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: JUNE 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 Identification Number)
incorporation or organization)


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


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


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 July 18, 2006: 6,272,345


                                       1


<PAGE>


                                TABLE OF CONTENTS

PART 1 - FINANCIAL INFORMATION

ITEM 1.       INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)           3

              INTERIM CONSOLIDATED BALANCE SHEETS                             4

              INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS                   5

              INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS                   6

              NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  7

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION    15
              AND RESULTS OF OPERATIONS

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK     36

ITEM 4.       CONTROLS AND PROCEDURES                                        38

PART II - OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS                                              39

ITEM 1A.      RISK FACTORS                                                   39

ITEM 2.       UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS    39

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES                                39

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS            39

ITEM 5.       OTHER INFORMATION                                              40

ITEM 6.       EXHIBITS                                                       40

INDEX TO EXHIBITS                                                            41

SIGNATURES                                                                   42


                                       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  MARGINS;  (3)  GENERAL  ECONOMIC   CONDITIONS,   EITHER  NATIONALLY  OR
REGIONALLY, ARE LESS FAVORABLE THAN EXPECTED,  RESULTING IN, AMONG OTHER THINGS,
A DETERIORATION  IN CREDIT QUALITY;  (4) CHANGES IN THE REGULATORY  ENVIRONMENT;
(5) CHANGES IN BUSINESS  CONDITIONS  AND  INFLATION;  (6) COSTS AND  EXPENSES OF
COMPLYING WITH THE INTERNAL CONTROL PROVISIONS OF THE SARBANES-OXLEY ACT AND OUR
DEGREE OF SUCCESS IN ACHIEVING  COMPLIANCE;  (7) CHANGES IN SECURITIES  MARKETS,
(8) FUTURE CREDIT LOSS EXPERIENCE;  (9) CIVIL  DISTURBANCES OR TERRORIST THREATS
OR ACTS, OR APPREHENSION  ABOUT POSSIBLE FUTURE OCCURANCES OF ACTS OF THIS TYPE;
AND (10) THE  INVOLVEMENT  OF THE  UNITED  STATES  IN WAR OR OTHER  HOSTILITIES.
THEREFORE,  THE  INFORMATION  IN  THIS  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.

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

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)
                                                                   JUNE 30,      DECEMBER 31,
                                                                     2006            2005
                                                                --------------------------------
<S>                                                                  <C>              <C>
ASSETS
CASH AND DUE FROM BANKS                                              $  22,471        $  22,880
FEDERAL FUNDS SOLD                                                     114,955           46,660
                                                                --------------------------------
  Total cash and equivalents                                           137,426           69,540
                                                                --------------------------------

INVESTMENT SECURITIES AVAILABLE FOR SALE                                11,004           12,383
LOANS, net of allowance for credit losses of $6,620 at
June 30, 2006 and $5,936 at December 31, 2005                          469,228          432,667

ACCRUED INTEREST RECEIVABLE                                              2,813            2,202
OTHER ASSETS                                                            18,085           17,391

                                                                --------------------------------
   TOTAL                                                             $ 641,578        $ 536,520
                                                                ================================

LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
  Demand noninterest-bearing                                         $ 177,445        $ 185,557
  Demand interest-bearing                                                2,987            2,866
  Savings                                                              286,321          210,011
  Time                                                                 107,039           69,724
                                                                --------------------------------
     Total deposits                                                    573,792          468,158
                                                                --------------------------------

JUNIOR SUBORDINATED DEBT SECURITIES                                     17,527           12,372
OTHER BORROWINGS                                                             -           10,000
ACCRUED INTEREST PAYABLE                                                   265              130
OTHER LIABILITIES                                                        5,693            6,146
                                                                --------------------------------
     TOTAL LIABILITIES                                                 597,277          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 June 30, 2006.
     6,227,596 shares issued and outstanding at December 31, 2005.      34,523           33,907
  Retained earnings                                                      9,858            5,909
  Accumulated other comprehensive (loss)                                   (80)            (102)
                                                                --------------------------------
     TOTAL SHAREHOLDERS' EQUITY                                         44,301           39,714
                                                                --------------------------------
     TOTAL                                                           $ 641,578        $ 536,520
                                                                ================================
</TABLE>

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

                                       4
<PAGE>


<TABLE>
<CAPTION>
                     BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
                       Statement of Operations (unaudited)
                             (dollars in thousands)

                                           THREE MONTHS ENDED             SIX MONTHS ENDED
                                               JUNE 30,                       JUNE 30,
                                          2006            2005           2006          2005
                                      ------------------------------  -------------------------
<S>                                        <C>              <C>          <C>         <C>
INTEREST INCOME:
  Loans                                    $ 11,682         $ 7,315      $ 21,934     $ 13,585
  Federal funds sold                            692             482         1,270          703
  Investment securities available for sale      105             118           203          242
                                      --------------  --------------  ------------  -----------
    TOTAL INTEREST INCOME                    12,479           7,915        23,407       14,530
                                      --------------  --------------  ------------  -----------

INTEREST EXPENSE:
  Deposits:
    Interest-bearing demand                       7               6            14           11
    Money market and savings                  1,913           1,034         3,340        1,695
    Certificates of deposit                   1,020             420         1,685          734
    Other                                       281             177           568          385
                                      --------------  --------------  ------------  -----------
    TOTAL INTEREST EXPENSE                    3,221           1,637         5,607        2,825
                                      --------------  --------------  ------------  -----------

NET INTEREST INCOME                           9,258           6,278        17,800       11,705
  Provision for credit losses                   450             429           672          762
                                      --------------  --------------  ------------  -----------
NET INTEREST INCOME AFTER
  PROVISION FOR CREDIT LOSSES                 8,808           5,849        17,128       10,943
                                      --------------  --------------  ------------  -----------

OTHER INCOME:
  Service charges on deposit accounts           127              69           239          137
  Gain on sale of SBA loans                     388             642           839        1,062
  Other non interest income                     563             425         1,083          721
                                      --------------  --------------  ------------  -----------
     TOTAL OTHER INCOME                       1,078           1,136         2,161        1,920
                                      --------------  --------------  ------------  -----------

OTHER EXPENSES:
  Salaries and benefits                       4,160           2,780         8,079        5,332
  Premises and fixed assets                     700             542         1,314        1,092
  Other                                       1,770           1,320         3,575        2,533
                                      --------------  --------------  ------------  -----------
     TOTAL OTHER EXPENSES                     6,630           4,642        12,968        8,957
                                      --------------  --------------  ------------  -----------

INCOME BEFORE INCOME TAXES                    3,256           2,343         6,321        3,906
                                      --------------  --------------  ------------  -----------
Income taxes                                  1,237             964         2,371        1,570
                                      --------------  --------------  ------------  -----------
NET INCOME                                 $  2,019         $ 1,379      $  3,950     $  2,336
                                      ==============  ==============  ============  ===========

Basic earnings per share                   $   0.32          $ 0.22       $  0.63      $  0.38
                                      ==============  ==============  ============  ===========
Diluted earnings per share                 $   0.30          $ 0.21       $  0.58      $  0.35
                                      ==============  ==============  ============  ===========
Average common shares outstanding         6,260,576       6,155,897     6,251,518    6,143,788
                                      ==============  ==============  ============  ===========
Average common and equivalent
  shares outstanding                      6,816,282       6,677,290     6,802,519    6,676,009
                                      ==============  ==============  ============  ===========

