UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


[X]   QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
      EXCHANGE ACT OF 1934


               FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2006


                                       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
 incorporation or organization)                           Identification Number)


                    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
                                                           ______________

Bridge Bank,  N.A. (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 X
No . Indicate by checkmark whether  registrant is a large accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
file and large  accelerated  filer" in Rule 12b-2 of the  Exchange  Act.  (Check
one):

    Large accelerated filer [] Accelerated filer [X] Non-accelerated filer []

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

The  number of shares  of Common  Stock  outstanding  as of  November  2,  2006:
6,292,645


<PAGE>


                                TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION

Item 1        Financial Statements

              Interim Consolidated Balance Sheets                             4

              Interim Consolidated Statements of Operations                   5

              Interim Consolidated Statements of Cash Flows                   6

              Notes to Interim Consolidated Financial Statements              7

Item 2        Management's Discussion and Analysis of Financial              14
              Condition and Results of Operations

Item 3        Quantitative and Qualitative Disclosures About                 33
              Market Risk

Item 4        Controls and Procedures                                        35


PART II - OTHER INFORMATION

Item 1        Legal Proceedings                                              36

Item 1A       Risk Factors                                                   36

Item 2        Unregistered Sales of Equity Securities and Use of Proceeds    36

Item 3        Defaults Upon Senior Securities                                36

Item 4        Submission of Matters to a Vote of Security Holders            36

Item 5        Other Information                                              36

Item 6        Exhibits                                                       36

Signatures                                                                   37

Index to Exhibits                                                            38


                                       2


<PAGE>


                           FORWARD-LOOKING STATEMENTS

IN  ADDITION TO THE  HISTORICAL  INFORMATION,  THIS  QUARTERLY  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 QUARTERLY 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  MARGIN;   (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  QUARTERLY  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.

THE  COMPANY'S  PRIMARY  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.

THE READER  SHOULD REFER TO THE MORE  COMPLETE  DISCUSSION  OF SUCH RISKS IN THE
COMPANY'S ANNUAL REPORTS ON FORM 10-K.


                                       3


<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS




<TABLE>
<CAPTION>


                     BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
                      Interim Consolidated Balance Sheets
                             (dollars in thousands)

                                                                    (unaudited)
                                                                  September 30,       December 31,
                                                                      2006                2005
                                                                  _____________       ____________
<S>                                                                     <c>                 <c>

ASSETS
Cash and due from banks                                                $ 18,987           $ 22,880
Federal funds sold                                                      116,165             46,660
                                                                       ________           ________
  Total cash and equivalents                                            135,152             69,540
                                                                       ________           ________

Investment securities available for sale                                 18,971             12,383
Loans, net of allowance for credit losses of $6,728 at
     September 30, 2006 and $5,936 at December 31, 2005                 477,303            432,667

Premises and equipment, net                                               2,935              2,337
Accrued interest receivable                                               3,041              2,202
Other assets                                                             18,304             17,391
                                                                       ________           ________
     Total assets                                                      $655,706           $536,520
                                                                       ========           ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
  Demand noninterest-bearing                                           $164,483           $185,557
  Demand interest-bearing                                                 4,005              2,866
  Savings                                                               294,698            210,011
  Time                                                                  122,638             69,724
                                                                       ________           ________
     Total deposits                                                     585,824            468,158
                                                                       ________           ________

Junior subordinated debt securities                                      17,527             12,372
Other borrowings                                                              -             10,000
Accrued interest payable                                                    355                130
Other liabilities                                                         5,044              6,146
                                                                       ________           ________
     Total liabilities                                                  608,750            496,806
                                                                       ________           ________

Commitments and contingencies                                                 -                  -

SHAREHOLDERS' EQUITY
Preferred stock, no par value; 10,000,000 shares authorized;
     none issued         -               -
Common stock, no par value; 30,000,000 shares authorized;
     6,272,345 shares issued and outstanding at September 30, 2006;
     6,227,596 shares issued and outstanding at December 31, 2005.       34,824             33,907
Retained earnings                                                        12,167              5,909
Accumulated other comprehensive (loss)                                      (35)              (102)
                                                                       ________           ________
     Total shareholders' equity                                          46,956             39,714
                                                                       ________           ________
     Total liabilities and shareholders' equity                        $655,706           $536,520
                                                                       ========           ========

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

</TABLE>

                                                4


<PAGE>


<TABLE>
<CAPTION>


                     BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
           Interim Consolidated Statements of Operations (unaudited)
                             (dollars in thousands)


                                                         Three months ended               Nine months ended
                                                            September 30,                   September 30,
                                                   _________________________       _________________________
                                                     2006            2005            2006            2005
                                                   _________       _________       _________       _________
<S>                                                  <C>              <C>            <C>             <C>

INTEREST INCOME:
Loans                                              $  12,762       $   8,670       $  34,696       $  22,254
Federal funds sold                                     1,453             399           2,723           1,102
Investment securities available for sale                 113             104             316             346
                                                   _________       _________       _________       _________
     Total interest income                            14,328           9,173          37,735          23,702
                                                   _________       _________       _________       _________

INTEREST EXPENSE:
Deposits:
    Interest-bearing demand                                9               9              23              20
    Money market and savings                           2,733           1,103           6,073           2,798
    Certificates of deposit                            1,239             460           2,924           1,194
    Other                                                257             177             825             562
                                                   _________       _________       _________       _________
    Total interest expense                             4,238           1,749           9,845           4,574
                                                   _________       _________       _________       _________

Net interest income                                   10,090           7,424          27,890          19,128
Provision for credit losses                              100             800             772           1,562
                                                   _________       _________       _________       _________
Net interest income after provision
     for credit losses                                 9,990           6,624          27,118          17,566
                                                   _________       _________       _________       _________

NON-INTEREST INCOME:
Service charges on deposit accounts                      131              89             370             246
Gain on sale of SBA loans                                225             521           1,064           1,583
Other non interest income                                443             384           1,526           1,085
                                                   _________       _________       _________       _________
     Total non-interest income                           799             994           2,960           2,914
                                                   _________       _________       _________       _________

OPERATING EXPENSES:
Salaries and benefits                                  4,627           2,993          12,706           8,325
Premises and fixed assets                                808             562           2,122           1,654
Other                                                  1,631           1,568           5,206           4,100
                                                   _________       _________       _________       _________
     Total operating expenses                          7,066           5,123          20,034          14,079
                                                   _________       _________       _________       _________

Income before income taxes                             3,723           2,495          10,044           6,401
                                                   _________       _________       _________       _________
Income taxes                                           1,415             990           3,786           2,560
                                                   _________       _________       _________       _________
     Net income                                    $   2,308       $   1,505       $   6,258       $   3,841
                                                   =========       =========       =========       =========

Basic earnings per share                           $    0.37       $    0.24       $    1.00       $    0.62
                                                   =========       =========       =========       =========
Diluted earnings per share                         $    0.34       $    0.22       $    0.92       $    0.57
                                                   =========       =========       =========       =========
Average common shares outstanding                  6,283,125       6,171,500       6,262,169       6,153,498
                                                   =========       =========       =========       =========
Average common and equivalent
  shares outstanding                               6,819,049       6,783,177       6,795,493       6,714,327
                                                   =========       =========       =========       =========


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


</TABLE>

                                       5


<PAGE>





<TABLE>
<CAPTION>


                     BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
            Interim Consolidated Statements of Cash Flows (unaudited)
                             (dollars in thousands)


                                                           Nine months ended September 30,
                                                           _______________________________
                                                                 2006           2005
                                                               ________       ________
<S>                                                              <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income                                                   $  6,258       $  3,841
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Provision for credit losses                                   772          1,562
      Depreciation and amortization                                 645            637
      Stock based compensation                                      500              -
      Loans originated for sale                                 (39,660)       (23,622)
      Proceeds from loan sales                                   35,417         18,674
      Increase in accrued interest receivable and other assets   (1,798)        (2,192)
      (Decrease) increase in accrued interest payable
        and other liabilities                                      (877)         4,509
                                                               ________       ________
          Net cash provided by operating activities               1,257          3,409
                                                               ________       ________

CASH FLOWS FROM INVESTING ACTIVITIES:

  Purchase of securities available for sale                     (15,052)       (50,394)
  Proceeds from maturity of securities available for sale         8,625         60,300
  Net increase in loans                                         (41,165)      (104,573)
  Purchase of fixed assets                                       (1,290)          (778)
                                                               ________       ________
          Net cash used in investing activities                 (48,882)       (95,445)
                                                               ________       ________

CASH FLOW FROM FINANCING ACTIVITIES:

  Net increase in deposits                                      117,665        128,814
  (Decrease) in other borrowings                                 (4,845)             -
  Common stock issued                                               417            439
                                                               ________       ________
         Net cash provided by financing activities              113,237        129,253
                                                               ________       ________

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS:                 65,612         37,217
Cash and equivalents at beginning of period                      69,540         69,210
                                                               ________       ________
Cash and equivalents at end of period                          $135,152       $106,427
                                                               ========       ========


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


</TABLE>

                                       6


<PAGE>


                     BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
         NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying  unaudited financial  statements of Bridge Capital Holdings and
Bridge Bank,  N.A.  have been  prepared in accordance  with  generally  accepted
accounting  principles and pursuant to the rules and regulations of the SEC. The
interim  financial  data as of  September  30,  2006 and for the  three and nine
months ended  September  30, 2006 is unaudited;  however,  in the opinion of the
Company,  the interim data includes all  adjustments,  consisting only of normal
recurring  adjustments,  necessary  for a fair  statement of the results for the
interim periods.  Certain information and note disclosures  normally included in
annual  financial  statements  have  been  omitted  pursuant  to SEC  rules  and
regulations;  however, the Company believes the disclosures made are adequate to
ensure that the information  presented is not misleading.  Results of operations
for the quarter ended September 30, 2006, are not necessarily indicative of full
year results.

The  comparative  balance sheet  information  as of December 31, 2005 is derived
from  the  audited  financial  statements;  however,  it does  not  include  all
disclosures  required by accounting  principles generally accepted in the United
States of America.

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.  See Note 2 to the  financial  statements  for  additional
information on earnings per share.

