**Washington,      D.C. 20549**

**FORM      10-Q**

| **x** | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|-------|------------------------------------------------------------------------------------------------------------------------------------------|

**For      the Quarterly Period Ended: September 30, 2007**

**OR**

| **o** | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------|

**For      the Transition Period From ____________ to _____________**

**000-50914**

| **California**                                 | **80-0123855**                                         |
|------------------------------------------------|--------------------------------------------------------|
| (State                or other jurisdiction of | (I.R.S.                Employer Identification Number) |
| incorporation                or organization)  |                                                   |

**55      Almaden Boulevard, San Jose, CA 95113**

**(408)      423-8500**

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**TABLE        OF CONTENTS**

| **PART                    I - FINANCIAL INFORMATION** |                                                                                                                        |
|-------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|
|                                                  |                                                                                                                        |   |
| Item                    1                             | Financial                    Statements                                                                                     |   |
|                                                  |                                                                                                                        |   |
|                                                  | Interim                    Consolidated Balance Sheets                                                                      | 4 |
|                                                  |                                                                                                                        |   |
|                                                  | Interim                    Consolidated Statements of Operations                                                            | 5 |
|                                                  |                                                                                                                        |   |
|                                                  | Interim                    Consolidated Statements of Cash Flows                                                            | 6 |
|                                                  |                                                                                                                        |   |
|                                                  | Notes                    to Interim Consolidated Financial Statements                                                       | 7 |
|                                                  |                                                                                                                        |   |
| Item                    2                             | Management's                    Discussion and Analysis of Financial Condition and Results                    of Operations | 13 |
|                                                  |                                                                                                                        |   |
| Item                    3                             | Quantitative                    and Qualitative Disclosures About Market Risk                                               | 30 |
|                                                  |                                                                                                                        |   |
| Item                    4                             | Controls                    and Procedures                                                                                  | 32 |
|                                                  |                                                                                                                        |   |
| **PART                    II - OTHER INFORMATION**    |                                                                                                                        |
|                                                  |                                                                                                                        |   |
| Item                    1                             | Legal                    Proceedings                                                                                        | 33 |
|                                                  |                                                                                                                        |   |
| Item                    1A                            | Risk                    Factors                                                                                             | 33 |
|                                                  |                                                                                                                        |   |
| Item                    2                             | Unregistered                    Sales of Equity Securities and Use of Proceeds                                              | 33 |
|                                                  |                                                                                                                        |   |
| Item                    3                             | Defaults                    Upon Senior Securities                                                                          | 33 |
|                                                  |                                                                                                                        |   |
| Item                    4                             | Submission                    of Matters to a Vote of Security Holders                                                      | 33 |
|                                                  |                                                                                                                        |   |
| Item                    5                             | Other                    Information                                                                                        | 33 |
|                                                  |                                                                                                                        |   |
| Item                    6                             | Exhibits                                                                                                                    | 33 |
|                                                  |                                                                                                                        |   |
| Signatures                                            | 34                                                                                                                          |
|                                                  |                                                                                                                        |   |
| Index                    to Exhibits                  | 35                                                                                                                          |

----

**FORWARD-LOOKING      STATEMENTS**

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

*Forward-looking      statements are generally identifiable by the use of terms such as "believe",      "expect", "intend", "anticipate", "estimate", "project", "assume," "plan,"      "predict," "forecast," “in management’s opinion,” “management considers” or      similar expressions. Wherever such phrases are used, such statements are as      of      and based upon the knowledge of Management, at the time made and are subject      to      change by the passage of time and/or subsequent events, and accordingly such      statements are subject to the same risks and uncertainties noted above with      respect to forward-looking statements.*

*The      Company’s primary operations and most of its customers are located in      California. Other events, including those of September 11, 2001, have increased      the uncertainty related to the national and California economic outlook and      could have an effect on the future operations of the Company or its customers,      including borrowers. The Company does not undertake, and specifically disclaims      any obligation, to update any*
*      forward-looking statements*
*      to      reflect occurrences or unanticipated events or circumstances after the date      of      such statements.*

*The      reader should refer to the more complete discussion of such risks in the      Company’s Annual Reports on Form 10-K.*

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**PART      I - FINANCIAL INFORMATION**

**ITEM      1 - FINANCIAL STATEMENTS**

**BRIDGE      CAPITAL HOLDINGS AND SUBSIDIARY**

**Interim      Consolidated Balance Sheets**

|                                                                                                                                                                                                                                               |   | **(unaudited)**        |    |                  |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|                                                                                                                                                                                                                                               |   | **September 30,** |    | **December 31,** |   |
|                                                                                                                                                                                                                                               |   | **2007**               |    | **2006**              |   |
| **ASSETS**                                                                                                                                                                                                                                         |   |                   |    |                  |   |   |   |
| Cash                and due from banks                                                                                                                                                                                                             |   | $                      | 19,076  |                  | $      | 24,360 |   |
| Federal                funds sold                                                                                                                                                                                                                  |   |                   | 70,155  |                  |   | 93,845 |   |
| Total                cash and equivalents                                                                                                                                                                                                          |   |                   | 89,231  |                  |   | 118,205 |   |
|                                                                                                                                                                                                                                               |   |                   |    |                  |   |   |   |
| Investment                securities available for sale                                                                                                                                                                                            |   |                   | 66,071  |                  |   | 43,933 |   |
| Loans,                net of allowance for credit losses of $8,003 at September 30, 2007                and                $7,329 at December 31, 2006                                                                                             |   |                   | 601,587 |                  |   | 531,956 |   |
|                                                                                                                                                                                                                                               |   |                   |    |                  |   |   |   |
| Premises                and equipment, net                                                                                                                                                                                                         |   |                   | 4,618   |                  |   | 3,479 |   |
| Accrued                interest receivable                                                                                                                                                                                                         |   |                   | 4,748   |                  |   | 4,292 |   |
| Other                assets                                                                                                                                                                                                                        |   |                   | 23,622  |                  |   | 20,114 |   |
| Total                assets                                                                                                                                                                                                                        |   | $                      | 789,877 |                  | $      | 721,979 |   |
|                                                                                                                                                                                                                                               |   |                   |    |                  |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS' EQUITY**                                                                                                                                                                                            |   |                   |    |                  |   |   |   |
| Deposits:                                                                                                                                                                                                                                          |   |                   |    |                  |   |   |   |
| Demand                noninterest-bearing                                                                                                                                                                                                          |   | $                      | 201,133 |                  | $      | 198,639 |   |
| Demand                interest-bearing                                                                                                                                                                                                             |   |                   | 4,271   |                  |   | 3,901 |   |
| Savings                                                                                                                                                                                                                                            |   |                   | 418,503 |                  |   | 333,838 |   |
| Time                                                                                                                                                                                                                                               |   |                   | 78,943  |                  |   | 108,609 |   |
| Total                deposits                                                                                                                                                                                                                      |   |                   | 702,850 |                  |   | 644,987 |   |
|                                                                                                                                                                                                                                               |   |                   |    |                  |   |   |   |
| Junior                subordinated debt securities                                                                                                                                                                                                 |   |                   | 17,527  |                  |   | 17,527 |   |
| Other                borrowings                                                                                                                                                                                                                    |   |                   | -       |                  |   | - |   |
| Accrued                interest payable                                                                                                                                                                                                            |   |                   | 298     |                  |   | 318 |   |
| Other                liabilities                                                                                                                                                                                                                   |   |                   | 9,187   |                  |   | 10,053 |   |
| Total                liabilities                                                                                                                                                                                                                   |   |                   | 729,862 |                  |   | 672,885 |   |
|                                                                                                                                                                                                                                               |   |                   |    |                  |   |   |   |
| 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; 6,441,900 shares                issued                and outstanding at September 30, 2007; 6,349,824 shares issued and                outstanding at December 31, 2006. |   |                   | 36,888  |                  |   | 35,427 |   |
| Retained                earnings                                                                                                                                                                                                                   |   |                   | 22,722  |                  |   | 14,543 |   |
| Accumulated                other comprehensive income (loss)                                                                                                                                                                                       |   |                   | 405     |                  |   | (876 | ) |
| Total                shareholders' equity                                                                                                                                                                                                          |   |                   | 60,015  |                  |   | 49,094 |   |
| Total                liabilities and shareholders' equity                                                                                                                                                                                          |   | $                      | 789,877 |                  | $      | 721,979 |   |

