions that amend
the Bank Secrecy Act,  allows the Secretary of the Treasury to exempt  specified
currency  transactions from reporting  requirements and permits the federal bank
regulatory  agencies to impose civil money  penalties on banks for violations of
the currency transaction reporting requirements.

R.  Safety and Soundness Standards

         Federal banking regulators have adopted a Safety and Soundness Rule and
Interagency  Guidelines  Prescribing  Standards  for Safety and  Soundness.  The
guidelines  create  standards  for a wide range of  operational  and  managerial
matters including (a) internal controls, information systems, and internal audit



                                       21
<PAGE>

systems;  (b) loan  documentation;  (c) credit  underwriting;  (d) interest rate
exposure; (e) asset growth; (f) compensation and benefits; and (g) asset quality
and earnings.

         The  Community  Development  Act required  the federal bank  regulatory
agencies to prescribe  standards  prohibiting as an unsafe and unsound  practice
the payment of excessive  compensation  that could result in material  financial
loss to an  institution,  and to specify  when  compensation,  fees or  benefits
become excessive.  These guidelines characterize compensation as excessive if it
is unreasonable or  disproportionate  to the services actually  performed by the
executive   officer,   employee,   director  or  principal   shareholder   being
compensated.

         Federal  regulators  have  stated that the  guidelines  are meant to be
flexible and general enough to allow each institution to develop its own systems
for  compliance.  With the  exception  of the  standards  for  compensation  and
benefits,  a  failure  to  comply  with  the  guidelines'   standards  does  not
necessarily constitute an unsafe and unsound practice or condition. On the other
hand, an institution in conformance  with the standards may still be found to be
engaged  in an unsafe and  unsound  practice  or to be in an unsafe and  unsound
condition.

         Although meant to be flexible,  an institution  that falls short of the
guidelines'  standards  may be  requested  to  submit  a  compliance  plan or be
subjected to regulatory  enforcement  actions.  Generally,  the federal  banking
agencies will request a compliance plan if an institution's  failure to meet one
or more of the  standards  is of  sufficient  severity to threaten  the safe and
sound operation of the  institution.  An institution must file a compliance plan
within 30 days of request by its primary federal regulator,  which is the OCC in
the  case of the  Bank.  The  guidelines  provide  for  prior  notice  of and an
opportunity to respond to the agency's proposed order. An enforcement action may
be commenced  if, after being  notified  that it is in violation of a safety and
soundness  standard,  the institution  fails to submit an acceptable  compliance
plan or fails in any material respect to implement an accepted plan. The Federal
Deposit  Insurance  Act provides the agencies  with a wide range of  enforcement
powers. An agency may, for example, obtain an enforceable cease and desist order
in the United States District Court, or may assess civil money penalties against
an institution or its affiliated parties.

S.  Legislation and Proposed Changes

         From time to time,  legislation  is  enacted  which  has the  effect of
increasing  the  cost of  doing  business,  limiting  or  expanding  permissible
activities  or  affecting  the  competitive  balance  between  banks  and  other
financial  institutions.  Proposals to change the laws and regulations governing
the operations and taxation of banks, bank holding companies and other financial
institutions  are frequently made in Congress and before various bank regulatory
agencies.  For  example,  from  time to time  Congress  has  considered  various
proposals to eliminate the federal thrift  charter,  create a uniform  financial
institutions charter, conform holding company regulation, and abolish the Office
of Thrift Supervision.  Typically,  the intent of this type of legislation is to
strengthen the banking industry, even if it may on occasion prove to be a burden
on  management's  plans.  No prediction  can be made as to the likelihood of any
major changes or the impact that new laws or regulations might have on the Bank.

T.  Impact of Government Monetary Policy

         The  earnings of the Bank are and will be  affected by the  policies of
regulatory authorities,  including the Federal Reserve. An important function of
the Federal Reserve is to regulate the national supply of bank credit. Among the
instruments  used to implement  these  objectives are open market  operations in
U.S.  Government  securities,  changes  in  reserve  requirements  against  bank
deposits,  and changes in the discount rate which banks pay on advances from the
Federal Reserve System.  These  instruments are used in varying  combinations to
influence  overall  growth  and  distribution  of bank  loans,  investments  and
deposits,  and their use may also  affect  interest  rates on loans or  interest
rates paid for deposits. The monetary policies of the FRB have had a significant
effect on the operating results of commercial banks in the past and are expected
to continue to do so in the future.  The effect,  if any, of such  policies upon
the future business earnings of the Bank cannot be predicted.



                                       22
<PAGE>

U.  Conclusions

         It is impossible to predict with any certainty the  competitive  impact
the laws and  regulations  described  above will have on  commercial  banking in
general and on the business of the Bank in particular,  or to predict whether or
when any of the proposed  legislation  and  regulations  described above will be
adopted.  It is anticipated  that banking will continue to be a highly regulated
industry.  Additionally,  there has been a continued lessening of the historical
distinction  between the services  offered by financial  institutions  and other
businesses  offering  financial  services,   and  the  trend  toward  nationwide
interstate banking is expected to continue.  As a result of these factors, it is
anticipated banks will experience  increased  competition for deposits and loans
and, possibly, further increases in their cost of doing business.










                                       23
<PAGE>

ITEM 2.  PROPERTIES

         At December 31, 2004,  the Bank had three  facilities  located in Santa
Clara County,  one facility located in Sacramento County and one facility in San
Diego county.

         The first office,  which is also the principal  executive office of the
Bank, is located at 2120 El Camino Real,  in the City of Santa Clara,  County of
Santa  Clara,  State of  California.  The office is  located in a  freestanding,
two-story building, consisting of 5,430 square feet, located at the intersection
of El Camino Real and McCormick  Drive.  The building was previously a branch of
Washington  Mutual  Bank,  and includes a vault and teller  lines.  The premises
include 42 parking spaces situated on a 35,719 square foot parcel.  The premises
are sublet from Washington  Mutual Bank. The sublease  provides for a basic rent
of $13,582.50 per month from the commencement  date until the first  anniversary
of the sublease.  On each  anniversary date of the commencement of the sublease,
the basic rent will be  increased  by 4% of the amount of the basic rent  during
the prior year. The Bank is also responsible for real estate taxes and insurance
costs. The sublease is for a period of ten (10) years,  terminating on September
30, 2010.  There is no option to extend the sublease  beyond that date.  Current
lease  payments  are  $14,690.83  per  month  through  the  anniversary  of  the
commencement  date.  The  foregoing  description  of the office is  qualified by
reference  to the lease  agreement  dated  August 31, 2000  exhibit 10.4 to this
Report.

         The second  facility  is a banking  office  located  at 525  University
Avenue,  City of Palo Alto,  County of Santa  Clara,  State of  California.  The
office consists of approximately  2,975 square feet consisting of Suites 101 and
103 on the first floor of the building known as the Palo Alto Office Center. The
lease is for a term of 60 months  commencing  on  December 1, 2001 and ending on
November 30, 2006. The Lease provides for a basic rent of $12,197.50 through the
first  anniversary of the lease date.  Effective with the first anniversary date
the lease  payments  will be adjusted  by a factor that is tied to the  Consumer
Price Index.  Current lease  payments are  $16,147.39 per month through the 2004
anniversary of the commencement  date The foregoing  description is qualified by
reference  to the lease  agreement  dated  October 15, 2001  attached as exhibit
10.12 to this Report.

         The third  facility is an  administrative  office located at 55 Almaden
Boulevard,  City of San Jose,  County of Santa Clara,  State of California.  The
office  consists  of  approximately  24,767  square  feet  on two  floors  of an
eight-story office building. The facility is being sublet from a prior tenant in
a sublease which commenced  December 26, 2003 and terminates  December 31, 2006.
The  sublease  provides  for  an  initial  base  rent  of  $28,730  with  annual
escalations  to  $45,819 in the final  year of the  sublease.  The Bank has also
entered into a direct lease with the landlord,  which will commence  immediately
following the sublease term on January 1, 2007 for 120 months ending on December
31,  2016.  The direct  lease  provides  for an initial  twelve-month  period of
reduced rent followed by a base rent of $47,304.97  beginning on January 1, 2008
and increasing 3% on each anniversary date thereafter.

         The  fourth  facility  is a loan  production  office  located  at  3035
Prospect Park Drive,  Suite 100, City of Rancho  Cordova,  County of Sacramento,
State of  California.  The office  consists of  approximately  1,964 square feet
consisting  of  Suite  100 in the real  estate  development  known as  "Prospect
Center".  The lease is for a term of 36 months commencing on October 1, 2002 and
ending on September 30, 2005.  The Lease  provides for a basic rent of $1,865.80
through the first anniversary of the lease date. The basic rent will increase to
$1,940.43  effective  with the  first  anniversary  date and  then  increase  to
$2,018.01 on the second anniversary date. The foregoing description is qualified
by reference to the lease  agreement  dated August 13, 2002  attached as exhibit
10.13 herein.

         The fifth facility is a loan  production  office located at 7676 Hazard
Center  Drive,  Fifth Floor,  City of San Diego,  County of San Diego,  State of
California.  The office consists of approximately  905 square feet consisting of
offices No. 36a,  36b, 36c, 36d and 37 in the real estate  development  known as
"Barrister  Executive Suites". The lease is for a term of 6 months commencing on
November 1, 2003 and ending on June 1, 2004. The lease provides for a basic rent
of $4,300.00 per month. The term of the lease will be automatically extended for
the same period of time as the initial term, upon the same terms and conditions,



                                       24
<PAGE>

unless  either  party  notifies the other in writing to the contrary at least 90
days prior to the termination date.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is not a defendant in any pending legal  proceedings and no
such proceedings are known to be contemplated.  No director, officer, affiliate,
more than 5%  shareholder  of the Company or any associate of these persons is a
party adverse to the Company or has a material  interest  adverse to the Company
in any material legal proceeding.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was  submitted  during the fourth  quarter of the fiscal year
covered  by this  Annual  Report  to a vote of  security  holders,  through  the
solicitation of proxies or otherwise.










                                       25
<PAGE>

                                     PART II

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

         There is limited  trading in and no  established  public trading market
for the Company's  Common Stock. On January 27, 2003, the Company's Common Stock
began  trading  on the  Nasdaq  Small  Cap  exchange  under the  symbol  "BBNK".
Previously,  it was traded on the Over-the-Counter  Bulletin Board (OTCBB) under
the symbol "BBSV".  Hoefer and Arnett,  Incorporated,  Knight  Securities,  LLP,
Schwab  Capital  Markets,  and Baird Patrick & Co. make markets in the Company's
Common Stock.

         The following  table  summarizes  those trades of which the Company has
knowledge, setting forth the approximate high and low bid prices for the periods
indicated.  The prices  indicated  below may not  necessarily  represent  actual
transactions.

                                     Bid Price of
                                   Common stock (1)
             Quarter ended          Low      High
          __________________       _____     _____

          March 31, 2003            5.25      7.25
          June 30, 2003             6.00      8.75
          September 30, 2003        8.00     12.50
          December 31, 2003        10.25     13.50
          March 31, 2004           12.00     13.24
          June 30, 2004            11.06     12.95
          September 30, 2004       10.75     13.76
          December 31, 2004        13.07     17.65

(1) Prices  represent the actual trading history on the Nasdaq Small Cap market.
Additionally,  since trading in the Company's common stock is limited, the range
of prices stated is not necessarily  representative of prices which would result
from a more active market.

The Company had 495 shareholders of record as of January 21, 2005.

            The Company's  shareholders  are entitled to receive  dividends when
and as  declared  by its  Board of  Directors,  out of funds  legally  available
therefor,  subject to  statutory  and  regulatory  restrictions.  FDIC  policies
generally  preclude dividend payments during the first three years of operation,
allow  cash  dividends  to be paid only from net  operating  income,  and do not
permit  dividends to be paid until an appropriate  allowance for loans and lease
losses has been  established and overall capital is adequate.  The FDIC requires
that a depository  institution  maintain a Tier 1 capital to assets ratio of not
less than 8% during the first three years of  operation.  See  "SUPERVISION  AND
REGULATION - Capital Adequacy Requirements."

           After the first three years of operations,  the Board of Directors of
a  national  bank may  declare  the  payment  of  dividends  depending  upon the
earnings,  financial  condition and cash needs of the bank and general  business
conditions.  A  national  bank  may not pay  dividends  from  its  capital.  All
dividends must be paid out of net profits then on hand,  after deducting  losses
and bad debts. A national bank is further  prohibited  from declaring a dividend
on its  shares of common  stock  until its  surplus  fund  equals  the amount of
capital stock or until 10% of the bank's net profits of the preceding  half year
in  the  case  of  quarterly  or  semiannual  dividends,  or the  preceding  two
consecutive half-year periods in the case of an annual dividend, are transferred
to the surplus fund. The approval of the Comptroller is required for the payment
of dividends if the total of all dividends  declared by the bank in any calendar
year would  exceed the total of its net profits of that year  combined  with its



                                       26
<PAGE>

retained net profits of the two preceding years, less any required  transfers to
surplus or a fund for the retirement of any preferred stock.

         In  addition  to the  above  requirements,  guidelines  adopted  by the
Comptroller set forth factors,  which are to be considered by a national bank in
determining the payment of dividends.  A national bank, in assessing the payment
of dividends,  is to evaluate the bank's capital position, its maintenance of an
adequate  allowance for loan and lease losses, and the need to revise or develop
a comprehensive capital plan.

         The  Comptroller  also has broad  authority to prohibit a national bank
from engaging in banking  practices  which it considers to be unsafe or unsound.
It is possible,  depending upon the financial  condition of the national bank in
question and other factors,  that the Comptroller may assert that the payment of
dividends or other payments by a bank is considered an unsafe or unsound banking
practice and therefore, implement corrective action to address such a practice.

         The Company has not declared  dividends  since  inception of the Bank's
existence.  In the future,  the Company may consider  cash and stock  dividends,
subject to the restrictions on the payment of cash dividends as described above,
depending upon the level of earnings,  management's assessment of future capital
needs and other factors considered by the Board of Directors.

            The following  chart  provides  information  as of December 31, 2004
concerning the Bank's Stock Option Plan, the Company's only equity  compensation
plan:

<TABLE>
<CAPTION>


                            Number of securities      Weighted average        Number of securities
                             to be issued upon        exercise price of       remaining available
                                exercise of          outstanding options,     for future issuance
                            outstanding options,    warrents, and rights          under equity
                            warrants, and rights                               compensation plans
                                                                             (excluding securities
                                                                            reflected in column (a)
                                    (a)                      (b)                      (c)
                           -----------------------  ----------------------  -------------------------
<S>                              <C>                        <C>                       <C>

Equity compensation
plans approved by
security holders                 1,255,974                  $ 6.81                    503,638

Equity compensation
plans not approved by
security holders                         -                       -                          -
                           -----------------------  ----------------------  -------------------------

Total                             1,255,974                  $ 6.81                    503,638
                           =======================  ======================  =========================

</TABLE>


                                       27
<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

         The following table presents certain consolidated financial information
concerning  the  business of the  Company.  This  information  should be read in
conjunction   with  the  Financial   Statements  and  the  notes  thereto,   and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations contained elsewhere herein.

<TABLE>
<CAPTION>

                                                                                            For the period
                                                                                            from inception
Statement of Operations Data:                                                                May 14, 2001
(dollars in thousands, except per share data)            As of and for the years ended         through
                                                           December 31,                      December 31,
                                                         2004        2003         2002           2001
                                                     -------------------------------------------------------
<S>                                                     <C>         <C>          <C>              <C>

Interest income                                         $ 19,457    $ 12,133     $  7,002         $  1,573
Interest expense                                           2,896       2,235        1,192              419
                                                     -------------------------------------------------------
Net interest income                                       16,561       9,898        5,810            1,154
Provision for credit losses                               (1,671)       (843)      (1,424)            (511)
Net interest income after provision
  for credit losses                                       14,890       9,055        4,386              643
                                                     -------------------------------------------------------
Other income                                               3,855       2,664        1,460               18
Other expenses                                           (13,596)    (10,214)      (8,530)          (4,202)
                                                     -------------------------------------------------------
Income before income taxes                                 5,149       1,505       (2,684)          (3,541)
Income taxes                                              (2,112)      1,868           (1)               -
                                                     -------------------------------------------------------
Net income (loss)                                       $  3,037    $  3,373     $ (2,685)        $ (3,541)
                                                     =======================================================

Per share Data:
Basic income (loss) per share                           $   0.50    $   0.56     $  (0.53)        $  (0.92)
Diluted income (loss) per share                             0.46        0.53        (0.53)           (0.92)
Shareholders' equity per share                              5.43        4.95         4.39             4.05
Cash dividend per common share                                 -           -            -                -

Balance Sheet Data:
Balance sheet totals-end of year:
  Assets                                                $402,037    $278,579     $181,188         $ 96,185
  Loans, net                                             289,467     191,053      126,345           35,581
  Deposits                                               352,456     246,394      153,359           80,100
  Shareholders' equity                                    33,122      29,954       26,564           15,524

Average balance sheet amounts:
  Assets                                                $341,466    $222,454     $133,830         $ 38,857
  Loans, net                                             240,465     156,587       86,892           10,151
  Deposits                                               307,471     193,765      111,607           27,753
  Shareholders' equity                                    30,768      27,075       21,126           10,847

Selected Ratios:
Return on average equity                                    9.87%      12.46%      -12.71%          -32.64%
Return on average assets                                    0.89%       1.52%       -2.01%           -9.11%
Efficiency ratio                                           66.59%      81.31%      117.33%          358.53%
Leverage capital ratio                                      9.70%      13.47%       19.85%           39.95%
Net chargeoffs (recoveries) to average loans                0.08%      -0.05%        0.20%               -
Allowance for loan losses to total loans                    1.41%       1.38%        1.37%            1.42%
Average equity to average assets                            9.01%      12.17%       15.79%           27.92%

</TABLE>


                                       28
<PAGE>



ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

         Certain  matters  discussed or incorporated by reference in this Annual
Report on Form 10-K are forward-looking statements that are subject to risks and
uncertainties  that could cause actual results to differ  materially  from those
projected.  Please see  "Forward-Looking  Statements" on page 1. Therefore,  the
information  set forth therein should be carefully  considered  when  evaluating
business prospects of the Bank.

CRITICAL ACCOUNTING POLICIES

         Our  accounting  policies  are  integral to  understanding  the results
reported.  Accounting  policies  are  described  in  detail  in  Note  1 to  the
Consolidated Financial Statements.  Our most complex accounting policies require
management's  judgment  to  ascertain  the  valuation  of  assets,  liabilities,
commitments and contingencies. We have established detailed policies and control
procedures that are intended to ensure valuation methods are well controlled and
applied  consistently  from period to period.  In  addition,  the  policies  and
procedures  are intended to ensure that the process for  changing  methodologies
occurs in an  appropriate  manner.  The following is a brief  description of our
current  accounting   policies  involving   significant   management   valuation
judgments.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses  represents  management's  best estimate of losses
inherent  in the  existing  loan  portfolio.  The  allowance  for loan losses is
increased  by the  provision  for loan losses  charged to expense and reduced by
loans  charged  off,  net of  recoveries.  The  provision  for  loan  losses  is
determined  based on  management's  assessment of several  factors:  reviews and
evaluation  of  specific  loans,  changes  in the  nature and volume of the loan
portfolio,  current  economic  conditions  and the  related  impact on  specific
borrowers and industry groups,  historical loan loss  experiences,  the level of
classified and nonperforming loans and the results of regulatory examinations.