STOCK-BASED COMPENSATION

On January 1, 2006,  the Company  adopted SFAS No. 123 (revised  2004) (SFAS No.
123R),  Share-Based  Payments,  which  addresses the accounting for  stock-based
payment  transactions  in which an  enterprise  receives  employee  services  in
exchange for (a) equity  instruments of the enterprise or (b)  liabilities  that
are based on the fair value of the enterprise's  equity  instruments or that may
be settled by the  issuance of such equity  instruments.  In January  2005,  the
Securities and Exchange  Commission (SEC) issued Staff Accounting Bulletin (SAB)
No. 107, which provides supplemental  implementation guidance for SFAS No. 123R.
SFAS No. 123R  eliminates  the ability to account for  stock-based  compensation
transactions using the intrinsic value method under Accounting  Principles Board
(APB)  Opinion No. 25,  Accounting  for Stock Issued to  Employees,  and instead
generally   require   that  such   transactions   be   accounted   for  using  a
fair-value-based  method.  The  Company  uses the  Black-Scholes-Merton  ("BSM")
option-pricing  model to determine the  fair-value of  stock-based  awards under
SFAS No. 123R,  consistent with that used for pro forma  disclosures  under SFAS
No. 123,  Accounting for Stock-Based  Compensation.  The Company has elected the
modified  prospective  transition  method  as  permitted  by SFAS  No.  123R and
accordingly  prior  periods have not been restated to reflect the impact of SFAS
No. 123R. The modified  prospective  transition method requires that stock-based
compensation  expense  be  recorded  for  all new and  unvested  stock  options,
restricted  stock,  restricted  stock units,  and employee  stock  purchase plan
shares that are ultimately expected to vest as the requisite service is rendered
beginning on January 1, 2006,  the first day of the Company's  fiscal year 2006.
Stock-based  compensation expense for awards granted prior to January 1, 2006 is
based on the grant date fair-value as determined  under the pro forma provisions
of SFAS No. 123. The Company has recorded an  incremental  $178,000 and $500,000


                                       7


<PAGE>


of  stock-based  compensation  expense  during the three and nine  months  ended
September 30, 2006, respectfully,  as a result of the adoption of SFAS No. 123R.


No  stock-based  compensation  costs were  capitalized as part of the cost of an
asset as of September 30, 2006. As of September 30, 2006,  $2.0 million of total
unrecognized  compensation  cost related to stock options and  restricted  stock
units are expected to be recognized over a  weighted-average  period of 5 years.

Prior to the  adoption  of SFAS No.  123R,  the  Company  measured  compensation
expense for its  employee  stock-based  compensation  plans using the  intrinsic
value  method  prescribed  by APB  Opinion  No.  25.  The  Company  applied  the
disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, Accounting for
Stock-Based  Compensation - Transition and Disclosure as if the fair-value-based
method had been applied in measuring compensation expense. Under APB Opinion No.
25, when the exercise price of the Company's employee stock options was equal to
the  market  price  of the  underlying  stock  on the  date  of  the  grant,  no
compensation expense was recognized.

The  following  table  illustrates  the effect on net income after taxes and net
income per common share as if the Company had applied the fair value recognition
provisions  of SFAS No. 123R to  stock-based  compensation  during the three and
nine-month  periods  ended  September,  2005 (in  thousands,  except  per  share
amounts):

<TABLE>
<CAPTION>

                                  Three months       Nine months
                                     ended              ended
                                  ____________       ___________
                                        September 30, 2005
                                     _________________________
<S>                                  <C>                <C>

Net income as reported               $1,505             $3,841
Deduct: Total stock-based
  employee compensation expense
  determined under fair value based
  method for all awards, net of
  related tax effects                   (93)              (205)
                                     ______             ______
Pro forma net income                  1,412              3,636
Earnings per share:
  Basic-as reported                  $ 0.24             $ 0.62
  Basic-pro forma                    $ 0.23             $ 0.59

  Diluted-as reported                $ 0.22             $ 0.57
  Diluted-pro forma                  $ 0.21             $ 0.54

</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 cumulative other comprehensive income (loss)
totaling $(35,000), net of tax, as of September 30, 2006 and $(120,000),  net of
tax, as of September 30, 2005.

<TABLE>
<CAPTION>


                                     Three months ended         Nine months ended
 (dollars in thousands)                 September 30,             September 30,
                                     ___________________       ___________________
                                      2006         2005         2006         2005
                                     ______       ______       ______       ______
<S>                                  <C>          <C>          <C>          <C>

Net income                           $2,308       $1,505       $6,258       $3,841

Other comprehensive earnings-
 Net unrealized gains on
 securities available for sale           45            2           67           (1)
                                     ______       ______       ______       ______

Total comprehensive income           $2,353       $1,507       $6,325       $3,840
                                     ======       ======       ======       ======

</TABLE>


                                       8


<PAGE>


SEGMENT 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 per share is computed by dividing net earnings  applicable to
common  shareholders by the weighted average number of common shares outstanding
during the  period.  Diluted  net  earnings  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  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 per share available to
common shareholders is as follows (in thousands, except for per share amounts):

<TABLE>
<CAPTION>

                                            Three months ended           Nine months ended
                                               September 30,               September 30,
                                          _______________________     _______________________
                                            2006          2005          2006          2005
                                          _________     _________     _________     _________
<S>                                       <C>           <C>           <C>           <C>

Net income                                $   2,308     $   1,505     $   6,258     $   3,841

Weighted average shares used in
  computing:
    Basic earnings per share              6,283,125     6,171,500     6,262,169     6,153,498
    Diluted potential common shares
      related to stock options using
    the treasury stock method               535,924       611,677       533,324       560,829
                                          _________     _________     _________     _________
Total average shares and equivalents      6,819,049     6,783,177     6,795,493     6,714,327

Basic earnings per share                  $    0.37     $    0.24     $    1.00     $    0.62
                                          =========     =========     =========     =========
Diluted earnings per share                $    0.34     $    0.22     $    0.92     $    0.57
                                          =========     =========     =========     =========

</TABLE>

3.       SECURITIES

The amortized  cost and  approximate  fair values of securities at September 30,
2006 and December 31, 2005 are as follows:


                                       9


<PAGE>


<TABLE>
<CAPTION>


(dollars in thousands)                        As of September 30, 2006
                                       _______________________________________
                                                   Gross Unrealized
                                                   ________________     Fair
                                        Cost       Gains     Losses     Value
                                       _______     _____     ______    _______
<S>                                    <C>          <C>      <C>       <C>

U.S. government treasury notes         $   200      $-       $  -      $   200
U.S. government agency notes            18,828       -        (57)      18,771
                                       _______      ___      ____      _______
Total securities available for sale     19,028       -        (57)      18,971
                                       _______      ___      ____      _______
     Total investment securities       $19,028      $-       $(57)     $18,971
                                       =======      ===      ====      =======

                                               As of December 31, 2005
                                       _______________________________________
                                                   Gross Unrealized
                                                   ________________     Fair
                                        Cost       Gains     Losses     Value
                                       _______     _____     ______    _______

U.S. government treasury notes         $   199      $ -      $   -     $   199
U.S. government agency notes            12,355       -        (171)     12,184
                                       _______      ___      _____     _______
Total securities available for sale     12,554       -        (171)     12,383
                                       _______      ___      _____     _______
     Total investment securities       $12,554      $-       $(171)    $12,383
                                       =======      ===      =====     =======

</TABLE>

The scheduled  maturities of securities available for sale at September 30, 2006
and December 31, 2005 were as follows:

<TABLE>
<CAPTION>

(dollars in thousands)                     September 30, 2006
                                         _____________________
                                         Amortized      Fair
                                              Cost       Value
                                         _________     _______
<S>                                        <C>         <C>

Due in one year or less                    $12,893     $12,855
Due after one year through five years        5,146       6,116
Due after five years through ten years           -           -
Due after ten years                              -           -
                                           _______     _______
Total securities available for sale         18,039      18,971
                                           _______     _______
     Total investment securities           $18,039     $18,971
                                           =======     =======


                                            December 31, 2005
                                         _____________________
                                         Amortized        Fair
                                              Cost       Value
                                         _________     _______

Due in one year or less                    $10,536     $10,429
Due after one year through five years        2,018       1,954
Due after five years through ten years           -           -
Due after ten years                              -           -
                                           _______     _______
Total securities available for sale         12,554      12,383
                                           _______     _______
     Total investment securities           $12,554     $12,383
                                           =======     =======

</TABLE>



As of  September  30,  2006,  investment  securities  with  carrying  values  of
approximately  $200,000  were pledged as  collateral.  As of September 30, 2006,
$54,000 in unrealized losses was attributable to securities  maturing in greater
than 12 months.  The unrealized losses on investments in U.S.  Government agency
securities which have been in an unrealized loss position for one year or longer
as of  September  30,  2006 (a total of 4  securities),  were  caused  by market
interest rate increases  subsequent to the purchase of the  securities.  Because
the Bank has the  ability to hold  these  investments  until a recovery  in fair
value,  which  may be  maturity,  these  investments  are not  considered  to be
other-than-temporarily impaired as of September 30, 2006.


                                       10


<PAGE>


4.       LOANS


The balances in the various loan  categories  are as follows as of September 30,
2006 and December 31, 2005:


(dollars in thousands)
                                        September 30,  December 31,
                                          2006            2005
                                        _____________  ____________
Commercial                                $ 185,789      $ 182,396
SBA                                          51,894         46,867
Real estate construction                     99,427         84,792
Real estate other                           105,395         83,748
Factoring and asset based lending            36,658         38,184
Other                                         6,469          4,011
                                          _________      _________
     Loans, gross                           485,632        439,998
Unearned fee income                          (1,601)        (1,395)
                                          _________      _________
     Total loan portfolio                   484,031        438,603
Less allowance for credit losses             (6,728)        (5,936)
                                          _________      _________
     Loans, net                           $ 477,303      $ 432,667
                                          =========      =========

5.       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,  generally  three to fifteen years, or
the estimated useful lives of the assets, generally three to five years.

Premises and equipment at September 30, 2006 and December 31, 2005 are comprised
of the following:


(dollars in thousands)                   September 30, 2006
                                  _________________________________
                                             Accumulated   Net Book
                                   Cost     Depreciation    Value
                                  _______   ____________   ________

Leasehold improvements            $ 2,696     $   (922)     $ 1,774
Furniture and fixtures                736         (498)         238
Capitalized software                1,614       (1,076)         538
Equipment                           1,271         (886)         385
                                  _______     ________      _______
     Totals                       $ 6,317     $ (3,382)     $ 2,935
                                  =======     ========      =======


                                          December 31, 2005
                                  _________________________________
                                             Accumulated   Net book
                                   Cost     Depreciation    Value
                                  _______   ____________   ________

Leasehold improvements            $ 1,981     $   (700)     $ 1,281
Furniture and fixtures                676         (407)         269
Capitalized software                1,344         (856)         488
Equipment                           1,076         (777)         299
                                  _______     ________      _______
     Totals                       $ 5,077     $ (2,740)     $ 2,337
                                  =======     ========      =======


                                       11


<PAGE>


6.           JUNIOR SUBORDINATED DEBT SECURITIES AND OTHER BORROWINGS

JUNIOR SUBORDINATED DEBT SECURITIES

On December 21, 2004, the Company issued $12,372,000 of junior subordinated debt
securities (the "debt  securities") to Bridge Capital Trust I, a statutory trust
created under the laws of the State of  California.  These debt  securities  are
subordinated  to  effectively  all  borrowings  of the  Company  and are due and
payable in March 2035. Interest is payable quarterly on these debt securities at
a fixed rate of 5.9% for the first five years,  and thereafter  interest accrues
at LIBOR plus 1.98%. The debt securities can be redeemed at par at the Company's
option  beginning  in March  2010;  they can also be  redeemed at par if certain
events  occur that  impact the tax  treatment  or the capital  treatment  of the
issuance.

