**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10 - QSB**




**QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(D)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**




**For
      the quarterly period ended June 30, 2005**




Commission
      File Number: 333-118859




**PACIFIC
      COAST NATIONAL BANCORP**


(Exact
      name of registrant as specified in its charter)




**California**
            
            **61-1453556**(State
                or other jurisdiction of
            
            (I.R.S.
                Employerincorporation
                or organization)
            
            Identification
                No.)905
                Calle Amanecer, Suite 100, San Clemente, California
                92673(Address
                of principal executive offices, including zip code)(949)
                361- 4300(Registrant’s
                telephone number, including area code)


Indicate
      by check mark whether the registrant: (i) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (ii) has been subject to such filing requirements
      for
      the past 90 days.


Yes
xNo
o




Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Exchange Act).




Yes
oNo
x




The
      number of shares outstanding of the issuer’s Common Stock as of August 15, 2005,
      was 2,280,000 shares.











**PACIFIC
      COAST NATIONAL BANCORP**




INDEX




PAGEItem
                1 -
            Financial
                StatementsConsolidated
                Balance Sheet at June 30, 2005 (unaudited)
            3Consolidated
                Statements of Operations for the period ended June 30, 2005
                (unaudited)
            4Consolidated
                Statements of Cash Flows for the period ended June 30,
                2005(unaudited)
            5Condensed
                Notes to Unaudited Consolidated Financial Statements
            6Item
                2 -
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            7Item
                3 -
            Controls
                and Procedures
            17PART
                II - OTHER INFORMATIONItem
                1 -
            Legal
                Proceedings
            18Item
                2 -
            Changes
                in Securities and Use of Proceeds
            18Item
                3 -
            Defaults
                upon Senior Securities
            18Item
                4 -
            Submission
                of Matters to a Vote of Security Holders
            18Item
                5 -
            Other
                Information
            18Item
                6 -
            Exhibits
                and Reports on Form 8-K
            18Signatures
            19





-2-


**PART
      I -** **FINANCIAL
      INFORMATION**




**ITEM
      1.** **Financial
      Statements**




**PACIFIC
      COAST NATIONAL BANCORP**


**CONSOLIDATED
      BALANCE SHEET (UNAUDITED)**


**JUNE
      30, 2005**


**(Dollars
      in Thousands)**


**ASSETS**Cash
                  and Due from Banks
              
              $
              1,223Federal
                  Funds Sold
              
              
              18,070TOTAL
                  CASH AND CASH EQUIVALENTS
              
              
              19,293Federal
                  Reserve and Federal Home Loan Bank Stock, at Cost
              
              
              585Loans,
                  Net
              
              
              771Premises
                  and Equipment, Net
              
              
              1,115Accrued
                  Interest and Other Assets
              
              
              110**TOTAL
                  ASSETS**
              
              $
              21,874**LIABILITIES
                  AND SHAREHOLDERS' EQUITY**DepositsNoninterest-Bearing
                  Demand
              
              $
              94Money
                  Market and NOW
              
              
              758Savings
              
              
              20Time
                  Deposits Under $100,000
              
              
              187Time
                  Deposits $100,000 and Over
              
              
              600TOTAL
                  DEPOSITS
              
              
              1,659Accrued
                  Interest and Other Liabilities
              
              
              2TOTAL
                  LIABILITIES
              
              
              1,661Shareholders'
                  Equity:Common
                    Stock, $0.01 par value; authorized 10,000,000 shares issued and
outstanding
                    2,280,000
                    shares
              
              
              23Surplus
              
              
              23,272Accumulated
                  Deficit
              
              
              (
                  3,082
              )TOTAL
                  SHAREHOLDERS' EQUITY
              
              
              20,213**TOTAL
                  LIABILITIES AND SHAREHOLDERS' EQUITY**
              
              $
              21,874
 See
      accompanying notes to unaudited consolidated financial statements.







-3-


**PACIFIC
      COAST NATIONAL BANCORP**


**STATEMENTS
      OF OPERATIONS (UNAUDITED)**


**(Dollars
      in Thousands, except per share amounts)**


3
                  months ending
              
              6
                  months endingJune
                  30, 2005
              
              June
                  30, 2005**INTEREST
                  INCOME**Interest
                  and Fees on Loans
              
              
              9
              
              
              9Interest
                  on Investment Securities
              
              
              80
              
              
              80Other
                  Interest Income
              
              
              --
              
              
              --TOTAL
                  INTEREST INCOME
              
              
              89
              
              
              89**INTEREST
                  ON DEPOSITS**
              
              
              3
              
              
              3NET
                  INTEREST INCOME
              
              
              86
              
              
              86**PROVISION
                  FOR LOAN LOSSES**
              
              
              5
              
              
              5NET
                  INTEREST INCOME AFTERPROVISION
                  FOR LOAN LOSSES
              
              
              81
              
              
              81**NONINTEREST
                  EXPENSE**Salaries
                  and Employee Benefits
              
              
              165
              
              
              165Occupancy
              
              
              26
              
              
              26Furniture
                  and Equipment
              
              
              22
              
              
              22Data
                  Processing
              
              
              50
              
              
              50Promotional
              
              
              30
              
              
              30Legal
                  and Accounting
              
              
              11
              
              
              11Other
                  Expenses
              
              
              46
              
              
              46Pre-Opening
                  Expenses
              
              
              781
              
              
              1,217TOTAL
                  NONINTEREST EXPENSE
              
              
              1,131
              
              
              1,567**NET
                  (LOSS)**
              
              
              (1,050
              )
              
              (1,486
              )**LOSS
                  PER SHARE - BASIC AND DILUTED**
              
              $
              (0.46
              )
              $
              (0.65
              )WEIGHTED
                  AVERAGE SHARES OUTSTANDINGBASIC
                  AND DILUTED
              
              
              2,280,000
              
              
              2,280,000


See
      accompanying notes to unaudited consolidated financial statements.