----

**BRIDGE      CAPITAL HOLDINGS AND SUBSIDIARY**

**Interim      Consolidated Statements of Operations (unaudited)**

|                                                                 |   | **Three months ended** |      | **Nine months ended** |   |
|----------------------------------------------------------------------|--------|----------------------------------|-----------|---------------------------------|--------|
|                                                                 |   | **September 30,**           |      | **September 30,**          |   |
|                                                                 |   | **2007**                         |      | **2006**                        |   | **2007** |   | **2006** |   |
| **INTEREST                INCOME:**                                  |   |                             |      |                            |   |   |   |   |   |   |   |   |   |
| Loans                                                                |   | $                                | 15,585    |                            | $      | 12,762 |   | $ | 45,202 |   | $ | 34,696 |   |
| Federal                funds sold                                    |   |                             | 1,138     |                            |   | 1,453 |   |   | 2,415 |   |   | 2,723 |   |
| Investment                securities available for sale              |   |                             | 904       |                            |   | 113 |   |   | 2,324 |   |   | 316 |   |
| Total                interest income                                 |   |                             | 17,627    |                            |   | 14,328 |   |   | 49,941 |   |   | 37,735 |   |
|                                                                 |   |                             |      |                            |   |   |   |   |   |   |   |   |   |
| **INTEREST                EXPENSE:**                                 |   |                             |      |                            |   |   |   |   |   |   |   |   |   |
| Deposits:                                                            |   |                             |      |                            |   |   |   |   |   |   |   |   |   |
| Interest-bearing                demand                               |   |                             | 10        |                            |   | 9 |   |   | 33 |   |   | 23 |   |
| Money                market and savings                              |   |                             | 3,984     |                            |   | 2,733 |   |   | 10,609 |   |   | 6,073 |   |
| Certificates                of deposit                               |   |                             | 1,039     |                            |   | 1,239 |   |   | 3,307 |   |   | 2,924 |   |
| Other                                                                |   |                             | 262       |                            |   | 257 |   |   | 782 |   |   | 825 |   |
| Total                interest expense                                |   |                             | 5,295     |                            |   | 4,238 |   |   | 14,731 |   |   | 9,845 |   |
|                                                                 |   |                             |      |                            |   |   |   |   |   |   |   |   |   |
| Net                interest income                                   |   |                             | 12,332    |                            |   | 10,090 |   |   | 35,210 |   |   | 27,890 |   |
| Provision                for credit losses                           |   |                             | 475       |                            |   | 100 |   |   | 1,675 |   |   | 772 |   |
| Net                interest income after provision for credit losses |   |                             | 11,857    |                            |   | 9,990 |   |   | 33,535 |   |   | 27,118 |   |
|                                                                 |   |                             |      |                            |   |   |   |   |   |   |   |   |   |
| **NON-INTEREST                INCOME:**                              |   |                             |      |                            |   |   |   |   |   |   |   |   |   |
| Service                charges on deposit accounts                   |   |                             | 166       |                            |   | 131 |   |   | 497 |   |   | 370 |   |
| Gain                on sale of SBA loans                             |   |                             | 363       |                            |   | 225 |   |   | 2,986 |   |   | 1,064 |   |
| Other                non interest income                             |   |                             | 906       |                            |   | 443 |   |   | 1,859 |   |   | 1,526 |   |
| Total                non-interest income                             |   |                             | 1,435     |                            |   | 799 |   |   | 5,342 |   |   | 2,960 |   |
|                                                                 |   |                             |      |                            |   |   |   |   |   |   |   |   |   |
| **OPERATING                EXPENSES:**                               |   |                             |      |                            |   |   |   |   |   |   |   |   |   |
| Salaries                and benefits                                 |   |                             | 5,530     |                            |   | 4,627 |   |   | 15,796 |   |   | 12,706 |   |
| Premises                and fixed assets                             |   |                             | 1,173     |                            |   | 808 |   |   | 3,149 |   |   | 2,122 |   |
| Other                                                                |   |                             | 2,012     |                            |   | 1,631 |   |   | 6,046 |   |   | 5,206 |   |
| Total                operating expenses                              |   |                             | 8,715     |                            |   | 7,066 |   |   | 24,991 |   |   | 20,034 |   |
|                                                                 |   |                             |      |                            |   |   |   |   |   |   |   |   |   |
| Income                before income taxes                            |   |                             | 4,577     |                            |   | 3,723 |   |   | 13,886 |   |   | 10,044 |   |
| Income                taxes                                          |   |                             | 1,825     |                            |   | 1,415 |   |   | 5,707 |   |   | 3,786 |   |
| Net                income                                            |   | $                                | 2,752     |                            | $      | 2,308 |   | $ | 8,179 |   | $ | 6,258 |   |
|                                                                 |   |                             |      |                            |   |   |   |   |   |   |   |   |   |
| Basic                earnings per share                              |   | $                                | 0.43      |                            | $      | 0.37 |   | $ | 1.28 |   | $ | 1.00 |   |
| Diluted                earnings per share                            |   | $                                | 0.40      |                            | $      | 0.34 |   | $ | 1.18 |   | $ | 0.92 |   |
| Average                common shares outstanding                     |   |                             | 6,397,140 |                            |   | 6,283,125 |   |   | 6,369,991 |   |   | 6,262,169 |   |
| Average                common and equivalent shares outstanding      |   |                             | 6,947,833 |                            |   | 6,819,049 |   |   | 6,923,726 |   |   | 6,795,493 |   |

----

**BRIDGE      CAPITAL HOLDINGS AND SUBSIDIARY**

**Interim      Consolidated Statements of Cash Flows (unaudited)**

|                                                                                                            |   | **Nine months ended September 30,** |    |
|-----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------|---------|
|                                                                                                            |   | **2007**                                                |    | **2006** |   |
|                                                                                                            |   |                                                    |    |   |   |
| CASH                FLOWS FROM OPERATING ACTIVITIES:                                                            |   |                                                    |    |   |   |   |   |
|                                                                                                            |   |                                                    |    |   |   |   |   |
| Net                income                                                                                       |   | $                                                       | 8,179   |   | $ | 6,258 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities: |   |                                                    |    |   |   |   |   |
| Provision                for credit losses                                                                      |   |                                                    | 1,675   |   |   | 772 |   |
| Depreciation                and amortization                                                                    |   |                                                    | 745     |   |   | 645 |   |
| Stock                based compensation                                                                         |   |                                                    | 850     |   |   | 500 |   |
| Loans                originated for sale                                                                        |   |                                                    | (74,210 | ) |   | (39,660 | ) |
| Proceeds                from loan sales                                                                         |   |                                                    | 76,799  |   |   | 35,417 |   |
| Decrease                in accrued interest receivable and other assets                                         |   |                                                    | (3,008  | ) |   | (1,798 | ) |
| Decrease                  in accrued interest payable and                  other liabilities                    |   |                                                    | (1,119  | ) |   | (877 | ) |
| Net                cash provided by operating activities                                                        |   |                                                    | 9,911   |   |   | 1,257 |   |
|                                                                                                            |   |                                                    |    |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                                                            |   |                                                    |    |   |   |   |   |
|                                                                                                            |   |                                                    |    |   |   |   |   |
| Purchase                of securities available for sale                                                        |   |                                                    | (38,361 | ) |   | (15,052 | ) |
| Proceeds                from maturity of securities available for sale                                          |   |                                                    | 17,000  |   |   | 8,625 |   |
| Net                increase in loans                                                                            |   |                                                    | (73,895 | ) |   | (41,165 | ) |
| Purchase                of fixed assets                                                                         |   |                                                    | (2,102  | ) |   | (1,290 | ) |
| Net                cash used in investing activities                                                            |   |                                                    | (97,358 | ) |   | (48,882 | ) |
|                                                                                                            |   |                                                    |    |   |   |   |   |
| CASH                FLOW FROM FINANCING ACTIVITIES:                                                             |   |                                                    |    |   |   |   |   |
|                                                                                                            |   |                                                    |    |   |   |   |   |
| Net                increase in deposits                                                                         |   |                                                    | 57,862  |   |   | 117,665 |   |
| Decrease                in other borrowings                                                                     |   |                                                    | -       |   |   | (4,845 | ) |
| Common                stock issued                                                                              |   |                                                    | 611     |   |   | 417 |   |
| Net                cash provided by financing activities                                                        |   |                                                    | 58,473  |   |   | 113,237 |   |
|                                                                                                            |   |                                                    |    |   |   |   |   |
| NET                INCREASE (DECREASE) IN CASH AND EQUIVALENTS:                                                 |   |                                                    | (28,974 | ) |   | 65,612 |   |
| Cash                and equivalents at beginning of period                                                      |   |                                                    | 118,205 |   |   | 69,540 |   |
| Cash                and equivalents at end of period                                                            |   | $                                                       | 89,231  |   | $ | 135,152 |   |
|                                                                                                            |   |                                                    |    |   |   |   |   |
| OTHER                CASH FLOW INFORMATION:                                                                     |   |                                                    |    |   |   |   |   |
| Cash                paid for interest                                                                           |   | $                                                       | 14,859  |   | $ | 9,515 |   |
| Cash                paid for income taxes                                                                       |   | $                                                       | 6,902   |   | $ | 5,095 |   |

----

**BRIDGE      CAPITAL HOLDINGS AND SUBSIDIARY**

**Notes      to Interim Consolidated Financial Statements (Unaudited)**

**1.**
**Summary      of Significant Accounting Policies**

**Basis      of Presentation**

**Use      of Estimates**

**Earnings      Per Share**

**Stock-Based      Compensation**

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.      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 recorded an incremental      $291,000 ($253,000 net of tax) and $850,000 ($734,000 net of tax) of stock-based      compensation expense during the three and nine months ended September 30, 2007      as a result of the adoption of SFAS No. 123R.  

