----

**FORM      10-Q**

| R | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR                15(d) |
|---|--------------------------------------------------------------------------------|

|   | OF                THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|-------------------------------------------------------|

| £ | TRANSITION                REPORT PURSUANT TO SECTION 13 OR                15(d) |
|--------|---------------------------------------------------------------------------------|

|   | OF                THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|-------------------------------------------------------|

|   | **IMPERIAL                CAPITAL BANCORP, INC.**                                    |   |
|--------|--------------------------------------------------------------------------------------|--------|
|   | (Exact                Name of Registrant as                Specified in its Charter) |   |

| Delaware                                                                                     |   | 95-4596322                                                      |
|----------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|
| (State                or Other Jurisdiction                of Incorporation or Organization) |   | (IRS                Employer Identification                No.) |
|                                                                                         |   |                                                            |
| 888                Prospect St., Suite 110, La Jolla, California                             |   | 92037                                                           |
| (Address                of Principal                Executive Offices)                       |   | (Zip                Code)                                       |

| (858)                551-0511                                                                           |
|---------------------------------------------------------------------------------------------------------|
| (Registrant’s                Telephone                Number, Including Area                Code) |

| Indicate                by check mark whether the registrant (1) has filed all reports required                to                be filed by Section  13 or 15(d) of the Securities Exchange Act                of 1934 during the preceding 12 months (or for such shorter period                that                the registrant was required to file such reports), and (2) has been                subject to such filing requirements for the past 90 days.  Yes                R   No                £. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Indicate                by check mark whether the registrant is a large accelerated filer,                an                accelerated filer, or a non-accelerated filer. See definition of                “accelerated filer” in Rule 12b-2 of the Exchange Act. Large Accelerated                Filer £   Accelerated                Filer R   Non-Accelerated                Filer £                                                                                                     |
| Indicate                by check mark whether the Registrant is a shell company(as                defined in Rule 12b-2 of the Exchange Act).  Yes £   No                R.                                                                                                                                                                                                                                                                                                                                               |
| Number                of shares of common stock of the registrant: 5,472,660 outstanding                as of                August 3, 2007.                                                                                                                                                                                                                                                                                                                                                                                                            |

----

**IMPERIAL      CAPITAL BANCORP, INC.**

**FORM      10-Q**

**FOR      THE THREE AND SIX MONTHS ENDED JUNE 30, 2007**

**TABLE      OF CONTENTS**

| **PART                I – FINANCIAL INFORMATION** |                                                                                                                                  |
|---------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|
| Item                1.                                  | Financial                Statements                                                                                                   | 3 |
|                                                    | Consolidated                Balance Sheets – June 30, 2007                (Unaudited) and December 31, 2006                     | 3 |
|                                                    | Consolidated                Statements of Income – Three and                Six Months Ended June 30, 2007 and 2006 (Unaudited) | 4 |
|                                                    | Consolidated                Statements of Cash Flows – Six                Months Ended June 30, 2007 and 2006 (Unaudited)       | 5 |
|                                                    | Notes                to the Unaudited Consolidated Financial                Statements                                                | 6 |
| Item                2.                                  | Management’s                Discussion and Analysis of                Financial Condition and Results of Operations             | 11 |
| Item                3.                                  | Quantitative                and Qualitative Disclosures                about Market Risk                                              | 24 |
| Item                4.                                  | Controls                and Procedures                                                                                                | 24 |
|                                                    |                                                                                                                                  |   |
| **PART                II – OTHER INFORMATION**    |                                                                                                                                  |
| Item                1.                                  | Legal                Proceedings                                                                                                      | 26 |
| Item                1A.                                 | Risk                Factors                                                                                                           | 26 |
| Item                2.                                  | Unregistered                Sales of Equity Securities and Use of                Proceeds                                             | 26 |
| Item                3.                                  | Defaults                Upon Senior Securities                                                                                        | 26 |
| Item                4.                                  | Submission                of Matters to a Vote of Security                Holders                                                     | 26 |
| Item                5.                                  | Other                Information                                                                                                      | 26 |
| Item                6.                                  | Exhibits                                                                                                                              | 26 |
|                                                    | Signatures                                                                                                                            | 27 |
|                                                    | Certifications                                                                                                                        | 29 |