-4-


**PACIFIC
      COAST NATIONAL BANCORP**


**CONSOLIDATED
      STATEMENT OF CASH FLOWS (UNAUDITED)**


(Dollars
      in Thousands)


Six
                  Months EndedJune
                  30, 2005OPERATING
                  ACTIVITIESNet
                  Loss
              
              $
              (
                  1,486
              )Adjustments
                    to Reconcile Net Income toNet Cash Provided by Operating
                    Activities:Provision
                  for Loan Losses
              
              
              5Noncash
                  expense for organizer warrants
              
              
              495Other
                  Items - Net
              
              
              (
                  281
              )NET
                  CASH (USED) BY OPERATING ACTIVITIES
              
              
              (
                  1,267
              )INVESTING
                  ACTIVITIESPurchases
                  of Investment Securities
              
              
              (
                  585
              )Net
                  Change in Loans
              
              
              (
                  776
              )Purchase
                  of Premises and Equipment
              
              
              (
                  1,035
              )NET
                  CASH (USED) BY INVESTING ACTIVITIES
              
              
              (
                  2,396
              )FINANCING
                  ACTIVITIESNet
                  Change in Deposits
              
              
              1,659Payments
                  on Notes Payable and Due To Organizers
              
              
              (
                  1,560
              )Proceeds
                  from Sale of Common Stock
              
              
              22,800NET
                  CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              22,899INCREASE
                  IN CASH AND CASH EQUIVALENTS
              
              
              19,236Cash
                  and Cash Equivalents at Beginning of Period
              
              
              57CASH
                  AND CASH EQUIVALENTS AT END OF PERIOD
              
              $
              19,293


Non-cash
      financing activities during the six months ended June 30,
      2005:





During
      the six months ended June 30, 2005, the Company issued Director warrants valued
      at $495,000 and recorded compensation expense for $495,000, the fair value
      of
      the warrants at the date of issue.




See
      accompanying notes to unaudited consolidated financial statements





-5-


**PACIFIC
      COAST NATIONAL BANCORP**


**CONDENSED
      NOTES TO FINANCIAL STATEMENTS**





**Note
      1 - Basis of Presentation**




The
      consolidated financial statements include the amounts of Pacific Coast National
      Bancorp (the “Company”) and its wholly-owned subsidiary, Pacific Coast National
      Bank (the “Bank”). All significant inter-company accounts have been eliminated
      on consolidation. The Bank opened for business on May 16, 2005. Prior to May
      16,
      2005, the Company was a “Development-Stage Company” as defined by Statement on
      Financial Standards 7. The cumulative loss from operations through the Company’s
      development period (July 2, 2003 to May 16, 2005) was $2.2 million.




The
      accounting principles followed by the Company and the methods of applying these
      principles conform with accounting principles generally accepted in the United
      States of America (GAAP) and with general practices within the banking industry.
      In preparing financial statements in conformity with GAAP, management is
      required to make estimates and assumptions that affect the reported amounts
      in
      the financial statements. Actual results could differ significantly from those
      estimates. Material estimates common to the banking industry that are
      particularly susceptible to significant change in the near term include, but
      are
      not limited to, the determination of the allowance for loan losses, the
      valuation of real estate acquired in connection with or in lieu of foreclosure
      on loans, and valuation allowances associated with deferred tax assets, the
      recognition of which are based on future taxable income.




The
      consolidated interim financial statements included in this report are unaudited
      but reflect all adjustments which, in the opinion of management, are necessary
      for a fair presentation of the financial position and results of operations
      for
      the interim periods presented. All such adjustments are of a normal recurring
      nature. The results of operations for the period ended June 30, 2005 are not
      necessarily indicative of the results of a full year’s operations. For further
      information, refer to the financial statements and footnotes included in the
      Company’s annual report on form 10-KSB for the year ended December 31,
      2004.




**Note
      2 - Loss Per Share**




Loss
      per
      common share is based on the weighted average number of common shares
      outstanding during the period. The effects of potential common shares
      outstanding during the period would be included in diluted earnings (loss)
      per
      share; however, the effect of potential shares would be antidilutive during
      all
      periods presented.




**Note
      3 - Stock-Based Compensation**




The
      Company accounts for stock-based employee compensation as prescribed by APB
      Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and has
      adopted Statement of Financial Accounting Standards 148, “Accounting for
      Stock-Based Compensation - Transition and Disclosure” (“SFAS 148”), that amends
      certain aspects of Financial Accounting Standards No. 123, “Accounting for
      Stock-Based Compensation” (“SFAS 123”). APB 24 provides that compensation
      expense relative to the Company’s employee stock options is measured based on
      the intrinsic value of the stock options granted. SFAS 123 and 148 require
      pro
      forma disclosures of net income (loss) and net income (loss) per share as if
      the
      fair value based method of accounting for stock-based awards had been applied
      for employee grants. They also require disclosure of option status on a more
      prominent and frequent basis. The Company accounts for stock options and
      warrants issued to non-employees based on the fair value method, but has not
      elected this treatment for grants to employees and board members. Under the
      fair
      value based method, compensation cost is recorded based on the value of the
      award at the grant date and is recognized over the service period.




In
      December 2004, the FASB issued SFAS No. 123 (Revised), *Share-Based
      Payment* .
      This
      standard revises SFAS No. 123, APB Opinion No. 25 and related accounting
      interpretations, and eliminates the use of the intrinsic value method for
      employee stock-based compensation. SFAS No. 123 (R) requires compensation costs
      related to share-based payment transactions to be recognized in the financial
      statements over the period that an employee provides service in exchange for
      the
      award. Currently, the Company uses the intrinsic value method of APB Opinion
      No.
      25 to value share-based options granted to employees and board members. The
      new
      standard requires the expensing of all share-based compensation, including
      options, using the fair value-based method. The effective date of this standard
      for the Company will be January 1, 2006. Management is currently assessing
      the
      impact that this new standard will have on the Company’s financial
      statements.






-6-


The
      Company has not presented any pro forma information related to employee option
      grants since its stock option plan is subject to shareholder
      approval.




As
      part
      of the Company’s initial stock offering, the Company’s outside Directors were
      awarded a total of 64,000 warrants  in
      recognition of the expertise imparted, time expended and the substantial
      financial risks undertaken by the Directors.




The
      fair
      value of each warrant grant was estimated at the grant date using the
      Black-Scholes option-pricing model. The Black-Scholes option-pricing valuation
      model was developed for use in estimating the fair value of traded options
      and
      warrants that have no vesting restrictions and are fully transferable. In
      addition, option valuation models require the input of highly subjective
      assumptions, including the expected stock price volatility. Because the
      Company’s stock options and warrants have characteristics significantly
      different from those of traded options, and because changes in the subjective
      input assumptions can materially affect the fair value estimate, in management’s
      opinion, the existing models do not necessarily provide a reliable single
      measure of the fair value of its stock options and warrants.