The Company also purchased a 3% minority  interest in the Trust.  The balance of
the  equity  of the  Trust is  comprised  of  mandatorily  redeemable  preferred
securities.

On March 30, 2006 the Company  issued  $5,155,000  of junior  subordinated  debt
securities (the "debt securities") to Bridge Capital Trust II, a statutory trust
created  under the laws of the State of  Delaware.  These  debt  securities  are
subordinated  to  effectively  all  borrowings  of the  Company  and are due and
payable in March 2037. Interest is payable quarterly on these debt securities at
a fixed rate of 6.60% for the first five years, and thereafter  interest accrues
at LIBOR plus 1.38%. The debt securities can be redeemed at par at the Company's
option  beginning  in April  2011;  they can also be  redeemed at par if certain
events  occur that  impact the tax  treatment  or the capital  treatment  of the
issuance.

The Company also purchased a 3% minority  interest in the Trust.  The balance of
the  equity  of the  Trust is  comprised  of  mandatorily  redeemable  preferred
securities.

Under FASB  Interpretation  No.46 (FIN 46),  Consolidation of Variable  Interest
Entities,  an  interpretation  of ARB No. 51, these Trusts are not  consolidated
into the company's financial  statements.  Prior to the issuance of FIN 46, bank
holding companies  typically  consolidated  these entities.  The Federal Reserve
Board has ruled  that  subordinated  notes  payable  to  unconsolidated  special
purpose  entities  ("SPE's")  such as  these  Trusts,  net of the  bank  holding
company's  investment in the SPE, qualify as Tier 1 Capital,  subject to certain
limits.

OTHER BORROWINGS

Other  borrowings  at December  31, 2005 were  comprised of one advance from the
Federal Home Loan Bank of San Francisco for $10.0  million.  There were no other
borrowings at September 30, 2006.

As of  September  30, 2006,  the Bank had a total  borrowing  capacity  with the
Federal Home Loan Bank of San Francisco of approximately $111.0 million.

The Bank also has unsecured  borrowing lines with  correspondent  banks totaling
$27.0  million.  At September 30, 2006,  there were no balances  outstanding  on
these lines.

7. STOCK-BASED COMPENSATION

SFAS No. 123R requires the use of a valuation  model to calculate the fair value
of  stock-based  awards.  The Company has elected to use the BSM  option-pricing
model, which incorporates  various assumptions  including  volatility,  expected
life,  and interest  rates.  The expected  volatility is based on the historical
volatility  of  the   Company's   common  stock  over  the  most  recent  period
commensurate  with the estimated  expected life of the Company's  stock options,
adjusted for the impact of unusual fluctuations not reasonably expected to recur
and other relevant factors including implied volatility in market traded options
on the  Company's  common  stock.  The  expected  life of an  award  is based on
historical  experience  and on the terms  and  conditions  of the  stock  awards
granted to employees.

The weighted average assumptions used for the three and nine-month periods ended
September 30, 2006 and the resulting  estimates of  weighted-average  fair value
per share of options granted during those periods are as follows:


                                       12


<PAGE>


                                             Three Months     Nine Months
                                                ended            ended
                                             ____________     ___________
                                                  September 30, 2006
                                               _________________________

Expected life                                  60 months       60 months

Stock volatility                                   32.9%           32.9%

Risk free interest rate                            4.64%           4.74%

Dividend yield                                     0.00%           0.00%

Fair value per share                              $ 7.64          $ 7.27




















                                       13


<PAGE>


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         In  addition  to the  historical  information,  this  quarterly  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 quarterly 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  interest  rate
environment reduces margin; (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 of terrorist
threats or acts, or apprehension  about possible  future  occurrences of acts of
this  type;  and (10)  the  involvement  of the  United  States  in war or other
hostilities.  Therefore,  the  information  in this  quarterly  report should be
carefully considered when evaluating the business prospects of the Company.

CRITICAL ACCOUNTING POLICIES

         Our  accounting  policies  are  integral to  understanding  the results
reported.  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 that 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 associated provision for loan losses.

         The  Company has the ability and the intent to sell all or a portion of
certain  SBA loans in the loan  portfolio  and, as such,  carries  the  saleable
portion  of  these  loans at the  lower  of  aggregate  cost or fair  value.  At
September 30, 2006 and December 31, 2005,  the fair value of SBA loans  exceeded
aggregate cost and therefore, SBA loans were carried at aggregate cost.

         In calculating  gain on the sale of SBA loans,  the Company performs an
allocation  based on the  relative  fair values of the sold portion and retained
portion of the loan.  The  Company's  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.


                                       14


<PAGE>


         Supplemental  Employee  Retirement  Plan:  The Company has entered into
supplemental  employee  retirement  agreements with certain executive and senior
officers.  The  measurement  of the liability  under these  agreements  includes
estimates  involving  life  expectancy,  length of time before  retirement,  and
expected benefit levels. Should these estimates prove materially wrong, we could
incur additional or reduced expense to provide the benefits.






































                                       15


<PAGE>


SELECTED FINANCIAL DATA

         The following presents selected financial data and ratios as of and for
the quarter and nine periods ended September 30, 2006 and 2005.

<TABLE>
<CAPTION>

(dollars in thousands, except per share data)

                                                          Three months ended                   Nine months ended
                                                             September 30,                       September 30,
                                                      ___________________________         ___________________________
STATEMENT OF OPERATIONS DATA:                           2006              2005              2006              2005
                                                      _________         _________         _________         _________
<S>                                                   <C>               <C>               <C>               <C>

Interest income                                       $  14,328         $   9,173         $  37,735         $  23,702
Interest expense                                          4,238             1,749             9,845             4,574
                                                      _________         _________         _________         _________
Net interest income                                      10,090             7,424            27,890            19,128
Provision for credit losses                                 100               800               772             1,562
                                                      _________         _________         _________         _________
Net interest income after provision
  for credit losses                                       9,990             6,624            27,118            17,566
                                                      _________         _________         _________         _________
Other income                                                799               994             2,960             2,914
Other expenses                                            7,066             5,123            20,034            14,079
                                                      _________         _________         _________         _________
Income before income taxes                                3,723             2,495            10,044             6,401
Income taxes                                              1,415               990             3,786             2,560
                                                      _________         _________         _________         _________
Net income                                            $   2,308         $   1,505         $   6,258         $   3,841
                                                      =========         =========         =========         =========

PER SHARE DATA:
Basic earnings per share                              $    0.37         $    0.24         $    1.00         $    0.62
Diluted earnings per share                                 0.34              0.22              0.92              0.57
Shareholders' equity per share                             7.46              6.07              7.46              6.07
Cash dividend per common share                                -                 -                 -                 -

BALANCE SHEET DATA:
Balance sheet totals:
  Assets                                              $ 655,706         $ 539,635
  Loans, net                                            477,303           397,426
  Deposits                                              585,824           481,270
  Shareholders' equity                                   46,956            37,401

Average balance sheet amounts:
  Assets                                              $ 636,273         $ 485,324         $ 582,449         $ 447,978
  Loans, net                                            465,102           372,190           447,567           334,908
  Deposits                                              566,083           431,516           512,527           394,546
  Shareholders' equity                                   45,814            36,667            43,328            35,146

SELECTED RATIOS:
Return on average assets                                  1.44%             1.23%             1.44%             1.15%
Return on average equity                                 19.99%            16.28%            19.31%            14.61%
Efficiency ratio                                         64.89%            60.86%            64.94%            63.87%
Risk based capital ratio                                 12.47%            11.92%
Net chargeoffs to average gross loans                     0.00%             0.09%             0.00%             0.11%
Allowance for loan losses to total loans                  1.39%             1.32%
Average equity to average assets                          7.20%             7.56%             7.44%             7.85%

</TABLE>


SUMMARY OF FINANCIAL RESULTS - QUARTER ENDED SEPTEMBER 30, 2006

The Company  reported net income of $2.3 million  ($0.37 basic and $0.34 diluted
earnings per share) for the quarter ended September 30, 2006 as compared to $1.5
million ($0.24 basic and $0.22 diluted earnings per share) for the quarter ended
September 30, 2005. The increase in net income resulted primarily from increases
in net interest  income  offset,  in part, by lower  non-interest  income and an
increase in operating expenses.


                                       16


<PAGE>


The table below  highlights  the changes in the nature and sources of income and
expense.

<TABLE>
<CAPTION>


                                                 Three months ended
                                                    September 30,
                                              _________________________           Increase
(dollars in thousands)                         2006              2005            (Decrease)
                                              _______           _______          __________
<S>                                          <C>                <C>               <C>

Interest income                               $14,328           $ 9,173           $ 5,155
Interest expense                                4,238             1,749             2,489
                                              _______           _______           _______

Net interest income                            10,090             7,424             2,666
Provision for credit losses                       100               800              (700)
                                              _______           _______           _______

Net interest income after provision
  for credit losses                             9,990             6,624             3,366
                                              _______           _______           _______
Other income                                      799               994              (195)
Other expenses                                  7,066             5,123             1,943
                                              _______           _______           _______
Income before income taxes                      3,723             2,495             1,228

Income taxes                                    1,415               990               425
                                              _______           _______           _______
Net income                                    $ 2,308           $ 1,505             $ 803
                                              =======           =======           =======

</TABLE>



NET INTEREST INCOME AND MARGIN

         Net interest  income,  the difference  between interest earned on loans
and investments and interest paid on deposits is the principal  component of the
Company's earnings. Net interest income is affected by changes in the nature and
volume of earning  assets  held  during the  quarter,  the rates  earned on such
assets and the rates paid on interest bearing liabilities.

         Net interest  income for the quarter ended September 30, 2006 was $10.1
million,  which was  comprised  of $14.3  million  in  interest  income and $4.2
million in interest expense. Net interest income for the quarter ended September
30,  2005 was $7.4  million,  which was  comprised  of $9.2  million in interest
income and $1.8 million in interest expense. Net interest income for the quarter
ended September 30, 2006 represented an increase of $2.7 million or 48% over the
same period one year earlier. The average balance sheet and the general interest
rate environment drive net interest income.

         The net interest margin (net interest income divided by average earning
assets) was 6.73% for the quarter ended September 30, 2006 compared to 6.67% for
the same quarter in 2005. The  improvement in net interest margin was the result
of growth in the  volume of  average  earning  assets,  improved  balance  sheet
leverage and the impact of higher short-term market interest rates.