----

**Comprehensive      Income**

|                                                                                                                                            |   | Three months ended |   | Nine months ended |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|-----------------------------|--------|
|                                                                                                                                            |   | September 30,           |   | September 30,          |   |
| (dollars                  in thousands)                                                                                                    |   | 2007                         |   | 2006                        |   | 2007 |   | 2006 |   |
|                                                                                                                                            |   |                         |   |                        |   |   |   |   |   |
| Net                  income                                                                                                                     |   | $                            | 2,752  |                        | $      | 2,308 |   | $ | 8,179 |   | $ | 6,258 |   |
|                                                                                                                                            |   |                         |   |                        |   |   |   |   |   |   |   |   |   |
| Other                  comprehensive earnings-                                                                                                  |   |                         |   |                        |   |   |   |   |   |   |   |   |   |
| Net                  unrealized gains (losses) on securities available for sale                                                                 |   |                         | 377    |                        |   | 45 |   |   | 332 |   |   | 67 |   |
| Net                  unrealized gains (losses) on FAS 158 adjustment - supplemental                  executive                  retirement plan |   |                         | 10     |                        |   | - |   |   | 31 |   |   | - |   |
| Net                  unrealized gains (losses) on cash flow hedges                                                                              |   |                         | 1,468  |                        |   | - |   |   | 918 |   |   | - |   |
|                                                                                                                                            |   |                         |   |                        |   |   |   |   |   |   |   |   |   |
| Total                  comprehensive income                                                                                                     |   | $                            | 4,607  |                        | $      | 2,353 |   | $ | 9,460 |   | $ | 6,325 |   |

**Segment      Information**

**2.**
**Earnings      Per Share**

----

|                                                                                                                                        |   | Three months ended |      | Nine months ended |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|-----------------------------|--------|
|                                                                                                                                        |   | September 30,           |      | September 30,          |   |
| (dollars                in thousands)                                                                                                       |   | 2007                         |      | 2006                        |   | 2007 |   | 2006 |   |
|                                                                                                                                        |   |                         |      |                        |   |   |   |   |   |
| Net                income                                                                                                                   |   | $                            | 2,752     |                        | $      | 2,308 |   | $ | 8,179 |   | $ | 6,258 |   |
|                                                                                                                                        |   |                         |      |                        |   |   |   |   |   |   |   |   |   |
| Weighted                average shares used in computing:                                                                                   |   |                         |      |                        |   |   |   |   |   |   |   |   |   |
| Basic                common shares                                                                                                          |   |                         | 6,397,140 |                        |   | 6,283,125 |   |   | 6,369,991 |   |   | 6,262,169 |   |
| Diluted                potential common shares related to stock based awards, using the                treasury                stock method |   |                         | 550,693   |                        |   | 535,924 |   |   | 553,735 |   |   | 533,324 |   |
| Total                average common equivalent shares                                                                                       |   |                         | 6,947,833 |                        |   | 6,819,049 |   |   | 6,923,726 |   |   | 6,795,493 |   |
|                                                                                                                                        |   |                         |      |                        |   |   |   |   |   |   |   |   |   |
| Basic                earnings per share                                                                                                     |   | $                            | 0.43      |                        | $      | 0.37 |   | $ | 1.28 |   | $ | 1.00 |   |
| Diluted                earnings per share                                                                                                   |   | $                            | 0.40      |                        | $      | 0.34 |   | $ | 1.18 |   | $ | 0.92 |   |

**3.**
**Securities**

|                                               |   | As of September 30, 2007 |   |
|----------------------------------------------------|--------|----------------------------------------------|--------|
|                                               |   |                                         |   | Gross Unrealized |   | Fair |   |
| (dollars                in thousands)              |   | Cost                                         |   | Gains |   | Losses |   | Value |   |
|                                               |   |                                         |   |   |   |   |   |   |   |
| U.S.                government treasury notes      |   | $                                            | 200    |   | $ | 1 |   | $ | - |   | $ | 201 |   |
| U.S.                government agency notes        |   |                                         | 65,394 |   |   | 486 |   |   | (10 | ) |   | 65,870 |   |
| Total                securities available for sale |   |                                         | 65,594 |   |   | 487 |   |   | (10 | ) |   | 66,071 |   |
| Total                investment securities         |   | $                                            | 65,594 |   | $ | 487 |   | $ | (10 | ) | $ | 66,071 |   |

|                                               |   | As of December 31, 2006 |   |
|----------------------------------------------------|--------|---------------------------------------------|--------|
|                                               |   |                                        |   | Gross Unrealized |   | Fair |   |
|                                               |   | Cost                                        |   | Gains |   | Losses |   | Value |   |
|                                               |   |                                        |   |   |   |   |   |   |   |
| U.S.                government treasury notes      |   | $                                           | 200    |   | $ | - |   | $ | - |   | $ | 200 |   |
| U.S.                government agency notes        |   |                                        | 43,815 |   |   | 24 |   |   | (106 | ) |   | 43,733 |   |
| Total                securities available for sale |   |                                        | 44,015 |   |   | 24 |   |   | (106 | ) |   | 43,933 |   |
| Total                investment securities         |   | $                                           | 44,015 |   | $ | 24 |   | $ | (106 | ) | $ | 43,933 |   |

----

|                                                  |   | September 30, 2007 |   |
|-------------------------------------------------------|--------|------------------------------|--------|
|                                                  |   | Amortized                    |   | Fair |   |
| (dollars                in thousands)                 |   | Cost                         |   | Value |   |
|                                                  |   |                         |   |   |   |
| Due                in one year or less                |   | $                            | 22,151 |   | $ | 22,184 |   |
| Due                after one year through five years  |   |                         | 43,443 |   |   | 43,887 |   |
| Due                after five years through ten years |   |                         | -      |   |   | - |   |
| Due                after ten years                    |   |                         | -      |   |   | - |   |
| Total                securities available for sale    |   |                         | 65,594 |   |   | 66,071 |   |
| Total                investment securities            |   | $                            | 65,594 |   | $ | 66,071 |   |

|                                                  |   | December 31, 2006 |   |
|-------------------------------------------------------|--------|-----------------------------|--------|
|                                                  |   | Amortized                   |   | Fair |   |
|                                                  |   | Cost                        |   | Value |   |
|                                                  |   |                        |   |   |   |
| Due                in one year or less                |   | $                           | 17,042 |   | $ | 16,993 |   |
| Due                after one year through five years  |   |                        | 26,973 |   |   | 26,940 |   |
| Due                after five years through ten years |   |                        | -      |   |   | - |   |
| Due                after ten years                    |   |                        | -      |   |   | - |   |
| Total                securities available for sale    |   |                        | 44,015 |   |   | 43,933 |   |
| Total                investment securities            |   | $                           | 44,015 |   | $ | 43,933 |   |

**4.**
**Loans**

|                                             |   | September 30, |    | December 31, |   |
|--------------------------------------------------|--------|--------------------|---------|-------------------|--------|
| (dollars                in thousands)            |   | 2007               |    | 2006              |   |
|                                             |   |               |    |              |   |
| Commercial                                       |   | $                  | 264,360 |              | $      | 197,174 |   |
| SBA                                              |   |               | 63,205  |              |   | 59,888 |   |
| Real                estate construction          |   |               | 83,030  |              |   | 103,710 |   |
| Real                estate other                 |   |               | 144,438 |              |   | 115,313 |   |
| Factoring                and asset based lending |   |               | 43,942  |              |   | 56,924 |   |
| Other                                            |   |               | 12,231  |              |   | 7,771 |   |
| Loans,                gross                      |   |               | 611,206 |              |   | 540,780 |   |
| Unearned                fee income               |   |               | (1,616  | )                 |   | (1,495 | ) |
| Total                loan portfolio              |   |               | 609,590 |              |   | 539,285 |   |
| Less                allowance for credit losses  |   |               | (8,003  | )                 |   | (7,329 | ) |
| Loans,                net                        |   | $                  | 601,587 |              | $      | 531,956 |   |

----

**5.        **
**Premises        and Equipment**

|                                   |   |  September                30, 2007 |   |
|----------------------------------------|--------|-----------------------------------------|--------|
| (dollars                in thousands)  |   | Cost                                    |   | Accumulated                Depreciation |   | Net                Book Value |   |
|                                   |   |                                    |   |   |   |   |   |
| Leasehold                improvements  |   | $                                       | 4,476  |   | $ | (1,659 | ) | $ | 2,817 |   |
| Furniture                and fixtures  |   |                                    | 1,158  |   |   | (603 | ) |   | 555 |   |
| Capitalized                software    |   |                                    | 2,094  |   |   | (1,460 | ) |   | 634 |   |
| Equipment                              |   |                                    | 1,750  |   |   | (1,138 | ) |   | 612 |   |
| Construction                in process |   |                                    | -      |   |   | - |   |   | - |   |
| Totals                                 |   | $                                       | 9,478  |   | $ | (4,860 | ) | $ | 4,618 |   |

|                                   |   | December                31, 2006  |   |
|----------------------------------------|--------|----------------------------------------|--------|
|                                   |        | Cost                                   |   | Accumulated                Depreciation |   |  Net                book Value |   |
|                                   |   |                              |   |    |   |    |   |
| Leasehold                improvements  |   | $                                      | 2,673  |   | $ | (1,010 | ) | $ | 1,663 |   |
| Furniture                and fixtures  |   |                                   | 741    |   |   | (524 | ) |   | 217 |   |
| Capitalized                software    |   |                                   | 1,691  |   |   | (1,160 | ) |   | 531 |   |
| Equipment                              |   |                                   | 1,264  |   |   | (939 | ) |   | 325 |   |
| Construction                in process |   |                                   | 743    |   |   | - |   |   | 743 |   |
| Totals                                 |   | $                                      | 7,112  |   | $ | (3,633 | ) | $ | 3,479 |   |