         Loans are  considered  impaired  if, based on current  information  and
events, it is probable that we will be unable to collect the scheduled  payments
of principal or interest when due according to the contractual terms of the loan
agreement.  The  measurement of impaired loans is generally based on the present
value of  expected  future cash flows  discounted  at the  historical  effective
interest   rate   stipulated   in  the   loan   agreement,   except   that   all
collateral-dependent  loans are measured for impairment  based on the fair value
of the  collateral.  In measuring the fair value of the  collateral,  management
uses assumptions and methodologies  consistent with those that would be utilized
by unrelated third parties.

Changes  in  the  financial  condition  of  individual  borrowers,  in  economic
conditions,  in historical  loss  experience and in the condition of the various
markets in which collateral may be sold may all affect the required level of the
allowance for loan losses and the association provision for loan losses.

SALE OF SBA LOANS

         In  calculating  gain on the sale of SBA loans,  the Bank  performs  an
allocation  based on the  relative  fair values of the sold portion and retained
portions of the loan.  The company  assumptions  are  validated  by reference to
external market information.

AVAILABLE-FOR-SALE SECURITIES

The fair value of most securities  classified as  available-for-sale is based on
quoted market prices. If quoted market prices are not available, fair values are
extrapolated from the quoted prices of similar instruments.



                                       29
<PAGE>

DEFERRED TAX ASSETS

         Our  deferred  tax assets are  explained  in the section  below  titled
"Income Tax" and in Note 8 to the Consolidated Financial Statements presented in
our 2004 10-K.  We use an  estimate of future  earnings to support our  position
that the benefit of our deferred tax assets will be realized.  If future  income
should  prove  non-existent  or less than the amount of the  deferred tax assets
within  the tax  years  to which  they may be  applied,  the  asset  will not be
realized and our net income will be reduced.

SECONDARY STOCK OFFERING

         The Bank filed a Registration  Statement on Form SB-2 on March 22, 2002
with  respect to a proposed  public  offering of the Bank's  Common stock for an
aggregate consideration of $12,000,001.  The registration statement was declared
effective by the Comptroller on April 15, 2002. A second registration statement,
registering  additional  shares to cover  over-subscriptions  was filed with the
Comptroller  on June 14, 2002,  and became  effective as of that date.  The Bank
completed the offering of 2,215,384 shares of Common Stock,  $2.50 par value, at
a price of $6.50 per share,  for an aggregate  consideration  of  $14,399,996 on
June 17, 2002.

OPERATING RESULTS

         For the year ended December 31, 2004,  the Company  reported net income
of $3,037,000 or $0.50 basic and $0.46 diluted earnings per share, compared with
net income of $3,373,000 or $0.56 basic and $0.53 diluted earnings per share for
the year ended December 31, 2003 and a net loss of ($2,685,000) or ($0.53) basic
and diluted loss per share for the year ended  December 31, 2002. Net income for
2004  represented  a decrease of $336,000  compared to 2003  primarily  due to a
one-time  benefit of $1.9  million  related to the  recognition  of deferred tax
assets in 2003.  The impact was offset,  in part, by an increase of $6.7 million
in interest income and an increase of $1.2 million in other income,  offset,  in
part,  by an increase of $0.8  million in provision  for credit  losses and $3.4
million in other expense.  See the specific sections below for details regarding
these changes.

         Net income for the year ended December 31, 2003 of $3,373,000, or $0.56
basic and $0.53 diluted  earnings per share,  compared to net loss of $2,685,000
or ($0.53) basic and diluted  earnings per share in 2002. The improvement in net
income of $6.1 million resulted from an increase of $4.1 million in net interest
income,  $1.2 million in  non-interest  income and a decrease of $0.6 million in
the provision for credit losses,  offset, in part by an increase of $1.7 million
in non-interest  expenses and a one-time  benefit of $1.9 million related to the
recognition of deferred tax assets.



                                       30
<PAGE>

NET INTEREST INCOME AND MARGIN

         Net interest income is the principal source of the Company's  operating
earnings. Net interest income is affected by changes in the nature and volume of
earning  assets  held during the year,  the rates  earned on such assets and the
rates  paid on  interest-bearing  liabilities.  The  following  table  shows the
composition  of average  earning  assets and average  funding  sources,  average
yields and rates and the net interest  margin for the three years ended December
31, 2004, 2003 and 2002.

<TABLE>
<CAPTION>

AVERAGE BALANCES, RATES AND YIELDS
                                                                     December 31,
                                         2004                            2003                          2002
                            ------------------------------  ----------------------------- ------------------------------
                                                            (dollars in thousands)
                                        INTEREST  YIELDS/              INTEREST  YIELDS/              INTEREST  YIELDS/
                             AVERAGE    INCOME/    RATES     AVERAGE    INCOME/   RATES     AVERAGE    INCOME/   RATES
                             BALANCE    EXPENSE    PAID      BALANCE    EXPENSE   PAID      BALANCE    EXPENSE   PAID
                            ------------------------------  ----------------------------- ------------------------------
<S>                          <C>          <C>        <C>      <C>       <C>         <C>     <C>         <C>        <C>

ASSETS

Interest earning assets:
  Loans (1)                  $ 244,600    $18,378    7.5%     $159,346  $ 11,587    7.3%    $  86,892   $ 6,318    7.3%
  Federal funds sold            43,000        546    1.3%       38,982       407    1.0%       21,844       362    1.7%
  Investment securities (2)     30,002        533    1.8%       12,061       139    1.2%       17,132       303    1.8%
  Interest bearing deposits
     in other banks                  -          -    0.0%            -         -    0.0%          869        19    2.2%
                            ------------------------------  ----------------------------- ----------------------
      Total earning assets     317,602     19,457    6.1%      210,389    12,133    5.8%      126,737     7,002    5.5%
                                       -----------                     ----------                     ----------
Noninterest earning assets:
  Cash and due from banks       18,272                          10,734                          6,504
  Other assets (3)               5,592                           1,331                            589
                            -----------                     -----------                   ------------
TOTAL ASSETS                 $ 341,466                        $222,454                      $ 133,830
                            ===========                     ===========                   ============
LIABILITIES AND
  SHAREHOLDERS' EQUITY

Interest-bearing liabilities:
  Deposits:
    Demand                   $   3,543         21    0.6%     $  4,201        30    0.7%    $   2,339        25    1.1%
    Savings                    138,776      1,833    1.3%       69,209     1,040    1.5%       30,337       491    1.6%
    Time                        47,008      1,020    2.2%       47,612     1,165    2.4%       26,988       676    2.5%
    Other                          361         22    6.1%            1         -    0.0%            -         -    0.0%
                            ------------------------------  ----------------------------- ------------------------------
       Total interest-bearing
         deposits:             189,688      2,896    1.5%      121,023     2,235    1.8%       59,664     1,192    2.0%
                                       -----------                     ----------                     ----------
Noninterest-bearing liabilities:
  Demand deposits              118,144                          72,744                         51,943
  Accrued expenses and
    other liabilities            2,866                           1,612                          1,097
Shareholders' equity            30,768                          27,075                         21,126
                            -----------                     -----------                   ------------
TOTAL SHAREHOLDERS'
  EQUITY AND LIABILITIES     $ 341,466                        $222,454                      $ 133,830
                            ===========                     ===========                   ============

Net interest income and margin            $16,561    5.2%               $  9,898    4.7%                 $5,810    4.6%
                                       ===================             ==================             ==================

<FN>

(1) Includes  amortization  of loan fee of $2,010 for 2004,  $1,159 for 2003 and
$741 for 2002.  Nonperforming loans have been included in average loan balances.

(2)  Interest  income  is  reflected  on an  actual  basis,  not  fully  taxable
equivalent basis. Yields are based on amortized cost.

(3) Net of average  allowance for credit losses of $ 3,347 and average  deferred
loan fees of $787 for 2004,  average  allowance for credit losses of $ 2,209 and
deferred  loan fees of $549 for 2003 and average  allowance for credit losses of
$1,192 and deferred loan fees of $471 for 2002.

</FN>
</TABLE>


                                       31
<PAGE>


         The following  table shows the effect on the interest  differential  of
volume and rate changes for the years ended December 31, 2004, 2003 and 2002:

<TABLE>
<CAPTION>

VOLUME/RATE ANALYSIS
(dollars in thousands)
                                                2004 vs. 2003                      2003 vs. 2002
                                      --------------------------------- ----------------------------------
                                                  Increase (decrease)               Increase (decrease)
                                                    due to change in                  due to change in
                                      --------------------------------- ----------------------------------
                                        Average    Average     Total      Average     Average     Total
                                        Volume      Rate      Change       Volume      Rate      Change
                                      --------------------------------- ----------------------------------
<S>                                       <C>         <C>      <C>           <C>        <C>       <C>

 Interest income:
   Loans                                  $6,406      $ 385    $ 6,791       $5,269     $    0    $ 5,269
   Federal funds sold                         51         88        139          179       (134)        45
   Investment securities                     319         75        394          (58)      (106)      (164)
    Other                                      -          -          -            -        (19)       (19)
                                      --------------------------------- ----------------------------------
      Total interest income                6,776        548      7,324        5,389       (258)     5,131
                                      --------------------------------- ----------------------------------

 Interest expense:
   Demand                                     (4)        (5)        (9)          13         (8)         5
   Savings                                   919       (126)       793          584        (35)       549
   Time                                      (13)      (132)      (145)         505        (16)       489
   Other                                      22          0         22            -          -          -
                                      --------------------------------- ----------------------------------
       Total interest expense                925       (263)       661        1,102        (59)     1,043
                                      --------------------------------- ----------------------------------

 Change in net interest income            $5,851      $ 811    $ 6,663       $4,287     $ (199)   $ 4,088
                                      ================================= ==================================

</TABLE>


         Net interest income was  $16,561,000 in 2004,  comprised of $19,457,000
in interest  income and $2,896,000 in interest  expense.  Net interest income in
2004 compared to $9,898,000,  comprised of  $12,133,000  in interest  income and
$2,235,000  in  interest  expense  for the year ended  December  31,  2003.  The
increase of  $6,663,000  in net interest  income in 2004 was primarily due to an
increase of $7,324,000  in interest  income  offset,  in part, by an increase of
$661,000 in interest expense.

         Net interest income for the year ended December 31, 2003 represented an
increase of $4,088,000 over $5,810,000 for the year ended December 31, 2002. The
increase  in net  interest  income  was  primarily  a result of an  increase  of
$5,131,000 in interest  income offset,  in part, by an increase of $1,043,000 in
interest expense.

         The net interest margin (net interest income divided by average earning
assets) was 5.2% for the year ended  December 31, 2004,  as compared to 4.7% for
the year ended  December  31,  2003 and 4.6% for 2002.  The  improvement  in net
interest  margin in 2004  compared to 2003 was primarily the result of increases
in the prime  rate  during the  second  half of the year,  a shift in the mix of
loans toward higher yielding  product lines,  and a shift in the mix of deposits
toward  lower-cost  sources of funds.  The improvement in net interest margin in
2003  compared to 2002 was primarily  due to improved  balance  sheet  leverage.
Average loans  represented 77% of average earning assets in 2004 compared to 76%
in 2003 and 69% in 2002. In addition,  in 2004 the Bank's ratio of average loans
to average deposits was 80%, down from 82% in 2003 and 78% in 2002.

         Significant  factors affecting net interest income are: rates,  volumes
and mix of the loan, investment and deposit portfolios. Due to the nature of the
Bank's  lending  markets,  in which the majority of loans are generally  tied to
Prime Rate,  we believe  that an increase in interest  rates  should  positively



                                       32
<PAGE>

affect the Bank's future earnings,  while a decline will have a negative impact.
However,  it is not  feasible  to provide an  accurate  measure of such a change
because  of the many  factors  (many  of them  uncontrollable)  influencing  the
result.

INTEREST INCOME

         For the year ended  December 31, 2004,  the Company  reported  interest
income of $19,457,000 an increase of $7,324,000 or 60% over $12,133,000 reported
in 2003. The increase in interest income  primarily  reflects an increase in the
volume of average  earning  assets in 2004  compared  to 2003.  Average  earning
assets  were $318  million for the year ended  December  31, 2004 an increase of
$107 million or 51% over $210 million for the year ended  December 31, 2003.  In
addition,  the majority of the Bank's earning assets have rate  structures  that
re-price with movements in short-term  interest rates,  primarily the prime rate
and fed funds rate. From June 2004 through  December 2004, each of these indices
increased by 1.25%.

         For the year ended December 31, 2003, the Bank reported interest income
of $12,133,000 for an increase of $5,131,000 or 73% over $7,002,000  reported in
2002.  The  increase in interest  income  primarily  reflects an increase in the
volume of average  earning  assets in 2003  compared  to 2002.  Average  earning
assets were $210 million for the year ended December 31, 2003 an increase of $83
million or 65% over $127 million for the year ended December 31, 2002.

INTEREST EXPENSE

         Interest  expense was  $2,896,000 for the year ended December 31, 2004,
which  represented an increase of $661,000 or 30% compared to $2,235,000 for the
year ended  December  31,  2003.  The  increase  in interest  expense  primarily
reflects an increase in average interest-bearing liabilities in 2004 compared to
2003. Average interest-bearing  liabilities were $190 million for the year ended
December 31,  2004,  an increase of $69 million or 57% from $121 million for the
year ended  December 31, 2003.  Partially  offsetting  the impact of the greater
volume of interest-bearing liabilities was a decrease in the average rate paid.

         Interest  expense was  $2,235,000 for the year ended December 31, 2003,
which  represented  an increase of $1,043,000 or 88% compared to $1,192,000  for
the year ended  December 31, 2002.  The increase in interest  expense  primarily
reflects an increase in average interest-bearing liabilities in 2003 compared to
2002. Average interest-bearing  liabilities were $121 million for the year ended
December 31,  2003,  an increase of $61 million or 102% from $60 million for the
year ended  December 31, 2002.  Partially  offsetting  the impact of the greater
volume of interest-bearing liabilities was a decrease in the average rate paid.

CREDIT RISK AND PROVISION FOR CREDIT LOSSES

         The Bank  maintains an allowance for credit  losses which is based,  in
part, on loss experience of the Bank and the California  banking  industry,  the
impact of economic conditions within the Bank's market area, and, as applicable,
the State of California,  the value of underlying  collateral,  loan performance
and  inherent  risks  in  the  loan  portfolio.  The  allowance  is  reduced  by
charge-offs  and increased by provisions  for credit losses charged to operating
expense and recoveries of previously  charged-off  loans.  Based on management's
current  evaluation  of  such  risks,  additions  of  $1,671,000,  $843,000  and
$1,424,000  were made to the allowance for credit losses in 2004, 2003 and 2002,
respectively.  During  2004,  the Bank had charge  offs  totaling  $240,000  and
recoveries  of $32,000 as  compared  to  $10,000 in charge  offs and  $85,000 in
recoveries  in 2003 and  $170,000  charged off and no  recoveries  in 2002.  The
resulting allowance for credit losses was $4,146,000 representing 1.41% of total
loans at December 31, 2004 as compared to $2,683,000 representing 1.38% of total
loans at December 31, 2003 and $1,765,000  representing  1.37% of total loans at
December 31, 2002.

         The accrual of interest on loans would be discontinued  and any accrued
and unpaid  interest is reversed  when, in the opinion of  management,  there is



                                       33
<PAGE>

significant doubt as to the  collectibility of interest or principal or when the
payment of principal  or interest is ninety days past due,  unless the amount is
well-secured and in the process of collection.  There were two non-accrual loans
at  December  31, 2004  totaling  $1,026,000  as  compared to one loan  totaling
$59,000 at December 31, 2003.  There were no  non-accrual  loans at December 31,
2002. At December 31, 2004,  the  non-accrual  loans  consisted of two SBA loans
totaling $1,026,000 of which $712,000 is guaranteed by the  U.S.Government.  The
remaining  balance of $314,000 is secured by business  assets and real property.
Of the two loans on nonaccrual at December 31, 2004,  one loan was determined to
be impaired and its  carrying  value  reflects the fair value of the  collateral
securing the loan.

In addition,  at December 31, 2004, 2003 and 2002,  there were no loans past due
90 days or more as to principal or interest and still accruing interest.

         At December 31, 2004,  2003 and 2002 there were no properties  owned by
the Bank acquired through the foreclosure process.

         Management  is of the opinion that the  allowance  for credit losses is
maintained  at a level  adequate  for  inherent  losses  in the loan  portfolio.
However, the Bank's loan portfolio, which includes approximately $122,000,000 in
real estate loans,  representing  approximately  42% of the portfolio,  could be
adversely affected if California  economic conditions and the real estate market
in the Bank's  market area were to weaken.  The effect of such events,  although
uncertain  at  this  time,   could  result  in  an  increase  in  the  level  of
non-performing  loans and OREO and the level of the  allowance  for loan losses,
which could adversely affect the Bank's future growth and profitability.

NON-INTEREST INCOME

The following table sets forth the components of other income and the percentage
distribution of such income for the years ended December 31, 2004, 2003 and 2002

<TABLE>
<CAPTION>

 Other Income
 (dollars in thousands)                          2004                     2003                     2002
                                         ----------------------   ----------------------   ----------------------
                                           Amount     Percent       Amount     Percent       Amount     Percent
                                         ----------------------   ----------------------   ----------------------
<S>                                          <C>         <C>          <C>         <C>          <C>         <C>

 Gain on sale of SBA loans                   $2,737      71.0%        $2,095      80.2%        $1,335      91.4%
 SBA loan servicing income                      310       8.0%           181       6.9%            39       2.7%
 Depositor service charges                      362       9.4%           194       7.4%            38       2.6%
 Other operating income                         446      11.6%           142       5.4%            48       3.3%
                                         ----------------------   ----------------------   ----------------------

                                             $3,855     100.0%        $2,612     100.0%        $1,460     100.0%
                                         ===========              ===========              ===========

</TABLE>

         Non-interest   income  totaled  $3,855,000  in  2004,  an  increase  of
$1,243,000  or 48%  over  $2,612,000  in  2003.  Non-interest  income  increased
$1,152,000,  or 79% from 2002 to 2003. Non-interest income consists primarily of
gains  recognized on sales of SBA loans,  SBA loan  packaging fees and servicing
income  and  service  charge  income  on  deposit  accounts.  The  increases  in
non-interest  income in 2004  compared to 2003 and in 2003  compared to 2002 are
primarily  due to higher  volumes of SBA loan sales as a result of  expansion of
the SBA lending operation.  The company established its SBA lending operation in
March 2002.