         The following table details the average  balances,  interest income and
expense and the effective  yields/rates for earning assets and  interest-bearing
liabilities for the quarters ended September 30, 2006 and 2005.


                                       17


<PAGE>

<TABLE>
<CAPTION>

                                                                 Three months ended September 30,
                                            ___________________________________________________________________________
(dollars in thousands)                                     2006                                     2005
                                            __________________________________       __________________________________
                                                          Yields      Interest                     Yields      Interest
                                            Average         or         Income/       Average         or         Income/
                                            Balance        Rates       Expense       Balance        Rates       Expense
                                            ________      ______      ________       ________      ______      ________
<S>                                         <C>            <C>        <C>            <C>             <C>        <C>

ASSETS
Interest earning assets (2):
  Loans (1)                                 $473,311       10.8%      $ 12,763       $378,357        9.2%       $ 8,670
  Federal funds sold                         110,219        5.3%         1,453         45,825        3.5%           399
  Investment securities                       11,272        4.0%           113         17,462        2.4%           104
  Other                                            -           -             -              -        0.0%             -
                                            ________       _____      ________       ________       _____       _______
Total interest earning assets                594,802        9.6%        14,329        441,644        8.3%         9,173
                                            ________       _____      ________       ________       _____       _______

Noninterest-earning assets:
  Cash and due from banks                     26,209                                   30,557
  All other assets (3)                        15,262                                   13,123
                                            ________                                 ________
      TOTAL                                 $636,273                                 $485,324
                                            ========                                 ========

LIABILITIES AND
  SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Deposits:
   Demand                                    $ 3,900        0.9%           $ 9        $ 4,176        0.9%           $ 9
   Savings                                   288,895        3.8%         2,733        205,120        2.1%         1,103
   Time                                      116,353        4.2%         1,239         52,644        3.5%           460
Other                                         17,527        5.8%           258         12,000        5.9%           177
                                            ________       _____      ________       ________       _____       _______
Total interest bearing liabilities           426,675        4.0%         4,239        273,940        2.6%         1,749
                                            ________       _____      ________       ________       _____       _______

Noninterest-bearing liabilities:
   Demand deposits                           156,935                                  169,576
   Accrued expenses and
     other liabilities                         6,849                                    5,141
Shareholders' equity                          45,814                                   36,667
                                            ________                                 ________
    TOTAL                                   $636,273                                 $485,324
                                            ========                                 ========

                                                           _____      ________                      _____       _______
Net interest income and margin                              6.7%      $ 10,090                       6.7%       $ 7,424
                                                           =====      ========                      =====       =======

<FN>

(1)           Loan fee amortization of $1.3 million and $846,000,  respectively,
              is  included  in interest  income.  Nonperforming  loans have been
              included in average loan balances.
(2)           Interest  income  is  reflected  on an actual  basis,  not a fully
              taxable equivalent basis.  Yields are based on amortized cost.
(3)           Net of average  allowance  for credit  losses of $6.7  million and
              $5.1 million, respectively.

</FN>
</TABLE>


                                       18


<PAGE>


         The following  table shows the effect of the interest  differential  of
volume and rate changes for the quarters ended  September 30, 2006 and 2005. The
change in interest due to both rate and volume has been  allocated in proportion
to the relationship of absolute dollar amounts of change in each.

<TABLE>
<CAPTION>


(dollars in thousands)                                Three months ended September 30,
                                                                2006 vs. 2005
                                                 ___________________________________________
                                                             Increase (decrease)
                                                              due to change in
                                                 ___________________________________________
                                                 Average           Average            Total
                                                 Volume             Rate             Change
                                                 _______           _______           _______
<S>                                              <C>               <C>               <C>

 Interest income:
   Loans                                         $ 2,560           $ 1,533           $ 4,093
   Federal funds sold                                849               205             1,054
   Investment securities                             (62)               71                 9
     Other                                             -                 -                 -
                                                 _______           _______           _______
      Total interest income                        3,347             1,809             5,156
                                                 _______           _______           _______
 Interest expense:
   Demand                                             (1)                1                 0
   Savings                                           793               837             1,630
   Time                                              678               101               779
   Other                                              81                (0)               81
                                                 _______           _______           _______
       Total interest expense                      1,551               939             2,490
                                                 _______           _______           _______
 Change in net interest income                   $ 1,798             $ 869           $ 2,666
                                                 =======           =======           =======

</TABLE>

INTEREST INCOME

         Interest  income of $14.3  million in the quarter  ended  September 30,
2006  represented an increase of $5.2 million,  or 56%, over $9.2 million in the
same quarter one year earlier. The increase in interest income was primarily due
to growth in  average  earning  assets,  particularly  growth  in  average  loan
balances.  Average  earning assets for the quarter ended September 30, 2006 were
$594.8  million  and  represented  growth of $153.2  million or 35% over  $441.6
million for the same period in 2005.

         Average  gross  loans  were  $473.31  million  for three  months  ended
September 30, 2006, an increase of $94.9 million or 25% over $378.4  million for
the same  period one year  earlier.  Average  loans  comprised  79.8% of average
earning assets in the three months ended September 30, 2006 compared to 85.7% in
the third  quarter of 2005.  During the quarter ended  September  30, 2006,  the
ratio of average  gross loans to average  deposits (one measure of leverage) was
83.6%, compared to 87.8% in the comparable period of 2005.

         Interest  income also benefited  from increases in short-term  interest
rates.  The  average  yield on  earning  assets was 9.6% for the  quarter  ended
September  30, 2006 and 8.3% for the  quarter  ended  September  30,  2005.  The
majority of the Company's  earning  assets,  including a majority of loans,  are
priced to adjust with movements in short-term  interest rates,  particularly the
prime rate,  and the  increase in yield was  primarily  due to  increases in the
prime  rate in the  second  half of 2005 and  continuing  into the first half of
2006.  The  Company's  prime  rate  averaged  8.25% in the  three  months  ended
September 30, 2006, up from 6.35% in the same period one year earlier.

         Other earning  assets,  consisting of  investment  securities,  federal
funds sold and interest bearing deposits in other banks, averaged $121.5 million
for the quarter  ended  September  30, 2006, an increase of $58.2 million or 92%
from $63.3 million for the three months ended September 30, 2005.


INTEREST EXPENSE

         Interest  expense was $4.2 million for the quarter ended  September 30,
2006,  which  represented  an increase of $2.5 million or 142% over $1.7 million
for the  comparable  period of 2005. The increase in interest  expense  reflects


                                       19


<PAGE>


growth in average interest-bearing liabilities and higher interest rates paid on
liabilities in 2006 compared to 2005. Average interest-bearing  liabilities were
$426.7  million for the three months ended  September  30, 2006,  an increase of
$152.8  million,  or 56%,  over  $273.9  million  for the same  period  one year
earlier.

         Growth in average  interest  bearing  liabilities  was primarily due to
growth in average interest bearing  deposits.  Average interest bearing deposits
were $409.1 million for the quarter ended September 30, 2006, which  represented
72.3% of total average  deposits and was an increase of $147.2 million,  or 56%,
over $261.9 million  representing  60.7% of total average  deposits in the third
quarter of 2005.

         Other   (non-deposit)   interest  bearing   liabilities  are  primarily
comprised of junior  subordinated  debt  securities  issued by the Company.  The
junior  subordinated debt is intended to supplement capital  requirements of the
Company  at a rate of  interest  that is fixed for five  years.  Other  interest
bearing  liabilities  averaged $17.5 million in the three months ended September
30, 2006 compared to $12.0  million for the same period one year earlier,  which
represented an increase of $5.5 million or 46%.

         The impact of increases in short-term  market  interest  rates together
with the factors noted above resulted in an increase in the average rate paid on
interest-bearing  liabilities  to 4.0% in the quarter  ended  September 30, 2006
compared to 2.6% in the third quarter of 2005.

         Net interest income is the principal source of the Company's  operating
earnings.  Significant factors affecting net interest income are: rates, volumes
and mix of the loan, investment and deposit portfolios. Due to the nature of the
Company's lending markets,  in which the majority of loans are generally tied to
prime rate, it is believed that an increase in interest rates should  positively
affect the Company's  future  earnings,  while a decline  should 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.

PROVISION FOR CREDIT LOSSES

         The Company maintains an allowance for credit losses which is based, in
part,  on the Company's  and industry  loss  experience,  the impact of economic
conditions  within the Company'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. The Company provided $100,000 to the
allowance  for credit  losses for the three months ended  September 30, 2006, as
compared to $800,000  for the same period in 2005.  There were no loans  charged
off and $8,000 in recoveries during the three months ended September 30, 2006 as
compared to $359,000 in loans  charged-off  and $2,000 in recoveries  during the
three month  period  ended  September  30, 2005.  At  September  30,  2006,  the
allowance for credit losses was $6.7 million,  representing 1.4% of total loans,
as compared to $5.3 million,  representing 1.3% of total loans, at September 30,
2005.

The following schedule provides an analysis of the allowance for credit losses:

                                           Three months ended
(dollars in thousands)                        September 30,
                                        _________________________
                                         2006              2005
                                        _________________________
Balance, beginning of period            $ 6,620           $ 4,886
Provision for credit losses                 100               800
Charge-offs                                   -              (359)
Recoveries                                    8                 2
                                        _______           _______
Balance, end of period                  $ 6,728           $ 5,329
                                        =======           =======

         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
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
totaling  $2.6 million at September  30, 2006 and one loan totaling $2.3 million
at December 31, 2005.  At September 30, 2006,  the  nonaccrual  total  consisted
primarily of an SBA loan which is secured by real property with values in excess
of the loan's  carrying  value.  At December  31,  2005,  the  nonaccrual  total
consisted of one  commercial  loan that was secured by business  assets and real
property and was subsequently paid off.


                                       20


<PAGE>


         In addition, at September 30, 2006 and December 31, 2005, there were no
loans past due 90 days or more as to principal  or interest  and still  accruing
interest.

         At September  30, 2006 and  December 31, 2005 there were no  properties
owned by the Company acquired through the foreclosure  process and there were no
restructured loans.

The following summarizes  nonperforming loans at September 30, 2006 and December
31, 2005.