**6.        **
**Junior        Subordinated Debt Securities and Other Borrowings**

**Junior      Subordinated Debt Securities**

----

**Other      Borrowings**

**7.**
**Stock-Based      Compensation **

|                                   |   | Three                months ended September                30, |   | Nine                months ended September                30, |   |
|----------------------------------------|--------|----------------------------------------------------------------|--------|---------------------------------------------------------------|--------|
|                                   |   | 2007                                                           |   | 2006                                                          |   | 2007 |   | 2006 |   |
| Expected                life           |   | 60                months                                       |   | 60                months                                      |   | 60                months |   | 60                months |   |
|                                   |   |                                                           |   |                                                          |   |   |   |   |   |
| Stock                volatility        |   |                                                           | 28.43  | %                                                             |   | 32.90 | % |   | 28.43 | % |   | 32.90 | % |
|                                   |   |                                                           |   |                                                          |   |   |   |   |   |   |   |   |   |
| Risk                free interest rate |   |                                                           | 4.39   | %                                                             |   | 4.64 | % |   | 4.71 | % |   | 4.74 | % |
|                                   |   |                                                           |   |                                                          |   |   |   |   |   |   |   |   |   |
| Dividend                yield          |   |                                                           | 0.00   | %                                                             |   | 0.00 | % |   | 0.00 | % |   | 0.00 | % |
|                                   |   |                                                           |   |                                                          |   |   |   |   |   |   |   |   |   |
| Fair                value per share    |   | $                                                              | 10.81  |                                                          | $      | 7.64 |   | $ | 9.59 |   | $ | 7.27 |   |

----

**ITEM      2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS      OF OPERATIONS **

**Critical      Accounting Policies**

----

**Selected      Financial Data**

|                                                                                        |   | Three                months ended September                30, |    | Nine                months ended September                30, |   |
|---------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|---------|---------------------------------------------------------------|--------|
| (dollars                in thousands, except per share data)                                |   | 2007                                                           |    | 2006                                                          |   | 2007 |   | 2006 |   |
| **Statement                of Operations Data:**                                            |   |                                                           |    |                                                          |   |   |   |   |   |
| Interest                income                                                              |   | $                                                              | 17,627  |                                                          | $      | 14,328 |   | $ | 49,941 |   | $ | 37,735 |   |
| Interest                expense                                                             |   |                                                           | 5,295   |                                                          |   | 4,238 |   |   | 14,731 |   |   | 9,845 |   |
| Net                interest income                                                          |   |                                                           | 12,332  |                                                          |   | 10,090 |   |   | 35,210 |   |   | 27,890 |   |
| Provision                for credit losses                                                  |   |                                                           | 475     |                                                          |   | 100 |   |   | 1,675 |   |   | 772 |   |
| Net                    interest income after provision for credit                    losses |   |                                                           | 11,857  |                                                          |   | 9,990 |   |   | 33,535 |   |   | 27,118 |   |
| Other                income                                                                 |   |                                                           | 1,435   |                                                          |   | 799 |   |   | 5,342 |   |   | 2,960 |   |
| Other                expenses                                                               |   |                                                           | 8,715   |                                                          |   | 7,066 |   |   | 24,991 |   |   | 20,034 |   |
| Income                before income taxes                                                   |   |                                                           | 4,577   |                                                          |   | 3,723 |   |   | 13,886 |   |   | 10,044 |   |
| Income                taxes                                                                 |   |                                                           | 1,825   |                                                          |   | 1,415 |   |   | 5,707 |   |   | 3,786 |   |
| Net                income                                                                   |   | $                                                              | 2,752   |                                                          | $      | 2,308 |   | $ | 8,179 |   | $ | 6,258 |   |
|                                                                                        |   |                                                           |    |                                                          |   |   |   |   |   |   |   |   |   |
| **Per                Share Data:**                                                          |   |                                                           |    |                                                          |   |   |   |   |   |   |   |   |   |
| Basic                earnings per share                                                     |   | $                                                              | 0.43    |                                                          | $      | 0.37 |   | $ | 1.28 |   | $ | 1.00 |   |
| Diluted                earnings per share                                                   |   |                                                           | 0.40    |                                                          |   | 0.34 |   |   | 1.18 |   |   | 0.92 |   |
| Shareholders'                equity per share                                               |   |                                                           | 9.32    |                                                          |   | 7.46 |   |   | 9.32 |   |   | 7.46 |   |
| Cash                dividend per common share                                               |   |                                                           | -       |                                                          |   | - |   |   | - |   |   | - |   |
|                                                                                        |   |                                                           |    |                                                          |   |   |   |   |   |   |   |   |   |
| **Balance                Sheet Data:**                                                      |   |                                                           |    |                                                          |   |   |   |   |   |   |   |   |   |
| Balance                sheet totals:                                                        |   |                                                           |         |                                                          |   |  |   |   |   |   |   |  |   |
| Assets                                                                                      |   | $                                                              | 789,877 |                                                          | $      | 655,706 |   |   |   |   |   |   |   |
| Loans,                net                                                                   |   |                                                           | 601,587 |                                                          |   | 477,303 |   |   |   |   |   |   |   |
| Deposits                                                                                    |   |                                                           | 702,850 |                                                          |   | 585,824 |   |   |   |   |   |   |   |
| Shareholders'                equity                                                         |   |                                                           | 60,015  |                                                          |   | 46,956 |   |   |   |   |   |   |   |
|                                                                                        |   |                                                           |    |                                                          |   |   |   |   |   |   |   |   |   |
| Average                balance sheet amounts:                                               |   |                                                           |    |                                                          |   |   |   |   |   |   |   |   |   |
| Assets                                                                                      |   | $                                                              | 801,249 |                                                          | $      | 636,273 |   | $ | 750,171 |   | $ | 582,449 |   |
| Loans,                net                                                                   |   |                                                           | 587,926 |                                                          |   | 465,102 |   |   | 569,209 |   |   | 447,567 |   |
| Deposits                                                                                    |   |                                                           | 714,918 |                                                          |   | 566,083 |   |   | 668,292 |   |   | 512,527 |   |
| Shareholders'                equity                                                         |   |                                                           | 57,400  |                                                          |   | 45,814 |   |   | 54,143 |   |   | 43,328 |   |
|                                                                                        |   |                                                           |    |                                                          |   |   |   |   |   |   |   |   |   |
| **Selected                Ratios:**                                                         |   |                                                           |    |                                                          |   |   |   |   |   |   |   |   |   |
| Return                on average assets                                                     |   |                                                           | 1.36    | %                                                             |   | 1.44 | % |   | 1.46 | % |   | 1.44 | % |
| Return                on average equity                                                     |   |                                                           | 19.02   | %                                                             |   | 19.99 | % |   | 20.20 | % |   | 19.31 | % |
| Efficiency                ratio                                                             |   |                                                           | 63.30   | %                                                             |   | 64.89 | % |   | 61.63 | % |   | 64.94 | % |
| Risk                based capital ratio                                                     |   |                                                           | 11.80   | %                                                             |   | 12.46 | % |   |   |   |   |   |   |
| Net                chargeoffs to average gross loans                                        |   |                                                           | 0.01    | %                                                             |   | 0.00 | % |   | 0.17 | % |   | 0.00 | % |
| Allowance                for loan losses to total loans                                     |   |                                                           | 1.31    | %                                                             |   | 1.39 | % |   |   |   |   |   |   |
| Average                equity to average assets                                             |   |                                                           | 7.16    | %                                                             |   | 7.20 | % |   | 7.22 | % |   | 7.44 | % |

----

**Summary      of Financial Results – Quarter ended September 30,      2007**

|                                                                                    |   | Three                months ended September                30, |   | Increase |   |
|-----------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|----------|--------|
| (dollars                in thousands)                                                   |   | 2007                                                           |   | 2006     |   | (Decrease) |   |
|                                                                                    |   |                                                           |   |     |   |   |   |
|                                                                                    |   |                                                           |   |     |   |   |   |
| Interest                income                                                          |   | $                                                              | 17,627 |     | $      | 14,328 |   | $ | 3,299 |   |
| Interest                expense                                                         |   |                                                           | 5,295  |     |   | 4,238 |   |   | 1,057 |   |
|                                                                                    |   |                                                           |   |     |   |   |   |   |   |   |
| Net                interest income                                                      |   |                                                           | 12,332 |     |   | 10,090 |   |   | 2,242 |   |
| Provision                for credit losses                                              |   |                                                           | 475    |     |   | 100 |   |   | 375 |   |
|                                                                                    |   |                                                           |   |     |   |   |   |   |   |   |
| Net                  interest income after provision for                  credit losses |   |                                                           | 11,857 |     |   | 9,990 |   |   | 1,867 |   |
| Other                income                                                             |   |                                                           | 1,435  |     |   | 799 |   |   | 636 |   |
| Other                expenses                                                           |   |                                                           | 8,715  |     |   | 7,066 |   |   | 1,649 |   |
| Income                before income taxes                                               |   |                                                           | 4,577  |     |   | 3,723 |   |   | 854 |   |
|                                                                                    |   |                                                           |   |     |   |   |   |   |   |   |
| Income                taxes                                                             |   |                                                           | 1,825  |     |   | 1,415 |   |   | 410 |   |
| Net                income                                                               |   | $                                                              | 2,752  |     | $      | 2,308 |   | $ | 444 |   |