                                       34
<PAGE>

NON-INTEREST EXPENSES

         The  components of other  expense are set forth in the following  table
for the years ended December 31, 2004, 2003 and 2002.

<TABLE>
<CAPTION>


 Other Expense as a Percent of Average Assets
 (dollars in thousands)

                                          2004                          2003                        2002
                                 ----------------------       -----------------------       ---------------------
                                   Amount       Percent          Amount       Percent        Amount       Percent
                                 ----------------------       -----------------------       ---------------------
<S>                              <C>              <C>         <C>              <C>          <C>             <C>

 Salaries and benefits           $  8,081         2.4%        $  6,594         3.0%         $ 5,094         3.8%
 Occupancy                          1,420         0.4%             890         0.4%             741         0.6%
 Data processing                      763         0.2%             536         0.2%             373         0.3%
 Legal and professional               645         0.2%             340         0.2%             253         0.2%
 Marketing and advertising            612         0.2%             370         0.2%             461         0.3%
 Furniture and equipment              585         0.2%             561         0.3%             464         0.3%
 Other                              1,490         0.4%             922         0.4%           1,144         0.9%
                                 ----------------------       -----------------------       ---------------------
                                 $ 13,596         4.0%        $ 10,213         4.6%         $ 8,530         6.4%
                                 ========                     ========                      =======

</TABLE>


         Non-interest  expenses  were  approximately  $13.6  million  in 2004 as
compared  to  approximately  $10.2  million  in 2003 and $8.5  million  in 2002.
Non-interest expense increased approximately $3.4 million in 2004 as compared to
2003.  This  increase  was  primarily  attributable  to  increased  salaries and
benefits  cost and  occupancy  expense as well as increases in  marketing,  data
processing  expense and  professional  services.  Non-interest  expenses in 2003
increased  approximately  $1.7  million  in the year  ended  December  31,  2003
compared to 2002. The increase was primarily  attributable  to increased  salary
and benefits cost as well as increases in occupancy, furniture and equipment and
data  processing  expense.  Non-interest  expenses  measured as a percentage  of
average earning assets were 4.0% in 2004,  which  represented  improvement  from
4.6% in 2003 and 6.4% in 2002.

         The increases in non-interest  expenses reflect the impact of expansion
of the business during 2004, 2003 and 2002.  During 2004, the Bank  consolidated
offices and moved its'  headquarters to a larger facility in San Jose;  launched
two new product lines,  international trade finance and investment services; and
added a SBA loan production office in Fresno, California.  During 2003, the Bank
opened a SBA loan  production  office in San Diego to cover Southern  California
and added staff in all major business lines.  During the year ended December 31,
2002, the Bank opened a branch office in downtown Palo Alto,  established a U.S.
Small  Business  Administration  Lending  ("SBA") Group that includes a regional
loan production office in Sacramento county, and launched Bridge Capital Finance
Group  ("BCFG"),  a  factoring  and  asset-based  lending  division  with a loan
production office in Santa Clara.

         Salaries  and related  benefits is the largest  component of the Bank's
non-interest expense. Salaries and benefits were $8.1 million for the year ended
December  31, 2004 as compared  to $6.6  million and $5.1  million for the years
ended December 31, 2003 and 2002,  respectively.  The increases in 2004 compared
to 2003 and 2003 compared to 2002 are primarily  attributable to the increase in
full time equivalent employees (FTE) related to expansion of the business and to
higher incentive  compensation  related to performance of the Bank. The Bank had
80 FTE at December  31, 2004 as compared to 60 FTE at December 31, 2003 and 50.5
FTE at December 31, 2002.

         Occupancy  expense for the year ended  December 31, 2004 was $1,420,000
and  represented  an increase of $530,000 over $890,000 for the prior year.  The
increase  in 2004 was  primarily  due to the  consolidation  of  offices  of the
Company in a new,  larger  headquarters  facility in  downtown  San Jose and the
addition of two loan  production  offices in the SBA group.  In 2003,  occupancy
expense  increased  $149,000 to $890,000 compared to $741,000 for the year ended
December 31, 2002.  The increase in  occupancy  expense  primarily  reflects the
full-year  impact of expansion of the SBA and Bridge  Capital  Finance  business
lines that occurred in 2002.



                                       35
<PAGE>


         The Company contracts with third-party vendors for most data processing
needs and to support technical  infrastructure.  Data processing expense in 2004
was $763,000,  which  represented an increase of $227,000 over $536,000 one year
earlier.  In 2003, data processing costs increased $163,000 to $536,000 compared
to  $373,000  in 2002.  The  increases  in data  processing  in both  years  are
primarily  due to  increases  in  deposit  transaction  volumes in  addition  to
increases in FTE.

         Legal  and  professional  expenses  were  $645,000  for the year  ended
December 31, 2004,  which  represented  an increase of $305,000 over $340,000 in
2003. The increase in 2004 was due, in part, to nonrecurring legal costs related
to the  formation  of the  holding  company  as well  as  increases  in  ongoing
accounting  and  audit  services.  In  2003,  legal  and  professional  expenses
increased $87,000 to $340,000 compared to $253,000 in 2002. The increase in 2003
was  primarily  due to  increased  legal costs  related to expansion of business
lines.

         Furniture,  fixtures and equipment  (FF&E)  expense of $585,000 for the
year ended December 31, 2004  represented a slight increase of $24,000  compared
to $561,000 in the same period one year earlier. In 2003, FF&E expense increased
$97,000 to $561,000  compared to $464,000 for the year ended  December 31, 2002.
The increases in FF&E expense  primarily  reflect the impact of establishing new
facilities and the increase in headcount  associated  with expansion of business
lines.

         As pressure  continues  on net interest  margins and net asset  growth,
management of operating expenses will continue to be a priority.

INCOME TAXES

         The Bank's  effective tax rate was 41% for the year ended  December 31,
2004.  For 2003 the  effective tax rate was -124.03% as a result of the one-time
recognition  of $1.9 million of deferred tax assets.  The Bank's  effective  tax
rate was 0% for the year ended  December  31, 2002 as a result of net  operating
losses  and net  operating  loss  carry  forward.  See  Note 9 to the  financial
statements for additional information on income taxes.

QUARTERLY INCOME

         The  unaudited  income  statement  data of the Bank,  in the opinion of
management,  includes all normal and  recurring  adjustments  necessary to state
fairly the  information  set forth  herein.  The results of  operations  are not
necessarily  indicative of results for any future  period.  The following  table
shows the Bank's  unaudited  quarterly  income statement data for the years 2004
and 2003.

<TABLE>
<CAPTION>

                                       First quarter      Second quarter      Third quarter       Fourth quarter
                                      2004      2003      2004      2003      2004      2003      2004      2003
                                   --------------------------------------------------------------------------------
<S>                                   <C>       <C>       <C>       <C>       <C>       <C>       <C>      <C>

 Net interest income                  $3,191    $2,110    $3,742    $2,382    $4,470    $2,633    $5,157   $ 2,773
 Provision for credit losses             405       254       369       228       611        82       286       279
 Other income                          1,122       594       779       516       834       749     1,121       804
 Other expenses                        3,115     2,321     3,094     2,392     3,308     2,827     4,079     2,673
                                   --------------------------------------------------------------------------------
                                         793       129     1,058       278     1,385       473     1,913       625
                                   --------------------------------------------------------------------------------
 Income tax                              327                 434                 568                 783    (1,867)
 Net income                           $  466    $  129    $  624    $  278    $  817    $  473    $1,130   $ 2,492
                                   ================================================================================

 Net income per share - basic         $ 0.08    $ 0.02    $ 0.10    $ 0.05    $ 0.13    $ 0.08    $ 0.19   $  0.41
 Net income per share - diluted       $ 0.07    $ 0.02    $ 0.09    $ 0.04    $ 0.12    $ 0.07    $ 0.17   $  0.38

</TABLE>


                                       36
<PAGE>


FINANCIAL CONDITION AND EARNING ASSETS

         As of December 31,  2004,  assets were $402  million,  gross loans were
$294 million and deposits were $352 million.  Assets  increased $123 million,  a
44% increase from $279 million at December 31, 2003.  Gross loans increased $100
million,  or 52% from $194 million at December 31, 2003. Deposits increased $106
million, a 43% increase from $246 million at December 31, 2003.

         As of December 31,  2003,  assets were $279  million,  gross loans were
$194 million and deposits were $246 million.  Assets increased $97.4 million,  a
54% increase from $181 million at December 31, 2002.  Gross loans  increased $65
million,  or 50% from $129 million at December 31, 2002.  Deposits increased $93
million, a 61% increase from $153 million at December 31, 2002.

FEDERAL FUNDS SOLD

         Federal  funds sold were  $62,675 at  December  31, 2004 as compared to
$47,975 at December 31, 2003.  This  increase is primarily due to an increase in
short term deposits, primarily in the money market category. The average balance
of federal  funds sold was $43,000 in 2004 and $38,982 in 2003.  These  balances
represented 14.0% and 20.1% of average deposits for 2004 and 2003, respectively.
They are maintained primarily for the short-term liquidity needs of the Bank.

SECURITIES

         The following table shows the  composition of the securities  portfolio
at December 31, 2004, 2003 and 2002.

<TABLE>
<CAPTION>

Investment Securities Composition                               December 31,
(dollars in thousands)                       2004                   2003                   2002
                                          ---------------------------------------------------------------------
                                                         Fair                   Fair                   Fair
                                             Cost       Value       Cost       Value       Cost       Value
                                          ---------------------------------------------------------------------
<S>                                           <C>        <C>         <C>        <C>         <C>        <C>

Available for sale:
  U. S. Treasury Securities                   $   100    $   100     $   100    $   100     $   100    $   100
  U. S. Government Agencies                    26,400     26,198      14,236     14,247       2,530      2,530
  Money Market Mutual Funds                         -          -      10,000     10,000      14,000     14,000
                                          ---------------------------------------------------------------------
Total available for sale                       26,500     26,298      24,336     24,347      16,630     16,630
                                          ---------------------------------------------------------------------

Total investment securities portfolio         $26,500    $26,298     $24,336    $24,347     $16,630    $16,630
                                          =====================================================================

</TABLE>


The maturities and yields of the investment portfolio is shown below:

<TABLE>
<CAPTION>


MATURITY AND YIELDS OF INVESTMENT SECURITIES
                                                                          After one year
(dollars in thousands)                              Within 1 year         within five years
                                                ----------------------- ----------------------
                                                             Weighted               Weighted
                                      Carrying               Average                Average
At December 31, 2004                   Value      Amount      Yield       Amount     Yield
----------------------------------------------------------------------- ----------------------
<S>                                     <C>        <C>           <C>       <C>          <C>

  U. S. Treasury Securities             $   100    $    100      1.64%     $  ----      ----
  U. S. Government Agencies              26,400      14,016      2.21%      12,384      2.61%
                                     -----------------------            -----------
    Total                               $26,500    $ 14,116      0.92%     $12,384
                                     =======================            ===========
At December 31, 2003
-------------------------------------
  U. S. Treasury Securities             $   100    $    100      1.53%     $  ----      ----
  U. S. Government Agencies              14,247       2,035      1.11%      12,212      1.74%
  Money Market Mutual Funds              10,000      10,000      0.87%        ----       ----
                                     -----------------------            -----------
    Total                               $24,347    $ 12,135      0.92%     $12,212
                                     =======================            ===========

</TABLE>


                                       37
<PAGE>


         Investment  securities  are  classified  as  available  for  sale.  Any
unrealized gain or loss on investment securities available for sale is reflected
in the  carrying  value of the  security and reported net of income taxes in the
equity section of the balance sheet.  The pre-tax  unrealized loss on securities
available for sale at December 31, 2004 was  ($119,000) as compared to a pre-tax
unrealized  gain on  securities  available  for  sale at  December  31,  2003 of
$11,000. There was no unrealized gain or loss at December 31, 2002.

LOAN PORTFOLIO

         The following table shows the Bank's loans by type and their percentage
distribution for the three years ended December 31, 2004, 2003 and 2002.

<TABLE>
<CAPTION>

LOAN PORTFOLIO
(dollars in thousands)
                                                     2004                2003                2002
                                         ------------------------------------------------------------
<S>                                                <C>                  <C>                 <C>

Commercial and other                               $ 100,681            $ 73,846            $ 50,235
SBA                                                   45,251              39,412              24,314
Real estate construction                              42,323              35,065              32,613
Real estate term                                      80,044              28,036              16,804
Factoring and Asset based                             22,342              13,106               1,537
Other                                                  3,945               4,984               3,200
                                         ------------------------------------------------------------
Total gross loans                                    294,586             194,449             128,703
Unearned fee income                                     (973)               (713)               (593)
                                         ------------------------------------------------------------
  Total loan portfolio                             $ 293,613            $193,736            $128,110
                                         ============================================================

Commercial and other                                   34.2%               38.0%               39.0%
SBA                                                    15.4%               20.3%               18.9%
Real estate construction                               14.3%               18.0%               25.3%
Real estate term                                       27.2%               14.4%               13.1%
Factoring and Asset based                               7.6%                6.7%                1.2%
Other                                                   1.3%                2.6%                2.5%
                                         ------------------------------------------------------------
Total gross loans                                     100.0%              100.0%              100.0%
                                         ============================================================

</TABLE>


               Loan balances  increased to $293.6  million at December 31, 2004,
which  represented  an increase of $99.9  million or 51.6% as compared to $193.7
million at December 31, 2003.  The increase in loans was primarily in commercial
and real estate term  (includes  longer term real estate  loans,  land loans and
home equity  lines),  without a  concentration  in any one specific  category of
loans.  The increase was a result of general  marketing  efforts.  Loan balances
increased to $193.7 million at December 31, 2003, which  represented an increase
of $65.6  million or 51.2% as compared to $128.1  million at December  31, 2002.
The increase in loans was primarily in  commercial,  SBA and  factoring/ABL  and
real estate term, without a concentration in any one specific category of loans.
The  increase was a result of the addition of the  factoring/ABL  department  in
addition to general marketing efforts.

         The Bank's  commercial  loan  portfolio  represents  loans to small and
middle-market businesses in the Santa Clara county region. Commercial loans were
$100.7  million at December 31,  2003,  which  represented  an increase of $26.8
million or 36.3% over $73.8  million at December 31, 2003. At December 31, 2004,
commercial loans comprised 34% of total loans  outstanding as compared to 38% at
December 31,  2003.  Commercial  loans were $73.8  million at December 31, 2003,
which  represented  an increase of $23.6  million or 47.0% over $50.2 million at
December 31, 2002. At December 31, 2003, commercial loans comprised 38% of total
loans outstanding as compared to 39% at December 31, 2002.

         In March of 2002,  the Bank  established  an SBA lending group in Santa
Clara with a loan production  office in Sacramento  County.  In October of 2003,



                                       38
<PAGE>

the Bank established a loan production office in San Diego county.  The Bank, as
a Preferred Lender,  originates SBA loans and participates in the SBA 7A and 504
SBA lending  programs.  Under the 7A program,  a loan is made for  commercial or
real estate purposes. The SBA guarantees these loans and the guarantee may range
from 70% to 90% of the total loan. In addition, the loan could be collateralized
by a deed of trust on real estate.

         Under the 504  program,  the Bank lends  directly to the  borrower  and
takes a first  deed of trust  to the  subject  property.  In  addition  the SBA,
through a Community  Development  Corporation  makes an  additional  loan to the
borrower and takes a deed of trust  subject to the Bank's  position.  The Bank's
position in relation to the real estate  "piggyback" loans can range from 50% to
70% loan to value.

         At December 31, 2004,  SBA loans  comprised  $45.3  million or 15.4% of
total loans as compared to $39.4 million or 20.3% of total loans at December 31,
2003 and $24.3  million or 18.9% of total loans at December 31,  2002.  The Bank
has the intent to sell all or a portion of the SBA loans and,  as such,  carries
the saleable  portion of SBA loans at the lower of aggregate cost or fair value.
At  December  31,  2004,  2003 and 2002,  the fair  value of SBA loans  exceeded
aggregate cost and therefore, SBA loans were carried at aggregate cost.

         The Bank's  construction loan portfolio  primarily consists of loans to
finance individual single-family residential homes,  approximately half of which
are  owner-occupied  projects.  Construction  loans  increased $7.2 million,  or
20.7%,  to $42.3  million at December  31, 2004 as compared to $35.1  million at
December 31, 2003.  Construction  loan  balances at December 31, 2004  comprised
14.4% of total loans as compared to 18.0% at  December  31,  2003.  Construction
loans increased $2.5 million,  or 7.5%, to $35.1 million at December 31, 2003 as
compared to $32.6  million at December 31, 2002.  Construction  loan balances at
December  31,  2003  comprised  18.0% of total  loans  as  compared  to 25.3% at
December 31, 2002.

         Other real  estate  loans  increased  $52.0  million or 185.5% to $80.0
million at December  31, 2004 as compared to $28.0  million at December 31, 2003
and increased  $11.2 million or 66.9% from $16.8 million at December 31, 2002 to
$28.0  million at December 31,  2003.  The increase in 2004 in other real estate
loans was approximately  equally split between home equity lines of credit, land
loans related to future  construction  credits and other real estate term loans.
In 2003, the increase was primarily in land loans related to future construction
credits.  At December 31, 2004,  other real estate  loans  represented  27.2% of
total loans as compared to 14.4% at December  31, 2002 and 13.1% at December 31,
2001.

         Factoring  and  asset-based   lending  represents   purchased  accounts
receivable  (factoring)  and a structured  accounts  receivable  lending program
where the Bank receives client specific payment for client  invoices.  Under the
factoring  program,  the Bank purchases  accounts  receivable  invoices from its
clients and then  receives  payment  directly  from the party  obligated for the
receivable. In most cases the Bank purchases the receivables subject to recourse
from the Bank's  factoring  client.  The asset-based  lending program requires a
security  interest in all of a client's  accounts  receivable.  At December  31,
2004,  Factoring/ABL  loans  totaled  $22.3  million  or 7.6% of total  loans as
compared to $13.1 million or 6.7% of total loans at December 31, 2003.

         Other loans  consist  primarily  of loans to  individuals  for personal
uses, such as installment purchases, overdraft protection loans and a variety of
other consumer purposes.  At December 31, 2004, other loans totaled $3.9 million
as compared to $5.0  million at December  31, 2003 and $3.2  million at December
31, 2002.