Exhibit      3.1

Exhibit      31.1

Exhibit      31.2

Exhibit      32

**Forward      Looking Statements**

----

Table          of Contents

**PART      I– FINANCIAL      INFORMATION**

| **IMPERIAL                CAPITAL BANCORP, INC. AND                SUBSIDIARIES**                                                                                                                                                    |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                BALANCE SHEETS**                                                                                                                                                                                       |   |
|                                                                                                                                                                                                                                 |   |   |   |   |   |   |
|                                                                                                                                                                                                                                 |   | **June                30,** |   |   |   |   |
|                                                                                                                                                                                                                                 |   | **2007** |   |   | **December                31,** |   |
|                                                                                                                                                                                                                                 |   | **(unaudited)** |   |   | **2006** |   |
|                                                                                                                                                                                                                                 |   | **(in                thousands, except share data)** |   |
| **Assets**                                                                                                                                                                                                                           |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                                             |   | $ | 36,673 |   |   | $ | 30,448 |   |
| Investment                securities available-for-sale, at fair value                                                                                                                                                               |   |   | 114,972 |   |   |   | 99,527 |   |
| Investment                securities held-to-maturity, at amortized cost                                                                                                                                                             |   |   | 175,506 |   |   |   | 193,512 |   |
| Stock                in Federal Home Loan Bank                                                                                                                                                                                       |   |   | 50,296 |   |   |   | 48,984 |   |
| Loans,                net (net of allowance for loan losses of $43,000 and $46,049 as                of June 30, 2007 and December 31, 2006, respectively)                                                                           |   |   | 3,081,771 |   |   |   | 2,973,368 |   |
| Interest                receivable                                                                                                                                                                                                   |   |   | 20,530 |   |   |   | 20,753 |   |
| Other                real estate and other assets owned, net                                                                                                                                                                         |   |   | 17,774 |   |   |   | 6,729 |   |
| Premises                and equipment, net                                                                                                                                                                                           |   |   | 8,839 |   |   |   | 7,851 |   |
| Deferred                income taxes                                                                                                                                                                                                 |   |   | 11,835 |   |   |   | 11,513 |   |
| Goodwill                                                                                                                                                                                                                             |   |   | 3,118 |   |   |   | 3,118 |   |
| Other                assets                                                                                                                                                                                                          |   |   | 19,350 |   |   |   | 19,707 |   |
| Total                assets                                                                                                                                                                                                          |   | $ | 3,540,664 |   |   | $ | 3,415,510 |   |
|                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |
| **Liabilities                and Shareholders’ Equity**                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Liabilities:                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Deposit                accounts                                                                                                                                                                                                      |   | $ | 2,158,427 |   |   | $ | 2,059,405 |   |
| Federal                Home Loan Bank advances and other borrowings                                                                                                                                                                  |   |   | 1,038,262 |   |   |   | 1,010,000 |   |
| Accounts                payable and other liabilities                                                                                                                                                                                |   |   | 30,016 |   |   |   | 38,168 |   |
| Junior                subordinated debentures                                                                                                                                                                                        |   |   | 86,600 |   |   |   | 86,600 |   |
| Total                liabilities                                                                                                                                                                                                     |   |   | 3,313,305 |   |   |   | 3,194,173 |   |
|                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Commitments                and contingencies                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Shareholders’                equity:                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Preferred                stock, 5,000,000 shares authorized, none issued                                                                                                                                                             |   |   | — |   |   |   | — |   |
| Contributed                capital - common stock, $.01 par value; 20,000,000 shares authorized,                9,137,256 and 9,065,672 issued as of June 30, 2007 and December 31,                2006,                respectively |   |   | 84,672 |   |   |   | 82,073 |   |
| Retained                earnings                                                                                                                                                                                                     |   |   | 254,839 |   |   |   | 243,823 |   |
| Accumulated                other comprehensive (loss) income, net                                                                                                                                                                    |   |   | (434 | ) |   |   | 35 |   |
|                                                                                                                                                                                                                                 |   |   | 339,077 |   |   |   | 325,931 |   |
| Less                treasury stock, at cost 3,940,120 and 3,803,969 shares as of June                30, 2007 and December 31, 2006, respectively                                                                                    |   |   | (111,718 | ) |   |   | (104,594 | ) |
|                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Total                shareholders' equity                                                                                                                                                                                            |   |   | 227,359 |   |   |   | 221,337 |   |
|                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Total                liabilities and shareholders' equity                                                                                                                                                                            |   | $ | 3,540,664 |   |   | $ | 3,415,510 |   |