The
      following table illustrates the effect on net income and earnings per share
      if
      the fair value based method had been applied to all outstanding and
      unvested director awards:


**Six Months Ended**
              **June
                30, 2005**Net
                loss, as reported
            
            $
            (1,486
            )Deduct:
                fair value based Director warrants
            
            
            (211
            )Pro
                forma net loss
            
            $
            (1,697
            )Loss
                per share:As
                reported
            
            $
            (0.65
            )Pro
                forma
            
            $
            (0.74
            )


**ITEM
      2.** **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.**




**MANAGEMENT’S
      DISCUSSION AND ANALYSIS**


**OF
      FINANCIAL CONDITION AND RESULTS OF OPERATIONS**




The
      following discussion and analysis presents our consolidated financial condition
      and results of operations for the three months and six months ended
      June
      30, 2005. The discussion should be read in conjunction with our financial
      statements and the notes related thereto which appear elsewhere in this
      Quarterly Report on Form 10-QSB.




Statements
      contained in this report that are not purely historical are forward-looking
      statements within the meaning of Section 21E of the Securities Exchange Act
      of
      1934, as amended, including our expectations, intentions, beliefs, or strategies
      regarding the future. Any statements in this document about expectations,
      beliefs, plans, objectives, assumptions or future events or performance are
      not
      historical facts and are forward-looking statements. These statements are often,
      but not always, made through the use of words or phrases such as “may,”“should,”“could,”“predict,”“potential,”“believe,”“will likely result,”“expect,”“will continue,”“anticipate,”“seek,”“estimate,”“intend,”“plan,”“projection,”“would” and “outlook,” and similar expressions. Accordingly, these
      statements involve estimates, assumptions and uncertainties, which could cause
      actual results to differ materially from those expressed in them. Any
      forward-looking statements are qualified in their entirety by reference to
      the
      factors discussed throughout this document. All forward-looking statements
      concerning economic conditions, rates of growth, rates of income or values
      as
      may be included in this document are based on information available to us on
      the
      dates noted, and we assume no obligation to update any such forward-looking
      statements. It is important to note that our actual results may differ
      materially from those in such forward-looking statements due to fluctuations
      in
      interest rates, inflation, government regulations, economic conditions, customer
      disintermediation and competitive product and pricing pressures in the
      geographic and business areas in which we conduct operations, including our
      plans, objectives, expectations and intentions and other factors discussed
      under
      the section entitled “Risk Factors,” in our Annual Report on Form 10-KSB for the
      year ended December 31, 2004, including the following:






-7-


·
              we
                  have limited operating history upon which to base an estimate of
                  our
                  future financial performance;
 
 ·
              we
                  have incurred substantial start-up expenses associated with our
                  organization and our recent public offering and expect to sustain
                  losses
                  or achieve minimal profitability during our initial years of
                  operations;
 
 ·
              if
                  we are unable to implement our business plan and strategies, we
                  will be
                  hampered in our ability to develop business and serve or customers,
                  which,
                  in turn, could have an adverse effect on our financial
                  performance;
 
 ·
              if
                  we fail to retain our key employees, growth and profitability could
                  be
                  adversely affected;
 
 ·
              we
                  face substantial competition in our primary market
                  area;
 
 ·
              the
                  Bank’s current legally mandated lending limits are lower than those
                  of our
                  competitors, which may impair our ability to attract
                  borrowers;
 
 ·
              an
                  economic downturn, especially one affecting our primary service
                  area, may
                  have an adverse effect on our financial
                  performance;
 
 ·
              changes
                  in governmental economic and monetary policies, the Internal Revenue
                  Code
                  and banking and credit regulations, as well as other factors, will
                  affect
                  the demand for loans and the ability of the Bank to attract
                  deposits;
 
 ·
              changes
                  in the general level of interest rates and other economic factors
                  can
                  affect the Bank’s interest income by affecting the spread between
                  interest-earning assets and interest-bearing
                  liabilities;
 
 ·
              we
                  have no current intentions of paying cash
                  dividends;
 
 ·
              we
                  are subject to significant government regulation and legislation
                  that
                  increases the cost of doing business and inhibits our ability to
                  compete;
 
 ·
              we
                  may not be able to raise additional capital on terms favorable
                  to us;
                  and
 
 ·
              our
                  directors and executive officers beneficially own a significant
                  portion of
                  our outstanding common stock.
 
  These
      factors and the risk factors referred to in our Annual Report on Form 10-KSB
      for
      the year ended December 31, 2004 could cause actual results or outcomes to
      differ materially from those expressed in any forward-looking statements made
      by
      us, and you should not place undue reliance on any such forward-looking
      statements. Any forward-looking statement speaks only as of the date on which
      it
      is made and we do not undertake any obligation to update any forward-looking
      statement or statements to reflect events or circumstances after the date on
      which such statement is made or to reflect the occurrence of unanticipated
      events. New factors emerge from time to time, and it is not possible for us
      to
      predict which will arise. In addition, we cannot assess the impact of each
      factor on our business or the extent to which any factor, or combination of
      factors, may cause actual results to differ materially from those contained
      in
      any forward-looking statements.




-8-


**Executive
      Overview**




***Introduction***




Pacific
      Coast National Bancorp is a bank holding company headquartered in San Clemente,
      California, offering a broad array of banking services through our wholly owned
      banking subsidiary, Pacific Coast National Bank. The Bank’s principal markets
      include the coastal regions of Southern Orange County and Northern San Diego
      County. As of June 30, 2005, the Company had, on a consolidated basis, total
      assets of $21.9 million, net loans of $771 thousand, total deposits of $1.7
      million, and shareholders’ equity of $20.2 million. The Bank currently operates
      through a main office located at 905 Calle Amanecer, San Clemente, California
      and a branch office at 499 North El Camino Real, Encinitas, California.




The
      Company was incorporated under the laws of the State of California on July
      2,
      2003, to organize and serve as the holding company for the Bank. In 2005, an
      initial public offering of our common stock was completed, issuing 2,280,000
      shares at a price of $10.00 per share. The net proceeds received from the
      offering were approximately $20.5 million. The Bank opened for business on
      May
      16, 2005.




The
      following discussion focuses on the Company’s financial condition and results of
      operations for the three months and six months ended June 30, 2005. The
      Company’s principal operations for the three months and the six months ended
      June 30, 2005 consisted of the operations of Pacific Coast National Bank which
      opened for business May 16, 2005.