ALLOWANCE FOR LOAN LOSSES

            A consequence  of lending  activities is the potential for loss. The
amount  of such  losses  will vary  from  time to time  depending  upon the risk
characteristics of the loan portfolio as affected by economic conditions, rising
interest rates and the financial experience of the borrowers.  The allowance for
loan  losses,  which  provides  for the risk of losses  inherent  in the  credit
extension  process,  is increased by the  provision  for loan losses  charged to



                                       39
<PAGE>

expense and decreased by the amount of charge-offs  net of recoveries.  There is
no precise method of estimating  specific  losses or amounts that ultimately may
be charged off on  particular  segments of the loan  portfolio.  Similarly,  the
adequacy of the allowance for loan losses and the level of the related provision
for loan losses is determined in  management's  judgment based on  consideration
of:

     -    Economic conditions,
     -    Borrowers' financial condition
     -    Loan impairment
     -    Evaluation of industry trends
     -    Historic losses, migrations and delinquency trends
     -    Industry and other concentrations
     -    Loans  which  are  contractually  current  as  to  payment  terms  but
          demonstrate a higher degree of risk as identified by management
     -    Continuing evaluation of the performing loan portfolio
     -    Periodic review and evaluation of problem loans
     -    Off balance sheet risks
     -    Assessments by regulators and other third parties

            In addition to the internal  assessment of the loan  portfolio,  the
 Bank also retains a consultant  who performs  credit reviews on a regular basis
 and then  provides an  assessment  of the  adequacy of the  allowance  for loan
 losses.  The federal banking  regulators also conduct  examinations of the loan
 portfolio periodically.

              The following  table  summarizes the activity in the allowance for
loan losses.

<TABLE>
<CAPTION>

(dollars in thousands)                                  Period ended December 31,
                                                     2004         2003         2002
                                                 ---------------------------------------
<S>                                                   <C>          <C>          <C>

Balance, beginning of period                          $ 2,683      $ 1,765      $   511
Loans charged off by category:
  Commercial and other                                    240            -          170
  Real estate Construction                                  -            -            -
  Real estate term                                          -            -            -
  Factoring and asset-based                                 -            -            -
  Consumer                                                  -           10            -
                                                 ---------------------------------------
    Total charge-offs                                     240           10          170
                                                 ---------------------------------------
Recoveries by category:
  Commercial and other                                     32           85            -
  Real estate Construction                                  -            -            -
  Real estate term                                          -            -            -
  Factoring and asset-based                                 -            -            -
  Consumer                                                  -            -            -
                                                 ---------------------------------------
    Total recoveries                                       32           85            -
                                                 ---------------------------------------
Net (recoveries) charge-offs                              208          (75)         170
Provision charged to expense                            1,671          843        1,424
                                                 ---------------------------------------
Balance, end of year                                  $ 4,146      $ 2,683      $ 1,765
                                                 =======================================

Ratio of net charge-offs during
  the period to average loans
  outstanding                                            0.09%       -0.05%        0.20%
Ratio of allowance for credit
  losses to loans outstanding
  at end of year                                         1.41%        1.38%        1.37%
Allowance to nonperforming loans
  at end of year                                       404.09%     4547.46%          --

</TABLE>


                                       40
<PAGE>


         Based on an evaluation of the  individual  credits,  historical  credit
loss experienced by loan type and economic conditions,  management has allocated
the allowance for loan losses as follows for the three years ended December 31:

<TABLE>
<CAPTION>

                                    December 31, 2004        December 31, 2003        December 31, 2002
                                  ------------------------ ------------------------ -----------------------
                                             Percent of               Percent of              Percent of
                                            loans in each                 loans in each      loans in each
                                             category to              category to             category to
(dollars in thousands)             Amount    total loans    Amount    total loans    Amount   total loans
                                  ------------------------ ------------------------ -----------------------
<S>                                  <C>           <C>        <C>           <C>       <C>           <C>

Commercial and other                 $  998        34.18%     $  666        37.98%    $  771        39.03%
SBA                                   1,231        15.36%      1,042        20.27%       198        18.89%
Real estate construction                444        14.33%        400        18.03%       410        25.34%
Real estate term                      1,132        27.17%        288        14.42%       359        13.06%
Factoring/ABL                           312         7.58%        261         6.74%         -         1.19%
Other                                    29         1.34%         26         2.56%        27         2.49%
                                  ------------------------ ------------------------ -----------------------
                                     $4,146        99.96%     $2,683       100.00%    $1,765       100.00%
                                  ======================== ======================== =======================

</TABLE>


RISK ELEMENTS

         Loans  for  which  the   accrual  of  interest   has  been   suspended,
restructured loans and other loans with principal or interest contractually past
due 90 days or more as set forth in the  following  table as of  December  31 of
each year:

<TABLE>
<CAPTION>


Nonperforming Loans
(dollars in thousands)                                                     2004           2003           2002
                                                                   ---------------------------------------------
<S>                                                                       <C>                <C>            <C>

Loans accounted for on a non-accrual basis                                $ 1,026            $ 59           $ -
Loans restructured and in compliance with modified terms                        -               -             -
Other loans with principal or interest contracturally past due
  90 days or more                                                               -               -             -
                                                                   ---------------------------------------------
                                                                          $ 1,026            $ 59           $ -
                                                                   =============================================

</TABLE>



         There  were  two  non-accrual  loans  at  December  31,  2004  totaling
$1,026,000 as compared to one non-accrual  loan totaling $59,000 at December 31,
2003.  There were no  non-accrual  loans at December 31,  2002.  At December 31,
2004, the non-accrual  loans  consisted of two SBA loans totaling  $1,026,000 of
which  $712,000 is guaranteed by the  U.S.Government.  The remaining  balance of
$314,000 is secured by business  assets and real  property.  Of the two loans on
nonaccrual at December 31, 2004,  one loan was determined to be impaired and its
carrying value reflects the fair value of the collateral securing the loan.

FUNDING

Deposits  represent Bridge Bank's principal source of funds.  Most of the Bank's
deposits are obtained from professionals,  small- to medium sized businesses and
individuals  within the Bank's market area.  The Bank's deposit base consists of
non-interest  and  interest-bearing  demand  deposits,  savings and money market
accounts  and  certificates  of deposit.  The  following  table  summarizes  the
composition of deposits as of December 31, 2004, 2003 and 2002.



                                       41
<PAGE>


<TABLE>
<CAPTION>

DEPOSIT CATEGORIES
(dollars in thousands)                    2004                      2003                      2002
                                  ------------------------  ------------------------- -------------------------
                                                Percent                    Percent                   Percent
                                     Total      of total       Total      of total       Total      of total
                                     Amount     deposits       Amount     deposits       Amount     deposits
                                  ------------------------  ------------------------- -------------------------
<S>                                   <C>          <C>          <C>           <C>         <C>           <C>

Noninterest-bearing  demand           $126,895     36.00%       $ 76,510      31.05%      $ 76,325      49.77%
Interest-bearing demand                  3,946      1.12%          6,954       2.82%         2,529       1.65%
Money market and savings               169,801     48.18%        115,930      47.05%        32,991      21.51%
Certificates of deposit:
  Less than $100                        16,182      4.59%         16,006       6.50%         7,621       4.97%
  $100 and more                         35,632     10.11%         30,994      12.58%        33,893      22.10%
                                  ------------------------  ------------------------- -------------------------
Total                                 $352,456    100.00%       $246,394     100.00%      $153,359     100.00%
                                  ========================  ========================= =========================

</TABLE>


         Deposits  increased  $106.1  million  or 43.0% from  $246.4  million at
December  31,  2003 to $352.5  million at December  31,  2004.  The  increase in
deposits  was  primarily  in  non-interest  bearing  demand,  money  market  and
certificates  of deposit  raised from the Bank's  primary  market in Santa Clara
County. The increase can be attributed to marketing efforts from the Bank's main
office in Santa Clara and branch office in Palo Alto and certificates of deposit
raised from  institutions in order to manage balance sheet liquidity in addition
to expansion from general  marketing from the Bank's main office in Santa Clara.
Deposits at December 31, 2004 included $55.3 million,  or 15.6% of the total, in
title and escrow company account balances compared to $28.4 million, or 11.5% at
December 31, 2003 and $52.0  million,  or 33.9% at December 31, 2002.  Excluding
title and escrow company account balances,  deposits  increased $79.2 million or
36.3%  compared to December 31, 2003,  and  increased  $117 million or 115% from
2002 to 2003.

CAPITAL RESOURCES

         The Company's capital resources consist of shareholders'  equity, trust
preferred  securities  and (for  regulatory  purposes)  the allowance for credit
losses  (subject to  limitations).  At December 31, 2004, the Company's  capital
resources increased  $15,168,000 to $45,122,000 from $29,954,000 at December 31,
2003. Tier 1 capital  increased  14,218,000 to $44,172,000  primarily due to net
income of $3,037,000,  trust  preferred  securities up to the allowable limit of
$11,050,000 and issuance of stock. Tier 2 capital increased $2,413,000 comprised
of an increase in the allowance for credit losses of $1,463 and trust  preferred
securities allowable for Tier 2 capital of $950,000.

         The  Company is subject to capital  adequacy  guidelines  issued by the
Board of  Governors  and the OCC.  The Company is  required  to  maintain  total
capital  equal  to at least 8% of  assets  and  commitments  to  extend  credit,
weighted by risk,  of which at least 4% must consist  primarily of common equity
including  retained  earnings  (Tier 1 capital) and the remainder may consist of
subordinated debt,  cumulative  preferred stock or a limited amount of allowance
for credit losses.  Certain assets and commitments to extend credit present less
risk  than  others  and  will be  assigned  to  lower  risk-weighted  categories
requiring less capital allocation than the 8% total ratio. For example, cash and
government  securities are assigned to a 0%  risk-weighted  category,  most home
mortgage  loans are  assigned  to a 50%  risk-weighted  category  requiring a 4%
capital  allocation  and commercial  loans are assigned to a 100%  risk-weighted
category  requiring  an 8% capital  allocation.  As of December  31,  2004,  the
Company's  and the Bank's total  risk-based  capital  ratios were  approximately
13.8% and 13.2%,  respectively,  (14.7% for the Company and the Bank at December
31, 2003).

The Board of Governors and other federal Banking agencies have adopted a revised
minimum  leverage  ratio for  Companying  organizations  as a supplement  to the
risk-weighted capital guidelines. The old rule established a 3% minimum leverage



                                       42
<PAGE>

standard for well-run Banking  organizations  (Bank holding companies and Banks)
with diversified risk profiles.  Banking organizations that did not exhibit such
characteristics  or had  greater  risk due to  significant  growth,  among other
factors, were required to maintain a minimum leverage ratio 1% to 2% higher. The
old rule did not take into account the implementation of the market risk capital
measure set forth in the federal regulatory agency capital adequacy  guidelines.
The revised  leverage  ratio  establishes  a minimum  Tier 1 ratio of 3% (Tier 1
capital to total assets) for the highest rated Bank holding companies and Banks.
All other Bank holding  companies  must maintain a minimum Tier 1 leverage ratio
of 4% with higher  leverage  capital ratios  required for Banking  organizations
that have  significant  financial  and/or  operational  weaknesses,  a high risk
profile, or are undergoing or anticipating rapid growth.

The following table reflects the Company's Leverage, Tier 1 and total risk-based
capital ratios for the period ended December 31, 2004 and 2003.

<TABLE>
<CAPTION>

                                                        As of December 31,
             (in thousands)                        2004                       2003
                                          -----------------------   -----------------------
                                            Amount      Ratio          Amount      Ratio
                                          -----------------------   -----------------------
COMPANY CAPITAL RATIOS
------------------------------------------
<S>                                          <C>          <C>            <C>       <C>
Tier 1 Capital                               $ 44,172     12.34%         N/A        N/A
(to Risk Weighted Assets)
Tier 1 capital minimum requirement           $ 14,313      4.00%         N/A        N/A

Total Capital                                $ 49,268     13.77%         N/A        N/A
(to Risk Weighted Assets)
Total capital minimum requirement            $ 28,625      8.00%         N/A        N/A

Company leverage
Tier 1 Capital                               $ 44,172     12.94%         N/A        N/A
(to Average Assets)
Total capital minimum requirement            $ 13,659      4.00%         N/A        N/A

BANK RISK BASED CAPITAL RATIOS
------------------------------------------
Tier 1 Capital                               $ 43,058     12.03%        $ 29,954    13.48%
(to Risk Weighted Assets)
Tier 1 capital minimum requirement           $ 14,313      4.00%        $  8,890     4.00%
To be well capitalized under
  prompt corrective action provisions        $ 21,469      6.00%        $ 13,336     6.00%

Total Capital                                $ 47,204     13.19%        $ 32,637    14.68%
(to Risk Weighted Assets)
Total capital minimum requirement            $ 28,625      8.00%        $ 17,781     8.00%
To be well capitalized under
  prompt corrective action provisions        $ 35,781     10.00%        $ 22,226    10.00%

Bank leverage
Tier 1 Capital                               $ 43,058     12.61%        $ 29,954    13.47%
(to Average Assets)
Total capital minimum requirement            $ 13,659      4.00%        $  8,898     4.00%
To be well capitalized under
  prompt corrective action provisions        $ 17,073      5.00%        $ 11,123     5.00%

</TABLE>


         On  December  19,  1991,  the  Federal  Deposit  Insurance  Corporation
Improvement  Act of 1991 (the  "FDICIA") was signed into law. The FDICIA,  among
other matters,  substantially  revised  banking  regulations  and  established a
framework for determination of capital adequacy of financial institutions. Under
the FDICIA,  financial institutions are placed into one of five capital adequacy
categories as follows:  (1) "Well capitalized" - consisting of institutions with



                                       43
<PAGE>

a total risk-based  capital ratio of 10% or greater, a Tier 1 risk-based capital
ratio  of 6% or  greater  and a  leverage  ratio  of  5%  or  greater,  and  the
institution is not subject to an order, written agreement,  capital directive or
prompt corrective action directive; (2) "Adequately capitalized" - consisting of
institutions  with a total risk-based  capital ratio of 8% or greater,  a Tier 1
risk-based capital ratio of 4% or greater and a leverage ratio of 4% or greater,
and the  institution  does  not  meet  the  definition  of a "well  capitalized"
institution;  (3)  "Undercapitalized"  - consisting of institutions with a total
risk-based capital ratio less than 8%, a Tier 1 risk-based capital ratio of less
than  4%,   or  a   leverage   ratio  of  less  than  4%;   (4)   "Significantly
undercapitalized"  - consisting of institutions with a total risk-based  capital
ratio of less than 6%, a Tier 1 risk-based  capital  ratio of less than 3%, or a
leverage ratio of less than 3%; (5) "Critically  undercapitalized"  - consisting
of an institution  with a ratio of tangible equity to total assets that is equal
to or less than 2%.

Financial  institutions  classified as  undercapitalized or below are subject to
various limitations including,  among other matters, certain supervisory actions
by bank regulatory authorities and restrictions related to (i) growth of assets,
(ii)  payment  of  interest  on  subordinated  indebtedness,  (iii)  payment  of
dividends or other capital distributions, and (iv) payment of management fees to
a parent holding company. The FDICIA requires the bank regulatory authorities to
initiate  corrective action regarding  financial  institutions that fail to meet
minimum capital  requirements.  Such action may result in orders to, among other
matters,  augment capital and reduce total assets.  Critically  undercapitalized
financial  institutions  may also be subject  to  appointment  of a receiver  or
implementation of a capitalization plan.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

LIQUIDITY/INTEREST RATE SENSITIVITY

         The Bank strives to manage its liquidity to provide  adequate  funds at
an acceptable cost to support  borrowing  requirements  and deposit flows of its
customers.  Liquidity  requirements  are evaluated by taking into  consideration
factors such as deposit  concentrations,  seasonality and  maturities,  loan and
lease demand,  capital  expenditures  and  prevailing and  anticipated  economic
conditions.   The  Bank's  business  is  generated  primarily  through  customer
referrals and employee business development efforts.

         The Bank is  primarily a business and  professional  bank and, as such,
its deposit base is more susceptible to economic fluctuations.  The Bank strives
to  maintain a balanced  position  of liquid  assets to  volatile  and  cyclical
deposits.  At December 31, 2004,  liquid assets as a percentage of deposits were
27% as compared to 33% in 2003.  In addition to cash and due from banks,  liquid
assets include  interest-bearing  deposits with other banks,  federal funds sold
and unpledged securities available for sale.

         Management regularly reviews general economic and financial conditions,
both  external and internal,  and  determines  whether the positions  taken with
respect to liquidity and interest rate  sensitivity  continue to be appropriate.
The Bank also utilizes a monthly "Gap" report as well as a quarterly  simulation
model to identify rate sensitivity over the short- and long-term.

         The  following   table  sets  forth  the   distribution   of  repricing
opportunities,  based on contractual  terms, of the Company's earning assets and
interest-bearing liabilities at December 31, 2004, the interest rate sensitivity
gap  (i.e.   interest  rate  sensitive   assets  less  interest  rate  sensitive
liabilities),  the cumulative  interest rate  sensitivity gap, the interest rate
sensitivity gap ratio (i.e. interest rate gap divided by interest rate sensitive
assets) and the cumulative interest rate sensitivity gap ratio.

Based on the contractual terms of its assets and liabilities, the Bank's balance
sheet at  December  31,  2004 was  asset  sensitive  in terms of its  short-term
exposure to interest  rates.  That is, at December 31, 2004 the volume of assets
that might reprice within the next year exceeded the volume of liabilities  that
might reprice. This position provides a hedge against rising interest rates, but
has a detrimental effect during times of rate decreases.  Net interest income is
negatively impacted by a decline in interest rates and positively impacted by an
increase  in  interest  rates.  To  partially  mitigate  the  adverse  impact of
declining  rates, the majority of variable rate loans made by the Bank have been
written with a minimum "floor" rate.



                                       44
<PAGE>


<TABLE>
<CAPTION>

DISTRIBUTION OF REPRICING OPPORTUNITIES
December 31, 2004
(dollars in thousands)                            After three   After six   After one
                                         Within    months but   months but   year but     After
                                         three     within six   within one    within      five
                                         months      months        year     five years    years       Total
                                       ------------------------------------------------------------------------
<S>                                       <C>           <C>          <C>        <C>         <C>        <C>

Federal funds sold                       $ 62,675        -----        -----      -----       -----    $ 62,675
Treasury/agency securities                  6,107        1,993        5,974     12,224       -----      26,298
Loans                                     154,912       24,456       25,408     57,110      32,700     294,586
                                       ------------------------------------------------------------------------
 Total earning assets                     223,694       26,449       31,382     69,334      32,700     383,559
                                       ------------------------------------------------------------------------
Interest checking, money market
  and savings                             173,748        -----        -----      -----       -----     173,748
Certificates of deposit:
 Less than $100,000                         3,439        1,040        4,138      7,565       -----      16,182
  $100,000 or more                         23,824        1,905        8,224      1,679       -----      35,632
                                       ------------------------------------------------------------------------
 Total interest-bearing liabilities       201,011        2,945       12,362      9,244           0     225,562
                                       ------------------------------------------------------------------------
Interest rate gap                        $ 22,683      $23,504      $19,020   $ 60,090    $ 32,700    $157,997
                                       ========================================================================
Cumulative interest rate gap             $ 22,683      $46,187      $65,207   $125,297    $157,997
                                       ============================================================
Interest rate gap ratio                      0.10         0.89         0.61       0.87        1.00
                                       ============================================================
Cumulative interest rate gap ratio           0.10         0.18         0.23       0.36        0.41
                                       ============================================================

</TABLE>


         The following table shows maturity and interest rate sensitivity of the
loan   portfolio  at  December  31,  2004  and  2003.   At  December  31,  2004,
approximately  72% of the loan portfolio is priced with floating  interest rates
which limit the exposure to interest rate risk on long-term loans.