</TABLE>

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

                                       5

<PAGE>

<TABLE>
<CAPTION>

            BRIDGE CAPITAL HOLDINGS AND SUBSIDIARY
             Statements of Cash Flows (unaudited)
                    (dollars in thousands)
                                                                   SIX MONTHS ENDED JUNE 30,
                                                                    2006              2005
                                                               ---------------   ----------------
<S>                                                                 <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income                                                        $   3,950           $  2,336
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Provision for credit losses                                         672                762
      Depreciation and amortization                                       419                423
      Stock based compensation                                            321                  -
      Loans originated for sale                                       (29,033)           (31,109)
      Proceeds from loan sales                                         27,301             29,059
      Increase in accrued interest receivable and other assets         (1,323)            (1,765)
      Increase in accrued interest payable and other liabilities         (691)               (72)
                                                               ---------------   ----------------
          Net cash provided by operating activities                     1,616              1,684
                                                               ---------------   ----------------

  Purchase of securities available for sale                            (5,080)           (50,197)
  Proceeds from maturity of securities available for sale               6,525              8,100
  Net increase in loans                                               (35,501)           (52,315)
  Purchase of fixed assets                                             (1,129)              (603)
                                                               ---------------   ----------------
          Net cash used in investing activities                       (35,185)           (97,065)
                                                               ---------------   ----------------

CASH FLOW FROM FINANCING ACTIVITIES:

  Net increase in deposits                                            105,634             93,838
  Decrease in Federal Home Loan Bank borrowings                       (10,000)                 -
  Increase (decrease) in other borrowings                               5,527                  -
  Common stock issued                                                     294                350
                                                               ---------------   ----------------
Net cash provided by financing activities                             101,455             94,188
                                                               ---------------   ----------------

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS:                       67,886             (1,193)
Cash and equivalents at beginning of period                            69,540             69,210
                                                               ---------------   ----------------
Cash and equivalents at end of period                               $ 137,426           $ 68,017
                                                               ===============   ================
</TABLE>

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

                                       6

<PAGE>


                             BRIDGE CAPITAL HOLDINGS
                          NOTES TO FINANCIAL STATEMENTS

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 June 30,  2006 and for the three  and six  months
ended June 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  June 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.

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

                                       7

<PAGE>

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 $321,000 of stock-based
compensation  expense  during the six months  ended June 30, 2006 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  June  30,  2006.  As of June  30,  2006,  $1.6  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.  123 to  stock-based  compensation  during the three and
six-month periods ended June, 2005 (in thousands, except per share amounts):


                                             Quarter     Six months
                                               ended          ended
                                                   June 30,
                                                     2005
                                          ----------------------------

Net income as reported                    $1,379,000   $ 2,336,000
Deduct: Total stock-based
  employee compensation expense
  determined under fair value based
  method for all awards, net of
  related tax effects                       (113,000)     (214,000)
                                          ----------------------------
Pro forma net income                       1,266,000     2,122,000
Earnings per share:
  Basic-as reported                           $ 0.22        $ 0.38
  Basic-pro forma                             $ 0.21        $ 0.35

  Diluted-as reported                         $ 0.21        $ 0.35
  Diluted-pro forma                           $ 0.19        $ 0.32


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

                                       8

<PAGE>

available-for-sale. The Company had cumulative other comprehensive income (loss)
totaling  $(80,000),  net of  tax,  for the  period  ended  June  30,  2006  and
$(122,000), net of tax, for the period ended June 30, 2005.

<TABLE>
<CAPTION>


 (dollars in thousands)                Quarter ended June 30,        Six months ended June 30,
                                       2006            2005            2006            2005
                                   --------------  --------------  --------------  --------------
<S>                                      <C>             <C>             <C>             <C>

Net income                               $ 2,019         $ 1,379         $ 3,950         $ 2,336

Other comprehensive earnings-
 Net unrealized gains on
 securities available for sale                 5              51              22              (3)
                                   --------------  --------------  --------------  --------------
Total comprehensive income               $ 2,024         $ 1,430         $ 3,972         $ 2,333
                                   ==============  ==============  ==============  ==============
</TABLE>


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):


                                       9

<PAGE>

<TABLE>
<CAPTION>

                                          Quarter ended June 30,           Six months ended June 30,
                                           2006            2005              2006             2005
                                         ----------------------------   --------------------------------
<S>                                        <C>             <C>               <C>              <C>

Net income                               $2,019,000      $1,379,000       $ 3,950,000      $ 2,336,000
                                         ----------------------------   --------------------------------

Weighted average shares used in
  computing:
    Basic earnings per share               6,260,576       6,155,897         6,251,518        6,143,788
    Diluted potential common shares
      related to stock options using
    the treasury stock method                555,706         521,393           551,001          532,221
                                         ----------------------------   ---------------  ---------------
Total average shares and equivalents       6,816,282       6,677,290         6,802,519        6,676,009

Basic earnings per share                      $ 0.32          $ 0.22            $ 0.63           $ 0.38
                                         ============================   ================================
Diluted earnings per share                    $ 0.30          $ 0.21            $ 0.58           $ 0.35
                                         ============================   ================================

</TABLE>


3.       SECURITIES


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


(dollars in thousands)                           as of June 30, 2006
                                        ---------------------------------------
                                                   Gross Unrealized
                                                   ------------------  Fair
                                           Cost     Gains   Losses     Value
                                        ---------------------------------------
  U. S. Government Treasuries                $ 199     $ -      $ (1)    $ 198
  U. S. Government Agencies                 10,934       -      (128)   10,806
                                        ---------------------------------------
Total available for sale                    11,133       -      (129)   11,004
                                        ---------------------------------------
  Total investment securities portfolio    $11,133     $ -     $(129)  $11,004
                                        =======================================

(dollars in thousands)                         as of December 31, 2005
                                        ---------------------------------------
                                                   Gross Unrealized
                                                   ------------------  Fair
                                           Cost     Gains   Losses     Value
                                        ---------------------------------------
  U. S. Government Treasuries                $ 199     $ -       $ -     $ 199
  U. S. Government Agencies                 12,355       -      (171)   12,184
                                        ---------------------------------------
Total available for sale                    12,554       -      (171)   12,383
                                        ---------------------------------------
  Total investment securities portfolio    $12,554     $ -     $(171)  $12,383
                                        =======================================


                                       10


<PAGE>


The scheduled  maturities of securities available for sale at June 30, 2006 were
as follows:


(dollars in thousands)                                June 30, 2006
                                                ------------------------
                                                 Amortized     Fair
       Securities available for sale               Cost        Value
--------------------------------------------    ------------------------
Due in one year or less                             $ 6,073     $ 6,032
Due after one year through five years                 5,060       4,972
Due after five years through ten years                    -           -
Due after ten years                                       -           -
                                                ------------------------
  Total securities available for sale                11,133      11,004
                                                ------------------------
    Total Investment securities                     $11,133     $11,004
                                                ========================

                                                   December 31, 2005
                                                ------------------------
                                                 Amortized     Fair
       Securities available for sale               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
                                                ========================


As of June 30, 2006, investment securities with carrying values of approximately
$199,000 were pledged as collateral.  As of June 30, 2006, $99,000 in unrealized
losses was attributable to securities  positioned for the period 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 June 30, 2006 (a total of 6  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,  the unrealized  losses on these investments are not considered
to be other-than-temporarily impaired as of June 30, 2006.