Because
      the bank opened on May 16, 2005, the results of operations for the six months
      ended June 30, 2005 were virtually the same as the results of operations for
      the
      three months ended June 30, 2005, with the exception of the pre-opening expenses
      for the three months ended March 31, 2005 which totaled $436
      thousand.




**Results
      of Operations for the Three Months and the Six Months Ended June 30,
      2005**




***Net
      Interest Income and Net Interest Margin***




Net
      interest income is the difference between interest income, principally from
      loan, lease and investment securities portfolios, and interest expense,
      principally on customer deposits and borrowings. Net interest income is our
      principal source of earnings. Changes in net interest income result from changes
      in volume, spread and margin. Volume refers to the average dollar level of
      interest-earning assets and interest-bearing liabilities. Spread refers to
      the
      difference between the average yield on interest-earning assets and the average
      cost of interest-bearing liabilities. Margin refers to net interest income
      divided by average interest-earning assets, and is influenced by the level
      and
      relative mix of interest-earning assets and interest-bearing
      liabilities.




Net
      interest income was $86 thousand in the second quarter of 2005. Our net interest
      margin was 3.6%.




Total
      interest income was $89 thousand for the second quarter of 2005. Average net
      loans were $1.0 million and average investments, primarily overnight investments
      with other banks, were $18.4 million.




Total
      interest expense was $3 thousand in the second quarter of 2005, paid on average
      deposits of $1.6 million for the same period.






-9-


The
      following table sets forth our average balances of assets, liabilities and
      shareholders’ equity, in addition to the major components of net interest income
      and our net interest margin for the quarter ended June 30, 2005.




**ASSETS**
            
            Average
                Balance
            
            Income
                / Expense
            
            Average
                Rate / YieldInterest-earning
                assets:Net
                loans and leases
            
            $
            1,026,500
            
            $
            9,172
            
            
            7.25
            %Securities
                of U.S. government agenciesOther
                investment securities
            
            
            585,000
            
            
            4,290
            
            
            5.95
            %Securities
                purchased under agreements to resell and federal funds sold
            
            
            17,776,800
            
            
            75,296
            
            
            3.44
            %Total
                interest-earning assets
            
            
            19,388,300
            
            
            88,758
            
            
            3.71
            %Total
                noninterest-earning assets
            
            
            2,485,600**TOTAL
                ASSETS**
            
            $
            21,873,900**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Interest-bearing
                liabilities:Money
                market deposits
            
            
            619,600
            
            
            825
            
            
            1.08
            %NOW
                deposits
            
            
            69,900
            
            
            39
            
            
            0.45
            %Savings
                deposits
            
            
            13,200
            
            
            11
            
            
            0.68
            %Time
                certificates of deposit in denominations of $100,000 or more
            
            
            403,300
            
            
            1,014
            
            
            2.04
            %Other
                time deposits
            
            
            167,600
            
            
            542
            
            
            2.62
            %Other
                borrowings
            
            
            --
            
            
            --Total
                interest-bearing liabilities
            
            
            1,273,600
            
            
            2,430
            
            
            1.55
            %Noninterest-bearing
                liabilities:Noninterest-bearing
                deposits
            
            
            335,500Other
                liabilities
            
            
            100Total
                noninterest-bearing liabilities
            
            
            335,600SHAREHOLDERS’
                EQUITY
            
            
            20,264,700**TOTAL
                LIABILITIES AND SHAREHOLDERS’ EQUITY**
            
            $
            21,873,900Net
                interest income
            
            
            
            
            
            86,328Net
                interest spread
            
            
            
            
            
            
            
            
            2.17
            %Net
                interest margin
            
            
            
            
            
            
            
            
            3.61
            %


Changes
      in volume and changes in interest rates affect our interest income and interest
      expense. The effect of these changes is typically displayed in a volume, mix
      and
      rate analysis table which compares the changes in income and expense over
      periods. Since the Company has a limited operating history, data to analyze
      these changes is not currently available.




***Provision
      for Loan Losses***




We
      determine a provision for loan losses that we consider sufficient to maintain
      an
      allowance to absorb probable losses inherent in our portfolio as of the balance
      sheet date. For additional information concerning this determination, see the
      section of this discussion and analysis captioned *“Allowance
      for Loan Losses.”*




In
      the
      second quarter of 2005, our provision for loan and lease losses was $4,505.
      The
      provision amount is directly related to loan volumes. Because the Bank recently
      opened, there were no charge-offs or non-performing loans during the second
      quarter of 2005.




***Noninterest
      Income***




The
      non-interest income for the quarter ended June 30, 2005 was negligible. In
      general, deposit accounts incur service charges one month in arrears. Due to
      the
      low volume of accounts and the brief amount of time any of the accounts had
      been
      opened, virtually no service charges were collected.




***Noninterest
      Expense***




Our
      total
      noninterest expense was $1.131 million in the second quarter of 2005. This
      expense is not representative of future expense, as the Bank was open for
      approximately half of the quarter. While it is anticipated that the overall
      volume of noninterest expense will continue to increase as the Bank grows,
      management is committed to controlling costs and expects to moderate these
      increases relative to revenue growth.




Salaries
      and employee benefits totaled $165,000 for the second quarter of 2005. The
      Bank
      employed 15 full-time equivalent employees as of June 30, 2005. The volume
      of
      assets per employee as of the end of the second quarter of 2005 was
      $1,485,000.






-10-


Occupancy
      and equipment expenses totaled $48,000 for the second quarter of 2005,
      attributable primarily to lease expense and the start-up costs associated with
      opening two locations simultaneously including the installation of a security
      system .




Data
      processing expense was $50,000 for the second quarter of 2005, attributable
      primarily to the cost associated with the establishment of the computer network,
      and computer supplies.




Promotional
      expenses were $30,000 for the second quarter of 2005. This included expenses
      for
      advertising in the bank’s two primary markets, direct mail campaigns to local
      businesses, and sponsorship of key community events to coincide with the bank’s
      opening.




Professional
      fees of $11,000 for the second quarter of 2005 were primarily attributable
      to
      legal expenses related to the opening of the Bank, and compliance services
      fees.




Other
      expenses of $46,000 for the second quarter of 2005 included holding company
      administrative expenses were $11,000 of 2005. This is attributable primarily
      to
      fees associated with public reporting and other expenses generally associated
      with publicly traded companies. Other expenses within this category included
      costs for office supplies, workers compensation insurance, and director
      training.