COMMERCIAL AND REAL ESTATE LOAN MATURITIES AND INTEREST RATE SENSITIVITY

<TABLE>
<CAPTION>

                                Balances at                     Due after one
                               December 31,     Due one year     year through      Due after
(dollars in thousands)             2004           or less         five years      five years
------------------------------------------------------------------------------------------------
<S>                                <C>              <C>               <C>             <C>

Commercial and other               $100,681         $ 40,649          $46,138         $13,894
SBA                                  45,251            9,411                -          35,840
Real estate construction             42,323           37,623            4,700               -
Real estate-other                    80,044           38,014           12,585          29,445
Factoring/ABL                        22,342           19,638            2,704               -
Other                                 3,945            3,715              230               -
                              ------------------------------------------------------------------
TOTAL                              $294,586         $149,050          $66,357         $79,179
                              ==================================================================

                                Balances at                     Due after one
                               December 31,     Due one year     year through      Due after
(dollars in thousands)             2003           or less         five years      five years
------------------------------------------------------------------------------------------------
Commercial and other               $ 73,846         $ 36,876          $24,161         $12,809
SBA                                  39,412           10,943                -          28,469
Real estate construction             35,065           34,576              427              62
Real estate-other                    28,036            9,225            7,829          10,982
Factoring/ABL                        13,105           13,105
Other                                 4,985            4,329              656
                              ------------------------------------------------------------------
TOTAL                              $194,449         $109,054          $33,073         $52,322
                              ==================================================================

</TABLE>


                                       45
<PAGE>

OFF-BALANCE SHEET ARRANGEMENTS AND AGGREGATE CONTRACTUAL OBLIGATIONS

The definition of "off-balance  sheet  arrangements"  includes any  transaction,
agreement or other  contractual  arrangement to which an entity is a party under
which we have:

     o    Any obligation under a guarantee contract that has the characteristics
          as defined in paragraph 3 of FASB  Interpretation No. 45, "Guarantor's
          Accounting  and  Disclosure   Requirements  for  Guarantee   including
          Indirect Guarantees of Indebtedness to Others" ("FIN 45");
     o    A  retained  or  contingent  interest  in  assets  transferred  to  an
          unconsolidated  entity or similar  arrangement  that serves as credit,
          liquidity or market risk support to that entity for such assets,  such
          as  a  subordinated   retained  interest  in  a  pool  of  receivables
          transferred to an unconsolidated entity,
     o    Any obligation,  including a contingent  obligation,  under a contract
          that would be accounted for as a derivative instrument, except that it
          is both  indexed  to the  registrant's  own  stock and  classified  in
          stockholders' equity; or
     o    Any obligation,  including  contingent  obligations,  arising Out of a
          material variable interest,  as defined in FASB Interpretation No. 46,
          "Consolidation  of  Variable  Interest  Entities"  ("FIN  46"),  in an
          unconsolidated entity that provides financing,  liquidity, market risk
          or credit  risk  support to the  registrant,  or  engages in  leasing,
          hedging or research and development services with the registrant.

         In the ordinary course of business,  we have issued certain  guarantees
which qualify as off-balance sheet  arrangements,  as of December 31, 2004 those
guarantees include the following:

            Financial Letters of Credit in the amount of $3,928,000.

The table below summarizes the Bank's off-balance sheet contractual obligations.

<TABLE>
<CAPTION>

Off-balance Sheet Arrangement and Aggregate Contractual Obligations

                                   Payments due by period
                                -------------------------------------------------------------------------
   Contractural Obligations                      Less than       1 - 3          3 - 5       More than
                                    Total         1 year         years          years        5 years
---------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>          <C>           <C>            <C>

Long-term contracts                $   435,000   $   334,000    $   101,000   $         -    $         -

Operating leases                     9,396,000       899,000      1,422,000     1,735,000      5,340,000
                                -------------------------------------------------------------------------
Total                              $ 9,831,000   $ 1,233,000    $ 1,523,000   $ 1,735,000    $ 5,340,000
                                =========================================================================

</TABLE>


                                       46
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                             INDEX TO FINANCIAL STATEMENTS

                                                                           Page
                                                                           ----

Report of Independent Registered Public Accounting Firm                     47

Balance Sheet, December 31, 2004 and 2003                                   48

Statement of operations for the years ended December 31,
2004, 2003 and  2002                                                        49

Statement of Shareholders' Equity and Comprehensive Income
for the Years ended December 31, 2004, 2003 and 2002                        50

Statement of Cash Flows for the years ended December 31,
2004, 2003 and 2002                                                         51

Notes to Financial Statements                                             52-70


         All schedules  have been omitted since the required  information is not
present or not  present  in amounts  sufficient  to  require  submission  of the
schedule or because  the  information  required  is  included  in the  Financial
Statements or notes thereto.

                                     *****



                                       47
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF BRIDGE CAPITAL HOLDINGS:

In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of Bridge
Capital  Holdings and its subsidiary at December 31, 2004 and December 31, 2003,
and the results of their  operations  and their cash flows for each of the three
years in the period  ended  December  31,  2004 in  conformity  with  accounting
principles  generally accepted in the United States of America.  These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to  express  an opinion  on these  financial  statements.  We
conducted our audits of these statements in accordance with the standards of the
Public Company  Accounting  Oversight  Board (United  States).  Those  standards
require that we plan and perform the audit to obtain reasonable  assurance about
whether the financial  statements  are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.



MARCH 8, 2005



                                       48
<PAGE>

<TABLE>
<CAPTION>

                    BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEET
                            (dollars in thousands)

                                                                                       As of December 31,
ASSETS                                                                               2004              2003
                                                                               -----------------------------------
<S>                                                                                    <C>              <C>

CASH AND DUE FROM BANKS                                                                $   6,535        $   9,572
FEDERAL FUNDS SOLD                                                                        62,675           47,975
                                                                               -----------------------------------
  Total cash and equivalents                                                              69,210           57,547
                                                                               -----------------------------------

INVESTMENT SECURITIES AVAILABLE FOR SALE                                                  26,298           24,347
LOANS, net of allowance for credit losses of $4,146 in 2004 and
  $2,683 in 2003                                                                         289,467          191,053

PREMISES AND EQUIPMENT, net                                                                2,215            1,515
ACCRUED INTEREST RECEIVABLE                                                                1,366              864
OTHER ASSETS                                                                              13,481            3,253

                                                                               -----------------------------------
   TOTAL                                                                               $ 402,037        $ 278,579
                                                                               ===================================

LIABILITIES AND SHAREHOLDERS' EQUITY

DEPOSITS:
  Demand noninterest-bearing                                                           $ 126,895        $  76,510
  Demand interest-bearing                                                                  3,946            6,954
  Savings                                                                                169,801          115,930
  Time                                                                                    51,814           47,000
                                                                               -----------------------------------
     Total deposits                                                                      352,456          246,394
                                                                               -----------------------------------

OTHER BORROWINGS                                                                          12,000                -
ACCRUED INTEREST PAYABLE                                                                      69               48
OTHER LIABILITIES                                                                          4,390            2,183
                                                                               -----------------------------------
     Total liabilities                                                                   368,915          248,625
                                                                               -----------------------------------

COMMITMENTS AND CONTINGENCIES                                                                  -                -

SHAREHOLDERS' EQUITY
  Preferred stock, $2.50 par value; 10,000,000 shares authorized;
    none issued
  Common stock, $2.50 par value; 10,000,000 shares authorized;
     6,097,697 shares issued and outstanding at December 31, 2004.
     6,051,646 shares issued and outstanding at December 31, 2003.                        33,057           32,800
  Retained earnings (accumulated deficit)                                                    184           (2,853)
  Accumulated other comprehensive (loss) income                                             (119)               7
                                                                               -----------------------------------
     Total shareholders' equity                                                           33,122           29,954
                                                                               -----------------------------------
     TOTAL                                                                             $ 402,037        $ 278,579
                                                                               ===================================

The accompanying notes are an integral part of the financial statements.

</TABLE>



                                       49
<PAGE>


<TABLE>
<CAPTION>

                     BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (dollars in thousands, except per share amounts)

                                                                   Year ended
                                                                  December 31,
                                                     2004             2003              2002
                                               ----------------------------------------------------
<S>                                                  <C>               <C>              <C>

INTEREST INCOME:
  Loans                                              $   18,378        $   11,587       $    6,318
  Federal funds sold                                        546               407              362
  Interest-bearing deposits in other banks                    -                 -               19
  Investment securities available for sale                  533               139              271
  Other                                                       -                 -               32
                                               ----------------------------------------------------
    Total interest income                                19,457            12,133            7,002
                                               ----------------------------------------------------

INTEREST EXPENSE:
  Deposits:
    Interest-bearing demand                                  21                30               25
    Money market and savings                              1,833             1,040              491
    Certificates of deposit                               1,020             1,165              676
    Other                                                    22                 -                -
                                               ----------------------------------------------------
    Total interest expense                                2,896             2,235            1,192
                                               ----------------------------------------------------

Net interest income                                      16,561             9,898            5,810
  Provision for credit losses                             1,671               843            1,424
                                               ----------------------------------------------------
NET INTEREST INCOME AFTER PROVISION
 FOR CREDIT LOSSES                                       14,890             9,055            4,386
                                               ----------------------------------------------------

OTHER INCOME:
  Service charges on deposit accounts                       362               194               38
  Gain on sale of SBA loans                               2,737             2,095            1,335
  Other non interest income                                 756               375               87
                                               ----------------------------------------------------
     Total other income                                   3,855             2,664            1,460
                                               ----------------------------------------------------

OTHER EXPENSES:
  Salaries and benefits                                   8,081             6,594            5,094
  Occupancy                                               1,420               890              741
  Furniture and equipment                                   585               561              464
  Marketing                                                 612               370              461
  Data services                                             763               536              373
  Third party services                                       95                35              209
  Deposit services/supplies                                 311               193              184
  Professional services                                     645               340              253
  Other                                                   1,084               695              751
                                               ----------------------------------------------------
     Total other expenses                                13,596            10,214            8,530
                                               ----------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES                         5,149             1,505           (2,684)
Income taxes                                              2,112            (1,868)               1
                                               ----------------------------------------------------
NET INCOME (LOSS)                                    $    3,037        $    3,373       $   (2,685)
                                               ====================================================

Basic earnings (loss) per share                           $0.50             $0.56           $(0.53)
                                               ====================================================
Diluted earnings (loss) per share                         $0.46             $0.53           $(0.53)
                                               ====================================================
Average common shares outstanding                     6,063,028         6,050,826        5,053,800
                                               ====================================================
Average common share equivalents outstanding          6,595,413         6,375,399        5,053,800
                                               ====================================================

The accompanying notes are an integral part of the financial statements.

</TABLE>



                                       50
<PAGE>

<TABLE>
<CAPTION>

                     BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
     CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                 PERIODS ENDED DECEMBER 31, 2002, 2003 AND 2004
                    (dollars in thousands, except share data)

                                                                                         Accumulated       Total
                                                                                            Other         Share-
                                                       Common Stock         Retained    Comprehensive    holders'
                                                    Shares       Amount     Earnings        Income        Equity
--------------------------------------------------------------------------------------------------------------------
Balances, December 31, 2001                         3,828,700      $19,065     $(3,541)       $   0     $15,524
================================================================================================================
<S>                                                 <C>             <C>                                  <C>

Issuance of common stock, net                       2,215,384       13,695        ----         ----      13,695

Stock options exercised                                 5,875           30        ----         ----          30

Net loss for the year                                    ----         ----      (2,685)        ----      (2,685)

----------------------------------------------------------------------------------------------------------------
Balances, December 31, 2002                         6,049,959      $32,790     $(6,226)       $   0     $26,564
================================================================================================================

Stock options exercised                                 1,687           10        ----         ----          10

Other comprehensive income- unrealized .
  gain on securities available for sale, net             ----  ----               ----            7           7

Net income for the year                                  ----         ----       3,373                    3,373

----------------------------------------------------------------------------------------------------------------
Balances, December 31, 2003                         6,051,646      $32,800     $(2,853)       $   7     $29,954
================================================================================================================

Stock options exercised                                46,051          257        ----         ----         257

Other comprehensive income- unrealized .
  loss on securities available for sale, net             ----  ----               ----         (126)       (126)

Net income for the year                                  ----         ----       3,037                    3,037

----------------------------------------------------------------------------------------------------------------
Balances, December 31, 2004                         6,097,697      $33,057     $   184        $(119)    $33,122
================================================================================================================


The accompanying notes are an integral part of the financial statements.

</TABLE>


                                       51
<PAGE>

<TABLE>
<CAPTION>

                     BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)

                                                                             Year ended December 31,
                                                                       2004           2003           2002
                                                                   -------------------------------------------
<S>                                                                   <C>               <C>          <C>

CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income (loss)                                                   $   3,037         $  3,373     $ (2,685)
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Provision for credit losses                                         1,671              843        1,424
      Depreciation and amortization                                         908              691          458
      Increase in accrued interest receivable and other assets           (2,730)          (2,440)        (421)
      Increase in accrued interest payable and other liabilities          2,314              962          704
                                                                   -------------------------------------------
          Net cash (used in) provided by operating activities             5,200            3,429         (520)
                                                                   -------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

  Purchase of securities available for sale                             (17,554)         (20,000)     (15,710)
  Proceeds from maturities of securities available for sale              15,200           12,277       15,277
  Purchase of interest bearing deposits                                       -                -            -
  Proceeds from maturities of interest bearing deposits                       -                -        3,994
  Net increase in loans                                                (100,085)         (65,551)     (92,188)
  Purchase of life insurance                                             (8,000)
  Purchase of fixed assets                                               (1,417)            (499)        (887)
                                                                   -------------------------------------------
          Net cash (used in) investing activities                      (111,856)         (73,773)     (89,514)
                                                                   -------------------------------------------

CASH FLOW FROM FINANCING ACTIVITIES:
  Net increase in deposits                                              106,062           93,035       73,259
  Proceeds from sale of common stock                                        257               10       13,725
  Increase in other borrowings                                           12,000                -            -
                                                                   -------------------------------------------
Net cash provided by financing activities                               118,319           93,045       86,984
                                                                   -------------------------------------------

          Net increase (decrease) in cash and equivalents                11,663           22,701       (3,050)
Cash and equivalents at beginning of period                              57,547           34,846       37,896
                                                                   -------------------------------------------
Cash and equivalents at end of period                                 $  69,210         $ 57,547     $ 34,846
                                                                   ===========================================

OTHER CASH FLOW INFORMATION:
  Cash paid for interest                                              $   2,694         $  2,112     $  1,130
  Cash paid for income taxes                                              2,101                -            1
                                                                   ===========================================

The accompanying notes are an integral part of the financial statements.

</TABLE>


                                       52
<PAGE>

BRIDGE CAPITAL HOLDINGS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

1.       SIGNIFICANT ACCOUNTING POLICIES

         BUSINESS  - Bridge  Bank,  N.A.  commenced  business  in  Santa  Clara,
         California  on May 14,  2001.  Its main office is located at 55 Almaden
         Blvd, San Jose,  California,  95113.  The Bank conducts  commercial and
         retail banking business,  which includes accepting demand,  savings and
         time deposits and making commercial, real estate and consumer loans. It
         also issues cashier's checks, sells travelers checks and provides other
         customary banking services.

         On  October  1,  2004,  Bridge  Bank,  National  Association  announced
         completion of a bank holding  company  structure  which was approved by
         shareholders at the Bank's annual shareholders' meeting held on May 20,
         2004. The bank holding company, formed as a California corporation,  is
         named Bridge Capital  Holdings.  Information in this report dated prior
         to September 30, 2004 is for Bridge Bank, N.A.

         Bridge  Capital  Holdings  was formed for the purpose of serving as the
         holding  company for Bridge Bank and will be supervised by the Board of
         Governors of the Federal  Reserve  System.  Effective  October 1, 2004,
         Bridge  Capital  Holdings  acquired 100% of the voting shares of Bridge
         Bank, National Association. As a result of the transaction,  the former
         shareholders  of Bridge  Bank  received  one  share of common  stock of
         Bridge  Capital  Holdings for every one share of common stock of Bridge
         Bank owned.

         Prior to the  share  exchange,  the  common  stock of the Bank had been
         registered with the Office of Comptroller of the Currency.  As a result
         of the share exchange,  common stock of Bridge Capital  Holdings is now
         considered  registered  with the  Securities  and Exchange  Commission.
         Future filings under the federal  securities laws will be made with the
         SEC rather than the Office of the  Comptroller of the Currency and will
         be available on the SEC's website, http://www.sec.gov as well as on the
         Company's website http://www.bridgebank.com.

         BASIS OF PRESENTATION - The accounting and reporting policies of Bridge
         Capital  Holdings and Bridge Bank, N.A.  conform to generally  accepted
         accounting  principles  and  prevailing  practices  within the  banking
         industry.

         USE  OF  ESTIMATES  -  The  preparation  of  financial   statements  in
         conformity  with  generally  accepted  accounting  principles  requires
         management  to make  estimates  and  assumptions  that affect  reported
         amounts of assets,  liabilities,  revenues and expenses, and disclosure
         of  contingent  assets  and  liabilities  as of the  dates  and for the
         periods presented.  A significant estimate included in the accompanying
         financial  statements is the allowance for loan losses.  Actual results
         could differ from those estimates.

         EARNINGS PER SHARE - Basic net income per share is computed by dividing
         net income  applicable to common  shareholders by the weighted  average
         number of common  shares  outstanding  during the  period.  Diluted net
         income per share is  determined  using the weighted  average  number of
         common shares outstanding during the period,  adjusted for the dilutive
         effect of common stock equivalents,  consisting of shares that might be
         issued upon exercise of common stock options.  Common stock equivalents
         are  included in the diluted  net income per share  calculation  to the
         extent these shares are dilutive.