**Net      Interest Income and Margin**

----

|                                                      |   | Three                months ended September 30, |    |
|-----------------------------------------------------------|--------|-------------------------------------------------|---------|
|                                                      |   | 2007                                            |    | 2006 |   |
| (dollars                in thousands)                     |   | Average                Balance                  |    | Yields                or                Rates |   | Interest                Income/                Expense |   | Average                Balance |   | Yields                or                Rates |   | Interest                Income/ Expense |   |
| ASSETS                                                    |   |                                            |    |   |   |   |   |   |   |   |   |   |   |
| Interest                earning assets (2):               |   |                                            |    |   |   |   |   |   |   |   |   |   |   |
| Loans                (1)                                  |   | $                                               | 597,214 |   |   | 10.4 | % | $ | 15,585 |   | $ | 473,311 |   |   | 10.7 | % | $ | 12,763 |   |
| Federal                funds sold                         |   |                                            | 89,483  |   |   | 5.0 | % |   | 1,138 |   |   | 110,219 |   |   | 5.2 | % |   | 1,453 |   |
| Investment                securities                      |   |                                            | 70,498  |   |   | 5.1 | % |   | 904 |   |   | 11,272 |   |   | 4.0 | % |   | 113 |   |
| Total                interest earning assets              |   |                                            | 757,195 |   |   | 9.2 | % |   | 17,627 |   |   | 594,802 |   |   | 9.6 | % |   | 14,329 |   |
|                                                      |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning                assets:                |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                and due from banks                    |   |                                            | 20,882  |   |   |   |   |   |   |   |   | 26,209 |   |   |   |   |   |   |   |
| All                other assets (3)                       |   |                                            | 23,172  |   |   |   |   |   |   |   |   | 15,262 |   |   |   |   |   |   |   |
| TOTAL                                                     |   | $                                               | 801,249 |   |   |   |   |   |   |   | $ | 636,273 |   |   |   |   |   |   |   |
|                                                      |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                  AND SHAREHOLDERS' EQUITY     |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                bearing liabilities:              |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                                                    |   | $                                               | 5,761   |   |   | 0.7 | % | $ | 10 |   | $ | 3,900 |   |   | 0.9 | % | $ | 9 |   |
| Savings                                                   |   |                                            | 417,255 |   |   | 3.8 | % |   | 3,984 |   |   | 288,895 |   |   | 3.8 | % |   | 2,733 |   |
| Time                                                      |   |                                            | 84,149  |   |   | 4.9 | % |   | 1,039 |   |   | 116,353 |   |   | 4.2 | % |   | 1,239 |   |
| Other                                                     |   |                                            | 17,527  |   |   | 5.9 | % |   | 262 |   |   | 17,527 |   |   | 5.8 | % |   | 258 |   |
| Total                interest bearing liabilities         |   |                                            | 524,692 |   |   | 4.0 | % |   | 5,295 |   |   | 426,675 |   |   | 3.9 | % |   | 4,239 |   |
|                                                      |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing                liabilities:           |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                deposits                            |   |                                            | 207,753 |   |   |   |   |   |   |   |   | 156,935 |   |   |   |   |   |   |   |
| Accrued                    expenses and other liabilities |   |                                            | 11,404  |   |   |   |   |   |   |   |   | 6,849 |   |   |   |   |   |   |   |
| Shareholders'                equity                       |   |                                            | 57,400  |   |   |   |   |   |   |   |   | 45,814 |   |   |   |   |   |   |   |
| TOTAL                                                     |   | $                                               | 801,249 |   |   |   |   |   |   |   | $ | 636,273 |   |   |   |   |   |   |   |
|                                                      |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income and margin             |   |                                            |    |   |   | 6.5 | % | $ | 12,332 |   |   |   |   |   | 6.7 | % | $ | 10,090 |   |

| (1) | Loan                fee amortization of $1.5 million and $1.3 million, respectively,                is                included in interest income. Nonperforming loans have been included                in                average loan balances. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (3) | Net                of average allowance for credit losses of $7.8 million and $6.7 million,                respectively. |
|-----|--------------------------------------------------------------------------------------------------------------------------|

----

|                                         |   | Three                months ended September 30, 2007                vs. 2006 |   |
|----------------------------------------------|--------|------------------------------------------------------------------------------|--------|
|                                         |   | Increase                (decrease) due                to change in           |   |
| (dollars                in thousands)        |   | Average                Volume                                                |   | Average                Rate |   | Total                Change |   |
| Interest                income:              |   |                                                                         |   |   |   |   |   |
| Loans                                        |   | $                                                                            | 3,233  |   | $ | (411 | ) | $ | 2,822 |   |
| Federal                funds sold            |   |                                                                         | (264   | ) |   | (51 | ) |   | (315 | ) |
| Investment                securities         |   |                                                                         | 759    |   |   | 32 |   |   | 791 |   |
| Total                interest income         |   |                                                                         | 3,729  |   |   | (431 | ) |   | 3,298 |   |
|                                         |   |                                                                         |   |   |   |   |   |   |   |   |
| Interest                expense:             |   |                                                                         |   |   |   |   |   |   |   |   |
| Demand                                       |   |                                                                         | 3      |   |   | (2 | ) |   | 1 |   |
| Savings                                      |   |                                                                         | 1,226  |   |   | 25 |   |   | 1,251 |   |
| Time                                         |   |                                                                         | (398   | ) |   | 198 |   |   | (200 | ) |
| Other                                        |   |                                                                         | -      |   |   | 4 |   |   | 4 |   |
| Total                interest expense        |   |                                                                         | 831    |   |   | 225 |   |   | 1,056 |   |
|                                         |   |                                                                         |   |   |   |   |   |   |   |   |
| Change                in net interest income |   | $                                                                            | 2,898  |   | $ | (656 | ) | $ | 2,242 |   |

**Interest      Income**

**Interest      Expense**

----

**Credit      Risk and Provision for Credit Losses**

|                                        |   | Three                months ended September                30, |   |
|---------------------------------------------|--------|----------------------------------------------------------------|--------|
| (dollars                in thousands)       |   | 2007                                                           |   | 2006 |   |
|                                        |   |                                                           |   |   |   |
| Balance,                beginning of period |   | $                                                              | 7,590  |   | $ | 6,620 |   |
| Provision                for credit losses  |   |                                                           | 475    |   |   | 100 |   |
| Charge-offs                                 |   |                                                           | (312   | ) |   | - |   |
| Recoveries                                  |   |                                                           | 250    |   |   | 8 |   |
| Balance,                end of period       |   | $                                                              | 8,003  |   | $ | 6,728 |   |

----

| (dollars                in thousands)                                                                                 |   | September                30, 2007 |   | December                31, 2006 |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|----------------------------------|--------|
|                                                                                                                  |   |                              |   |                             |   |
| Loans                accounted for on a non-accrual basis                                                             |   | $                                 | -      |                             | $      | 437 |   |
| Loans                restructured and in compliance with modified terms                                               |   |                              | -      |                             |   | - |   |
| Other                  loans with principal or interest contracturally past due 90                  days or more |   |                              | -      |                             |   | - |   |
| Total                nonperforming loans                                                                              |   |                              | -      |                             |   | 437 |   |
| Other                real estate owned                                                                                |   |                              | 425    |                             |   | - |   |
| Total                nonperforming assets                                                                             |   | $                                 | 425    |                             | $      | 437 |   |

|                                    |   | September                30, 2007 |   | December                31, 2006 |   |
|-----------------------------------------|--------|-----------------------------------|--------|----------------------------------|--------|
| (dollars                in thousands)   |   | Amount                            |   | Percent                          |   | Amount |   | Percent |   |
|                                    |   |                              |   |                             |   |   |   |   |   |
| Commercial                and other     |   | $                                 | 3,391  |                             |   | 42.4 | % | $ | 1,831 |   |   | 25.0 | % |
| SBA                                     |   |                              | 1,205  |                             |   | 15.1 | % |   | 1,803 |   |   | 24.6 | % |
| Real                estate construction |   |                              | 616    |                             |   | 7.7 | % |   | 1,082 |   |   | 14.8 | % |
| Real                estate other        |   |                              | 1,941  |                             |   | 24.3 | % |   | 1,152 |   |   | 15.7 | % |
| Factoring/ABL                           |   |                              | 769    |                             |   | 9.6 | % |   | 1,415 |   |   | 19.3 | % |
| Other                                   |   |                              | 80     |                             |   | 1.0 | % |   | 46 |   |   | 0.6 | % |
|                                    |   | $                                 | 8,003  |                             |   | 100.0 | % | $ | 7,329 |   |   | 100.0 | % |

**Non-interest      Income**

----

|                                               |   | Three                months ended September 30, |   |
|----------------------------------------------------|--------|-------------------------------------------------|--------|
|                                               |   | 2007                                            |   | 2006 |   |
| (dollars                in thousands)              |   | Amount                                          |   | Percent |   | Amount |   | Percent |   |
|                                               |   |                                            |   |   |   |   |   |   |   |
| Gain                on sale of SBA loans           |   | $                                               | 363    |   |   | 25.3 | % | $ | 225 |   |   | 28.2 | % |
| Foreign                exchange upcharge           |   |                                            | 174    |   |   | 12.1 | % |   | 70 |   |   | 8.8 | % |
| Depositor                service charges           |   |                                            | 166    |   |   | 11.6 | % |   | 132 |   |   | 16.5 | % |
| SBA                loan servicing income           |   |                                            | 121    |   |   | 8.4 | % |   | 137 |   |   | 17.1 | % |
| Increase                in value of life insurance |   |                                            | 97     |   |   | 6.8 | % |   | 86 |   |   | 10.8 | % |
| Other                operating income              |   |                                            | 514    |   |   | 35.8 | % |   | 149 |   |   | 18.6 | % |
|                                               |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
|                                               |   | $                                               | 1,435  |   |   | 100.0 | % | $ | 799 |   |   | 100.0 | % |