<TABLE>
<CAPTION>

                                                                     September 30,        December 31,
(dollars in thousands)                                                   2006                 2005
                                                                     _____________        ____________
<S>                                                                     <C>                  <C>

Loans accounted for on a non-accrual basis                              $ 2,572              $ 2,320
Loans restructured and in compliance with modified terms                      -                    -
Other loans with principal or interest contracturally past due
  90 days or more                                                             -                    -
                                                                        _______              _______
                                                                        $ 2,572              $ 2,320
                                                                        =======              =======

</TABLE>

         Based on an evaluation of the  individual  credits,  historical  credit
loss experience by loan type, and economic conditions,  management has allocated
the  allowance for loan losses as follows for the periods  ending  September 30,
2006 and December 31, 2005:

<TABLE>
<CAPTION>


(dollars in thousands)                  September 30, 2006                   December 31, 2005
                                     _________________________           __________________________
                                     Amount            Percent           Amount             Percent
                                     _______           _______           _______            _______
<S>                                  <C>                 <C>             <C>                  <C>

Commercial and other                 $ 1,852             38.3%           $ 2,029              41.5%
SBA                                    2,232             10.7%             1,975              10.7%
Real estate construction               1,057             20.5%               742              19.2%
Real estate term                         964             21.7%               721              19.0%
Factoring/ABL                            584              7.5%               443               8.7%
Other                                     39              1.3%                26               0.9%
                                     _______            ______           _______             ______
                                     $ 6,728            100.0%           $ 5,936             100.0%
                                     =======            ======           =======             ======

</TABLE>

         Management  is of the opinion that the  allowance  for credit losses is
maintained at a level adequate for known and unidentified losses inherent in the
loan  portfolio.   However,   the  Company's  loan  portfolio,   which  includes
approximately $204.8 million in real estate and construction loans, representing
approximately  42% of the portfolio,  could be adversely  affected if California
economic conditions and the real estate market in the Company'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
Company'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 three months ended September 30,
2006 and 2005:


                                       21


<PAGE>

<TABLE>
<CAPTION>

                                                             Three months ended September 30,
                                               ____________________________________________________________
 (dollars in thousands)                                 2006                                2005
                                               _______________________             ________________________
                                               Amount           Percent            Amount            Percent
                                               ______           _______            ______            _______
<S>                                            <C>               <C>               <C>                <C>

 Gain on sale of SBA loans                     $ 225             28.2%             $ 521              52.4%
 SBA loan servicing income                       137             17.1%               104              10.5%
 Increase in value of life insurance              86             10.8%                86               8.6%
 Depositor service charges                       132             16.5%                89               9.0%
 Other operating income                          219             27.4%               194              19.5%
                                               _____            ______             _____             ______
                                               $ 799            100.0%             $ 994             100.0%
                                               =====            ======             =====             ======

</TABLE>

         Non-interest  income  totaled  $799,000 in the first quarter of 2006, a
decrease of $195,000 or 20% from $994,000 in 2005.  Non-interest income consists
primarily of gains recognized on sales of SBA loans, SBA loan servicing  income,
and packaging fees and service charge income on deposit  accounts.  The decrease
in non-interest income for the third quarter of 2006 was primarily a result of a
decrease in gains  recognized on SBA loan sales offset,  in part, by an increase
in SBA loan servicing  income,  depositor  service charges,  and other operating
income.

           Revenue  from  sales  of  SBA  loans  is   dependant  on   consistent
origination  and  funding  of new loan  volumes,  the  timing  of  which  may be
impacted,  from time to time, by (1) increased  competition  from other lenders;
(2) the relative attractiveness of SBA borrowing to other financing options; (3)
adjustment of programs by the SBA; (4) changes in activities of secondary market
participants and; (5) other factors. Gains recognized on sales of SBA loans were
$225,000 in the quarter ended September 30, 2006 which represented a decrease of
$296,000  or 57%  compared to $521,000  the same  period one year  earlier.  The
decrease was attributed to lower volume of loans sold during the quarter. During
the third  quarter of 2006 the  Company's  SBA group funded $10.6 million in new
loans and sold $8.1 million  which  compared to $22.6  million  funded and $17.6
million sold in the same period one year earlier.

NON-INTEREST EXPENSE

         The  components of other expense as a percentage of average  assets are
set forth in the following  table for the three months ended  September 30, 2006
and 2005.

<TABLE>
<CAPTION>


                                                Three months ended September 30,
                                 ______________________________________________________________
 (dollars in thousands)                    2006                                2005
                                 _________________________           __________________________
                                 Amount             Percent          Amount              Percent
                                 _______            _______          _______             _______
<S>                              <C>                  <C>            <C>                   <C>

 Salaries and benefits           $ 4,627              3.1%           $ 2,993               2.7%
 Occupancy                         $ 630              0.4%               418               0.4%
 Data processing                   $ 345              0.2%               254               0.2%
 Deposit services                  $ 315              0.2%               396               0.4%
 Furniture and equipment           $ 178              0.1%               144               0.1%
 Legal and professional            $ 172              0.1%               204               0.2%
 Other                             $ 799              0.5%               714               0.6%
                                 _______              ____           _______               ____
                                 $ 7,066              4.7%           $ 5,123               4.4%
                                 =======              ====           =======               ====
</TABLE>

         Operating  expenses  were  $7.1  million  for the  three  months  ended
September  30,  2006,  an increase of $2.0 or 39% from $5.1 million at September
30, 2005.  As a percentage of average  earning  assets,  other  expenses for the
three months ended September 30, 2006 and 2005 were 4.7% and 4.6%, respectively,
on an annualized basis. In 2006,  operating expenses were comprised primarily of
salaries and benefits of $4.6 million,  which  compared to $3.0 million in 2005.
The  increase in salaries  and  benefits  was  primarily  due to the  additional
headcount  related to expansion of the  business.  At  September  30, 2006,  the
Company  employed 132 FTE compared to 97 FTE on the same date one year  earlier.
In addition,  salaries  and benefits  included a charge of $178,000 to recognize
compensation related to stock option grants as a result of the implementation of


                                       22


<PAGE>


FAS No. 123R in 2006.  Occupancy,  data processing,  and furniture and equipment
expenses for the third quarter of 2006 increased $212,000, $91,000, and $34,000,
respectively,  or 51%, 36%, and 24%,  respectively,  compared to the same period
one year  earlier.  The increase was primarily due to expansion of the business.
The  decrease  in deposit  services  expense was due to a decline in real estate
related title and escrow deposit accounts.

SUMMARY OF FINANCIAL RESULTS - NINE MONTHS ENDED SEPTEMBER 30, 2005

The Company  reported net income of $6.3 million  ($1.00 basic and $0.92 diluted
earnings per share) for the nine months ended  September 30, 2006 as compared to
$3.8  million  ($0.62 basic and $0.57  diluted  earnings per share) for the nine
months ended September 30, 2005. The increase in net income  resulted  primarily
from  increases  in net  interest  income  offset,  in part,  by an  increase in
operating expenses.

The table below  highlights  the changes in the nature and sources of income and
expense.

<TABLE>
<CAPTION>

                                               Nine months ended
                                                 September 30,
                                           __________________________          Increase
(dollars in thousands)                       2006              2005           (Decrease)
                                           ________          ________          ________
<S>                                        <C>               <C>               <C>

Interest income                            $ 37,735          $ 23,702          $ 14,033
Interest expense                              9,845             4,574             5,271
                                           ________          ________          ________

Net interest income                          27,890            19,128             8,762
Provision for credit losses                     772             1,562              (790)
                                           ________          ________          ________

Net interest income after provision
  for credit losses                          27,118            17,566             9,552
                                           ________          ________          ________
Other income                                  2,960             2,914                46
Other expenses                               20,034            14,079             5,955
                                           ________          ________          ________
Income before income taxes                   10,044             6,401             3,643

Income taxes                                  3,786             2,560             1,226
                                           ________          ________          ________
Net income                                  $ 6,258           $ 3,841           $ 2,417
                                           ========          ========          ========

</TABLE>



NET INTEREST INCOME AND MARGIN

         Net interest  income,  the difference  between interest earned on loans
and investments and interest paid on deposits is the principal  component of the
Company's earnings. Net interest income is affected by changes in the nature and
volume of earning  assets held during the nine months,  the rates earned on such
assets and the rates paid on interest bearing liabilities.

         Net interest  income for the nine months ended  September  30, 2006 was
$27.9 million,  which was comprised of $37.7 million in interest income and $9.8
million in interest  expense.  Net  interest  income for the nine  months  ended
September  30, 2005 was $19.1  million,  which was comprised of $23.7 million in
interest  income and $4.6 million in interest  expense.  Net interest income for
the nine months ended September 30, 2006 represented an increase of $8.8 million
or 46% over the same period one year earlier.  The average balance sheet and the
general interest rate environment drive net interest income.

         The net interest margin (net interest income divided by average earning
assets) was 6.91% for the nine months ended September 30, 2006 compared to 6.26%
for the same nine months in 2005. The improvement in net interest margin was the
result of improved  balance  sheet  leverage  together with the impact of higher
short-term market interest rates.

         The following table details the average  balances,  interest income and
expense and the effective  yields/rates for earning assets and  interest-bearing
liabilities for the nine months ended September 30, 2006 and 2005.


                                       23


<PAGE>

<TABLE>
<CAPTION>



                                                                  Nine months ended September 30,
                                            ___________________________________________________________________________
                                                           2006                                     2005
                                            __________________________________       __________________________________

                                                          Yields      Interest                     Yields      Interest
                                            Average         or         Income/       Average         or         Income/
                                            Balance        Rates       Expense       Balance        Rates       Expense
                                            ________       _____      ________       ________       _____      ________
<S>                                         <C>            <C>        <C>            <C>             <C>       <C>

ASSETS
Interest earning assets (2):
  Loans (1)                                 $453,891       10.2%      $ 34,696       $339,570        8.8%      $ 22,254
  Federal funds sold                          73,177        5.0%         2,723         49,178        3.0%         1,102
  Investment securities                       12,240        3.5%           316         19,923        2.3%           342
  Other                                            -                         -            183        2.9%             4
                                            ________       _____      ________       ________       _____      ________
Total interest earning assets                539,308        9.4%        37,735        408,854        7.8%        23,702
                                            ________       _____      ________       ________       _____      ________

Noninterest-earning assets:
  Cash and due from banks                     27,596                                   26,496
  All other assets (3)                        15,545                                   12,628
                                            ________                                 ________
      TOTAL                                 $582,449                                 $447,978
                                            ========                                 ========

LIABILITIES AND
  SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Deposits:
   Demand                                    $ 3,595        0.9%          $ 23        $ 3,538        0.8%          $ 20
   Savings                                   245,230        3.3%         6,073        183,426        2.0%         2,798
   Time                                       95,708        4.1%         2,924         54,015        3.0%         1,194
Other                                         19,638        5.6%           825         13,833        5.4%           562
                                            ________       _____      ________       ________       _____      ________
Total interest bearing liabilities           364,171        3.6%         9,845        254,812        2.4%         4,574
                                            ________       _____      ________       ________       _____      ________

Noninterest-bearing liabilities:
   Demand deposits                           167,993                                  153,568
   Accrued expenses and
     other liabilities                         6,957                                    4,452
Shareholders' equity                          43,328                                   35,146
                                            ________                                 ________
    TOTAL                                   $582,449                                 $447,978
                                            ========                                 ========

                                                           _____      ________                      _____      ________
Net interest income and margin                              6.9%      $ 27,890                       6.3%      $ 19,128
                                                           =====      ========                      =====      ========

<FN>

(1)           Loan  fee   amortization   of  $3.1  million  and  $2.3   million,
              respectively,  is included in interest income. Nonperforming loans
              have been included in average loan balances.
(2)           Interest  income  is  reflected  on an actual  basis,  not a fully
              taxable equivalent basis.  Yields are based on amortized cost.
(3)           Net of average  allowance  for credit  losses of $6.3  million and
              $4.7 million,
              respectively.