                                       53
<PAGE>


<TABLE>
<CAPTION>

Earnings per share calculation (dollars in thousands, except per share amounts)

                                                            Year ended December 31,

                                                      2004            2003             2002
                                                 --------------- ---------------- ---------------

<S>                                                 <C>             <C>            <C>
Net income (loss)                                   $3,037,000      $3,373,000     $(2,685,000)
                                                 --------------- ---------------- ---------------
Weighted average shares used in computing:

Basic earnings per share                             6,063,028       6,050,826       5,053,853
Dilutive potential common shares related to stock
  options, using the treasury stock method             733,661         324,573               0
                                                 --------------- ---------------- ---------------
Total average shares and equivalents                 6,796,689       6,375,399       5,053,853

Basic income (loss) per share                       $     0.50      $     0.56     $     (0.53)
                                                 =============== ================ ===============
Diluted income (loss) per share                     $     0.46      $     0.53     $     (0.53)
                                                 =============== ================ ===============

</TABLE>


         All options are dilutive.

         CASH EQUIVALENTS - For purposes of reporting cash flows,  cash and cash
         equivalents include cash on hand, amounts due from banks, Federal Funds
         sold and highly  liquid  debt  instruments  purchased  with an original
         maturity of three  months or less.  The Company is required to maintain
         non-interest  earning  cash  reserves  against  certain of the  deposit
         accounts.  As of December 31, 2004,  aggregate reserves (in the form of
         deposits with the Federal Reserve Bank) of $1,041,000 were maintained.

         SECURITIES - The Company classifies its investment  securities into two
         categories,  available  for sale and held to  maturity,  at the time of
         purchase. Securities available for sale are reported at fair value with
         net  unrealized  holding  gains or losses,  net of tax,  recorded  as a
         separate component of shareholders' equity. Securities held to maturity
         are measured at amortized cost based on the Bank's  positive intent and
         ability to hold the securities to maturity.

         Premiums and  discounts  are amortized or accreted over the life of the
         related security as an adjustment to yield using the effective interest
         method.  Dividend and interest income is recognized when earned.  Gains
         and  losses  on  sales  of  securities   are  computed  on  a  specific
         identification basis.

         LOANS - Loans are stated at the principal  amount  outstanding less the
         allowance  for credit  losses and net deferred  loan fees.  Interest on
         loans is credited to income as earned.  Loans are  generally  placed on
         nonaccrual  status and any accrued and unpaid interest is reversed when
         the  payment of  principal  or  interest is 90 days past due unless the
         loan is both well  secured and in the process of  collection.  Interest
         accruals  are resumed on such loans only when they are brought  current
         with respect to interest  and  principal  and when,  in the judgment of
         management,  the loans are estimated to be fully collectible as to both
         principal and interest.

         Loan origination fees and costs are deferred and amortized to income at
         the instrument  level using the effective  interest method based on the
         contractual lives adjusted for prepayments.

         ALLOWANCE  FOR  CREDIT  LOSSES - The  allowance  for  credit  losses is
         established  through a provision charged to expense.  Loans are charged
         off against the allowance when management  believes that the collection



                                       54
<PAGE>

         of principal is unlikely.  The  allowance is an amount that  management
         believes  will be adequate to absorb known and  probable  losses in the
         loan portfolio. The allowance is based on a number of factors including
         prevailing economic trends,  industry experience,  estimated collateral
         values,   management's  assessment  of  credit  risk  inherent  in  the
         portfolio,  delinquency  trends,  historical loss experience,  specific
         problem  loans and other  relevant  factors.  Because the allowance for
         loan  losses  is based on  estimates,  ultimate  losses  may vary  from
         current estimates.

         ACCOUNTING FOR IMPAIRED  LOANS - A loan is considered  impaired when it
         is probable that interest and principal will not be collected according
         to the  contractual  terms  of the loan  agreement.  Any  allowance  on
         impaired loans is generally based on three methods. 1) present value of
         expected future cash flows discounted at the loan's effective  interest
         rate or, 2) as a practical  expedient,  at the loan's observable market
         price or 3) the fair value of the  collateral if the loan is collateral
         dependent.  Income recognition on impaired loans is consistent with the
         policy for income recognition on non-accrual loans described above.

         PREMISES AND EQUIPMENT - Premises and equipment are stated at cost less
         accumulated    depreciation   and   amortization.    Depreciation   and
         amortization are computed on a straight-line  basis over the shorter of
         the lease term or the estimated  useful lives of the assets,  which are
         generally three years for computer  equipment,  three to five years for
         furniture,  fixtures and  equipment and five to ten years for leasehold
         improvements.

         OTHER REAL ESTATE OWNED - Other real estate owned  ("OREO")  consist of
         properties acquired through  foreclosure.  We value these properties at
         the lower of cost or fair  value  less  estimated  costs to sell at the
         time we acquire them,  which  establishes the new cost basis. We charge
         against the allowance for credit losses any losses  arising at the time
         of acquisition of such properties. After we acquire them, we carry such
         properties  at the lower of cost or fair value less  estimated  selling
         costs. If we record any write-downs or losses from  disposition of such
         properties  after  acquiring  them,  we  include  this  amount in other
         noninterest expense. Development and improvement costs relating to OREO
         are capitalized (assuming they are recoverable).

         INCOME TAXES - Deferred tax assets and  liabilities  are  recognized at
         currently  enacted rates applicable to the period in which the deferred
         tax assets and  liabilities  are  expected to be realized  and settled.
         Deferred  income  taxes  are  provided  on  income  and  expense  items
         recognized  in  different  periods  for  financial  statement  and  tax
         reporting  purposes.  The Bank eliminated its valuation  allowance with
         respect to its net deferred tax asset of approximately  $2.0 million as
         of December  31,  2003.  During 2003,  it was  determined  that the net
         deferred  tax asset meets the  realizability  standards of SFAS No. 109
         and, as such the  valuation  allowance  was  eliminated.  No  valuation
         allowance was deemed necessary based on the judgment of Bank management
         that future  earnings would be sufficient to realize the benefit of all
         of its  deferred  tax assets.  The  reduction  in  valuation  allowance
         resulted  in a credit to  income  tax  expense  of  approximately  $1.9
         million for the tax year ended December 31, 2003.

                           STOCK-BASED  AWARDS - In October 1995,  the Financial
         Accounting  Standards  Board issued SFAS No. 123  "Accounting for Stock
         Based  Compensation"  as amended by SFAS No. 148  "Accounting for Stock
         -Based Compensation.  Under the provisions of SFAS No. 123, the Company
         is encouraged,  but not required, to measure compensation costs related
         to its employee stock compensation plan under the fair value method. If
         the Company  elects not to recognize  compensation  expense  under this
         method,  it is required  to  disclose  the pro forma net income and net
         income per share effects based on SFAS No. 123 fair value  methodology.
         The  Company  has elected to adopt the  disclosure  provisions  of this
         statement.



                                       55
<PAGE>

         The Company's stock options  generally vest annually over a period of 3
         to 4 years.  If the  computed  fair  value of the 2002  awards had been
         amortized to expense over the vesting  period of the awards,  pro for a
         net income would have been as follows:

<TABLE>
<CAPTION>

                                         Year ended       Year ended       Year ended
                                        December 31,     December 31,     December 31,
                                            2004             2003             2002
                                      ---------------------------------------------------
<S>                                      <C>              <C>             <C>

Net income (loss):
  As reported                            $3,037,000       $3,373,000      $(2,685,000)

  Stock based employee
  compensation, net of tax, that
  would have been included in
  the determination of net
  income if the fair value method
  had been applied to all awards         $ (214,000)      $ (414,000)     $  (287,000)

  Pro forma                              $2,823,000       $2,959,000      $(2,972,000)

Basic income (loss) per share:
  As reported                            $     0.50       $     0.56      $     (0.53)
  Pro forma                              $     0.47       $     0.49      $     (0.59)
Diluted income (loss) per share:
  As reported                            $     0.46       $     0.53      $     (0.53)
  Pro forma                              $     0.43       $     0.46      $     (0.59)

</TABLE>


         COMPREHENSIVE INCOME - SFAS No. 130, "Reporting  Comprehensive  Income"
         requires  that all  items  recognized  under  accounting  standards  as
         components of comprehensive earnings be reported in an annual financial
         statement  that is displayed  with the same  prominence as other annual
         financial  statements.  This  Statement  also  requires  that an entity
         classify  items of other  comprehensive  earnings by their nature in an
         annual  financial  statement.   Other  comprehensive  earnings  include
         unrealized  gains and  losses,  net of tax,  on  marketable  securities
         classified as  available-for-sale.  The Company had other comprehensive
         income  totaling  ($119,000),  net of tax,  at  December  31,  2004 and
         $7,000,  net of tax, at  December  31,  2003.  The Company had no other
         comprehensive income for 2002.

<TABLE>
<CAPTION>

                                                Period ended December 31,
                                            2004           2003           2002
                                         ------------   -----------    -----------
<S>                                           <C>           <C>           <C>

Net income (loss)                             $3,037        $3,373        $(2,685)

Other comprehensive earnings-
 Net unrealized gains (losses) on
 securities available for sale                  (126)            7              -
                                         ------------   -----------    -----------

Total comprehensive income (loss)             $2,911        $3,380        $(2,685)

</TABLE>



                                       56
<PAGE>

         SEGMENTS  OF AN  ENTERPRISE  AND  RELATED  INFORMATION  - SFAS No. 131,
         "Disclosure  about Segments of an Enterprise  and Related  Information,
         requires  certain  information  about  the  operating  segments  of the
         Company.  The objective of requiring  disclosures  about segments of an
         enterprise and related  information is to provide information about the
         different types of business  activities in which an enterprise  engages
         and the  different  economic  environment  in which it operates to help
         users of financial statements better understand its performance, better
         assess  its  prospects  for future  cash  flows and make more  informed
         judgments  about the enterprise as a whole.  The Company has determined
         that it has one segment,  general commercial banking,  and therefore it
         is  appropriate  to aggregate  the Company's  operations  into a single
         operating segment.

2.                EARNINGS PER SHARE

         Basic  net  earnings  (loss)  per share is  computed  by  dividing  net
         earnings  (loss)  applicable  to common  shareholders  by the  weighted
         average number of common shares outstanding during the period.  Diluted
         net earnings (loss) per share is determined  using the weighted average
         number of common shares outstanding during the period, adjusted for the
         dilutive effect of common stock equivalents,  consisting of shares that
         might be issued upon  exercise of common  stock  options.  Common stock
         equivalents  are included in the diluted net earnings  (loss) per share
         calculation to the extent these shares are dilutive.  A  reconciliation
         of the numerator and  denominator  used in the calculation of basic and
         diluted net earnings (loss) per share available to common  shareholders
         is as follows (in thousands, except for per share amounts):

Earnings per share calculation (dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>


                                                             Year ended December 31,

                                                      2004            2003             2002
                                                 --------------- ---------------- ---------------
<S>                                                <C>             <C>             <C>

Net income (loss)                                   $3,037,000      $3,373,000      $(2,685,000)
                                                 --------------- ---------------- ---------------
Weighted average shares used in computing:

Basic earnings per share                             6,063,028       6,050,826        5,053,853
Dilutive potential common shares related to stock
  options, using the treasury stock method             733,661         324,573                0
                                                 --------------- ---------------- ---------------
Total average shares and equivalents                 6,796,689       6,375,399        5,053,853

Basic income (loss) per share                       $     0.50      $     0.56      $     (0.53)
                                                 =============== ================ ===============
Diluted income (loss) per share                     $     0.46      $     0.53      $     (0.53)
                                                 =============== ================ ===============

</TABLE>


                  There were no securities (including those issuable pursuant to
         contingent stock agreements) that could potentially dilute basic EPS in
         the future  that were not  included in the  computation  of diluted EPS
         because  to do so  would  have  been  antidilutive  for  the  period(s)
         presented.



                                       57
<PAGE>

4.       SECURITIES

         The amortized  cost and estimated fair values of securities at December
31 are as follow:

<TABLE>
<CAPTION>

(dollars in thousands)                                   as of December 31, 2004
                                              ----------------------------------------------
                                                            Gross Unrealized       Fair
                                                          ----------------------
                                                 Cost       Gains      Losses      Value
                                              ----------------------------------------------
<S>                                              <C>             <C>        <C>    <C>

  U. S. Government Treasuries                    $    100        $ -        $ -    $    100
  U. S. Government Agencies                        26,400          -       (202)     26,198
                                              ----------------------------------------------
Total available for sale                           26,500          -       (202)     26,298
                                              ----------------------------------------------
  Total investment securities portfolio          $ 26,500        $ -     $ (202)   $ 26,298
                                              ==============================================

                                                         as of December 31, 2003
                                              ----------------------------------------------
                                                            Gross Unrealized       Fair
                                                          ----------------------
                                                 Cost       Gains      Losses      Value
                                              ----------------------------------------------
  U. S. Government Treasuries                    $    100        $ -        $ -    $    100
  U. S. Government Agencies                        14,236         13         (2)     14,247
  Money Market Mutual Funds                        10,000          -          -      10,000
                                              ----------------------------------------------
Total available for sale                           24,336         13         (2)     24,347
  Total investment securities portfolio          $ 24,336        $13        $(2)   $ 24,347
                                              ==============================================

</TABLE>


                  The  scheduled  maturities  of  securities  (other than equity
         securities) available for sale at December 31, 2004, 2003 and 2003 were
         as follows:


                                       58
<PAGE>

<TABLE>
<CAPTION>

MATURITY OF INVESTMENT SECURITIES PORTFOLIO
(dollars in thousands)                              December 31, 2004
                                             -------------------------------
                                                 Amortized         Fair
       Securities available for sale                Cost           Value
                                             -------------------------------
<S>                                                <C>             <C>

Due in one year or less                            $ 14,116        $ 14,074
Due after one year through five years                12,384          12,224
Due after five years through ten years                    -               -
Due after ten years                                       -               -
                                             -------------------------------
  Total securities available for sale                26,500          26,298
                                             -------------------------------
    Total Investment securities                    $ 26,500        $ 26,298
                                             ===============================

                                                    December 31, 2003
                                             -------------------------------
                                                 Amortized         Fair
       Securities available for sale                Cost           Value
                                             -------------------------------
Due in one year or less                            $ 10,100        $ 10,100
Due after one year through five years                14,236          14,247
Due after five years through ten years                    -               -
Due after ten years                                       -               -
                                             -------------------------------
  Total securities available for sale                24,336          24,347
                                             -------------------------------
    Total Investment securities                    $ 24,336        $ 24,347
                                             ===============================

                                                    December 31, 2002
                                             -------------------------------
                                                 Amortized         Fair
       Securities available for sale                Cost           Value
                                             -------------------------------
Due in one year or less                            $ 16,630        $ 16,630
Due after one year through five years                     -               -
Due after five years through ten years                    -               -
Due after ten years                                       -               -
                                             -------------------------------
  Total securities available for sale                16,630          16,630
                                             -------------------------------
    Total Investment securities                    $ 16,630        $ 16,630
                                             ===============================
</TABLE>


                  As of December 31, 2004,  investment  securities with carrying
         values of  approximately  $100,000  were pledged as  collateral.  As of
         December 31, 2004, no unrealized losses were attributable to securities
         positioned for the period greater than 12 months.

5.       LOANS AND ALLOWANCES FOR CREDIT LOSSES

                  The following  summarizes  loans and activity in the allowance
         for loan losses for the years ended December 31, 2004, 2003 and 2002.

<TABLE>
<CAPTION>

ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES:
(dollars in thousands)

                                  2004        2003        2002
                                 ------------------------------
<S>                              <C>         <C>         <C>

Balance, beginning of period     $ 2,683     $ 1,765     $  511
Provision for credit losses        1,671         843      1,424
Charge-offs                         (240)        (10)      (170)
Recoveries                            32          85          -
                                 -------------------------------
Balance, end of period           $ 4,146     $ 2,683     $ 1,765
                                 ===============================
</TABLE>


                                       59
<PAGE>


                  There were two non-accrual loans at December 31, 2004 totaling
         $1,026,000  as compared to one  non-accrual  loan  totaling  $59,000 at
         December  31,  2003.  There were no  non-accrual  loans at December 31,
         2002. At December 31, 2004, the non-accrual  loans consisted of two SBA
         loans  totaling  $1,026,000  of which  $712,000  is  guaranteed  by the
         U.S.Government.  The  remaining  balance  of  $314,000  is  secured  by
         business  assets and real  property.  Of the two loans on nonaccrual at
         December  31,  2004,  one loan was  determined  to be impaired  and its
         carrying value  reflects the fair value of the collateral  securing the
         loan.


6.       PREMISES AND EQUIPMENT

         Premises and  equipment at December 31, are  comprised of the following
(dollars in thousands):

<TABLE>
<CAPTION>

PREMISES AND EQUIPMENT
(dollars in thousands)
                                                              2004           2003          2002
                                                         -------------------------------------------
<S>                                                             <C>            <C>          <C>

Leasehold improvements                                          $ 1,590        $   981      $   813
Furniture and Equipment                                           1,488          1,181        1,006
Capitalized Software                                              1,066            655          577
                                                         -------------------------------------------
     Premises and equipment                                       4,144          2,817        2,396
Less accumulated depreciation and amortization                   (1,929)        (1,302)        (706)
                                                         -------------------------------------------
     Premises and equipment, net                                $ 2,215        $ 1,515      $ 1,690
                                                         ===========================================

</TABLE>


                  Depreciation and amortization  amounted to $717,000,  $674,000
         and  $499,000 for the years ended  December  31,  2004,  2003 and 2002,
         respectively,  and have been included in occupancy and/or furniture and
         equipment  expense,  depending  on the  nature of the  expense,  in the
         accompanying statements of operations.

7.       DEPOSITS

                  The  aggregate  amount of time  deposits,  each with a minimum
         denomination  of  $100,000  at  December  31,  2004,  2003 and 2002 was
         approximately $35,632,000, $30,994,000 and $38,893,000, respectively.