                                       11


<PAGE>



4.       LOANS


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


(dollars in thousands)
                                                     June 30,      December 31,
                                                       2006           2005
                                              -------------------------------
Commercial                                          $ 189,520      $ 182,396
SBA                                                    52,857         46,867
Real estate construction                               91,687         84,792
Real estate other                                      98,324         83,748
Factoring and asset based lending                      38,091         38,184
Other                                                   6,812          4,011
                                              -------------------------------
  Loans, gross                                        477,291        439,998
Unearned fee income                                    (1,443)        (1,395)
                                              -------------------------------
  Total loan portfolio                                475,848        438,603
Less allowance for credit losses                       (6,620)        (5,936)
                                              -------------------------------
     Loans, net                                     $ 469,228      $ 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 June 30, 2006 and December 31, 2005 are  comprised of
the following:

(dollars in thousands)

June 30, 2006                                        Accumulated     Net Book
----------------------------------
                                         Cost       Depreciation      Value
                                      -----------  ---------------  -----------
Leasehold improvements                   $ 2,635           $ (836)      $1,799
Furniture and fixtures                       830             (470)         360
Capitalized Software                       1,548             (995)         553
Equipment                                  1,143             (833)         310
                                      -----------  ---------------  -----------
     Totals                              $ 6,156         $ (3,134)      $3,022
                                      ===========  ===============  ===========

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
                                      ===========  ===============  ===========


                                       12


<PAGE>


5.           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 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  of 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 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  of 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  $10,000,000.  There were no other
borrowings at June 30, 2006.

As of June 30, 2006,  the Bank had a total  borrowing  capacity with the Federal
Home Loan Bank of San Francisco of approximately $111 million.

The Bank also has unsecured  borrowing lines with  correspondent  banks totaling
$27million. At June 30, 2006, there were no balances outstanding on these lines.

6. 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.


                                       13


<PAGE>


The assumptions used for the three and six-month periods ended June 30, 2006 and
2005 and the  resulting  estimates of  weighted-average  fair value per share of
options granted during those periods are as follows:

WEIGHTED AVERAGE ASSUMPTIONS FOR OPTIONS GRANTED
DURING THE PERIOD ENDED:
                                              Three Months    Six Months
                                                 ended          ended
                                                June 30,       June 30,
                                                  2006           2006
                                             ------------------------------
Expected life                                  60 months      60 months

Stock Volatility                                   32.9%          32.9%

Risk free interest rate                            4.92%          4.57%

Dividend yield                                     0.00%          0.00%


                                       14


<PAGE>


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

         In  addition  to the  historical  information,  this  quarterly  report
contains certain  forward-looking  information within the meaning of Section 27a
of the  Securities  Exchange  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
pressures  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
occurences 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 June 30,
2006 and December 31, 2005, the fair value of SBA loans exceeded  aggregate cost
and therefore, SBA loans were carried at aggregate cost.


                                       15


<PAGE>


         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.

         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.


                                       16



<PAGE>


 SELECTED FINANCIAL DATA

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

<TABLE>
<CAPTION>

Statement of Operations Data:
(dollars in thousands, except per share data)
                                                 Quarter ended June 30,          Six Months ended June 30,
                                                  2006            2005             2006            2005
                                              --------------  -------------------------------  --------------
<S>                                                <C>             <C>              <C>             <C>

Interest income                                    $ 12,479        $ 7,915          $ 23,407        $ 14,530
Interest expense                                      3,221           1,637            5,607           2,825
                                              --------------  -------------------------------  --------------
Net interest income                                   9,258           6,278           17,800          11,705
Provision for credit losses                             450             429              672             762
                                              --------------  -------------------------------  --------------
Net interest income after provision
  for credit losses                                   8,808           5,849           17,128          10,943
                                              --------------  -------------------------------  --------------
Other income                                          1,078           1,136            2,161           1,920
Other expenses                                        6,630           4,642           12,968           8,957
                                              --------------  -------------------------------  --------------
Income before income taxes                            3,256           2,343            6,321           3,906
Income taxes                                          1,237             964            2,371           1,570
                                              --------------  -------------------------------  --------------
Net income                                          $ 2,019         $ 1,379          $ 3,950         $ 2,336
                                              ==============  ===============================  ==============

PER SHARE DATA:
Basic earnings per share                             $ 0.32          $ 0.22           $ 0.63          $ 0.38
Diluted earnings per share                             0.30            0.21             0.58            0.35
Shareholders' equity per share                         7.06 #          5.81  #          7.06            5.81
Cash dividend per common share                            -               -                -               -

                                                 Quarter ended June 30,
BALANCE SHEET DATA:                               2006            2005
                                              --------------  --------------
Balance sheet totals:
  Assets                                        $ 641,578       $ 498,480
  Loans, net                                        469,228         343,070
  Deposits                                          573,792         446,294
  Shareholders' equity                               44,301          35,804

Average balance sheet amounts:
  Assets                                        $ 568,858       $ 460,265
  Loans, net                                        451,436         329,109
  Deposits                                          500,431         408,955
  Shareholders' equity                               43,176          34,929

SELECTED RATIOS:
Return on average assets                              1.42%           1.20%
Return on average equity                             18.76%          15.84%
Efficiency ratio                                     64.14%          62.61%
Risk based capital ratio                             12.36%          12.80%
Net chargeoffs to average loans                       0.00%           0.01%
Allowance for loan losses to total loans              1.39%           1.40%
Average equity to average assets                      7.59%           7.59%

</TABLE>


                                       17


<PAGE>


SUMMARY OF FINANCIAL RESULTS - QUARTER ENDED JUNE 30, 2006

The Company  reported net income of  $2,019,000  ($0.32 basic and $0.30  diluted
earnings  per  share)  for the  quarter  ended  June  30,  2006 as  compared  to
$1,379,000  ($0.22 basic and $0.21  diluted  earnings per share) for the quarter
ended  June 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.

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

<TABLE>
<CAPTION>


                                          Quarter ended June 30,        Increase
Operations                                 2006            2005        (Decrease)
(dollars in thousands)                  ------------   -------------  -------------
<S>                                        <C>              <C>            <C>

Interest income                            $ 12,479         $ 7,915        $ 4,564
Interest expense                              3,221           1,637          1,584
                                        ------------   -------------  -------------

Net interest income                           9,258           6,278          2,980
Provision for credit losses                    (450)           (429)           (21)
                                        ------------   -------------  -------------

Net interest income after provision
  for credit losses                           8,808           5,849          2,959
                                        ------------   -------------  -------------
Other income                                  1,078           1,136            (58)
Other expenses                               (6,630)         (4,642)        (1,988)
                                        ------------   -------------  -------------
Income before income taxes                    3,256           2,343            913

Income taxes                                 (1,237)           (964)          (273)
                                        ------------   -------------  -------------
Net income                                  $ 2,019         $ 1,379          $ 640
                                        ============   =============  =============

</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 June 30, 2006 was $9,258,000
comprised of $12,479,000 in interest income and $3,221,000 in interest  expense.
Net interest income for the quarter ended June 30, 2005 was $6,278,000 comprised
of  $7,915,000  in  interest  income and  $1,637,000  in interest  expense.  Net
interest  income for the quarter ended June 30, 2006  represented an increase of
$3.0 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 7.0% for the quarter  ended June 30, 2006 and  compared to 6.0% for
the same quarter in 2005.  The  improvement  in the 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 June 30, 2006 and 2005.