Pre-opening
      expenses of $781 thousand include the fair value calculation of
      $495
      thousand for non-director organizers’ warrants, using the Black-Scholes model.




Pre-opening
      expenses for the six month period ended June 30, 2005 were $1.217 million.




***Income
      Taxes***




No
      federal or state tax expense has been recorded for the quarter ended June 30,
      2005, based upon net operating losses.




**Financial
      Condition**




Total
      assets as of June 30, 2005 were $21.9 million, primarily the result of the
      initial public offering, which resulted in net capital after organizing expenses
      of $20.5 million.




As
      of
      June 30, 2005, shareholders’ equity was $20.2 million, as a result of the
      initial public offering which closed on April 30, 2005, partially offset by
      the
      losses from current operations.




***Short-Term
      Investments and Interest-bearing Deposits in Other Financial
      Institutions***




At
      June
      30, 2005, the Bank had $18.1 million in federal funds sold. Federal funds sold
      allow the Bank to meet liquidity requirements and provide temporary holdings
      until the funds can be otherwise deployed or invested.




***Investment
      Securities***




Our
      investment portfolio will primarily serve as a source of interest income and,
      secondarily, as a source of liquidity and a management tool for our interest
      rate sensitivity. We manage our investment portfolio according to a written
      investment policy established by our Board of Directors and implemented by
      our
      Investment/Asset-liability Committee.




At
      June
      30, 2005, the Bank’s securities consisted solely of Federal Reserve Bank Stock,
      having an amortized cost of $585,000 an estimate fair value of $585,000, and
      a
      weighted average yield of 5.95%.




***Loan
      Portfolio***




Our
      primary source of income is interest on loans. The following table presents
      the
      composition of our loan portfolio by category as of the dates
      indicated:




As
      of
      June 30, 2005, net loans were $771 thousand. Net loans as a percentage of total
      assets was 3.7% as of June 30, 2005.






-11-


The
      commercial loan portfolio will be comprised of lines of credit for working
      capital and term loans to finance equipment and other business assets. The
      lines
      of credit typically are limited to a percentage of the value of the assets
      securing the line. Lines of credit and term loans typically are reviewed
      annually and can be supported by accounts receivable, inventory, equipment
      and
      other assets of the client’s businesses. At June 30, 2005, commercial loans
      totaled $771 thousand, 100% of our total funded loans.




The
      consumer loan portfolio will consist of personal lines of credit and loans
      to
      acquire personal assets such as automobiles and boats. The lines of credit
      generally have terms of one year and the term loans generally have terms of
      three to five years. The lines of credit typically have floating rates. At
      June
      30, 2005, there were no consumer loans in the loan portfolio.




The
      real
      estate loan portfolio will be comprised of construction loans and short-term
      mortgage loans. Construction loans consist primarily of single-family
      residential properties, have a term of less than one year and have floating
      rates and commitment fees. Construction loans are typically made to builders
      that have an established record of successful project completion and loan
      repayment. Short-term mortgage loans typically are secured by commercial
      properties occupied by the borrower, have terms of three to seven years with
      both fixed and floating rates. At June 30, 2005, there were no real estate
      loans
      in the loan portfolio.




Loan
      concentrations are considered to exist when there are amounts loaned to a
      multiple number of borrowers engaged in similar activities that would cause
      them
      to be similarly impacted by economic or other conditions. At June 30, 2005,
      such
      an analysis would not be meaningful due to the small dollar amount of total
      loans. As new loans are generated and the Bank continues to grow, the presence
      of concentrations in the loan portfolio will be monitored.




Management
      may renew loans at maturity when requested by a customer whose financial
      strength appears to support such a renewal or when such a renewal appears to
      be
      in the best interest of the Bank. The Bank requires payment of accrued interest
      in such instances and may adjust the rate of interest, require a principal
      reduction, or modify other terms of the loan at the time of renewal.




Loan
      terms vary according to loan type. The following table shows the maturity
      distribution of loans and leases as of June 30, 2005:


**As
                of June 30, 2005****Over
                1 Year**
              **through
                5 Years**
            
            **Over
                5 Years****One
                Year**
              **or
                Less**
            
            **Fixed**
              **Rate**
            
            **Floating
                or Adjustable Rate**
            
            **Fixed**
              **Rate**
            
            **Floating
                or Adjustable Rate**
            
            **Total****(In
                thousands)**Real
                estate — construction
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0Real
                estate — secured
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Commercial
                and industrial
            
            
            750
            
            
            26
            
            
            0
            
            
            0
            
            
            0
            
            
            776Consumer
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Leases
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Other
                loans
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Total
            
            $
            750
            
            $
            26
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            776


**Nonperforming
      Loans, Leases and Assets**




Nonperforming
      assets consist of loans and leases on nonaccrual status, loans 90 days or more
      past due and still accruing interest, loans that have been restructured
      resulting in a reduction or deferral of interest or principal, OREO, and other
      repossessed assets. As of June 30, 2005, there were no nonperforming
      assets.




A
      potential problem loan is defined as a loan where information about possible
      credit problems of the borrower is known, causing management to have serious
      doubts as to the ability of the borrower to comply with the present loan payment
      terms and which may result in the inclusion of such loan in one of the
      nonperforming asset categories. An internally classified loan list is maintained
      that helps management assess the overall quality of the loan portfolio and
      the
      adequacy of the allowance for loan losses. Loans classified as “special mention”
      are those that contain a weakness that, if left unattended, could develop into
      a
      problem affecting the ultimate collectibility of the loan. Loans classified
      as
“substandard” are those loans with clear and defined weaknesses, such as highly
      leveraged positions, unfavorable financial ratios, uncertain repayment resources
      or poor financial condition, which may jeopardize recoverability of the loan.
      Loans classified as “doubtful” are those loans that have characteristics similar
      to substandard loans, but also have an increased risk that loss may occur or
      at
      least a portion of the loan may require a charge-off if liquidated at present.
      Although loans classified as substandard do not duplicate loans classified
      as
      doubtful, both substandard and doubtful loans may include some loans that are
      past due at least 90 days, are on nonaccrual status or have been restructured.
      Loans classified as “loss” are those loans that are in the process of being
      charged-off. The Bank had no loans classified in these categories at June 30,
      2005.