At  December  31,  2004,  time  deposits  of  $100,000  or more  have  remaining
maturities as follows:

(in thousands)

3 months or less                                     $ 24,496
Over 3 months to 6 months                               1,343
Over 6 months to 12 months                              8,114
Over 1 year to 5 years                                  1,679
                                               ---------------
    TOTAL                                            $ 35,632
                                               ===============


                                       60
<PAGE>


At December 31,  2004,  the  scheduled  maturities  of all time  deposits are as
follows:

(dollars in thousands)
                         2005                         $42,570
                         2006                           6,692
                         2007                           2,349
                         2008                             103
                         2009                             100
                                               ---------------
                                                      $51,814
                                               ===============

8.          INCOME TAXES

                  Income tax expense (benefit) consists of the following for the
         years ended December 31, 2004, 2003 and 2002 (dollars in thousands):

Income tax expense (benefit) consists of the following:
`
                            2004           2003           2002
                       ---------------------------------------------
Current:
  Federal                     $ 1,825        $    25            $ -
  State                           489            185              1
                       ---------------------------------------------
     Total current              2,314            210              1
                       ---------------------------------------------

Deferred:
  Federal                        (211)        (1,587)             -
  State                             8           (491)             -
                       ---------------------------------------------
    Total deferred               (203)        (2,078)             -
                       ---------------------------------------------
       Income taxes           $ 2,111       $ (1,868)           $ 1
                       =============================================


                  Deferred  income taxes reflect the net tax effect of temporary
         differences  between  carrying  amount of assets  and  liabilities  for
         financial  reporting  purposes  and the  amount  used  for  income  tax
         purposes.  The tax effects of temporary  differences  that gave rise to


                                      2004           2003           2002
                                     -----------------------------------------
Deferred tax assets (liability):
  Deferred Loan Fee                  $  340,000     $  250,000    $         -
  Allowance for credit losses         1,246,000        597,000        660,000
  Deferred Pre-opening expenses         153,000        240,000        357,000
  State income taxes                    536,000        467,000        348,000
  Fixed assets                         (113,000)       (91,000)       135,000
  Other                                       -          7,000              -
  Accrued expenses                      119,000         47,000         27,000
Net operating loss                            -        561,000        987,000
                                     -----------------------------------------

Deferred tax asset                    2,281,000      2,078,000      2,514,000
                                     -----------------------------------------

Valuation Allowance                           -              -     (2,514,000)
                                     -----------------------------------------
Net Deferred Tax Asset               $2,281,000     $2,078,000    $         -
                                     =========================================


                                       61
<PAGE>

         significant  portions of deferred tax assets at December 31, 2004, 2003
         and 2002 are as follows:


         As of December 31, 2003, the Bank has a net operating loss carryforward
         for federal income tax purposes of approximately $1.6 million and a net
         operating loss carryforward of approximately $2.7 million for state tax
         purposes.  These  losses  expire in 2022  (federal)  and 2012  (state).
         During  2002,  the  State  of  California  enacted   legislation  which
         suspended the  utilization  of corporate  net operating  losses for the
         2002 and 2003 tax years.  Subsequent  to 2003,  the Bank  expects to be
         permitted to deduct its net operating loss carryover in determining its
         taxable income for California purposes.

                  The Bank  eliminated  its valuation  allowance with respect to
         its net deferred tax asset of approximately $2.0 million as of December
         31, 2003.  During 2003, it was  determined  that the deferred tax asset
         meets  realizability  standards  of SFAS  No.  109  and,  as  such  the
         valuation  allowance was eliminated.  No valuation allowance was deemed
         necessary based on the judgment of Bank management that future earnings
         would be  sufficient  to realize  the benefit of all its  deferred  tax
         assets.  The reduction in valuation  allowance  resulted in a credit to
         income tax expense of approximately $1.9 million for the tax year ended
         December 31,2003.

         Rate Reconciliation:

The effective tax rate differs from the federal statutory rate as follows:

                                    2004           2003           2002
                              ------------------------------------------
Federal statutory rate              35.0%          35.0%          35.0%
State income tax, net of
   federal effect                    6.3%         -20.4%           0.0%
Other, net                          -0.3%           2.3%          -0.6%
Valuation allowance                  0.0%        -141.0%         -34.4%
                              ------------------------------------------
     Income taxes                   41.0%        -124.0%           0.0%
                              ==========================================


9.       STOCK OPTION PLAN

         At December 31, 2004 the total  authorized  shares  issuable  under the
         Bridge   Capital   Holdings   Stock   Option  Plan  (the   "Plan")  was
         approximately  1,813,225  shares and the number of shares available for
         future grant was approximately 503,638 shares.

         Options  issued  under  the  Plan  may  be  granted  to  employees  and
         nonemployee directors and may be either incentive or nonqualified stock
         options as defined under current tax laws.  The exercise  price of each
         option must equal the market  price of the Bank's  stock on the date of
         the grant. The term of the option may not exceed 10 years and generally
         vests over a 4 year period.

         A summary of the Bank's stock options as of December 31, 2004, 2003 and
         2002 and  changes  during  the period  ended on that date is  presented
         below:



                                       62
<PAGE>

                                                 Options Outstanding
                                        --------------------------------------
                                           Number        Weighted Average
                                         of Shares        Exercise Price
                                        --------------------------------------
Balances, December 31, 2001                 931,500         $ 5.19

Granted                                     235,250         $ 6.35
(weighted average value of $1.99)
Exercised                                    (5,875)        $ 5.00
Cancelled                                  (113,125)        $ 5.59
Expired                                                    -$ 0.00
                                        -------------

Balances, December 31, 2002               1,047,750         $ 5.41

Granted                                      76,800         $ 6.35
(weighted average value of $1.76)
Exercised                                    (1,687)        $ 5.00
Cancelled                                   (13,938)        $ 5.59
Expired                                           -
                                        -------------

Balances, December 31, 2003               1,108,925         $ 5.65

Granted                                     193,850         $13.14
(weighted average value of $3.49)
Exercised                                   (46,051)        $ 5.58
Cancelled                                     (750)         $ 6.44
Expired                                           -
                                        -------------
Balances, December 31, 2004               1,255,974         $ 6.81


         Options  exercisable  at December  31,  2004 and 2003 were  503,638 and
551,728, respectively.

         The  following  table  summarizes   information   about  stock  options
outstanding at December 31, 2004.

<TABLE>
<CAPTION>

                              Options Outstanding                 Options Exercisable
                           ------------------------------------------------------------------
                                           Weighted    Weighted                   Weighted
                              Number       Average      average      Number       average
                            Outstanding   remaining    exercise    exercisable    exercise
   Exercise Price range       (000's)    life (years)    price       (000's)       price
---------------------------------------------------------------------------------------------
<S>                 <C>          <C>         <C>          <C>           <C>       <C>
       $ 5.00 -     $ 5.75       732,074     6.3          $ 5.071       673,823   $ 5.062
       $ 5.76 -     $ 6.50       255,625     7.3          $ 6.317       138,750   $ 6.296
       $ 6.51 -     $10.00        46,425     8.4          $ 7.263         8,950   $ 7.301
       $10.01 -     $13.50       194,050     9.3          $12.711         6,999   $12.218
       $13.51 -     $16.23        27,800     9.9          $15.215             0   $ 0.000

</TABLE>


         In October,  1995, the Financial Accounting Standards Board issued SFAS
         No. 123, "Accounting for Stock-Based  Compensation" ("SFAS 123"). Under
         the  provisions  of SFAS No. 123,  the Company is  encouraged,  but not
         required,  to measure  compensation costs related to its employee stock
         compensation  plan under the fair value method.  If the Company  elects
         not to recognize compensation expense under this method, it is required
         to disclose  the pro forma net income and net income per share  effects
         based on SFAS No. 123 fair value  methodology.  The Company has elected
         to adopt the disclosure provisions of this statement.


                                       63
<PAGE>

         The Company applies Accounting Principles Board ("APB") Opinion No. 25,
         "Accounting for Stock Issued to Employees" and related  interpretations
         in its accounting for stock options.  Accordingly, no compensation cost
         has been recognized for its stock option plan. Had compensation for the
         Company's  stock option plan been  determined  consistent with SFAS No.
         123, the  Company's  net income per share would have been  decreased to
         the pro forma amounts indicated below.

Weighted Average Assumptions
                                        2004         2003         2002
                                    ---------------------------------------
Expected life                         60 months    60 months    60 months
Stock Volatility                          21.90%       14.00%       26.00%
Risk free interest rate                    3.18%        2.70%        4.07%
Dividend yield                             0.00%        0.00%        0.00%


         Under SFAS 123,  the fair value of  stock-based  awards to employees is
         calculated  through the use of option pricing  model,  even though such
         models were  developed to estimate  the fair value of freely  tradable,
         fully   transferable   options  without  vesting   restriction,   which
         significantly  differ from the  Company's  stock option  awards.  These
         models also  require  subjective  assumptions,  including  future stock
         price  volatility  and expected time to exercise,  which greatly affect
         the calculated values.  The Company's  calculations were made using the
         Black-Scholes  option pricing model with the following weighted average
         assumptions:

         The Bank's stock options  generally vest annually over a period of 3 to
         4  years.  If the  computed  fair  value of the  2002  awards  had been
         amortized to expense over the vesting  period of the awards,  pro forma
         net income would have been as follows:

<TABLE>
<CAPTION>


                                         Year ended       Year ended       Year ended
                                        December 31,     December 31,     December 31,
                                            2004             2003             2002
                                      ---------------------------------------------------
<S>                                      <C>              <C>              <C>

Net income (loss):
  As reported                            $ 3,037,000      $ 3,373,000      $(2,685,000)

  Stock based employee
  compensation, net of tax, that
  would have been included in
  the determination of net
  income if the fair value method
  had been applied to all awards         $  (214,000)     $  (414,000)     $  (287,000)
                                         ---------------------------------------------

  Pro forma                              $ 2,823,000      $ 2,959,000      $(2,972,000)

Basic income (loss) per share:
  As reported                            $      0.50      $      0.56      $     (0.53)
  Pro forma                              $      0.47      $      0.49      $     (0.59)
Diluted income (loss) per share:
  As reported                            $      0.46      $      0.53      $     (0.53)
  Pro forma                              $      0.43      $      0.46      $     (0.59)

</TABLE>




10.      PENSION BENEFIT PLANS

         Effective  August  1,  2004,  the  Bank  established  the  Supplemental
         Executive Retirement Plan (SERP), an unfunded  noncontributory  defined



                                       64
<PAGE>

         benefit pension plan. The SERP provides retirement benefits to a select
         group of key executives  and senior  officers based on years of service
         and final average salary. The Bank uses a December 31, measurement date
         for this plan.


OBLIGATIONS AND FUNDED STATUS                                 At December 31,
                                                                   2004
                                                             -------------------
CHANGE IN BENEFIT OBLIGATION
Projected benefit obligation at beginning of year              $         -
Service cost                                                       150,312
Interest cost                                                       35,341
Amendments (plan initiation)                                     1,027,706
Actuarial loss (gain)                                                    -
Benefits paid                                                            -
                                                             -------------------
Projected benefit obligation at end of year                      1,213,358
                                                             -------------------

CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year                           -
                                                             -------------------

Fair value of plan assets at end of year                                 -
                                                             -------------------

Funded status                                                   (1,213,358)
Unrecognized net actuarial loss (gain)                                   -
Unrecognized prior service cost                                    992,858
                                                             -------------------
Net amount recognized                                          $   220,774
                                                             ===================

                                                                Year ended
                                                             December 31, 2004
                                                             -------------------
COMPONENTS OF NET PERIODIC BENEFIT COST:
Service cost                                                   $   150,312
Interest cost                                                       35,341
Expected return on plan assets                                           -
Amortization of prior service cost                                  35,121
Amortization of net gain                                                 -
                                                             -------------------
Net periodic benefit cost                                      $   220,774
                                                             ===================

ASSUMPTIONS USED TO DETERMINE  BENEFIT OBLIGATIONS
AT DECEMBER 31, 2004
Discount rate                                                         6.00%
Rate of compensation increase                                         5.00%

ASSUMPTIONS USED TO DETERMINE  NET PERIODIC BENEFIT COST
Discount rate                                                         6.00%
Rate of compensation increase                                         5.00%


                                        65
<PAGE>


11.      RELATED PARTY TRANSACTIONS

         There are no existing or proposed  material  interests or  transactions
         between the Bank and/or any of its  officers or  directors  outside the
         ordinary course of the Bank's business except as indicated.

         Bank  Director  Barry A.  Turkus  is a  principal  in the  real  estate
         brokerage firm of BT Commercial.  An agent of BT Commercial represented
         the Bank in  sublease  negotiations  for the Bank's  offices at 2120 El
         Camino Real,  Santa Clara,  California.  The property,  which is master
         leased to Washington  Mutual Bank,  was listed with CB Commercial  real
         estate  services.  A leasing  fee was paid by  Washington  Mutual to CB
         Commercial in  accordance  with the  Exclusive  Listing and  Commission
         Agreement.  CB Commercial in turn paid  $34,076.18 to BT Commercial for
         the  procuring  portion of the leasing fee. In addition,  BT Commercial
         received a fee of $16,100 in connection with locating and executing the
         Bank's  lease at 525  University  Avenue  in Palo  Alto.  The  Board of
         Directors  determined that the fees paid to BT Commercial in connection
         with real estate  transactions  were no less favorable to the Bank then
         could have been obtained from disinterested third parties.

         The Bank had  entered  into a  consulting  agreement  with The  Brenner
         Group, Inc. (the "Consulting Agreement"), pursuant to which The Brenner
         Group,  Inc.  provided the Bank with  accounting  services prior to the
         opening.  Organizing  Director  Richard Brenner is also Chief Executive
         Officer of The Brenner  Group,  Inc. No service was provided  under the
         contract from June 1, 2001 through December 31, 2001, however, the Bank
         may, from time to time,  again make use of The Brenner Group's services
         under the  agreement.  No expense was  incurred by the Bank in 2003.  A
         total of  $1,800  and  $22,400  were  incurred  by the Bank  under  the
         Consulting  Agreement for the years ending  December 31, 2002 and 2001,
         respectively.  The Board of Directors has determined  that the fees are
         no  less   favorable  to  the  Bank  than  could  be  obtained  from  a
         disinterested third party.

         Some of the  officers and  directors of the Bank  borrowed a portion of
         the  purchase  price of the  shares  subscribed  by them in the  Bank's
         initial Stock Offering. These borrowings were obtained from one or more
         of the Bank's  correspondent  banks in accordance  with applicable laws
         and  were  not  conditioned  upon  the use of  inter-bank  deposits  as
         compensating  balances.  Federal law prohibits the Bank from lending on
         the security of its own capital stock.

12.      COMMITMENTS AND CONTINGENT LIABILITIES

         LEASE COMMITMENTS

         The Bank's Santa  Clara,  San Jose and Palo Alto  locations  are leased
         under  non-cancelable  operating  leases that expire in 2010,  2002 and
         2006,  respectively.  The Bank has renewal options with  adjustments to
         the lease payments based on changes in the consumer price index.

         Future minimum annual lease payments are as follows:

         Future lease payments
         For years ended December 31,
                          2005     $  899,000
                          2006        965,000
                          2007        784,000
                          2008        854,000
                          2009        880,000
                    thereafter      5,341,000
                               ---------------
                                   $9,723,000
                               ---------------


                                       66
<PAGE>

         Rental expense under operating leases was $977,000 in 2004, $574,000 in
         2003 and $527,000 in 2002.

         OTHER COMMITMENTS

         In the normal course of business,  there are outstanding commitments to
         extend credit,  which are not reflected in the  consolidated  financial
         statements.  These commitments involve, to varying degrees, credit risk
         in excess of the amount recognized as either an asset or a liability in
         the balance sheet. The Bank controls the credit risk through its credit
         approval process.  The same credit policies are used when entering into
         such  commitments.  Amounts  committed  to extend  credit  under normal
         lending agreements aggregated approximately $92,921,000 for undisbursed
         variable loan commitments and approximately  $6,635,000 for commitments
         under unused letters of credit at December 31, 2004.

         The Bank is party to financial instruments with  off-balance-sheet risk
         in the normal  course of  business to meet the  financing  needs of its
         customers.  These  financial  instruments  include loan  commitments of
         $99,556,000, $61,748,000 and $52,461,000 at December 31, 2004, 2003 and
         2002,  respectively.  The Bank's  exposure to credit loss is limited to
         amounts funded or drawn;  however,  at December 31, 2004, no losses are
         anticipated as a result of these commitments.

         Loan  commitments are typically  contingent upon the borrowers  meeting
         certain  financial and other covenants and such  commitments  typically
         have fixed  expiration  dates and require  payment of a fee. As many of
         these  commitments are expected to expire without being drawn upon, the
         total   commitments   do  not   necessarily   represent   future   cash
         requirements.  The  Bank  evaluates  each  potential  borrower  and the
         necessary collateral on an individual basis. Collateral varies, and may
         include real property, bank deposits, or business or personal assets.

         Undisbursed  loan  commitments  were  comprised  of  the  following  at
         December 31, 2004:

         Undisbursed Loan Commitments
         (dollars in thousands)

         Loan Category                  Amount
         ---------------             --------------

         Commercial                        $47,739
         SBA                                 8,018
         Real estate construction           17,325
         Real estate term                   10,703
         Factoring/ABL                       9,100
         Other                               6,671
                                     --------------
         Total                             $99,556
                                     ==============


13.      DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS

         The  following  estimated  fair value  amounts have been  determined by
         using  available   market   information   and   appropriate   valuation
         methodologies.  However, considerable judgment is required to interpret



                                       67
<PAGE>

         market data to develop the  estimates of fair value.  Accordingly,  the
         estimates presented are not necessarily  indicative of the amounts that
         could be realized in a current  market  exchange.  The use of different
         market  assumptions  and/or  estimation  techniques may have a material
         effect on the estimated fair value amounts.

         The following  table  presents the carrying  amount and estimated  fair
         value of certain  assets and  liabilities  of the Bank at December  31,
         2004,  2003 and 2002.  The  carrying  amounts  reported  in the balance
         sheets approximate fair value for the following financial  instruments:
         cash and due from banks,  federal funds sold, interest bearing deposits
         in other banks, demand and savings deposits (See Note 5 for information
         regarding securities).

<TABLE>
<CAPTION>


FAIR VALUE OF FINANCIAL INSTRUMENTS

                                   2004                     2003                     2002
                                -----------------------  -----------------------  -----------------------
(dollars in thousands)           Carrying      Fair       Carrying      Fair       Carrying     Fair
                                   Value      Value         Value      Value        Value       Value
                                -----------------------  -----------------------  -----------------------
<S>                               <C>         <C>          <C>         <C>          <C>        <C>

Financial Assets:
  Cash and due from banks         $ 6,535     $ 6,535      $ 9,573     $ 9,573      $ 6,706    $ 6,706
  Federal funds sold                62,675     62,675       47,975      47,975       28,140     21,795
  Investments securities            26,500     26,398       24,336      24,373       17,468     16,641
  Loans and leases, gross          293,612    300,962      193,735     197,485      128,707    129,025
  Bank owned life insurance          8,080      8,080            -           -            -          -
Financial liabilities:
  Deposits                         352,456    351,119      246,394     246,385      153,361    142,957
  Trust Preferred                   12,000     12,000            -           -            -          -
Net worth                           33,323     41,908       28,075      31,871       26,564     31,549

</TABLE>


         LOANS

         The fair value of loans with fixed rates is  estimated  by  discounting
         the future cash flows using  current rates at which similar loans would
         be made to  borrowers  with  similar  credit  ratings.  For loans  with
         variable  rates that adjust with  changes in market  rates of interest,
         the carrying amount is a reasonable estimate of fair value.

         TIME DEPOSITS

         The fair value of fixed maturity  certificates  of deposit is estimated
         using  rates  currently  offered  for  deposits  of  similar  remaining
         maturities.

         COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT

         Commitments  to extend credit and standby  letters of credit are issued
         in the normal  course of  business by the Bank.  Commitments  to extend
         credit are issued with variable  interest rates tied to market interest
         rates at the time the  commitments  are  funded  and the  amount of the
         commitments  equal  their  fair  value.  Standby  letters of credit are
         supported by commitments to extend credit with variable  interest rates
         tied to market interest rates at the time the commitments are funded.