                                       18


<PAGE>

<TABLE>
<CAPTION>



                                       June 30,                                June 30,
                                         2006                                    2005
                                    --------------------------------------  ---------------------------------------
(dollars in thousands)
                                                     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:
  Loans (1)                               $ 459,081     10.2%    $ 11,681         $ 334,713      8.7%      $ 7,315
  Federal funds sold                         56,129      4.9%         693            65,323      3.0%          482
  Investment securities (2)                  11,446      3.7%         105            19,647      2.3%          114
  Other                                           -         -           -               549      2.9%            4
                                    --------------------------------------  ---------------------------------------
Total interest earning assets               526,656      9.5%      12,479           420,232      7.5%        7,915
                                                    ----------------------                  -----------------------

Noninterest-earning assets:
  Cash and due from banks                    26,473                                  27,202
  All other assets (3)                       15,730                                  12,831
                                    ----------------                        ----------------
      TOTAL                               $ 568,859                               $ 460,265
                                    ================                        ================

LIABILITIES AND
  SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Deposits:
   Demand                                   $ 3,511      0.9%         $ 8           $ 3,161      0.8%          $ 6
   Savings                                  233,173      3.3%       1,913           191,096      2.2%        1,042
   Time                                      97,294      4.2%       1,020            56,967      2.9%          412
Other                                        18,956      5.9%         280            12,110      5.8%          177
                                    --------------------------------------  ---------------------------------------
Total interest bearing liabilities          352,934      3.7%       3,221           263,334      2.5%        1,637
                                                    ----------------------                  -----------------------

Noninterest-bearing liabilities:
   Demand deposits                          166,454                                 157,732
   Accrued expenses and
     other liabilities                        6,295                                   4,270
Shareholders' equity                         43,176                                  34,929
                                    ----------------                        ----------------
    TOTAL                                 $ 568,859                               $ 460,265
                                    ================                        ================

                                                              ------------                            -------------
Net interest income                                      7.0%     $ 9,258                        6.0%      $ 6,278
                                                    ======================                  =======================

<FN>

(1)           Loan fee amortization of $920,000 and $761,000,  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  $6,275,000  and
              $4,615,000, respectively.

</FN>
</TABLE>



                                       19


<PAGE>


         The following  table shows the effect of the interest  differential  of
volume and rate  changes  for the  quarters  ended June 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.

VOLUME/RATE ANALYSIS
(dollars in thousands)                  June 30,
                                            2006 vs. 2005
                                      -------------------------------------
                                                  Increase (decrease)
                                                    due to change in
                                      -------------------------------------
                                         Average     Average      Total
                                         Volume        Rate       Change
                                      -------------------------------------
 Interest income:
   Loans                                   $ 3,164     $ 1,202     $ 4,366
   Federal funds sold                         (114)        325         211
   Investment securities                       (75)         66          (9)
     Other                                       -          (4)         (4)
                                      -------------------------------------
      Total interest income                  2,976       1,588       4,564
                                      -------------------------------------

 Interest expense:
   Demand                                        1           1           2
   Savings                                     345         526         871
   Time                                        423         185         608
   Other                                       101           2         103
                                      -------------------------------------
       Total interest expense                  869         715       1,584
                                      -------------------------------------

 Change in net interest income             $ 2,108       $ 873     $ 2,980
                                      =====================================


INTEREST INCOME

         Interest  income of $12.5  million in the  quarter  ended June 30, 2006
represented  an increase of $4.6 million,  or 58%, over $7.9 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 June 30, 2006 were $526.7 million
and represented growth of $106.5 million or 25% over $420.2 million for the same
period in 2005.

         Average gross loans were $459.1 million for three months ended June 30,
2006,  an  increase of $124.4  million or 37% over  $334.7  million for the same
period one year earlier. Average loans comprised 87.2% of average earning assets
in the three months ended June 30, 2006 compared to 79.7% in the second  quarter
of 2005.  In  addition,  during the quarter  ended June 30,  2006,  the ratio of
average gross loans to average  deposits (one measure of leverage)  increased to
91.7%, up from 81.9% in the comparable period of 2005.

         Interest  income also benefited  from increases in short-term  interest
rates.  The average yield on earning  assets was 9.5% for the quarter ended June
30,  2006 and 7.5% for the  quarter  ended June 30,  2005.  The  majority of the
Company's  earning assets,  including a majority of loans,  are priced to adjust
with movement 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  7.89% in the three months ended June 30, 2006,  up from 5.91% in
the same period one year earlier.


                                       20


<PAGE>



         Other earning  assets,  consisting of  investment  securities,  federal
funds sold and interest bearing deposits in other banks,  averaged $67.6 million
for the quarter  ended June 30, 2006, a decrease of $17.9  million or 21.0% from
$85.5 million for the three months ended June 30, 2005.


INTEREST EXPENSE

         Interest  expense was  $3,221,000  for the quarter ended June 30, 2006,
which  represented  an increase of $1,584,000 or 96.8% over  $1,637,000  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
$352.9  million for the three months  ended June 30, 2006,  an increase of $89.6
million, or 34.0%, over $263.3 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 $334.0 million for the quarter ended June 30, 2006, which represented 66.7%
of total average deposits and was an increase of $82.8 million,  or 32.9%,  over
$251.2  million  representing  61.4% of total  average  deposits  in the  second
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 at  levels.  Other
interest  bearing  liabilities  averaged $19.0 million in the three months ended
June 30, 2006  compared to $12.1  million for the same period one year  earlier,
which represented an increase of $6.8 million or 56.5%.

         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 3.7% in the quarter ended June 30, 2006 compared
to 2.5% in the first 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 $450,000 to the
allowance  for  credit  losses for the three  months  ended  June 30,  2006,  as
compared to $429,000  for the same period in 2005.  There were no loans  charged
off and $1,000 in  recoveries  during the three  months  ended June 30,  2006 as
compared  to $25,000 in loans  charged-off  and no  recoveries  during the three
month period ended June 30, 2005.  At June 30, 2006,  the  allowance  for credit
losses was $6.62  million,  representing  1.39% of total  loans,  as compared to
$4.89 million, representing 1.40% of total loans, at June 30, 2005.

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


                                       21


<PAGE>


Analysis of the allowance for credit losses:
                                         Quarter ended
(dollars in thousands)               June 30,
                                       2006         2005
                                    -------------------------
Balance, beginning of period            $ 6,169      $ 4,482
Provision for credit losses                 450          429
Charge-offs                                   -          (25)
Recoveries                                    1            -
                                    -------------------------
Balance, end of period                  $ 6,620      $ 4,886
                                    =========================


         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 was one non-accrual  loan
totaling  $2,283,000  at June  30,  2006  and one loan  totaling  $2,320,000  at
December 31, 2005. At June 30, 2006, the nonaccrual  total  consisted of one SBA
Department  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.

         In addition,  at June 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 June 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 June 30, 2006 and December 31,
2005.

<TABLE>
<CAPTION>


Nonperforming Loans                                                        June 30,    December 31,
(dollars in thousands)                                                       2006            2005
                                                                        --------------------------------
<S>                                                                            <C>              <C>

Loans accounted for on a non-accrual basis                                     $ 2,283          $ 2,320
Loans restructured and in compliance with modified terms                             -                -
Other loans with principal or interest contracturally past due
  90 days or more                                                                    -                -
                                                                        --------------------------------

                                                                               $ 2,283          $ 2,320
                                                                        ================================

</TABLE>

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


                                       22


<PAGE>

<TABLE>
<CAPTION>

                               June 30, 2006                    December 31, 2005
                               ------------------------------   -------------------------------
                                               Percent of                        Percent of
                                              loans in each                     loans in each
                                               category to                       category to
(dollars in thousands)            Amount       total loans          Amount       total loans
                               ------------------------------   -------------------------------
<S>                                  <C>               <C>             <C>               <C>

Commercial and other                 $ 1,911           39.7%           $ 2,029           41.5%
SBA                                    2,248           11.1%             1,975           10.7%
Real estate construction                 916           19.2%               742           19.2%
Real estate term                         941           20.6%               721           19.0%
Factoring/ABL                            565            8.0%               443            8.7%
Other                                     39            1.4%                26            0.9%
                               ------------------------------   -------------------------------
                                     $ 6,620          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  $190,000,000 in real estate and construction loans,  representing
approximately  40% 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 June 30, 2006
and 2005:

<TABLE>
<CAPTION>

Quarter ended June 30, 2006:

 NON-INTEREST INCOME
 (dollars in thousands)                   2006                       2005
                                      ------------------------   ------------------------
                                         Amount     Percent         Amount     Percent
                                      ------------------------   ------------------------
<S>                                         <C>         <C>            <C>         <C>

 Gain on sale of SBA loans                  $ 388       36.0%          $ 642       56.5%
 SBA loan servicing income                    166       15.4%            108        9.5%
 Depositor service charges                    127       11.8%             69        6.1%
 Other operating income                       397       36.8%            317       27.9%
                                      ------------------------   ------------------------

                                           $1,078      100.0%         $1,136      100.0%
                                      ========================   ========================

</TABLE>

         Non-interest  income totaled $1,078,000 in the first quarter of 2006, a
decrease  of  $58,000  or 5.1%  from  $1,136,000  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 first  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 and depositor service charges.