</FN>
</TABLE>

The following table shows the effect of the interest  differential of volume and
rate changes for the nine months ended  September 30, 2006 and 2005.  The change
in interest due to both rate and volume has been  allocated in proportion to the
relationship of absolute dollar amounts of change in each.


                                       24


<PAGE>

<TABLE>
<CAPTION>

(dollars in thousands)                          Nine months ended September 30,
                                                         2006 vs. 2005
                                          ___________________________________________
                                                      Increase (decrease)
                                                       due to change in
                                          ___________________________________________
                                          Average           Average            Total
                                          Volume             Rate             Change
                                          _______           _______           _______
<S>                                       <C>               <C>              <C>

 Interest income:
   Loans                                  $ 8,739           $ 3,703          $ 12,442
   Federal funds sold                         893               728             1,621
   Investment securities                     (198)              172               (26)
     Other                                      -                (4)               (4)
                                          _______           _______           _______
      Total interest income                 9,434             4,599            14,033
                                          _______           _______           _______

 Interest expense:
   Demand                                       0                 3                 3
   Savings                                  1,531             1,744             3,275
   Time                                     1,274               456             1,730
   Other                                      244                19               263
                                          _______           _______           _______
       Total interest expense               3,049             2,222             5,271
                                          _______           _______           _______
 Change in net interest income            $ 6,385           $ 2,377           $ 8,762
                                          =======           =======           =======

</TABLE>


INTEREST INCOME

         Interest income of $37.7 million in the nine months ended September 30,
2006 represented an increase of $14.0 million, or 59%, over $23.7 million in the
same nine months one year earlier. The increase in interest income was primarily
due to growth in earning assets,  particularly  growth in average loan balances.
Average  earning assets for the nine months ended September 30, 2006 were $539.3
million and represented  growth of $130.4 million or 32% over $408.9 million for
the same period in 2005.

         Average gross loans were $453.9 million for nine months ended September
30, 2006, an increase of $114.3  million or 34% over $339.6 million for the same
period one year earlier. Average loans comprised 84.2% of average earning assets
in the nine months ended  September 30, 2006 compared to 83.1% in the first nine
months of 2005.  In addition,  during the nine months ended  September 30, 2006,
the ratio of  average  gross  loans to  average  deposits  (another  measure  of
leverage) increased to 88.6%, up from 86.1% in the comparable period of 2005.

         Interest  income also benefited  from increases in short-term  interest
rates.  The average yield on average  earning assets was 9.4% in the nine months
ended  September  30, 2006 which  represented  an increase over 7.8% in the same
period one year earlier. The majority of the Company's earning assets, including
a majority of loans, are priced to adjust with movements in short-term  interest
rates,  particularly the prime rate, and the increase in yield was primarily due
to  increases in the prime rate in the second half of 2005 and  continuing  into
the first half of 2006.  The  Company's  prime rate  averaged  7.86% in the nine
months  ended  September  30,  2006 up from  5.91% in the same  period  one year
earlier.

         Other earning assets,  consisting of investment  securities and federal
funds sold, averaged $85.4 million for the nine months ended September 30, 2006,
an increase of $16.1 million or 23% from $69.3 million for the nine months ended
September 30, 2005.


INTEREST EXPENSE

         Interest  expense was $9.9 million for the nine months ended  September
30,  2006,  which  represented  an  increase  of $5.3  million or 115% over $4.6
million for the  comparable  period of 2005.  The  increase in interest  expense
reflects  growth in average  interest-bearing  liabilities  and higher  interest
rates paid on  liabilities  in 2006 compared to 2005.  Average  interest-bearing
liabilities were $364.2 million for the nine months ended September 30, 2006, an
increase of $109.4 million,  or 43%, over $254.8 million for the same period one
year earlier.


                                       25


<PAGE>


         Growth in average  interest  bearing  liabilities  was primarily due to
growth in average interest bearing  deposits.  Average interest bearing deposits
were  $344.5  million  for the nine  months  ended  September  30,  2006,  which
represented 67% of total average deposits and was an increase of $103.5 million,
or 43%, over $241.0 million  representing  61% of total average  deposits in the
same period of 2005.

         Other   (non-deposit)   interest  bearing   liabilities  are  primarily
comprised of junior  subordinated  debt  securities  issued by the Company.  The
junior  subordinated debt is intended to supplement capital  requirements of the
Company  at a rate of  interest  that is fixed for five  years.  Other  interest
bearing  liabilities  averaged $19.6 million in the nine months ended  September
30, 2006 compared to $13.8  million for the same period one year earlier,  which
represented an increase of $5.8 million or 42%.

         The impact of increases in short-term  market  interest  rates together
with the factors noted above resulted in an increase in the average rate paid on
interest-bearing liabilities to 3.6% in the nine months ended September 30, 2006
compared to 2.4% in the first nine months of 2005.

         Net interest income is the principal source of the Company's  operating
earnings.  Significant factors affecting net interest income are: rates, volumes
and mix of the loan, investment and deposit portfolios. Due to the nature of the
Company's lending markets,  in which the majority of loans are generally tied to
prime rate, it is believed that an increase in interest rates should  positively
affect the Company's  future  earnings,  while a decline  should 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.

PROVISION FOR CREDIT LOSSES

         The Company maintains an allowance for credit losses which is based, in
part,  on the Company's  and industry  loss  experience,  the impact of economic
conditions  within the Company'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. The Company provided $772,000 to the
allowance  for credit  losses for the nine months ended  September  30, 2006, as
compared  to $1.6  million  for the same  period  in 2005.  There  were no loans
charged off and $20,000 in recoveries during the nine months ended September 30,
2006 and $384,000 in loans  charged-off and $5,000 in recoveries during the nine
month period ended  September 30, 2005. At September 30, 2006, the allowance for
credit losses was $6.7 million, representing 1.4% of total loans, as compared to
$5.3 million, representing 1.3% of total loans, at September 30, 2005.

The following schedule provides an analysis of the allowance for credit losses:

                                           Three months ended
(dollars in thousands)                        September 30,
                                        _________________________
                                         2006              2005
                                        _______           _______

Balance, beginning of period            $ 6,620           $ 4,886
Provision for credit losses                 100               800
Charge-offs                                   -              (359)
Recoveries                                    8                 2
                                        _______           _______
Balance, end of period                  $ 6,728           $ 5,329
                                        =======           =======

         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
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 loan
totaling  $2.6 million at September  30, 2006 and one loan totaling $2.3 million
at December 31, 2005. In addition,  at September 30, 2006 and December 31, 2005,
there were no loans past due 90 days or more as to  principal  or  interest  and
still accruing interest.

         See  "Summary  of  Financial  Results -  Quarter  ended  September  30,
2006-Provision for Credit Losses" for a discussion of nonperforming assets.

                                       26


<PAGE>


NON-INTEREST INCOME

         The following  table sets forth the  components of other income and the
percentage  distribution  of such income for the nine months ended September 30,
2006 and 2005.

<TABLE>
<CAPTION>

                                                            Nine months ended September 30,
                                             ______________________________________________________________
 (dollars in thousands)                                 2006                                2005
                                             _________________________           __________________________
                                             Amount            Percent           Amount             Percent
                                             _______           _______           _______            _______
<S>                                          <C>                 <C>             <C>                  <C>

 Gain on sale of SBA loans                   $ 1,064             36.0%           $ 1,583              54.3%
 SBA loan servicing income                       392             13.2%               278               9.5%
 Depositor service charges                       370             12.5%               245               8.4%
 Increase in value of life insurance             263              8.9%               291              10.0%
 Other operating income                          871             29.4%               517              17.8%
                                             _______            ______           _______             ______
                                             $ 2,960            100.0%           $ 2,914             100.0%
                                             =======            ======           =======             ======
</TABLE>

         Non-interest  income  totaled $3.0 million for the first nine months of
2006,  an  increase  of  $46,000 or 2% from $2.9  million in 2005.  Non-interest
income consists  primarily of gains  recognized on sales of SBA loans,  SBA loan
packaging fees,  service charge income on deposit accounts and increase in value
of Bank owned life insurance.  The increase in non-interest income for the first
nine months of 2006 was primarily a result of an increase in SBA loan  servicing
income,  increased depositor service charges, and an increase in other operating
income, partially offset by a decrease in gains recognized on SBA loan sales.

           Revenue  from  sales  of  SBA  loans  is   dependent  on   consistent
origination  and  funding  of new loan  volumes,  the  timing  of  which  may be
impacted,  from time to time, by (1) increased  competition  from other lenders;
(2) the relative attractiveness of SBA borrowing to other financing options; (3)
adjustment of programs by the SBA; (4) changes in activities of secondary market
participants and; (5) other factors. Gains recognized on sales of SBA loans were
$1.1 million in the nine months ended  September  30, 2006 which  represented  a
decrease of $519,000  or 33%  compared to $1.6  million the same period one year
earlier.  The decrease was attributed to a lower volume of loans sold during the
current  year.  During the first  nine  months of 2006 the  Company's  SBA group
funded $39.7 million in new loans and sold $35.4 million which compared to $53.7
million in new loans and $47.7 million sold in the same period one year earlier.


NON-INTEREST EXPENSE

         The  components of other expense as a percentage of average  assets are
set forth in the  following  table for the nine months ended  September 30, 2006
and 2005.