                                       68
<PAGE>


14.      BRIDGE CAPITAL HOLDINGS

         The following are the financial  statements of Bridge Capital  Holdings
(parent company only):

                                  BALANCE SHEET

(dollars in thousands)
                                                                  December 31,
ASSETS:                                                               2004
                                                             -------------------

Cash and due from banks                                              $  2,095
Investment in bank & subsidiaries                                      43,430
                                                             -----------------
Total Assets                                                         $ 45,525
                                                             =================

LIABILITIES:
Balances due to subsidiaries                                           12,372
Other liabilities                                                          31
                                                             -----------------
Total Liabilities                                                      12,403
                                                             -----------------

CAPITAL:
Common stock                                                           33,057
Retained earnings                                                         184
Other Comprehensive income                                               (119)
                                                             -----------------
Total Capital                                                          33,122
                                                             -----------------

Total Liabilities and Capital                                        $ 45,525
                                                             =================

         STATEMENT OF OPERATIONS
                                                               Period ended
(dollars in thousands)                                         December 31,
                                                             -----------------
                                                                   2004
                                                             -----------------
Interest Income                                                      $      4
Total noninterest expenses                                                128
                                                             -----------------

Income before income taxes                                               (124)
Income taxes                                                                0
                                                             -----------------
Income before undistributed income
  of the bank                                                            (124)
Equity in undistributed income of the bank                              1,254
                                                             -----------------
Net income                                                           $  1,130
                                                             =================


                                       69
<PAGE>


                            STATEMENTS OF CASH FLOWS
                             (dollars in thousands)
                                                               Period ended
                                                               December 31,
                                                             ---------------
                                                                   2004
                                                             ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                 $ 1,130
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Equity in undistributed (earnings) of subsidiaries             (1,254)
      Net change in other liabilities                                    31
                                                             ---------------
Net cash (used in) provided by operating activities                     (93)
                                                             ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Payments for investment in subsidiary                             (10,394)
                                                             ---------------
Net cash used in investing activities                               (10,394)
                                                             ---------------

CASH FLOW FROM FINANCING ACTIVITIES:
  Proceeds from sale of Common stock                                    188
  Proceeds from issuance of long term debt                           12,394
                                                             ---------------
Net cash provided by financing activities                            12,582
                                                             ---------------

Net increase (decrease) in cash and equivalents                       2,095
Cash and equivalents at beginning of period                               -
                                                             ---------------
Cash and equivalents at end of period                               $ 2,095
                                                             ===============


15.      REGULATORY MATTERS

         The Bank and the  Holding  Company  are  subject to various  regulatory
         capital requirements administered by federal banking agencies.  Failure
         to meet minimum capital  requirements can initiate  certain  mandatory,
         and possibly additional,  discretionary  actions by regulators that, if
         undertaken, could have a direct material effect on the Bank's financial
         statements.  Under  capital  adequacy  guidelines  and  the  regulatory
         framework  for prompt  corrective  action,  the Bank must meet specific
         capital  guidelines  that involve  quantitative  measures of the Bank's
         assets, liabilities,  and certain off-balance-sheet items as calculated
         under regulatory accounting  practices.  The Bank's capital amounts and
         classification  are  also  subject  to  qualitative  judgments  by  the
         regulators about components, risk weightings, and other factors.

         Quantitative  measures  established  by  regulation  to ensure  capital
         adequacy  require the Bank to maintain  minimum amounts and ratios (set
         forth in the table  below) of total and Tier 1 capital  (as  defined in
         the  regulations) to risk-weighted  assets (as defined),  and of Tier I
         capital  (as  defined)  to  average  assets  (as  defined).  Management
         believes,  as of  December  31,  2004,  that the Bank meets all capital
         adequacy requirements to which they are subject.


                                       70
<PAGE>

         The  following  table shows the Bank's  capital  ratios at December 31,
         2004 and 2003 as well as the  minimum  capital  ratios  required  to be
         deemed "well capitalized" under the regulatory framework.

<TABLE>
<CAPTION>

                                                         As of December 31,
             (in thousands)                        2004                       2003
                                          -----------------------   -----------------------
                                            Amount      Ratio          Amount      Ratio
                                          -----------------------   -----------------------
<S>                                          <C>          <C>           <C>         <C>

COMPANY CAPITAL RATIOS
------------------------------------------
Tier 1 Capital                               $ 44,172     12.34%         N/A        N/A
(to Risk Weighted Assets)
Tier 1 capital minimum requirement           $ 14,313      4.00%         N/A        N/A

Total Capital                                $ 49,268     13.77%         N/A        N/A
(to Risk Weighted Assets)
Total capital minimum requirement            $ 28,625      8.00%         N/A        N/A

Company leverage
Tier 1 Capital                               $ 44,172     12.94%         N/A        N/A
(to Average Assets)
Total capital minimum requirement            $ 13,659      4.00%         N/A        N/A

BANK RISK BASED CAPITAL RATIOS
------------------------------------------

Tier 1 Capital                               $ 43,058     12.03%        $ 29,954    13.48%
(to Risk Weighted Assets)
Tier 1 capital minimum requirement           $ 14,313      4.00%        $  8,890     4.00%
To be well capitalized under
  prompt corrective action provisions        $ 21,469      6.00%        $ 13,336     6.00%

Total Capital                                $ 47,204     13.19%        $ 32,637    14.68%
(to Risk Weighted Assets)
Total capital minimum requirement            $ 28,625      8.00%        $ 17,781     8.00%
To be well capitalized under
  prompt corrective action provisions        $ 35,781     10.00%        $ 22,226    10.00%

Bank leverage
Tier 1 Capital                               $ 43,058     12.61%        $ 29,954    13.47%
(to Average Assets)
Total capital minimum requirement            $ 13,659      4.00%        $  8,898     4.00%
To be well capitalized under
  prompt corrective action provisions        $ 17,073      5.00%        $ 11,123     5.00%

</TABLE>


                                       71
<PAGE>

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

There  are  no  current  or  anticipated  changes  in,  or  disagreements  with,
accountants  on any matter of  accounting  principles  or  practices,  financial
statement disclosure or auditing scope or procedure

ITEM 9A.  CONTROLS AND PROCEDURES

ANNUAL EVALUATION OF THE BANK'S DISCLOSURE CONTROLS AND INTERNAL CONTROLS.

As of the end of the period  covered by this report,  the Company  evaluated the
effectiveness  of the design  and  operation  of its  "disclosure  controls  and
procedures" ("Disclosure  Controls"),  and its "internal controls over financial
reporting" ("Internal  Controls").  This evaluation (the "Controls  Evaluation")
was  done  under  the  supervision  and with the  participation  of  management,
including our President and Chief Executive  Officer ("CEO") and Chief Financial
Officer  ("CFO").  Rules  adopted by the SEC require that in this section of the
Annual  Report  we  present  the  conclusions  of the CEO and the CFO  about the
effectiveness of our Disclosure  Controls and Internal  Controls based on and as
of the date of the Controls Evaluation.

CEO AND CFO CERTIFICATIONS.

Appearing   as   Exhibits   31.1  and  31.2  of  this   Report   there  are  two
"Certifications"  of  the  CEO  and  the  CFO  required  by  Section  302 of the
Sarbanes-Oxley Act of 2002 (the "Section 302 Certification"). The section of the
Annual Report which you are currently reading is the information  concerning the
Controls  Evaluation  referred  to in the Section  302  Certifications  and this
information  should be read in conjunction  with the Section 302  Certifications
for a more complete understanding of the topics presented.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS.

Disclosure  Controls  are  procedures  that are designed  with the  objective of
ensuring  that  information  required to be disclosed in our reports filed under
the Exchange Act, such as this Annual Report, is recorded, processed, summarized
and reported  within the time periods  specified in the  Commission's  rules and
forms. Disclosure Controls are also designed with the objective of ensuring that
such  information is accumulated and  communicated to our management,  including
the CEO and CFO, as appropriate  to allow timely  decisions  regarding  required
disclosure.  Internal  Controls  are  procedures  which  are  designed  with the
objective  of  providing  reasonable  assurance  that (1) our  transactions  are
properly  authorized;  (2) our assets are  safeguarded  against  unauthorized or
improper use; and (3) our transactions are properly  recorded and reported,  all
to permit  the  preparation  of our  financial  statements  in  conformity  with
generally accepted accounting principles and reliable financial reporting.

LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS.

The  Company's  management,  including the CEO and CFO, does not expect that our
Disclosure  Controls or our  Internal  Controls  will  prevent all error and all
fraud. A control system, no matter how well conceived and operated,  can provide
only  reasonable,  not absolute,  assurance  that the  objectives of the control
system are met.  Further,  the design of a control  system must reflect the fact
that there are  resource  constraints,  and the  benefits  of a control  must be
considered  relative to its costs.  Because of the inherent  limitations  in all
control systems,  no evaluation of controls can provide absolute  assurance that
all control  issues and  instances of fraud,  if any,  within the Bank have been
detected.  These  inherent  limitations  include the realities that judgments in
decision-making  can be faulty,  and that breakdowns can occur because of simple
error or mistake.  Additionally,  controls can be circumvented by the individual
acts of some  persons,  by  collusion of two or more  people,  or by  management
override of the control.  The design of any system of controls  also is based in
part upon certain  assumptions about the likelihood of future events,  and there



                                       72
<PAGE>

can be no assurance  that any design will succeed in achieving  its stated goals
under all potential future conditions;  over time, control may become inadequate
because of changes in conditions,  or the degree of compliance with the policies
or  procedures  may  deteriorate.  Because  of  the  inherent  limitations  in a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected.

SCOPE OF THE CONTROLS EVALUATION.

The Controls evaluation included a review of objectives,  design, implementation
by the Company and the effect of the controls on the  information  generated for
use in this  Report.  In the  course of the  Controls  Evaluation,  we sought to
identify data errors, acts of fraud, and other problems with the control systems
and  to  confirm  that  appropriate   corrective   action,   including   process
improvements,  were being undertaken.  This type of evaluation will be done on a
quarterly basis as to our disclosure controls so that the conclusions concerning
their  effectiveness  can be reported in our Quarterly  Reports on Form 10-Q and
Annual  Report on Form 10-K.  Our  Internal  Controls  are also  evaluated on an
ongoing  basis by our  Internal  Audit  Department,  by other  personnel  in our
organization and by our independent  auditors in connection with their audit and
review activities.  The overall goals of these various evaluation activities are
to  monitor  our  Disclosure  Controls  and our  Internal  Controls  and to make
modifications  as  necessary;  our intent in this regard is that the  Disclosure
Controls and the Internal  Controls will be  maintained as dynamic  systems that
change (including with improvements and corrections) as conditions warrant.

Among other matters, we sought in our evaluation to determine whether there were
any  "significant  deficiencies"  or  "material  weaknesses"  in  the  Company's
Internal  Controls,  or whether  the Company  had  identified  any acts of fraud
involving  personnel  who  have a  significant  role in the  Company's  Internal
Controls.  This  information  was  important  both for the  Controls  Evaluation
generally and because items 5 and 6 in the Section 302 Certifications of the CEO
and CFO require that the CEO and CFO disclose  that  information  to our Board's
Audit Committee and to our independent auditors and to report on related matters
in this section of the Annual Report. In the professional  auditing  literature,
"significant deficiencies" are referred to as "reportable conditions"; these are
control  issues that could have a significant  adverse  effect on the ability to
record,   process,   summarize  and  report  financial  data  in  the  financial
statements.  A "material  weakness" is defined in the auditing  literature  as a
particularly  serious  reportable  condition where the internal control does not
reduce to a relatively low level the risk that misstatements  caused by error or
fraud may occur in amounts  that would be material in relation to the  financial
statements and not be detected within a timely period by employees in the normal
course of performing their assigned functions. We also sought to deal with other
controls matters in the Controls  Evaluation,  and in each case if a problem was
identified,  we considered what revision,  improvement and/or correction to make
in accord with our on-going procedures.

In accord with Commission  requirements,  the CEO and CFO note that there was no
change  in  Internal  Controls  during  the  fourth  quarter  of 2004  that  has
materially  affected  Internal  Controls,  or is reasonably likely to materially
affect, the Company.

CONCLUSIONS.

Based upon the Controls Evaluation, our CEO and CFO have concluded that, subject
to the limitations noted above, our Disclosure  Controls are effective to ensure
that  material   information  relating  to  the  Company  and  its  consolidated
subsidiaries   is  made  known  to  management,   including  the  CEO  and  CFO,
particularly during the period when our periodic reports are being prepared, and
that our Internal  Controls are effective to provide  reasonable  assurance that
our  financial  statements  are fairly  presented in conformity  with  generally
accepted accounting principles.



                                       73
<PAGE>

ITEM 9B.  OTHER INFORMATION

Not applicable


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The  information  required  hereunder  is  incorporated  by  reference  from the
Company's  definitive  proxy  statement for the Company's 2005 Annual Meeting of
Shareholders (to be filed pursuant to Regulation 14A).

ITEM 11. EXECUTIVE COMPENSATION.

The  information  required  hereunder  is  incorporated  by  reference  from the
Company's  definitive  proxy  statement for the Company's 2005 Annual Meeting of
Shareholders (to be filed pursuant to Regulation 14A).

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The  information  required  hereunder  is  incorporated  by  reference  from the
Company's  definitive  proxy  statement for the Company's 2005 Annual Meeting of
Shareholders (to be filed pursuant to Regulation 14A).

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The  information  required  hereunder  is  incorporated  by  reference  from the
Company's  definitive  proxy  statement for the Company's 2005 Annual Meeting of
Shareholders (to be filed pursuant to Regulation 14A).

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The  information  required  hereunder  is  incorporated  by  reference  from the
Company's  definitive  proxy  statement for the Company's 2005 Annual Meeting of
Shareholders (to be filed pursuant to Regulation 14A).


                                         PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) (1) Financial Statements. This information is included in Part II, Item 8.

(a) (2) Financial Statement Schedules. All schedules have been omitted since the
required  information is not present or is not present in amounts  sufficient to
require  submission  of the  schedule  or because  the  information  required is
included in Consolidated Financial Statements or notes thereto.

(a) (3) Exhibits.  The exhibits list  required by this item is  incorporated  be
reference to the accompanying Exhibit Index filed as part of this report.



                                       74
<PAGE>


                                       SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                 BRIDGE CAPITAL HOLDINGS



                                 By:  /s/ DANIEL P. MYERS
                                 -------------------------------------
                                          Daniel P. Myers, President
                                          (Principal Executive Officer)

Date:     March 3, 2005



                                       75
<PAGE>


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.


          Name                          Title                      Date
--------------------------       --------------------       -------------------


/s/ RICHARD M. BRENNER                 Director                March 3, 2005
--------------------------       --------------------       -------------------
Richard M. Brenner


/s/ OWEN BROWN                         Director                March 3, 2005
--------------------------       --------------------       -------------------
Owen Brown


/s/ DAVID V. CAMPBELL                  Director                March 3, 2005
--------------------------       --------------------       -------------------
David V. Campbell


/s/ DAVID K. CHUI                      Director                March 3, 2005
--------------------------       --------------------       -------------------
David K. Chui


/s/ ROBERT P. GIONFRIDDO               Director                March 3, 2005
-----------------------------------------------------       -------------------
Robert P. Gionfriddo

                                      Chairman
/s/ ALLAN C. KRAMER                    Director                March 3, 2005
--------------------------       --------------------       -------------------
Allan C. Kramer, M.D.


/s/ ROBERT P. LATTA                    Director                March 3, 2005
--------------------------       --------------------       -------------------
Robert Latta


/s/ THOMAS M. QUIGG                    Director                March 3, 2005
--------------------------       --------------------       -------------------
Thomas M. Quigg
                                  President, Chief
                                  Executive Officer
/s/ DANIEL P. MYERS                    Director                March 3, 2005
--------------------------       --------------------       -------------------
Daniel P. Myers                     (Principal Executive
                                 Officer)


                                      Director                March 3, 2005
--------------------------       --------------------       -------------------
Barry A. Turkus
                                   Executive Vice
                                  President, Chief
/s/ THOMAS A. SA                   Financial Officer           March 3, 2005
--------------------------       --------------------       -------------------
Thomas A. Sa                        (Principal Financial
                                  and Accounting Officer)




                                       76
<PAGE>


                                INDEX TO EXHIBITS


Exhibit
Number                            Description of Exhibit


(2.1)             Agreement and Plan of Reorganization among Bridge Capital
                  Holdings and Bridge Bank dated as of October 1, 2004
                  [incorporated by reference to Exhibit 2.1 to the registrant's
                  Current Report on Form 8-K dated 10/1/04]

(3.1)             Articles of Incorporation of the registrant [incorporated by
                  reference to Exhibit 3(i)(a) to the registrant's Current
                  Report on Form 8-K dated 10/1/04]

(3.2)             Amendment to the registrant's  Articles of Incorporation dated
                  August 27, 2004  [incorporated by reference to Exhibit 3(i)(b)
                  to the registrant's Current Report on Form 8-K dated 10/1/04]

(3.3)             Registrant's By-Laws [incorporated by reference to Exhibit
                  3(i)(c) to the registrant's Current Report on Form 8-K dated
                  10/1/04]

(4.1)             Indenture dated as of December 21, 2004 between Bridge Capital
                  Holdings and JP Morgan Chase Bank as Trustee.

(4.2)             Amended and Restated Declaration of trust of  Bridge Capital
                  Holdings Trust I dated December 21, 2004.

(10.1)            Bridge Bank Amended and Restated 2001 Stock Option Plan**

(10.2)            Bridge Bank, National Association Supplemental Executive
                  Retirement Plan.

(10.3)            Sublease for premises at 2120 El Camino Real, Santa Clara,
                  California.

(10.4)            Organizers' Acknowledgement of Liability on Lease.

(10.5)            Organizers' Acknowledgement of Liability on Lease and Letter
                  of Credit Lease.

(10.6)            Lease for banking office located at 525 University Avenue,
                  City of Palo Alto, County of Santa Clara, State of
                  California.**

(10.7)            Lease for banking office located at 3035 Prospect Park Drive,
                  Suite 100, Rancho Cordova, County of Sacramento, State of
                  California

(10.8)            Wire Transfer Service Agreement with BServ, Inc dated 6/25/02

(10.9)            Performance Incentive Compensation Plan


(21)              Subsidiaries

(31.1)            Certification of Principal Executive Officer pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002

(31.2)            Certification of Principal Financial Officer pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002

(32.1)            Certification of Principal Executive Officer pursuant to 18
                  U.S.C. Section 1350

(32.2)            Certification of Principal Financial Officer pursuant to 18
                  U.S.C. Section 1350

---------------------------------
    **Management contract or compensatory plan or arrangement



                                       77