                                       23


<PAGE>


           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
$388,000 in the  quarter  ended June 30,  2006 which  represented  a decrease of
$254,000 or 39.6%  compared to $642,000  the same period one year  earlier.  The
decrease was attributed to lower volume of loans sold during the quarter. During
the second  quarter of 2006 the  Company's SBA group funded $17.4 million in new
loans and sold $12.8  million which  compared to $18.1 million  funded and $17.9
million sold in the same period one year earlier.

NON-INTEREST EXPENSE

         The  components of other  expense are set forth in the following  table
for the three months ended June 30, 2006 and 2005.

<TABLE>
<CAPTION>


 Other Expense as a Percent of Average Earning Assets
 (dollars in thousands)            2006                          2005
                               --------------------------    --------------------------
                                  Amount       Percent          Amount       Percent
                               --------------------------    --------------------------
<S>                                 <C>             <C>           <C>             <C>

 Salaries and benefits              $ 4,160         3.2%          $ 2,780         2.7%
 Occupancy                            $ 526         0.4%              401         0.4%
 Deposit Services                     $ 362         0.3%              395         0.4%
 Data processing                      $ 355         0.3%              253         0.2%
 Legal and professional               $ 213         0.2%              157         0.1%
 Furniture and equipment              $ 174         0.1%              141         0.1%
 Other                                $ 840         0.6%              515         0.5%
                               -------------                 -------------
                                    $ 6,630         5.1%          $ 4,642         4.4%
                               =============                 =============
</TABLE>

         Operating  expenses were $6,630,000 for the three months ended June 30,
2006, an increase of $1,988,000 or 42.8% from  $4,642,000 at June 30, 2005. As a
percentage of average earning assets,  other expenses for the three months ended
June 30, 2006 and 2005 were 5.1% and 4.4%, respectively, on an annualized basis.
In 2006, operating expenses were comprised primarily of salaries and benefits of
$4,160,000,  which  compared to $2,780,000 in 2005 and other expense of $840,000
which  compared to $515,000 in 2005.  The  increase in salaries and benefits was
primarily due to the additional  headcount related to expansion of the business.
At June 30,  2006,  the Company  employed 123 FTE compared to 93 FTE on the same
date one year earlier.  In addition,  salaries and benefits included a charge of
$182,000 to recognize compensation related to stock option grants as a result of
the  implementation  of FAS 123R in 2006.  The  increase  in  other  expense  is
primarily  due to a $101,000  amortization  of a  California  Housing Tax Credit
investment, an increase of $41,000 in director and shareholder related expenses,
an increase of $45,000 in loan origination expense and an increase of $40,000 in
stationary and supply expense.


SUMMARY OF FINANCIAL RESULTS - SIX MONTHS ENDED JUNE 30, 2005

The Company  reported net income of  $3,950,000  ($0.63 basic and $0.58  diluted
earnings  per share)  for the six months  ended  June 30,  2006 as  compared  to
$2,336,000 ($0.38 basic and $0.35 diluted earnings per share) for the six months
ended  June 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.


                                       24


<PAGE>

<TABLE>
<CAPTION>

                                        Six months ended June 30,       Increase
Operations                                 2006            2005          (Decrease)
                                        ------------   -------------    -------------
(dollars in thousands)
<S>                                        <C>             <C>               <C>

Interest income                            $ 23,407        $ 14,530          $ 8,877
Interest expense                              5,607           2,825            2,782
                                        ------------   -------------    -------------

Net interest income                          17,800          11,705            6,095
Provision for credit losses                    (672)           (762)              90
                                        ------------   -------------    -------------

Net interest income after provision
  for credit losses                          17,128          10,943            6,185
                                        ------------   -------------    -------------
Other income                                  2,161           1,920              241
Other expenses                              (12,968)         (8,957)          (4,011)
                                        ------------   -------------    -------------
Income before income taxes                    6,321           3,906            2,415

Income taxes                                 (2,371)         (1,570)            (801)
                                        ------------   -------------    -------------
Net income                                  $ 3,950         $ 2,336          $ 1,614
                                        ============   =============    =============

</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 six months,  the rates  earned on such
assets and the rates paid on interest bearing liabilities.

         Net  interest  income  for the six  months  ended  June 30,  20065  was
$17,800,000  comprised  of  $23,407,000  in interest  income and  $5,607,000  in
interest expense. Net interest income for the six months ended June 30, 2005 was
$11,705,000  comprised  of  $14,530,000  in interest  income and  $2,825,000  in
interest  expense.  Net  interest  income for the six months ended June 30, 2006
represented  an  increase  of $6.1  million or 52% 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 7.02% for the six months  ended June 30, 2006 and  compared to 6.02%
for the same six months in 2005. The  improvement in the 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 six months ended June 30, 2006 and 2005.


                                       25


<PAGE>

<TABLE>
<CAPTION>

                                        June 30,                                  June 30,
                                          2006                                      2005
                                     -----------------------------------------  -------------------------------------
                                                   (dollars in thousands)
                                                       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:
  Loans (1)                                $ 444,021       9.9%       $21,934       $ 319,855      8.5%      $13,585
  Federal funds sold                          54,349       4.7%         1,270          50,883      2.8%          703
  Investment securities (2)                   12,733       3.2%           203          21,174      2.2%          238
  Other                                            -          -             -             276      2.9%            4
                                     -----------------------------------------  -------------------------------------
Total interest earning assets                511,103       9.2%        23,407         392,188      7.5%       14,530
                                                     -------------------------                -----------------------

Noninterest-earning assets:
  Cash and due from banks                     28,301                                   24,432
  All other assets (3)                        15,419                                   12,376
                                     ----------------                           --------------
      TOTAL                                $ 554,823                                $ 428,996
                                     ================                           ==============

LIABILITIES AND
  SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Deposits:
   Demand                                    $ 3,441       0.9%          $ 15         $ 3,214      0.7%         $ 11
   Savings                                   223,036       3.0%         3,340         172,399      2.0%        1,696
   Time                                       85,215       4.0%         1,685          54,711      2.7%          733
Other                                         20,711       5.5%           567          14,765         0          385
                                     -----------------------------------------  -------------------------------------
Total interest bearing liabilities           332,403       3.4%         5,607         245,089      2.3%        2,825
                                                     -------------------------                -----------------------

Noninterest-bearing liabilities:
   Demand deposits                           173,614                                  145,431
   Accrued expenses and
     other liabilities                         6,742                                    4,104
Shareholders' equity                          42,064                                   34,372
                                     ----------------                           --------------
    TOTAL                                  $ 554,823                                $ 428,996
                                     ================                           ==============

                                                                --------------                          -------------
Net interest income                                        7.0%       $17,800                      6.0%      $11,705
                                                     =========================                =======================

<FN>

(1)     Loan fee  amortization of $1,811,000 and $1,482,000,  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 $6,139,000 and $4,444,000,
        respectively.

</FN>
</TABLE>

                                       26


<PAGE>


The following table shows the effect of the interest  differential of volume and
rate  changes  for the six months  ended June 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.