<TABLE>
<CAPTION>

                                                Nine months ended September 30,
                                _______________________________________________________________
 (dollars in thousands)                     2006                                 2005
                                ___________________________         ____________________________
                                 Amount             Percent          Amount              Percent
                                ________            _______         ________             _______
<S>                             <C>                   <C>            <C>                   <C>

 Salaries and benefits          $ 12,706              3.1%           $ 8,325               2.7%
 Occupancy                         1,601              0.4%             1,222               0.4%
 Deposit services                  1,189              0.3%               983               0.3%
 Data processing                   1,062              0.3%               758               0.2%
 Legal and professional              566              0.1%               541               0.2%
 Furniture and equipment             521              0.1%               432               0.1%
 Other                             2,389              0.6%             1,818               0.6%
                                ________             _____          ________              _____
                                $ 20,034              5.0%          $ 14,079               4.6%
                                ========             =====          ========              =====

</TABLE>


                                       27


<PAGE>


         Operating  expenses  were  $20.0  million  for the  nine  months  ended
September  30, 2006,  an increase of $5.9  million or 42% from $14.1  million at
September 30, 2005. As a percentage of average  earning  assets,  other expenses
for the nine  months  ended  September  30,  2006 and 2005  were  5.0% and 4.6%,
respectively, on an annualized basis. In 2006, operating expenses were comprised
primarily  of salaries  and benefits of $12.7  million,  which  compared to $8.3
million in 2005,  occupancy  expense of $1.6  million,  which  compared  to $1.2
million in 2005, and deposit  services expense of $1.2 million which compared to
$983,000 in 2005. The increase in salaries and benefits was primarily due to the
additional  headcount  related to expansion of the  business.  At September  30,
2006, the Company  employed 132 FTE compared to 97 FTE on the same date one year
earlier.  In addition,  salaries  and benefits  included a charge of $500,000 to
recognize  compensation  related  to stock  option  grants  as a  result  of the
implementation  of FAS No. 123R in 2006.  The increase in  occupancy  expense is
primarily  due to expense  related to expansion  at the  facility  located at 55
Almaden Blvd,  San Jose,  California  and the new facility in Pleasanton at 6601
Koll Center Parkway, Suite 132, Pleasanton, California.

BALANCE SHEET

         Total assets of Bridge Bank at September 30, 2006 were $655.7  million,
an increase of $119.2 million, or 22%, as compared to $536.5 million at December
31, 2005.  Growth in total assets was  principally due to an increase in deposit
balances.

         The  following  table  shows  the  Company's  loans by type  and  their
percentage  distribution  for the periods ended  September 30, 2006 and December
31, 2005.

(dollars in thousands)                September 30,      December 31,
                                          2006               2005
                                      _____________      ____________

Commercial                              $ 185,789          $ 182,396
SBA                                        51,894             46,867
Real estate construction                   99,427             84,792
Real estate other                         105,395             83,748
Factoring and Asset based                  36,658             38,184
Other                                       6,469              4,011
                                        _________          _________
Total gross loans                         485,632            439,998
Unearned fee income                        (1,601)            (1,395)
     Total gross loans                    484,031            438,603
                                        _________          _________
Less allowance for credit losses           (6,728)            (5,936)
                                        _________          _________
     Total loans, net                   $ 477,303          $ 432,667
                                        =========          =========

Commercial                                  38.3%              41.5%
SBA                                         10.7%              10.7%
Real estate construction                    20.5%              19.2%
Real estate term                            21.7%              19.0%
Factoring and Asset based                    7.5%               8.7%
Other                                        1.3%               0.9%
                                        _________          _________
     Total gross loans                     100.0%             100.0%
                                        =========          =========


         Net loan  balances  increased to $477.3  million at September 30, 2006,
which  represented an increase of $44.6  million,  or 10%, as compared to $432.7
million at December 31, 2005. The increase in loans was primarily in real estate
construction  and real estate  other  (including  home equity  lines)  without a
concentration  in any one  specific  category of loans,  although  overall  real
estate  secured loans  comprise over 42% of loan balances at September 30, 2006.
The increase was a result of general marketing efforts.

         The Company's  commercial loan portfolio  represents loans to small and
middle-market businesses in the Santa Clara County region. Commercial loans were
$185.8  million at September  30,  2006,  which  represented  a increase of $3.4
million, or 2%, over $182.4 million at December 31, 2005. At September 30, 2006,
commercial  loans  comprised 38% of total loans  outstanding  compared to 42% at
December 31, 2005.


                                       28


<PAGE>


         In March of 2002, the Company established an SBA lending group in Santa
Clara County with a loan  production  office in  Sacramento  County.  In October
2004, the Company  established a loan production office in San Diego County. The
Company, 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 75% to 85% of the total loan.  In  addition,  the loan
could  be  collateralized  by a deed of  trust  on real  estate.  Under  the 504
program,  the Company  lends  directly to the borrower and takes a first deed of
trust to the  subject  property.  In  addition  the  SBA,  through  a  Certified
Development  Corporation,  makes an additional  loan to the borrower and takes a
deed of trust subject to the  Company's  position.  At September  30, 2006,  SBA
loans  comprised  $51.9  million,  or 11%, of total  loans,  an increase of $5.0
million,  or 11%, from $46.9  million at December 31, 2005.  The Company has the
ability  and 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 September 30, 2006 and December 31, 2005, the fair value of SBA loans
exceeded aggregate cost and therefore, SBA loans were carried at aggregate cost.

         The Company'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 $14.6 million,
or 17%, to $99.4  million at September  30, 2006 over $84.8  million at December
31, 2005. Construction loan balances at September 30, 2006 and December 31, 2005
comprised 21% and 19%, respectively, of total loans.

         Other  real  estate  loans  increased  $21.7  million  or 26% to $105.4
million at  September  30, 2006 over $83.7  million at December  31,  2005.  The
increase in other real estate loans was approximately equally split between home
equity lines of credit and other real estate term loans. Other real estate loans
represented 22% of total loans at September 30, 2006 compared to 19% at December
31, 2005.

         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 September 30,
2006, factoring/asset- based loans totaled $36.7 million or 8.0% of total loans,
a slight  decrease  as  compared  to  $38.2  million  or 8.7% of total  loans at
December 31, 2005.

         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 September 30, 2006, other loans totaled $6.5 million
as compared to $4.0 million at December 31, 2005.

         Average  total  assets  of the  Company  for  the  three  months  ended
September 30, 2006 were $636.3  million.  Average  earning assets reached $594.8
million,  representing 94% of total assets,  in the three months ended September
30,  2006 with an average  yield of 9.6%.  The  increase in yield  reflects  the
increase in the volume and yield of average  earning  assets.  At September  30,
2006,  average loans were $473.3  million,  representing  80% of average earning
assets and 84% of average  deposits as compared to $378.4  million at  September
30, 2005 representing 86% of average earning assets and 88% of average deposits.

         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 September 30, 2006 and December 31,
2005.


                                       29


<PAGE>

<TABLE>
<CAPTION>

(dollars in thousands)                September 30, 2006                   December 31, 2005
                                  __________________________          ___________________________
                                   Amount            Percent           Amount             Percent
                                  ________           _______          ________            _______
<S>                               <C>                 <C>             <C>                  <C>

Noninterest-bearing  demand       $164,483            28.08%          $185,557             39.64%
Interest-bearing demand              4,005             0.68%             2,866              0.61%
Money market and savings           294,698            50.31%           210,011             44.86%
Certificates of deposit:
     Less than $100                 26,676             4.55%            19,228              4.11%
     $100 and more                  95,962            16.38%            50,496             10.79%
                                  ________           _______          ________            _______
     Total deposits               $585,824           100.00%          $468,158            100.00%
                                  ========           =======          ========            =======
</TABLE>

         Deposits  increased  $117.6  million  or 25%  from  $468.2  million  at
December  31, 2005 to $585.8  million at  September  30,  2006.  The increase in
deposits  was  primarily  in money  market  and  institutional  certificates  of
deposit. The increase was a result of marketing efforts to attract such deposits
in order to meet the Bank's  liquidity  needs and to accommodate  projected loan
funding.  Deposit totals at September 30, 2006 included $28.0 million, or 5%, in
title and escrow company account balances compared to $78.7 million,  or 20%, at
December 31, 2005. Excluding title and escrow company account balances, deposits
increased $168.4 million or 43% compared to December 31, 2005.

         At September  30, 2006,  the total number of deposit  accounts  reached
4,671  with an average  balance  per  account  (excluding  title and  escrow) of
approximately $204,000.

         Average  deposits for the three months  ended  September  30, 2006 were
$566.1 million comprised of average interest-bearing  deposits of $409.1 million
and average  non-interest bearing demand deposits of $157.0 million. The average
rate paid on  interest-bearing  deposits was 4.0% and the Company's  overall net
interest margin was 6.7%.

LEVERAGE

         Total gross loan  balances at September  30, 2006 were $485.6  million.
The resulting loan to deposit ratio was 82.9%. Other earning assets at September
30, 2006 were primarily  comprised of Fed Funds sold of $116.2 million. To date,
the Company has deployed  earning  assets  primarily in Fed Funds to address the
potential  volatility of the title company  deposit  balances and to accommodate
projected loan funding.


CAPITAL RESOURCES

         The  Company and the Bank are  subject to the  capital  guidelines  and
regulations  governing  capital adequacy for bank holding companies and national
banks.  Additional capital  requirements may be imposed on banks based on market
risk.  The FDIC  requires a leverage  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% for national banks that have received the highest
composite  regulatory  rating (a  regulatory  measurement  of  capital,  assets,
management,   earnings  and  liquidity)  and  that  are  not   anticipating   or
experiencing  any significant  growth.  All other  institutions  are 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 might 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
nontraditional   activities;   the  quality  of  loans  and   investments;   the


                                       30


<PAGE>


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 Company'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 financial  intermediary,  it
introduces volatility to bank earnings and to the economic value of the Company.
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  effective  January  1, 1998 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.

         In connection with the recent  regulatory  attention to market risk and
interest rate risk, 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 shall be  maintained  at levels,  which are
higher than the minimum levels required by the guidelines. A national bank which
does not achieve and maintain adequate capital levels as required 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
Company is required to meet certain guidelines of the Comptroller concerning the
maintenance of an adequate allowance for loan and lease losses.

         The Company's  Tier 1 capital at September 30, 2006 was $62.6  million,
which was comprised of $34.8 million of capital stock and surplus, $12.1 million
in retained earnings and trust preferred securities up to the allowable limit of
$15.6 million.

         The following table shows the Company's capital ratios at September 30,
2006 and December 31, 2005 as well as the minimum  capital ratios required to be
deemed "well capitalized" under the regulatory framework.


                                       31


<PAGE>

<TABLE>
<CAPTION>

                                              As of September 30,                  As of December 31,
(dollars in thousands)                                 2006                                2005
                                           __________________________          ___________________________
                                            Amount             Ratio            Amount              Ratio
                                           ________            ______          ________             ______
<S>                                        <C>                 <C>             <C>                  <C>

Company Capital Ratios
Tier 1 Capital                             $ 62,559            11.03%          $ 51,593             10.38%
(to Risk Weighted Assets)
Tier 1 capital minimum requirement         $ 22,683             4.00%          $ 19,879              4.00%

Total Capital                              $ 70,647            12.46%          $ 57,529             11.58%
(to Risk Weighted Assets)
Total capital minimum requirement          $ 45,365             8.00%          $ 39,758              8.00%

Company Leverage
Tier 1 Capital                             $ 62,559            10.75%          $ 51,593             11.07%
(to Average Assets)
Tier 1 capital minimum requirement         $ 23,272             4.00%          $ 18,638              4.00%


Bank Capital Ratios
Tier 1 Capital                             $ 61,187            10.80%          $ 49,748             10.49%
(to Risk Weighted Assets)
Tier 1 capital minimum requirement         $ 22,661             4.00%          $ 18,970              4.00%

Total Capital                              $ 67,915            11.99%          $ 28,455              6.00%
(to Risk Weighted Assets)
Total capital minimum requirement          $ 45,323             8.00%          $ 55,684             11.74%

Bank Leverage
Tier 1 Capital                             $ 61,187            10.51%          $ 37,939              8.00%
(to Average Assets)
Tier 1 capital minimum requirement         $ 23,278             4.00%            47,424             10.00%

</TABLE>


The Company and the Bank were considered well capitalized at September 30, 2006.