-12-


***Allowance
      for Loan Losses***




Implicit
      in the Bank’s lending activities is the fact that loan losses will be
      experienced and that the risk of loss will vary with the type of loan being
      made
      and the creditworthiness of the borrower over the term of the loan. To reflect
      the currently perceived risk of loss associated with the loan portfolio,
      additions are made to the allowance for loan losses in the form of direct
      charges against income to ensure that the allowance is available to absorb
      possible loan losses. The factors that influence the amount include, among
      others, the remaining collateral and/or financial condition of the borrowers,
      historical loan loss, changes in the size and composition of the loan portfolio,
      and general economic conditions.




The
      amount of the allowance equals the cumulative total of the provisions made
      from
      time to time, reduced by loan charge-offs and increased by recoveries of loans
      previously charged-off. Until management has adequate historical data upon
      which
      to base the estimate of the allowance for loan losses,  information
      regarding the ability of the borrower to repay the loan, current economic
      conditions and  other pertinent factors will be considered. Thus, the
      allowance was $4,505, or 0.58% of outstanding principal as of June 30, 2005.




Credit
      and loan decisions are made by management and the Board of Directors in
      conformity with loan policies established by the board of directors. The Bank’s
      practice is to charge-off any loan or portion of a loan when the loan is
      determined by management to be uncollectible due to the borrower’s failure to
      meet repayment terms, the borrower’s deteriorating or deteriorated financial
      condition, the depreciation of the underlying collateral, the loan’s
      classification as a loss by regulatory examiners, or other reasons. During
      the
      second quarter of 2005, there were no charge-offs.




***Nonearning
      Assets***




Premises,
      leasehold improvements and equipment totaled $1.15 million at June 30, 2005.
      There are no definitive agreements regarding acquisition or disposition of
      owned
      or leased facilities and, for the near-term future, there are no significant
      changes anticipated in the total occupancy expense.




***Deposits***




Deposits
      are our primary source of funds. The following table sets forth, for the periods
      indicated, the distribution of our average deposit account balances and average
      cost of funds on each category of deposits as of June 30, 2005:




**Average
                Balance**
            
            **Percent
                of Deposits**
            
            **Average
                Rate****(Dollars
                in thousands)**Noninterest-bearing
                demand deposits
            
            $
            335
            
            
            21
            %
            
            0
            %Money
                market deposits
            
            
            620
            
            
            39
            %
            
            1.08
            %NOW
                deposits
            
            
            70
            
            
            4
            %
            
            0.45
            %Savings
                deposits
            
            
            13
            
            
            1
            %
            
            0.68
            %Time
                certificates of deposit in denominations of $100,000 or more
            
            
            403
            
            
            25
            %
            
            2.04
            %Other
                time deposits
            
            
            168
            
            
            10
            %
            
            2.62
            %Total
                deposits
            
            $
            1,609
            
            
            100
            %
            
            1.22
            %







-13-


The
      following table sets forth the amount and maturities of the time deposits of
      $100,000 or more as of June 30, 2005:




**Time
                Deposits of $100,00 or more**
            
            **Other
                Time Deposits**
            
            **Total
                Time Deposits****(Dollars
                in thousands)**Three
                months or less
            
            $
            --
            
            
            2
            
            $
            2Over
                three months through six months
            
            
            300
            
            
            40
            
            $
            340Over
                six months through 12 months
            
            
            300
            
            
            137
            
            $
            437Over
                12 months
            
            
            --
            
            
            8
            
            $
            8Total
            
            $
            600
            
            $
            187
            
            $
            787





**Return
      on Equity and Assets**




The
      following table sets forth certain information regarding the Company’s return on
      equity and assets for the periods indicated:




**At
                June 30, 2005**Return
                of assets
            
            
            -10.30
            %Return
                on equity
            
            
            -10.65
            %Dividend
                payout ratio
            
            
            0
            %Equity
                to assets ratio
            
            
            96.7
            %





**Off-Balance
      Sheet Arrangements**




Neither
      the Company nor the Bank has any material off-balance sheet
      arrangements.




***Borrowings***




The
      Company has access to a variety of borrowing sources including federal funds
      purchased.




***Loan
      Commitments***




At
      June
      30, 2005, the Company had outstanding loan origination commitments and unused
      commercial and retail lines of credit of $250 thousand and no standby letters
      of
      credit. Management believes the Bank has sufficient funds available to meet
      current origination and other lending commitments.




***Capital
      Resources and Capital Adequacy Requirements***




The
      risk-based capital regulations established and administered by the banking
      regulatory agencies discussed previously are applicable to the Bank. Risk-based
      capital guidelines are designed to make regulatory capital requirements more
      sensitive to differences in risk profiles among banks, to account for
      off-balance sheet exposure, and to minimize disincentives for holding liquid
      assets. Under the regulations, assets and off-balance sheet items are assigned
      to broad risk categories, each with appropriate weights. The resulting capital
      ratios represent capital as a percentage of total risk weighted assets and
      off-balance sheet items. Under the prompt corrective action regulations, to
      be
      adequately capitalized a bank must maintain minimum ratios of total capital
      to
      risk-weighted assets of 8.00%, Tier 1 capital to risk-weighted assets of 4.00%,
      and Tier 1 capital to total assets of 4.00%. Failure to meet these 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.






-14-


As
      of
      June 30, 2005, the Bank was categorized as well-capitalized. A well-capitalized
      institution must maintain a minimum ratio of total capital to risk-weighted
      assets of at least 10.00%, a minimum ratio of Tier 1 capital to risk weighted
      assets of at least 6.00%, and a minimum ratio of Tier 1 capital to total assets
      of at least 5.00% and must not be subject to any written order, agreement,
      or
      directive requiring it to meet or maintain a specific capital level.