VOLUME/RATE ANALYSIS
(dollars in thousands)                             June 30,
                                                 2006 vs. 2005
                                      -------------------------------------
                                                  Increase (decrease)
                                                    due to change in
                                      -------------------------------------
                                         Average     Average      Total
                                         Volume        Rate       Change
                                      -------------------------------------
 Interest income:
   Loans                                   $ 6,134     $ 2,215     $ 8,349
   Federal funds sold                           81         486         567
   Investment securities                      (135)        100         (35)
     Other                                       -          (4)         (4)
                                      -------------------------------------
      Total interest income                  6,080       2,797       8,877
                                      -------------------------------------

 Interest expense:
   Demand                                        1           3           4
   Savings                                     758         886       1,644
   Time                                        603         349         952
   Other                                       163          19         182
                                      -------------------------------------
       Total interest expense                1,525       1,257       2,782
                                      -------------------------------------

 Change in net interest income             $ 4,555     $ 1,540     $ 6,095
                                      =====================================


INTEREST INCOME

         Interest  income of $23.4 million in the six months ended June 30, 2006
represented an increase of $8.9 million,  or 61%, over $14.5 million in the same
six 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 six  months  ended  June 30,  2006 were  $511.1
million and represented  growth of $118.9 million or 30% over $392.2 million for
the same period in 2005.

         Average  gross loans were $444.0  million for six months ended June 30,
2006,  an  increase of $124.2  million or 39% over  $319.9  million for the same
period one year earlier. Average loans comprised 86.9% of average earning assets
in the six months ended June 30, 2006  compared to 81.6% in the first six months
of 2005.  In addition,  during the six months ended June 30, 2006,  the ratio of
average gross loans to average deposits (another measure of leverage)  increased
to 91.5%, up from 81.9% 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 9.2% in the six months
ended June 30, 2006 which  represented  an increase over 7.5% 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  movement 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  7.66% in the six
months ended June 30, 2006 up from 5.68% in the same period one year earlier.


                                       27


<PAGE>


         Other earning assets,  consisting of investment  securities and federal
funds sold,  averaged  $67.1  million for the six months  ended June 30, 2006, a
decrease of $5.0  million or 6.9% from $72.1  million  for the six months  ended
June 30, 2005.


INTEREST EXPENSE

         Interest expense was $5,607,000 for the six months ended June 30, 2006,
which  represented an increase of $2.8 million or 98.5% over  $2,825,000 for the
comparable  period of 2005. The increase in interest  expense reflects growth in
average interest-bearing liabilities and higher interest rates on liabilities in
2006 compared to 2005. Average interest-bearing  liabilities were $332.4 million
for the six months ended June 30, 2006, an increase of $87.3 million,  or 35.6%,
over $245.1 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 $311.7  million for the six months ended June 30, 2006,  which  represented
64.2% of total average deposits and was an increase of $81.4 million,  or 35.3%,
over $230.3  million  representing  61.3% 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 $20.7 million in the six months ended June 30, 2006
compared  to  $14.8  million  for  the  same  period  one  year  earlier,  which
represented an increase of $5.9 million or 40.3%.

         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 3.4% in the six  months  ended  June 30,  2006
compared to 2.3% in the first six 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 $672,000 to the
allowance  for  credit  losses for the three  months  ended  June 30,  2006,  as
compared to $762,000  for the same period in 2005.  There were no loans  charged
off and  $1,000 in  recoveries  during the six  months  ended June 30,  2006 and
$25,000  in loans  charged-off  and  $3,000 in  recoveries  during the six month
period ended June 30, 2005.  At June 30, 2006,  the  allowance for credit losses
was $6.62  million,  representing  1.39% of total  loans,  as  compared to $4.89
million, representing 1.40% of total loans, at June 30, 2005.

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


                                       28


<PAGE>


ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES:

                                         Quarter ended
(dollars in thousands)                      June 30,
                                       2006         2005
                                    -------------------------
Balance, beginning of period            $ 6,169      $ 4,482
Provision for credit losses                 450          429
Charge-offs                                   -          (25)
Recoveries                                    1            -
                                    -------------------------
Balance, end of period                  $ 6,620      $ 4,886
                                    =========================


         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 was one non-accrual  loan
totaling  $2,283,000  at June  30,  2006  and one loan  totaling  $2,320,000  at
December 31, 2005.  In addition,  at June 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  June  30,
2006-Provision for Credit Losses" for a discussion of nonperforming assets.

NON-INTEREST INCOME

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

 NON-INTEREST INCOME
 (dollars in thousands)               2006                      2005
                               --------------------  -------------------------
                                Amount     Percent        Amount      Percent
                               --------------------  -------------------------


 Gain on sale of SBA loans       $ 839       38.8%        $ 1,062       55.3%
 SBA loan servicing income         283       13.1%            173        9.0%
 Depositor service charges         239       11.1%            137        7.1%
 Other operating income            800       37.0%            548       28.5%
                               --------------------  -------------------------

                               $ 2,161      100.0%        $ 1,920      100.0%
                               ====================  =========================


         Non-interest  income  totaled  $2,161,000  for the first six  months of
2006,  an increase of $241,000 or 12.6% from  $1,920,000  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
six months of 2006 was  primarily a result of an increase in SBA loan  servicing
income, increased depositor service charges, an annual SBA loan volume incentive
payment of $40,000 and $53,000 in fee income on a conventional loan referral.

           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


                                       29


<PAGE>


$839,000 in the six months ended June 30, 2006 which  represented  a decrease of
$223,000 or 21% compared to $1,062,000 the same period one year earlier.  During
the first six months of 2006 the Company's SBA group funded $29.0 million in new
loans and sold $27.31  million which  compared to $31.1 million in new loans and
$29.1 million sold in the same period one year earlier.


NON-INTEREST EXPENSE

         The  components of other  expense are set forth in the following  table
for the six months ended June 30, 2006 and 2005.

 Other Expense as a Percent of Average Earning Assets
 (dollars in thousands)
                                2006                       2005
                             -----------------------   ------------------------
                               Amount     Percent         Amount     Percent
                             -----------------------   ------------------------

 Salaries and benefits          $ 8,079        3.2%        $ 5,332        2.7%
 Occupancy                          972        0.4%            804        0.4%
 Deposit Services                   874        0.3%            587        0.3%
 Data processing                    717        0.3%            504        0.3%
 Legal and professional             421        0.2%            337        0.2%
 Furniture and equipment            342        0.1%            288        0.1%
 Other                            1,563        0.6%          1,105        0.6%
                             -----------               ------------
                               $ 12,968        5.1%        $ 8,957        4.6%
                             ===========               ============


         Operating  expenses were  $12,968,000 for the six months ended June 30,
2006, an increase of $4,011,000 or 44.8% from  $8,957,000 at June 30, 2005. As a
percentage of average  earning  assets,  other expenses for the six months ended
June 30, 2006 and 2005 were 5.1% and 4.6%, respectively, on an annualized basis.
In 2006, operating expenses were comprised primarily of salaries and benefits of
$8,079,000, which compared to $5,332,000 in 2005, occupancy expense of $972,000,
which  compared to $804,000 in 2005,  and deposit  services  expense of $874,000
which  compared to $587,000 in 2005.  The  increase in salaries and benefits was
primarily due to the additional  headcount related to expansion of the business.
At June 30,  2006,  the Company  employed 123 FTE compared to 93 FTE on the same
date one year  earlier.  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 June 30, 2006 were $641.6  million,  an
increase of $143.1 million (28.7%) as compared to $498.5 million at December 31,
2005.  Growth in total  assets was  principally  due to an  increase  in deposit
balances.