**Non-interest      Expense**

|                                   |   | Three                months ended September 30, |   |
|----------------------------------------|--------|-------------------------------------------------|--------|
|                                   |   | 2007                                            |   | 2006 |   |
| (dollars                in thousands)  |   | Amount                                          |   | Percent |   | Amount |   | Percent |   |
|                                   |   |                                            |   |   |   |   |   |   |   |
| Salaries                and benefits   |   | $                                               | 5,530  |   |   | 2.9 | % | $ | 4,627 |   |   | 3.1 | % |
| Occupancy                              |   |                                            | 910    |   |   | 0.5 | % |   | 630 |   |   | 0.4 | % |
| Data                processing         |   |                                            | 491    |   |   | 0.3 | % |   | 345 |   |   | 0.2 | % |
| Marketing/Advertising                  |   |                                            | 389    |   |   | 0.2 | % |   | 266 |   |   | 0.2 | % |
| Furniture                and equipment |   |                                            | 263    |   |   | 0.1 | % |   | 178 |   |   | 0.1 | % |
| Legal                and professional  |   |                                            | 247    |   |   | 0.1 | % |   | 172 |   |   | 0.1 | % |
| Deposit                services        |   |                                            | 235    |   |   | 0.1 | % |   | 315 |   |   | 0.2 | % |
| Other                                  |   |                                            | 650    |   |   | 0.3 | % |   | 533 |   |   | 0.4 | % |
|                                   |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   | $                                               | 8,715  |   |   | 4.6 | % | $ | 7,066 |   |   | 4.7 | % |

----

**Summary      of Financial Results – Nine months ended September 30,      2007**

|                                                                 |   | Nine months ended  |   |     |   |
|----------------------------------------------------------------------|--------|------------------------------|--------|----------|--------|
|                                                                 |   | September                30, |   | Increase |   |
| (dollars                in thousands)                                |   | 2007                         |   | 2006     |   | (Decrease) |   |
|                                                                 |   |                         |   |     |   |   |   |
| Interest                income                                       |   | $                            | 49,941 |     | $      | 37,735 |   | $ | 12,206 |   |
| Interest                expense                                      |   |                         | 14,731 |     |   | 9,845 |   |   | 4,886 |   |
|                                                                 |   |                         |   |     |   |   |   |   |   |   |
| Net                interest income                                   |   |                         | 35,210 |     |   | 27,890 |   |   | 7,320 |   |
| Provision                for credit losses                           |   |                         | 1,675  |     |   | 772 |   |   | 903 |   |
|                                                                 |   |                         |   |     |   |   |   |   |   |   |
| Net                interest income after provision for credit losses |   |                         | 33,535 |     |   | 27,118 |   |   | 6,417 |   |
| Other                income                                          |   |                         | 5,342  |     |   | 2,960 |   |   | 2,382 |   |
| Other                expenses                                        |   |                         | 24,991 |     |   | 20,034 |   |   | 4,957 |   |
| Income                before income taxes                            |   |                         | 13,886 |     |   | 10,044 |   |   | 3,842 |   |
|                                                                 |   |                         |   |     |   |   |   |   |   |   |
| Income                taxes                                          |   |                         | 5,707  |     |   | 3,786 |   |   | 1,921 |   |
| Net                income                                            |   | $                            | 8,179  |     | $      | 6,258 |   | $ | 1,921 |   |

**Net      Interest Income and Margin**

----

|                                                               |   | Nine                months ended September 30, |    |
|--------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                               |   | 2007                                           |    | 2006 |   |
|                                                               |   |                                           |    | Yields |   | Interest |   |   |   | Yields |   | Interest |   |
|                                                               |   | Average                                        |    | or |   | Income/ |   | Average |   | or |   | Income/ |   |
| (dollars                in thousands)                              |   | Balance                                        |    | Rates |   | Expense |   | Balance |   | Rates |   | Expense |   |
| ASSETS                                                             |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Interest                earning assets (2):                        |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Loans                (1)                                           |   | $                                              | 578,204 |   |   | 10.5 | % | $ | 45,202 |   | $ | 453,891 |   |   | 10.2 | % | $ | 34,696 |   |
| Federal                funds sold                                  |   |                                           | 62,803  |   |   | 5.1 | % |   | 2,415 |   |   | 73,177 |   |   | 5.0 | % |   | 2,723 |   |
| Investment                securities                               |   |                                           | 60,809  |   |   | 5.1 | % |   | 2,324 |   |   | 12,240 |   |   | 3.5 | % |   | 316 |   |
| Total                interest earning assets                       |   |                                           | 701,816 |   |   | 9.5 | % |   | 49,941 |   |   | 539,308 |   |   | 9.4 | % |   | 37,735 |   |
|                                                               |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning                assets:                         |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                and due from banks                             |   |                                           | 27,210  |   |   |   |   |   |   |   |   | 27,596 |   |   |   |   |   |   |   |
| All                other assets (3)                                |   |                                           | 21,145  |   |   |   |   |   |   |   |   | 15,545 |   |   |   |   |   |   |   |
| TOTAL                                                              |   | $                                              | 750,171 |   |   |   |   |   |   |   | $ | 582,449 |   |   |   |   |   |   |   |
|                                                               |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                AND SHAREHOLDERS'                EQUITY |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                bearing liabilities:                       |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                          |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                                                             |   | $                                              | 5,563   |   |   | 0.8 | % | $ | 33 |   | $ | 3,595 |   |   | 0.9 | % | $ | 23 |   |
| Savings                                                            |   |                                           | 370,379 |   |   | 3.8 | % |   | 10,609 |   |   | 245,230 |   |   | 3.3 | % |   | 6,073 |   |
| Time                                                               |   |                                           | 91,247  |   |   | 4.8 | % |   | 3,307 |   |   | 95,708 |   |   | 4.1 | % |   | 2,924 |   |
| Other                                                              |   |                                           | 17,527  |   |   | 6.0 | % |   | 782 |   |   | 19,638 |   |   | 5.6 | % |   | 825 |   |
| Total                interest bearing liabilities                  |   |                                           | 484,716 |   |   | 4.1 | % |   | 14,731 |   |   | 364,171 |   |   | 3.6 | % |   | 9,845 |   |
|                                                               |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing                liabilities:                    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                deposits                                     |   |                                           | 201,103 |   |   |   |   |   |   |   |   | 167,993 |   |   |   |   |   |   |   |
| Accrued                expenses and other liabilities              |   |                                           | 10,209  |   |   |   |   |   |   |   |   | 6,957 |   |   |   |   |   |   |   |
| Shareholders'                equity                                |   |                                           | 54,143  |   |   |   |   |   |   |   |   | 43,328 |   |   |   |   |   |   |   |
| TOTAL                                                              |   | $                                              | 750,171 |   |   |   |   |   |   |   | $ | 582,449 |   |   |   |   |   |   |   |
|                                                               |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income and margin                      |   |                                           |    |   |   | 6.7 | % | $ | 35,210 |   |   |   |   |   | 6.9 | % | $ | 27,890 |   |

| (1) | Loan                fee amortization of $4.3 million and $3.1 million, respectively,                is                included in interest income. Nonperforming loans have been included                in                average loan balances. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Interest                income is reflected on an actual basis, not a fully taxable equivalent                basis. Yields are based on amortized cost.                                                                                          |
| (3) | Net                of average allowance for credit losses of $7.5 million and $6.3 million,                respectively.                                                                                                                          |

----

|                                         |   | Nine                months ended September 30, |   |
|----------------------------------------------|--------|------------------------------------------------|--------|
|                                         |   | 2007                vs. 2006                   |   |
|                                         |   |                                           |   | Increase (decrease) |   |   |   |
|                                         |   |                                           |   | due to change in |   |   |   |
|                                         |   | Average                                        |   | Average |   | Total |   |
| (dollars                in thousands)        |   | Volume                                         |   | Rate |   | Change |   |
| Interest                income:              |   |                                           |   |   |   |   |   |
| Loans                                        |   | $                                              | 9,718  |   |   | 787.6372318 |   | $ | 10,506 |   |
| Federal                funds sold            |   |                                           | (399   | ) |   | 90.9174084 |   |   | (308 | ) |
| Investment                securities         |   |                                           | 1,856  |   |   | 151.7886497 |   |   | 2,008 |   |
| Other                                        |   |                                           | -      |   |   | - |   |   | - |   |
| Total                interest income         |   |                                           | 11,176 |   |   | 1,030 |   |   | 12,206 |   |
|                                         |   |                                           |   |   |   |   |   |   |   |   |
| Interest                expense:             |   |                                           |   |   |   |   |   |   |   |   |
| Demand                                       |   |                                           | 12     |   |   | (2 | ) |   | 10 |   |
| Savings                                      |   |                                           | 3,585  |   |   | 951 |   |   | 4,536 |   |
| Time                                         |   |                                           | (162   | ) |   | 545 |   |   | 383 |   |
| Other                                        |   |                                           | (94    | ) |   | 51 |   |   | (43 | ) |
| Total                interest expense        |   |                                           | 3,341  |   |   | 1,545 |   |   | 4,886 |   |
|                                         |   |                                           |   |   |   |   |   |   |   |   |
| Change                in net interest income |   | $                                              | 7,835  |   | $ | (515 | ) | $ | 7,320 |   |