**Actual**
            
            **For
                Capital Adequacy Purposes**
            
            **To
                Be Well Capitalized Under Prompt Corrective Action
                Problems****Amount**
            
            **Ratio**
            
            **Amount**
            
            **Ratio**
            
            **Amount**
            
            **Ratio****As
                of June 30, 2005**Total
                Capital (to risk-weighted assets)
            
            $
            19,233,000
            
            
            309.56
            %
            
            497,000
            
            
            >8
            %
            $
            621,300
            
            
            >10
            %Tier
                1 capital (to risk-weighted assets)
            
            
            19,233,000
            
            
            309.56
            %
            
            248,500
            
            
            >4
            %
            
            372,800
            
            
            >6
            %Tier
                1 capital (to average assets)
            
            
            19,233,000
            
            
            91.80
            %
            
            838,000
            
            
            >4
            %
            
            1,047,600
            
            
            >5
            %





**Liquidity
      Management**




The
      stock
      offering closed April 30, 2005 with 2,280,000 shares sold representing $22.8
      million in gross total capital raised. Of this sum $19.5 million was injected
      into the Bank. Pre-opening costs totaled $1.6 million and consisted of
      professional fees of $264,000, consulting fees of $742,000, marketing costs
      of
      $103,000, occupancy costs of $133,000, and other operating costs of $404,000.
      In
      addition, both capital and pre-opening expenses were increased by $495,000
      representing the present value of the stock warrants issued to non-director
      organizers. These warrants were granted in recognition of the expertise
      imparted, time expended and the substantial financial risks undertaken by the
      organizers. Also, the Company funded certain expenses and the purchase of
      certain capital assets totaling $536,000 that were reimbursed and purchased
      by
      the Bank in June 2005. At June 30, 2005, the Company (excluding the Bank) had
      approximately $980,000 in remaining cash proceeds. These funds can be used
      for
      Company operations, investment and for later infusion into the Bank and other
      corporate activities. The primary source of liquidity for the Company will
      be
      dividends paid by the Bank. The Bank is currently restricted from paying
      dividends without regulatory approval that will not be granted until the
      accumulated deficit has been eliminated.




The
      Bank’s liquidity is monitored by its staff, the Investment/Asset-Liability
      Committee and the Board of Directors, who will review historical funding
      requirements, current liquidity position, sources and stability of funding,
      marketability of assets, options for attracting additional funds, and
      anticipated future funding needs, including the level of unfunded commitments.




The
      Bank’s primary sources of funds will be retail and commercial deposits, loan and
      securities repayments, other short-term borrowings, and other funds provided
      by
      operations. While scheduled loan repayments and maturing investments are
      relatively predictable, deposit flows and early loan prepayments are more
      influenced by interest rates, general economic conditions, and competition.
      The
      Bank will maintain investments in liquid assets based upon management’s
      assessment of (1) the need for funds, (2) expected deposit flows, (3) yields
      available on short-term liquid assets, and (4) objectives of the asset/liability
      management program.




As
      loan
      demand increases, greater pressure will be exerted on the Bank’s liquidity.
      However, it is management’s intention to maintain a conservative loan to deposit
      ratio in the range of 80% over time. Given this goal, the Bank will not
      aggressively pursue lending opportunities if sufficient funding sources
      ( *i.e.* ,
      deposits, Fed Funds, etc.) are not available, nor will the Bank seek to attract
      transient volatile, non-local deposits with above market interest rates. As
      of
      June 30, 2005, the loan to deposit ratio was 47%.






-15-


The
      Bank
      had cash and cash equivalents of $18.3 million, or 88% of total Bank assets,
      at
      June 30, 2005. Management feels that with the capital injection from the
      proceeds of the offering, the Bank should have more than adequate liquidity
      to
      meet anticipated future funding needs.




The
      Bank
      is subject to various regulatory capital requirements administered by federal
      and state banking agencies, which could affect its ability to pay dividends
      to
      the Company. Failure to meet minimum capital requirements can initiate certain
      mandatory and discretionary actions by regulators that, if undertaken, could
      have a direct material adverse effect on our financial statements. The minimum
      ratios required for the Bank to be considered “well capitalized” for regulatory
      purposes, and therefore eligible to consider the payment of dividends to the
      Company, will be 10% total capital to risk weighted assets, 6% tier 1 capital
      to
      risk weighted assets and 5% tier 1 capital to average assets. At June 30, 2005,
      the Bank was considered “well capitalized” by regulatory standards.




***Quantitative
      and Qualitative Disclosure About Market Risks***




Interest
      rate risk is the most significant market risk affecting the bank. Other types
      of
      market risk, such as foreign currency risk and commodity price risk, do not
      arise in the normal course of the bank’s business activities. Interest rate risk
      can be defined as the exposure to a movement in interest rates that could have
      an adverse effect on the net interest income or the market value of the bank’s
      financial instruments. The ongoing monitoring and management of this risk is
      an
      important component of the asset and liability management process, which is
      governed by policies established by the Company’s Board of Directors and carried
      out by the Bank’s Investment/Asset-liability Committee. The
      Investment/Asset-liability Committee’s objectives are to manage the exposure to
      interest rate risk over both the one year planning cycle and the longer term
      strategic horizon and, at the same time, to provide a stable and steadily
      increasing flow of net interest income.




The
      primary measurement of interest rate risk is earnings at risk, which is
      determined through computerized simulation modeling. The primary simulation
      model assumes a static balance sheet, using the balances, rates, maturities
      and
      repricing characteristics of all of the Bank’s existing assets and liabilities.
      Net interest income is computed by the model assuming market rates remaining
      unchanged and comparing those results to other interest rate scenarios with
      changes in the magnitude, timing and relationship between various interest
      rates. At June 30, 2005, no such analysis was performed as the results would
      not
      yet have been meaningful. In the future, rising and declining interest rate
      simulations in 100 basis point increments over a 12-month period will be
      performed. The impact of imbedded options in such products as callable and
      mortgage-backed securities, real estate mortgage loans and callable borrowings
      will be considered. Changes in net interest income in the rising and declining
      rate scenarios will then measured against the net interest income in the rates
      unchanged scenario. The Investment/Asset-liability Committee will utilize the
      results of the model to quantify the estimated exposure of net interest income
      to sustained interest rate changes.




The
      following table sets forth, on a stand-alone basis, the Bank’s amounts of
      interest-earning assets and interest-bearing liabilities outstanding at June
      30,
      2005, which are anticipated, based upon certain assumptions, to reprice or
      mature in each of the future time periods shown. The projected repricing of
      assets and liabilities anticipates prepayments and scheduled rate adjustments,
      as well as contractual maturities under an interest rate unchanged scenario
      within the selected time intervals. While it is believed that such assumptions
      are reasonable, there can be no assurance that assumed repricing rates will
      approximate actual future deposit activity.