                                       32


<PAGE>


ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

LIQUIDITY/INTEREST RATE SENSITIVITY

         The  Company  manages its  liquidity  to provide  adequate  funds at an
acceptable  cost to support  borrowing  requirements  and  deposit  flows of its
customers.  At September  30, 2006 and December  31,  2005,  liquid  assets as a
percentage of deposits were 26.3% and 17.5%,  respectively.  In addition to cash
and due from banks,  liquid assets  include  interest-bearing  deposits in other
banks, Federal funds sold and securities available for sale. The Company has $27
million in Federal funds lines of credit available with  correspondent  banks to
meet  liquidity  needs and  additionally  has  approximately  $111.0  million in
borrowing capacity at the Federal Home Loan Bank of San Francisco. The Company's
balance sheet position is asset-sensitive  (based upon the significant amount of
variable rate loans and the repricing  characteristics of its deposit accounts).
This balance sheet position  generally  provides a hedge against rising interest
rates, but has a detrimental effect during times of interest rate decreases. Net
interest income is generally  negatively impacted in the short term by a decline
in interest  rates.  Conversely,  an increase  in interest  rates  should have a
short-term positive impact on net interest income.

         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  September  30,  2006,   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 sensitive assets divided
by  interest  rate  sensitive  liabilities)  and the  cumulative  interest  rate
sensitivity gap ratio.

<TABLE>
<CAPTION>


(dollars in thousands)                                             As of September 30, 2006
                                       _______________________________________________________________________________
                                                     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                     $ 116,165           $ -           $ -           $ -           $ -     $ 116,165
U.S. Treasury securities                     200             -             -             -             -           200
Agency securities                          1,991         1,980         8,884         5,916             -        18,771
Loans                                    402,976        30,951         2,312        35,570        13,823       485,632
                                       _________      ________      ________      ________      ________      ________
Total earning assets                     521,332        32,931        11,196        41,486        13,823       620,768
                                       _________      ________      ________      ________      ________      ________

Interest checking, money
  market and savings                     298,703             -             -             -             -       298,703
Certificates of deposit:
  Less than $100,000                       4,389         4,004         8,467         9,068             -        25,928
  $100,000 or more                        44,887        10,746        16,533         8,945             -        81,111
                                       _________      ________      ________      ________      ________      ________
Total interest-bearing liabilities       347,979        14,750        25,000        18,013             0       405,742
                                       _________      ________      ________      ________      ________      ________

Interest rate gap                       $173,353       $18,181      ($13,804)      $23,473       $13,823      $215,026
                                       =========      ========      ========      ========      ========      ========
Cumulative interest rate gap            $173,353      $191,534      $177,730      $201,203      $215,026
                                       =========      ========      ========      ========      ========

Interest rate gap ratio                     0.33          0.55         (1.23)         0.57          1.00
                                       =========      ========      ========      ========      ========
Cumulative interest rate
     gap ratio                              0.33          0.35          0.31          0.33          0.35
                                       =========      ========      ========      ========      ========

</TABLE>

         Based on the  contractual  terms of its  assets  and  liabilities,  the
Company's  balance sheet as September  30, 2006 was asset  sensitive in terms of
its short-term  exposure to interest  rates.  That is, at September 30, 2006 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, a significant  portion of variable rate loans
made by the Company have been written with a minimum "floor" rate.


                                       33


<PAGE>


The following  table shows  maturity and interest rate  sensitivity  of the loan
portfolio at September  30, 2006 and December 31, 2005.  At September  30, 2006,
approximately  85% of the loan portfolio is priced with floating  interest rates
which limit the exposure to interest rate risk on long-term loans.

<TABLE>
<CAPTION>

                                               As of September 30, 2006
                               ________________________________________________________
(dollars in thousands)                                      Due after one
                                              Due one year   year through      Due after
                                Amount          or less       five years      five years
                               _________        ________       ________         _______
<S>                            <C>               <C>            <C>             <C>

Commercial and other           $ 185,789         $94,885        $80,738         $10,166
SBA                               51,894          12,966            194          38,734
Real estate construction          99,427          97,948          1,479               -
Real estate-other                105,395          40,436         26,404          38,555
Factoring/ABL                     36,658          34,043          2,615               -
Other                              6,469           4,664          1,805               -
                               _________        ________       ________         _______
     Total loans               $ 485,632        $284,942       $113,235         $87,455
                               =========        ========       ========         =======


                                              As of December 31, 2005
                               ________________________________________________________
                                                            Due after one
                                              Due one year   year through      Due after
                                Amount          or less       five years      five years
                               _________        ________       ________         _______
Commercial and other            $182,396         $99,900        $76,216          $6,280
SBA                               46,867           5,976            135          40,756
Real estate construction          84,792          80,609          4,183               -
Real estate-other                 83,748          28,215          6,627          48,906
Factoring/ABL                     38,184          37,134          1,050               -
Other                              4,011           3,755            256               -
                               _________        ________       ________         _______
     Total loans                $439,998        $255,589        $88,467         $95,942
                               =========        ========       ========         =======
</TABLE>


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  September  30,  2006 those
guarantees include the following:

         Standby Letters of Credit in the amount of $10.9 million

The  table  below  summarizes  the  Company's   off-balance   sheet  contractual
obligations:


                                       34


<PAGE>

<TABLE>
<CAPTION>

(dollars in thousands)                                           As of September 30, 2006
                                     ________________________________________________________________________________
                                                                  Payments due by period
                                     ________________________________________________________________________________
                                                       Less than           1 - 3             3 - 5           More than
                                      Total             1 year             years             years            5 years
                                     ________           _______           _______           _______           _______
<S>                                   <C>                 <C>               <C>               <C>                 <C>

Long-term contracts                   $ 2,479             $ 935             $ 713             $ 831               $ -

Operating leases                       10,507               793             1,695             2,533             5,486
                                     ________           _______           _______           _______           _______
Total                                $ 12,986           $ 1,728           $ 2,408           $ 3,364           $ 5,486
                                     ========           =======           =======           =======           =======
</TABLE>


ITEM 4 - CONTROLS AND PROCEDURES


DISCLOSURE CONTROLS AND PROCEDURES

As required by SEC rules, the Company's  management evaluated the effectiveness,
as of September 30, 2006, of the Company's  disclosure  controls and procedures.
The Company's chief executive officer and chief financial  officer  participated
in the  evaluation.  Based on this  evaluation,  the Company's  chief  executive
officer and chief  financial  officer  concluded  that the Company's  disclosure
controls and procedures were effective as of September 30, 2006.


INTERNAL CONTROL OVER FINANCIAL REPORTING

Internal  control  over  financial   reporting  is  defined  in  Rule  13a-15(f)
promulgated under the Securities  Exchange Act of 1934 as a process designed by,
or under the  supervision  of, the company's  principal  executive and principal
financial officers and effected by the company's board of directors,  management
and other personnel,  to provide reasonable  assurance regarding the reliability
of financial reporting and the preparation of financial  statements for external
purposes  in  accordance  with  generally  accepted  accounting  principles  and
includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable  detail  accurately and
fairly  reflect the  transactions  and  dispositions  of assets of the  company;
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company;  and provide reasonable  assurance  regarding  prevention or timely
detection of  unauthorized  acquisition,  use of  disposition  of the  company's
assets that could have a material effect on the financial statements.

Because of its inherent  limitations,  internal control over financial reporting
may not  prevent  or detect  misstatements.  Projections  of any  evaluation  of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies or procedures may  deteriorate.  No change occurred during the
third quarter of 2006 that has materially  affected,  or is reasonably likely to
materially affect, the Company's internal control over financial reporting.


                                       35


<PAGE>


PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS


         The  Company  is  not  a  defendant  in  any  pending   material  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 1A - RISK FACTORS


CHANGES IN ACCOUNTING RULES COULD AFFECT THE COMPANY'S FUTURE OPERATING RESULTS

Financial  statements are prepared in accordance  with U.S.  generally  accepted
accounting principles. These principles are subject to interpretation by various
governing  bodies,  including  the FASB and the SEC,  who create  and  interpret
appropriate  accounting  standards.  A change from current accounting  standards
could have a  significant  effect on the  Company's  results of  operations.  In
December  2004,  the FASB issued new guidance that  addresses the accounting for
share-based  payments,  SFAS No. 123R,  which the Company  adopted on January 1,
2006. In the third quarter of 2006,  stock-based  compensation  expense  reduced
basic earnings per common share by approximately $0.02 ($0.05 for the nine month
period ended September 30, 2006).  Although the effect from the adoption of SFAS
No. 123R is expected to continue to have an  immaterial  impact on the Company's
results of operations,  future changes to various  assumptions used to determine
the  fair-value of awards issued or the amount and type of equity awards granted
create uncertainty as to the amount of future stock-based compensation expense.


ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


         Not applicable


ITEM 3 - DEFAULTS UPON SENIOR SECURITIES


         Not applicable


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


         Not applicable


ITEM 5 - OTHER INFORMATION


         None


ITEM 6 - EXHIBITS


         (A) EXHIBITS


         See Index to Exhibits at page 38 of this Quarterly Report on Form 10-Q.


                                       36


<PAGE>


                                   SIGNATURES


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



                                                 BRIDGE CAPITAL HOLDINGS




Dated: November 2, 2006                     By:  /s/ DANIEL P. MYERS
                                                 _______________________________
                                                 Daniel P. Myers
                                                 President and Chief Executive
                                                 Officer
                                                 (Principal Executive Officer)



Dated: November 2, 2006                     By:    /s/ THOMAS A. SA
                                                  ______________________________
                                                 Thomas A. Sa
                                                 Executive Vice President
                                                 Chief Administrative Officer
                                                 and Chief Financial Officer
                                                 (Principal Financial and
                                                 Accounting Officer)


                                       37


<PAGE>


                                INDEX TO EXHIBITS




EXHIBIT
NUMBER   DESCRIPTION OF EXHIBIT


(10.10)  Lease for banking office located at 6601 Koll Center Parkway,
         Pleasanton, California

(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


                                       38