**Interest      Income**

**Interest      Expense**

----

**Credit      Risk and Provision for Credit Losses**

|                                        |   | Nine                months ended |   |
|---------------------------------------------|--------|----------------------------------|--------|
|                                        |   | September                30,     |   |
| (dollars                in thousands)       |   | 2007                             |   | 2006 |   |
|                                        |   |                             |   |   |   |
| Balance,                beginning of period |   | $                                | 7,329  |   | $ | 5,936 |   |
| Provision                for credit losses  |   |                             | 1,675  |   |   | 772 |   |
| Charge-offs                                 |   |                             | (1,255 | ) |   | - |   |
| Recoveries                                  |   |                             | 254    |   |   | 20 |   |
| Balance,                end of period       |   | $                                | 8,003  |   | $ | 6,728 |   |

**Non-interest      Income**

----

|                                               |   | Nine                months ended September 30, |   |
|----------------------------------------------------|--------|------------------------------------------------|--------|
|                                               |   | 2007                                           |   | 2006 |   |
| (dollars                in thousands)              |   | Amount                                         |   | Percent |   | Amount |   | Percent |   |
|                                               |   |                                           |   |   |   |   |   |   |   |
| Gain                on sale of SBA loans           |   | $                                              | 2,985  |   |   | 55.9 | % | $ | 1,064 |   |   | 35.9 | % |
| SBA                loan servicing income           |   |                                           | 338    |   |   | 6.3 | % |   | 392 |   |   | 13.2 | % |
| Depositor                service charges           |   |                                           | 497    |   |   | 9.3 | % |   | 370 |   |   | 12.5 | % |
| Increase                in value of life insurance |   |                                           | 308    |   |   | 5.8 | % |   | 263 |   |   | 8.9 | % |
| Foreign                exchange upcharge           |   |                                           | 434    |   |   | 8.1 | % |   | 151 |   |   | 5.1 | % |
| Other                operating income              |   |                                           | 780    |   |   | 14.6 | % |   | 720 |   |   | 24.3 | % |
|                                               |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
|                                               |   | $                                              | 5,342  |   |   | 100.0 | % | $ | 2,960 |   |   | 100.0 | % |

**Non-interest      Expense**

|                                   |   | Nine                months ended September 30, |   |
|----------------------------------------|--------|------------------------------------------------|--------|
|                                   |   | 2007                                           |   | 2006 |   |
| (dollars                in thousands)  |   | Amount                                         |   | Percent |   | Amount |   | Percent |   |
|                                   |   |                                           |   |   |   |   |   |   |   |
| Salaries                and benefits   |   | $                                              | 15,796 |   |   | 3.0 | % | $ | 12,706 |   |   | 3.1 | % |
| Occupancy                              |   |                                           | 2,450  |   |   | 0.5 | % |   | 1,601 |   |   | 0.4 | % |
| Data                processing         |   |                                           | 1,471  |   |   | 0.3 | % |   | 1,062 |   |   | 0.3 | % |
| Marketing/Advertising                  |   |                                           | 1,105  |   |   | 0.2 | % |   | 797 |   |   | 0.2 | % |
| Legal                and professional  |   |                                           | 860    |   |   | 0.2 | % |   | 566 |   |   | 0.1 | % |
| Deposit                services        |   |                                           | 719    |   |   | 0.1 | % |   | 1,189 |   |   | 0.3 | % |
| Furniture                and equipment |   |                                           | 699    |   |   | 0.1 | % |   | 521 |   |   | 0.1 | % |
| Other                                  |   |                                           | 1,891  |   |   | 0.4 | % |   | 1,592 |   |   | 0.4 | % |
|                                   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   | $                                              | 24,991 |   |   | 4.8 | % | $ | 20,034 |   |   | 5.0 | % |

----

**Balance      Sheet **

|                                             |   | September                30, |    | December                31, |   |
|--------------------------------------------------|--------|------------------------------|---------|-----------------------------|--------|
| (dollars                in thousands)            |   | 2007                         |    | 2006                        |   |
|                                             |   |                         |    |                        |   |
| Commercial                                       |   | $                            | 264,360 |                        | $      | 197,174 |   |
| SBA                                              |   |                         | 63,205  |                        |   | 59,888 |   |
| Real                estate construction          |   |                         | 83,030  |                        |   | 103,710 |   |
| Real                estate other                 |   |                         | 144,438 |                        |   | 115,313 |   |
| Factoring                and asset based lending |   |                         | 43,942  |                        |   | 56,924 |   |
| Other                                            |   |                         | 12,231  |                        |   | 7,771 |   |
| Total                gross loans                 |   |                         | 611,206 |                        |   | 540,780 |   |
| Unearned                fee income               |   |                         | (1,616  | )                           |   | (1,495 | ) |
| Total                gross loans                 |   |                         | 609,590 |                        |   | 539,285 |   |
| Less                allowance for credit losses  |   |                         | (8,003  | )                           |   | (7,329 | ) |
| Total                loans, net                  |   | $                            | 601,587 |                        | $      | 531,956 |   |
|                                             |   |                         |    |                        |   |   |   |
| Commercial                                       |   |                         | 43.3    | %                           |   | 36.5 | % |
| SBA                                              |   |                         | 10.3    | %                           |   | 11.1 | % |
| Real                estate construction          |   |                         | 13.6    | %                           |   | 19.2 | % |
| Real                estate other                 |   |                         | 23.6    | %                           |   | 21.3 | % |
| Factoring                and asset based lending |   |                         | 7.2     | %                           |   | 10.5 | % |
| Other                                            |   |                         | 2.0     | %                           |   | 1.4 | % |
| Total                gross loans                 |   |                         | 100.0   | %                           |   | 100.0 | % |

----

|                                      |   | September 30, |    | December 31, |   |
|-------------------------------------------|--------|--------------------|---------|-------------------|--------|
|                                      |   | 2007               |    | 2006              |   |
| (dollars                in thousands)     |   | Amount             |    | Percent           |   | Amount |   | Percent |   |
|                                      |   |               |    |              |   |   |   |   |   |
| Noninterest-bearing                demand |   | $                  | 201,133 |              |   | 28.62 | % | $ | 198,639 |   |   | 30.80 | % |
| Interest-bearing                demand    |   |               | 4,271   |              |   | 0.61 | % |   | 3,901 |   |   | 0.60 | % |
| Money                market and savings   |   |               | 418,503 |              |   | 59.54 | % |   | 333,838 |   |   | 51.76 | % |
| Certificates                of deposit:   |   |               |    |              |   |   |   |   |   |   |   |   |   |
| Less                than $100             |   |               | 23,839  |              |   | 3.39 | % |   | 28,918 |   |   | 4.48 | % |
| $100                and more              |   |               | 55,104  |              |   | 7.84 | % |   | 79,691 |   |   | 12.36 | % |
|                                      |   |               |    |              |   |   |   |   |   |   |   |   |   |
| Total                deposits             |   | $                  | 702,850 |              |   | 100.00 | % | $ | 644,987 |   |   | 100.00 | % |

----

**Leverage**

**Capital      Resources **

----

|                                                                  |   | As                of September 30, |   | As                of December 31, |   |
|-----------------------------------------------------------------------|--------|------------------------------------|--------|-----------------------------------|--------|
|                                                                  |   | 2007                               |   | 2006                              |   |
| (dollars                in thousands)                                 |   | Amount                             |   | Ratio                             |   | Amount |   | Ratio |   |
|                                                                  |   |                               |   |                              |   |   |   |   |   |
| **Company                Capital Ratios**                             |   |                               |   |                              |   |   |   |   |   |
| Tier                1 Capital(to                Risk Weighted Assets) |   | $                                  | 76,532 |                              |   | 10.68 | % | $ | 66,533 |   |   | 10.52 | % |
| Tier                1 capital minimum requirement                     |   | $                                  | 28,654 |                              |   | 4.00 | % | $ | 25,293 |   |   | 4.00 | % |
|                                                                  |   |                               |   |                              |   |   |   |   |   |   |   |   |   |
| Total                Capital(to                Risk Weighted Assets)  |   | $                                  | 84,535 |                              |   | 11.80 | % | $ | 74,229 |   |   | 11.74 | % |
| Total                capital minimum requirement                      |   | $                                  | 57,308 |                              |   | 8.00 | % | $ | 50,587 |   |   | 8.00 | % |
|                                                                  |   |                               |   |                              |   |   |   |   |   |   |   |   |   |
| Company                Leverage                                       |   |                               |   |                              |   |   |   |   |   |   |   |   |   |
| Tier                1 Capital(to                Average Assets)       |   | $                                  | 76,532 |                              |   | 10.20 | % | $ | 66,533 |   |   | 10.97 | % |
| Tier                1 capital minimum requirement                     |   | $                                  | 30,007 |                              |   | 4.00 | % | $ | 24,260 |   |   | 4.00 | % |
|                                                                  |   |                               |   |                              |   |   |   |   |   |   |   |   |   |
| **Bank                Capital Ratios**                                |   |                               |   |                              |   |   |   |   |   |   |   |   |   |
| Tier                1 Capital(to                Risk Weighted Assets) |   | $                                  | 73,815 |                              |   | 10.32 | % | $ | 64,145 |   |   | 10.15 | % |
| Tier                1 capital minimum requirement                     |   | $                                  | 28,616 |                              |   | 4.00 | % | $ | 25,272 |   |   | 4.00 | % |
|                                                                  |   |                               |   |                              |   |   |   |   |   |   |   |   |   |
| Total                Capital(to                Risk Weighted Assets)  |   | $                                  | 81,818 |                              |   | 11.44 | % | $ | 71,474 |   |   | 11.31 | % |
| Total                capital minimum requirement                      |   | $                                  | 57,233 |                              |   | 8.00 | % | $ | 50,544 |   |   | 7.99 | % |
|                                                                  |   |                               |   |                              |   |   |   |   |   |   |   |   |   |
| Bank                Leverage                                          |   |                               |   |                              |   |   |   |   |   |   |   |   |   |
| Tier                1 Capital(to                Average Assets)       |   | $                                  | 73,815 |                              |   | 9.85 | % | $ | 64,145 |   |   | 10.59 | % |
| Tier                1 capital minimum requirement                     |   | $                                  | 29,983 |                              |   | 4.00 | % | $ | 24,240 |   |   | 4.00 | % |