                                       30


<PAGE>


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

LOAN PORTFOLIO
(dollars in thousands)                           June 30,     December 31,
                                                   2006             2005
                                              ---------------------------------
Commercial                                          $ 189,520        $ 182,396
SBA                                                    52,857           46,867
Real estate construction                               91,687           84,792
Real estate other                                      98,324           83,748
Factoring and Asset based                              38,091           38,184
Other                                                   6,812            4,011
                                              ---------------------------------
Total gross loans                                     477,291          439,998
Unearned fee income                                    (1,443)          (1,395)
  Total loan portfolio                                475,848          438,603
                                              ---------------------------------
Less allowance for credit losses                       (6,620)          (5,936)
                                              ---------------------------------
     Loans, net                                     $ 469,228        $ 432,667
                                              =================================

Commercial                                              39.7%            41.5%
SBA                                                     11.1%            10.7%
Real estate construction                                19.2%            19.2%
Real estate term                                        20.6%            19.0%
Factoring and Asset based                                8.0%             8.7%
Other                                                    1.4%             0.9%
                                              ---------------------------------
Total gross loans                                      100.0%           100.0%
                                              =================================


         Net loan balances  increased to $469.2 million at June 30, 2006,  which
represented an increase of $36.6 million (8.5%) 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 40% of loan balances at June 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
$189.5  million at June 30, 2006,  which  represented a increase of $7.1 million
(3.9%) over $182.4  million at December 31, 2005.  At June 30, 2006,  commercial
loans comprised 39.7% of total loans  outstanding  compared to 41.5% at December
31, 2005.

         In March of 2002, the Company established an SBA lending group in Santa
Clara 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 June 30, 2006, SBA loans comprised $52.9 million, or
11.1%, of total loans, an increase of $6.0 million (12.8%) 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 June 30, 2006 and December 31,
2005,  the fair value of SBA loans exceeded  aggregate  cost and therefore,  SBA
loans were carried at aggregate cost.


                                       31


<PAGE>


         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 $6.9 million, or
8.1%, to $91.7 million at June 30, 2006 over $84.8 million at December 31, 2005.
Construction  loan  balances at June 30, 2006 and  December  31, 2005  comprised
19.2% of total loans.

         Other  real  estate  loans  increased  $14.6  million or 17.4% to $98.3
million at June 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  20.6% of total loans at June 30, 2006 compared to 19.0% 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 June 30, 2006,
Factoring/Asset  Based  loans  totaled  $38.1  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 June 30, 2006, other loans totaled $6.8 million as
compared to $4.0 million at December 31, 2005.

         Average total assets of the Company for the three months ended June 30,
2006 were  $568.9  million.  Average  earning  assets  reached  $527.2  million,
representing 92.7% of total assets, in the three months ended June 30, 2006 with
an average  yield of 9.5%.  The  increase in yield  reflects the increase in the
volume and yield of average  earning  assets.  At June 30,  2006,  average  loan
balances comprised $459.1 million,  representing 87.1% of average earning assets
and 91.7% of average  deposits as  compared  to $334.7  million at June 30, 2005
representing 79.7% of average earning assets and 81.8% 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 June 30, 2006 and  December  31,
2005.


                                       32


<PAGE>

<TABLE>
<CAPTION>

DEPOSIT CATEGORIES
(dollars in thousands)              June 30,                          December 31,
                                      2006                          2005
                                -----------------------    -------------------------
                                              Percent                       Percent
                                  Total       of total          Total      of total
                                  Amount      deposits          Amount     deposits
                                -----------------------    -------------------------
<S>                             <C>             <C>           <C>            <C>

Noninterest-bearing  demand     $ 177,445       30.92%        $ 185,557      39.64%
Interest-bearing demand             2,987        0.52%            2,866       0.61%
Money market and savings          286,321       49.90%          210,011      44.86%
Certificates of deposit:
  Less than $100                   25,928        4.52%           19,228       4.11%
  $100 and more                    81,111       14.14%           50,496      10.79%
                                -----------------------    -------------------------
Total                           $ 573,792      100.00%        $ 468,158     100.00%
                                =======================    =========================

</TABLE>

         Deposits  increased  $105.6  million  or 22.6% from  $468.2  million at
December 31, 2005 to $573.8  million at June 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 June 30, 2006 included  $46.9  million,  or 8.2%, in title and
escrow company account balances compared to $78.7 million, or 19.8%, at December
31,  2005.  Excluding  title  and  escrow  company  account  balances,  deposits
increased $115.7 million or 34.5% compared to December 31, 2005.

         At June 30, 2006,  the total number of deposit  accounts  reached 2,642
with  an  average   balance  per  account   (excluding   title  and  escrow)  of
approximately $206,480.

         Average  deposits  for the three months ended June 30, 2006 were $500.4
million  comprised of average  interest-bearing  deposits of $334.0  million and
average non-interest bearing demand deposits of $166.4 million. The average rate
paid on  interest-bearing  deposits  was  3.7%  and the  Company's  overall  net
interest margin was 7.0%.

LEVERAGE

Total gross loan  balances at June 30, 2006 were $477.3  million.  The resulting
loan to deposit  ratio was 83.2%.  Other  earning  assets at June 30,  2006 were
primarily  comprised of Fed Funds sold of $115.0  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 Tier 1 capital(1)/  ratio to total assets ratio of 8%
for new banks during the first three years of operation.


__________________

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


                                       33


<PAGE>


         After the first three years of operations,  the Comptroller  requires a
minimum  leverage  ratio of 3% of Tier 1 capital to total  assets  for  national
banks that have received the highest  composite  regulatory rating (a regulatory
measurement of capital, assets, management, earnings 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
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.


                                       34


<PAGE>


         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 June  30,  2006 was  $59.2  million
comprised  of $34.4  million  of  capital  stock and  surplus,  $9.9  million in
retained  earnings and trust  preferred  securities up to the allowable limit of
$13.2.

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


                                       35


<PAGE>

<TABLE>
<CAPTION>



                                              As of June 30,            As of December 31,
             (in thousands)                  2006                       2005
                                         -------------------------   -------------------------
                                            Amount       Ratio         Amount       Ratio
                                         -------------------------   -------------------------
<S>                                           <C>          <C>           <C>           <C>

COMPANY CAPITAL RATIOS

Tier 1 Capital                                $59,175      10.76%        $51,593       10.38%
(to Risk Weighted Assets)
Tier 1 capital minimum requirement            $22,005       4.00%        $19,879        4.00%

Total Capital                                 $68,001      12.36%        $57,529       11.58%
(to Risk Weighted Assets)
Total capital minimum requirement             $44,009       8.00%        $39,758        8.00%

Company leverage
Tier 1 Capital                                $59,175      10.67%      $ 51,593        11.07%
(to Average Assets)
Total capital minimum requirement             $22,193       4.00%      $ 18,638         4.00%

BANK RISK BASED CAPITAL RATIOS

Tier 1 Capital                                $58,502      10.64%        $49,748       10.49%
(to Risk Weighted Assets)
Tier 1 capital minimum requirement            $22,000       4.00%        $18,970        4.00%

Total Capital                                 $65,122      11.84%        $28,455        6.00%
(to Risk Weighted Assets)
Total capital minimum requirement             $44,000       8.00%        $55,684       11.74%

Bank leverage
Tier 1 Capital                                $58,502      10.55%        $37,939        8.00%
(to Average Assets)
Total capital minimum requirement             $22,174       4.00%         47,424       10.00%

</TABLE>


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


                                       36


<PAGE>


ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE 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 June 30, 2006 and December 31, 2005, liquid assets as a percentage
of deposits were 25.9% 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 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 June 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>