-16-


**As
                  of June 30, 2005****Volumes
                  Subject to Repricing Within****0-1
                  Days**
              
              **2-90
                  Days**
              
              **91-365
                  Days**
              
              **1-3
                  Years**
              
              **Over
                  3 Years**
              
              **Non-Interest
                  Sensitive**
              
              **Total****(Dollars
                  in Thousand****Assets:**Short-term
                  investments and federal funds sold
              
              $
              18,070
              
              $
              --
              
              $
              --
              
              $
              --
              
              $
              --
              
              $
              1,223
              
              $
              19,293Investment
                  securities
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              585
              
              
              --
              
              
              585Loans
              
              
              750
              
              
              --
              
              
              --
              
              
              --
              
              
              26
              
              
              --
              
              
              776Fixed
                  and other assets
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              1,220
              
              
              1,220Total
                  Assets
              
              $
              18,070
              
              $
              --
              
              $
              --
              
              $
              --
              
              $
              --
              
              $
              2,443
              
              $
              21,874**Liabilities
                  and Stockholders’ Equity:**Interest-bearing
                  checking, savings and money market accounts
              
              $
              778
              
              $
              --
              
              $
              --
              
              $
              --
              
              $
              --
              
              $
              94
              
              $
              872Certificates
                  of deposit
              
              
              --
              
              
              2
              
              
              777
              
              
              8
              
              
              --
              
              
              --
              
              
              787Borrowed
                  funds
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --Other
                  liabilities
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              2
              
              
              2Stockholders’
                  equity
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              20,213
              
              
              20,213Total
                  liabilities and stockholders’ equity
              
              $
              778
              
              $
              2
              
              $
              777
              
              $
              8
              
              $
              --
              
              $
              20,309
              
              $
              21,874Period
                  Gap
              
              $
              17,292
              
              $
              (2
              )
              $
              (777
              )
              $
              (8
              )
              $
              --Cumulative
                  gap
              
              $
              17,292
              
              $
              17,290
              
              $
              16,513
              
              $
              16,505
              
              $
              16,505Period
                  gap to total assets
              
              
              79.1
              %
              
              0.0
              %
              
              -3.6
              %
              
              0.0
              %
              
              0.0
              %Cumulative
                  gap to total assets
              
              
              79.1
              %
              
              79.0
              %
              
              75.5
              %
              
              75.5
              %
              
              75.5
              %Cumulative
                  interest-earnings assets to cumulative interest-bearing liabilities
              
              
              2322.6
              %
              
              2316.7
              %
              
              1160.6
              %
              
              1154.6
              %
              
              1154.6
              %


Certain
        shortcomings are inherent in the method of analysis presented in the gap
        table.
        For example, although certain assets and liabilities may have similar maturities
        or periods of repricing, they may react in different degrees to changes in
        market interest rates. Additionally, certain assets, such as adjustable-rate
        loans, have features that restrict changes in interest rates, both on a
        short-term basis and over the life of the asset. More importantly, changes
        in
        interest rates, prepayments and early withdrawal levels may deviate
        significantly from those assumed in the calculations in the table. As a result
        of these shortcomings, the Bank will focus more on earnings at risk simulation
        modeling than on gap analysis. The earnings at risk simulation modeling
        is
        considered by management to be more informative in forecasting future income
        at
        risk.




**ITEM
      3.** **Controls
      and Procedures**




With
      the
      participation of management, the Company’s chief executive officer and the chief
      financial officer reviewed and evaluated the Company’s disclosure controls and
      procedures as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the
      period covered by this report. Based on this evaluation, the chief executive
      officer and chief financial officer concluded that the disclosure controls
      and
      procedures are effective to ensure that the information required to be disclosed
      by the Company in reports that it files or submits under the Exchange Act is
      recorded, processed, summarized and reported to the Company’s management within
      the time periods specified in the Securities and Exchange Commission’s rules and
      forms




There
      have been no significant changes in the Company’s internal controls for
      financial reporting or in other factors that could significantly affect these
      controls, including any significant deficiencies or material weaknesses of
      internal controls that would require corrective action. In connection with
      the
      new rules, the Company is currently in the process of further reviewing and
      documenting its disclosure controls and procedures, including its internal
      accounting controls, and may from time to time make changes aimed at enhancing
      their effectiveness ands ensuring that the Company’s systems evolve with its
      business.




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**PART
        II -** **OTHER
        INFORMATION**




**ITEM
      1.** **Legal
      Proceedings**




There
      are
      no material pending legal proceedings to which the Company or the Bank is a
      party or to which any of our properties are subject; nor are there material
      proceedings known to the Company, in which any director, officer or affiliate
      or
      any principal shareholder is a party or has an interest adverse to the Company
      or the Bank.




**ITEM
      2.** **Changes
      in Securities and Use of Proceeds**




On
      November 10, 2004, the Securities and Exchange Commission declared effective
      the
      Company’s Registration Statement on Form SB-2 (File No. 333-118859) related to
      the initial public offering of the Company’s common stock, $0.01 par value. In
      addition, on May 11, 2005, a Form SB-2 MEF was filed under Rule 462 registering
      additional shares of common stock and warrants to purchase common stock under
      the public offering. A total of 3,448,800 shares of common stock were
      registered, of which 690,000 shares are issuable under registered common stock
      warrants (warrants to purchase an aggregate of 456,000 shares of common stock
      at
      an exercise price of $12.50 per share issued to the initial shareholders of
      the
      Company in connection with the offering, and warrants to purchase an aggregate
      of 234,000 shares of common stock at an exercise price of $10.00 per share
      issued to the organizers of the Company). On April 30, 2005, the initial public
      offering was completed having sold 2,280,000 shares at $10.00 per share, for
      an
      aggregate of $22.8 million.




**ITEM
      3.** **Defaults
      Upon Senior Securities**




None.




**ITEM
      4.** **Submission
      of Matters to a Vote of Security Holders**




None.




**ITEM
      5.** **Other
      Information**




Not
      applicable.




**ITEM
      6.** **Exhibits** **and Reports on Form 8-K**




(a)
            Exhibits




**Exhibit
                Number**
            
            **Description
                of Exhibit**31.1
            
            Certification
                of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200231.2
            
            Certification
                of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200232.1
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002.




(b)
            Reports
                on Form 8-K




None




-18-


**SIGNATURES**




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




**PACIFIC
                COAST NATIONAL BANCORP**Date: August
                22, 2005
              By:
              /s/ Colin
                M. ForknerColin
                  M. Forkner
                Chief Executive Officer
 Date: August
                  22, 2005
                By:
                /s/ Terry
                  StalkTerry
                    Stalk
                  Chief Financial Officer





-19-