----

**ITEM      3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

**Liquidity/Interest      Rate Sensitivity**

|                                                       |   | As                of September 30, 2007 |    |
|------------------------------------------------------------|--------|-----------------------------------------|---------|
|                                                       |   |                                    |    | After                three |   | After                six |   | After                one |   |   |   |   |   |
|                                                       |   | Within                                  |    | months                but |   | months                but |   | year                but |   | After |   |   |   |
|                                                       |   | three                                   |    | within                six |   | within                one |   | within |   | five |   |   |   |
| (dollars                in thousands)                      |   | months                                  |    | months |   | year |   | five                years |   | years |   | Total |   |
|                                                       |   |                                    |    |   |   |   |   |   |   |   |   |   |   |
| Federal                funds sold                          |   | $                                       | 70,155  |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | 70,155 |   |
| U.S.                Treasury securities                    |   |                                    | 100     |   |   | - |   |   | 101 |   |   | - |   |   | - |   |   | 201 |   |
| Agency                securities                           |   |                                    | 4,002   |   |   | 9,993 |   |   | 7,988 |   |   | 43,887 |   |   | - |   |   | 65,870 |   |
| Loans                                                      |   |                                    | 490,308 |   |   | 562 |   |   | 16,944 |   |   | 72,437 |   |   | 30,955 |   |   | 611,206 |   |
| Total                earning assets                        |   | $                                       | 564,565 |   | $ | 10,555 |   | $ | 25,033 |   | $ | 116,324 |   | $ | 30,955 |   | $ | 747,432 |   |
|                                                       |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                checking, money market and savings |   |                                    | 501,717 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 501,717 |   |
| Certificates                of deposit:                    |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less                than $100,000                          |   |                                    | 4,551   |   |   | 6,783 |   |   | 6,878 |   |   | 5,627 |   |   | - |   |   | 23,839 |   |
| $100,000                or more                            |   |                                    | 17,641  |   |   | 20,742 |   |   | 10,155 |   |   | 6,566 |   |   |   |   |   | 55,104 |   |
| Other                                                      |   |                                    | -       |   |   | - |   |   | - |   |   | 17,527 |   |   | - |   |   | 17,527 |   |
| Total                interest-bearing liabilities          |   | $                                       | 523,909 |   | $ | 27,525 |   | $ | 17,033 |   | $ | 29,720 |   | $ | - |   | $ | 598,187 |   |
|                                                       |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                rate gap                           |   | $                                       | 40,656  |   | $ | (16,970 | ) | $ | 8,000 |   | $ | 86,604 |   | $ | 30,955 |   | $ | 149,245 |   |
| Cumulative                interest rate gap                |   | $                                       | 40,656  |   | $ | 23,686 |   | $ | 31,686 |   | $ | 118,290 |   | $ | 149,245 |   |   |   |   |
|                                                       |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                rate gap ratio                     |   |                                    | 0.07    |   |   | (1.61 | ) |   | 0.32 |   |   | 0.74 |   |   | 1.00 |   |   |   |   |
| Cumulative                interest rate gap ratio          |   |                                    | 0.07    |   |   | 0.04 |   |   | 0.05 |   |   | 0.17 |   |   | 0.20 |   |   |   |   |

----

|                                           |   | As                of September 30, 2007 |    |
|------------------------------------------------|--------|-----------------------------------------|---------|
|                                           |   |                                    |    |   |   | Due                after one |   |   |   |
|                                           |   |                                    |    | Due                one year |   | year                through |   | Due                after |   |
| (dollars                in thousands)     |   | Amount                                  |    | or                less |   | five                years |   | five                years |   |
|                                           |   |                                    |    |   |   |   |   |   |   |
| Commercial                and other            |   | $                                       | 264,360 |   | $ | 144,064 |   | $ | 93,164 |   | $ | 27,132 |   |
| SBA                                            |   |                                    | 63,205  |   |   | 14,153 |   |   | 3,181 |   |   | 45,871 |   |
| Real                estate construction        |   |                                    | 83,030  |   |   | 80,464 |   |   | 2,566 |   |   | - |   |
| Real                estate-other               |   |                                    | 144,438 |   |   | 48,360 |   |   | 40,939 |   |   | 55,139 |   |
| Factoring                / Asset-Based Lending |   |                                    | 43,942  |   |   | 43,660 |   |   | 282 |   |   | - |   |
| Other                                          |   |                                    | 12,231  |   |   | 11,301 |   |   | 930 |   |   | - |   |
| Total                loans                     |   | $                                       | 611,206 |   | $ | 342,002 |   | $ | 141,062 |   | $ | 128,142 |   |

|                                           |   | As                of December 31, 2006 |    |
|------------------------------------------------|--------|----------------------------------------|---------|
|                                           |   |                                   |    |   |   | Due                after one |   |   |   |
|                                           |   |                                   |    | Due                one year |   | year                through |   | Due                after |   |
|                                           |   | Amount                                 |    | or                less |   | five                years |   | five                years |   |
|                                           |   |                                   |    |   |   |   |   |   |   |
| Commercial                and other            |   | $                                      | 197,174 |   | $ | 102,870 |   | $ | 82,154 |   | $ | 12,150 |   |
| SBA                                            |   |                                   | 59,888  |   |   | 8,857 |   |   | 186 |   |   | 50,845 |   |
| Real                estate construction        |   |                                   | 103,710 |   |   | 102,005 |   |   | 1,705 |   |   | - |   |
| Real                estate-other               |   |                                   | 115,313 |   |   | 44,802 |   |   | 25,633 |   |   | 44,878 |   |
| Factoring                / Asset-Based Lending |   |                                   | 56,924  |   |   | 56,924 |   |   | - |   |   | - |   |
| Other                                          |   |                                   | 7,771   |   |   | 4,656 |   |   | 3,115 |   |   | - |   |
| Total                loans                     |   | $                                      | 540,780 |   | $ | 320,114 |   | $ | 112,793 |   | $ | 107,873 |   |

**Off-Balance      Sheet Arrangements and Aggregate Contractual Obligations**

| · | 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”); |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | 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; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | 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 |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | 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. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Standby                Letters of Credit in the amount of $16.1                million. |
|--------|-----------------------------------------------------------------------------------------|

----

|                                          |   | As                  of September 30, 2007 |   |
|-----------------------------------------------|--------|-------------------------------------------|--------|
|                                          |   | Payments                  due by period   |   |
|                                          |   |                                      |   | Less                  than |   | 1                  -                  3 |   | 3                  -                  5 |   | More                  than |   |
| (dollars                  in thousands)  |   | Total                                     |   | 1                  year |   | years |   | years |   | 5                  years |   |
|                                          |   |                                      |   |   |   |   |   |   |   |   |   |
| Long-term                  contracts          |   | $                                         | 3,640  |   | $ | 1,151 |   | $ | 1,981 |   | $ | 508 |   | $ | - |   |
|                                          |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  leases             |   |                                      | 15,494 |   |   | 1,808 |   |   | 2,887 |   |   | 3,778 |   |   | 7,021 |   |
|                                          |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                         |   | $                                         | 19,134 |   | $ | 2,959 |   | $ | 4,868 |   | $ | 4,286 |   | $ | 7,021 |   |

**ITEM      4 – CONTROLS AND PROCEDURES**

**Disclosure      Controls and Procedures**

**Internal      Control over Financial Reporting**

----

**PART      II – OTHER INFORMATION**

**ITEM      1 – LEGAL PROCEEDINGS**

**ITEM      1A – RISK FACTORS**

**ITEM      2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF      PROCEEDS**

**ITEM      3 – DEFAULTS UPON SENIOR SECURITIES**

**ITEM      4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY      HOLDERS**

**ITEM      5 – OTHER INFORMATION**

**ITEM      6 – EXHIBITS**

**(a)      Exhibits**

----

**SIGNATURES**

|                                   | **BRIDGE                CAPITAL HOLDINGS**                                 |
|----------------------------------------|----------------------------------------------------------------------------|
|                                   |                                                                       |
|                                   |                                                                       |
| Dated:                November 1, 2007 | By:                                                                        | /s/                Daniel P. Myers |
|                                   |                                                                       |
|                                   | Daniel                P. Myers                                             |
|                                   | President                and Chief Executive Officer                       |
|                                   | (Principal                Executive Officer)                               |
|                                   |                                                                       |
|                                   |                                                                       |
| Dated:                November 1, 2007 | By:                                                                        | /s/                Thomas A. Sa |
|                                   |                                                                       |
|                                   | Thomas                A. Sa                                                |
|                                   | Executive                Vice President                                    |
|                                   | Chief                Administrative Officer and Chief Financial Officer    |
|                                   | (Principal                Financial and Accounting                Officer) |

----

**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                        |

----