DISTRIBUTION OF REPRICING OPPORTUNITIES
June 30, 2006
(dollars in thousands)
                                                     After three     After six    After one
                                         Within       months but    months but     year but     After
                                         three        within six    within one      within       five
                                         months         months         year       five years    years     Total
                                        ---------------------------------------------------------------------------
<S>                                     <C>                  <C>           <C>           <C>      <C>    <C>
Federal funds sold                      $ 114,955            $ -           $ -           $ -      $ -    $ 114,955
U.S. Treasury securities                      199              -             -             -        -          199
Agency securities                           2,091          1,979         1,962         4,972        -       11,004
Loans                                     386,376         38,625         4,705        35,405   12,180      477,291
                                        ---------------------------------------------------------------------------
 Total earning assets                     503,621         40,604         6,667        40,377   12,180      603,449
                                        ---------------------------------------------------------------------------
Interest checking, money market
  and savings                             289,308              -             -             -        -      289,308
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       338,584         14,750        25,000        18,013        0      396,347
                                        ---------------------------------------------------------------------------
Interest rate gap                        $165,037        $25,854      ($18,333)      $22,364  $12,180     $207,102
                                                                                                         ==========
                                        =================================================================
Cumulative interest rate gap             $165,037       $190,891      $172,558      $194,922 $207,102
                                        =================================================================
Interest rate gap ratio                      0.33           0.64         (2.75)         0.55     1.00
                                        =================================================================
Cumulative interest rate gap ratio           0.33           0.35          0.31          0.33     0.34
                                        =================================================================

</TABLE>

         Based on the  contractual  terms of its  assets  and  liabilities,  The
Company's  balance  sheet as June 30, 2006 was asset  sensitive  in terms of its
short-term  exposure to interest rates.  That is, at June 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


                                       37


<PAGE>


interest  income is  negatively  impacted  by a decline  in  interest  rates and
positively  impacted by an increase in interest rates. To partially mitigate the
adverse impact of declining  rates,  the majority of variable rate loans made by
the Company have been written with a minimum "floor" rate.

The following  table shows  maturity and interest rate  sensitivity  of the loan
portfolio  at  June  30,  2006  and  December  31,  2005.   At  June  30,  2006,
approximately  73% of the loan portfolio is priced with floating  interest rates
which limit the exposure to interest rate risk on long-term loans.

<TABLE>
<CAPTION>


                       Balances at                      Due after one
                         June 30,       Due one year     year through      Due after
(dollars in thousands)     2006           or less         five years       five years
--------------------------------------------------------------------------------------
<S>                      <C>                <C>              <C>               <C>

Commercial and other     $ 189,520          $98,433          $81,861           $9,226
SBA                         52,857           16,251              201           36,405
Real estate construction    91,687           91,687                -                -
Real estate-other           98,324           31,735           18,763           47,826
Factoring/ABL               38,091           35,478            2,613                -
Other                        6,812            4,900            1,912                -
                  --------------------------------------------------------------------
TOTAL                    $ 477,291         $278,484         $105,350          $93,457
                  ====================================================================

                    Balances at                      Due after one
                    December 31,     Due one year     year through      Due after
(dollars in thousands)  2005           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                     $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.


                                       38


<PAGE>


         In the ordinary course of business,  we have issued certain  guarantees
         which qualify as off-balance  sheet  arrangements,  as of June 30, 2006
         those guarantees include the following:

                  Standby Letters of Credit in the amount of $9,577,000.

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

<TABLE>
<CAPTION>


Off-balance Sheet Arrangement and Aggregate Contractual Obligations

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

Long-term contracts                $ 89,000      $ 89,000            $ -            $ -            $ -

Operating leases                 11,188,000     1,281,000      1,859,000      2,533,000      5,515,000
                           ----------------------------------------------------------------------------

Total                          $ 11,277,000   $ 1,370,000    $ 1,859,000    $ 2,533,000    $ 5,515,000
                           ============================================================================
</TABLE>


ITEM 4 - CONTROLS AND PROCEDURES


DISCLOSURE CONTROLS AND PROCEDURES

As required by SEC rules, the Company's  management evaluated the effectiveness,
as of June 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 June 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


                                       39


<PAGE>


inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies or procedures may  deteriorate.  No change occurred during the
first quarter of 2006 that has materially  affected,  or is reasonably likely to
materially affect, the Company's internal control over financial reporting.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The  Company's  management  is  responsible  for  establishing  and  maintaining
adequate internal control over financial  reporting for the Company.  Management
assessed the  effectiveness  of the Company's  internal  control over  financial
reporting as of June 30, 2006,  using the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control -
Integrated Framework. Based on this assessment,  management concluded that as of
June 30, 2006,  the  Company's  internal  control over  financial  reporting was
effective.
                                     PART II

ITEM 1 - LEGAL PROCEEDINGS


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


ITEM 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 second quarter of 2006,  stock-based  compensation  expense reduced
basic earnings per common share by approximately  $0.02 ($0.03 for the six month
period ended June 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.


                                       40


<PAGE>


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


The  Bank's  Annual  Meeting  of  Shareholders  was  held on May 19,  2005  (the
"Meeting") for the following purposes:

1. To elect directors;
2. To approve the Bridge Capital Holdings 2006 Equity Incentive Plan;
3. To ratify the  appointment of Vavrinek,  Trine,  Day & Co. LLP as independent
   accountants  for the  Company's  2006 fiscal  year;
4. To  transact  such other business,  including but not limited to motions for
   adjournment, as may properly come before the Meeting and at any and all
   adjournments thereof.

         There  were no  nominations  for  directors  other  than  the ten  (10)
nominees of the Board of  Directors.  Each  nominee was an  incumbent  director.
Therefore, the following nominees were each elected as a Director until the next
annual  meeting of  shareholders  and until  his/her  successor  is elected  and
qualified.

NOMINEE                     SHARES VOTED IN FAVOR       SHARES WITHHELD

Richard M. Brenner                4,921,129               29,376
Lawrence Owen Brown               4,916,429               34,076
David V. Campbell                 4,911,429               39,076
David K. Chui                     4,921,429               29,076
Robert P. Gionfriddo              4,921,429               29,076
Allan C. Kramer, M.D.             4,921,429               29,076
Robert P. Latta                   4,916,429               34,076
Daniel P. Myers                   4,921,429               29,076
Thomas M. Quigg                   4,927,429               23,076
Barry A. Turkus                   4,919,429               31,076

     On  Proposal  No. 2 to approve  the Bridge  Capital  Holdings  2006  Equity
Incentive  Plan,  2,181,812  shares voted in favor of approval,  213,768  shares
voted against approval, and 42,500 shares abstained. Accordingly, Proposal No. 2
was passed by the shareholders.

     On Proposal No. 3 to ratify the appointment of Vavrinek,  Trine,  Day & Co.
LLP as independent  accountants  for the Company's  2006 fiscal year,  4,929,155
shares voted in favor of approval,  11,750  shares voted against  approval,  and
9,600  shares  abstained.   Accordingly,  Proposal  No.  3  was  passed  by  the
shareholders.

ITEM 5 - OTHER INFORMATION


         None.


ITEM 6 -  EXHIBITS


         (A) EXHIBITS


         See Index to Exhibits at page 42 of this Quarterly Report on Form 10-Q.


                                       41


<PAGE>


                                INDEX TO EXHIBITS




EXHIBIT
NUMBER      DESCRIPTION OF EXHIBIT


(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


                                       42


<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: August 3, 2006        By:  \s\ DANIEL P. MYERS
                                  _________________________________________
                                      Daniel P. Myers
                                      President and Chief Executive Officer
                                      (Principal Executive Officer)



Dated: August 3, 2006        By:  \s\ THOMAS A. SA
                                  _________________________________________
                                      Thomas A. Sa
                                      Executive Vice President and
                                      Chief Financial Officer
                                      (Principal Financial and
                                      Accounting Officer)


                                       43