----

Table          of Contents

| **IMPERIAL                CAPITAL BANCORP, INC. AND                SUBSIDIARIES** |
|-----------------------------------------------------------------------------------|
| **CONSOLIDATED                STATEMENTS OF INCOME**                              |
| **(Unaudited)**                                                                   |

|                                                                |   |                                                                     |   |   |                                                                   |   |
|---------------------------------------------------------------------|--------|--------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------|--------|
|                                                                |   | **For                the Three Months Ended****June                30,** |   |   | **For                the Six Months Ended****June                30,** |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |
|                                                                |   | **2007**                                                                 |   |   | **2006**                                                               |   |   | **2007** |   |   | **2006** |   |
|                                                                |   | **(in                thousands, except per share data)**                 |   |
| Interest                income:                                     |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |
| Loans,                including fees                                |   | $                                                                        | 58,464 |   |                                                                   | $      | 51,082 |   |   | $ | 117,227 |   |   | $ | 98,219 |   |
| Cash                and investment securities                       |   |                                                                     | 4,519  |   |                                                                   |   | 4,678 |   |   |   | 9,088 |   |   |   | 8,969 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Total                interest income                                |   |                                                                     | 62,983 |   |                                                                   |   | 55,760 |   |   |   | 126,315 |   |   |   | 107,188 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                expense:                                    |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Deposit                accounts                                     |   |                                                                     | 27,485 |   |                                                                   |   | 19,773 |   |   |   | 54,073 |   |   |   | 36,971 |   |
| Federal                Home Loan Bank advances and other borrowings |   |                                                                     | 11,593 |   |                                                                   |   | 9,977 |   |   |   | 22,270 |   |   |   | 19,339 |   |
| Junior                subordinated debentures                       |   |                                                                     | 2,088  |   |                                                                   |   | 2,026 |   |   |   | 4,166 |   |   |   | 3,984 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Total                interest expense                               |   |                                                                     | 41,166 |   |                                                                   |   | 31,776 |   |   |   | 80,509 |   |   |   | 60,294 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income before provision for loan losses |   |                                                                     | 21,817 |   |                                                                   |   | 23,984 |   |   |   | 45,806 |   |   |   | 46,894 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Provision                for loan losses                            |   |                                                                     | 500    |   |                                                                   |   | 1,500 |   |   |   | 1,250 |   |   |   | 2,250 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income after provision for loan losses  |   |                                                                     | 21,317 |   |                                                                   |   | 22,484 |   |   |   | 44,556 |   |   |   | 44,644 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest                income:                                 |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Late                and collection fees                             |   |                                                                     | 236    |   |                                                                   |   | 261 |   |   |   | 539 |   |   |   | 484 |   |
| Other                                                               |   |                                                                     | 607    |   |                                                                   |   | 346 |   |   |   | 1,020 |   |   |   | 840 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Total                non-interest income                            |   |                                                                     | 843    |   |                                                                   |   | 607 |   |   |   | 1,559 |   |   |   | 1,324 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest                expense:                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Compensation                and benefits                            |   |                                                                     | 5,056  |   |                                                                   |   | 5,075 |   |   |   | 11,238 |   |   |   | 11,095 |   |
| Occupancy                and equipment                              |   |                                                                     | 1,998  |   |                                                                   |   | 1,876 |   |   |   | 3,941 |   |   |   | 3,682 |   |
| Other                                                               |   |                                                                     | 4,849  |   |                                                                   |   | 4,882 |   |   |   | 9,145 |   |   |   | 9,093 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Total                general and administrative                     |   |                                                                     | 11,903 |   |                                                                   |   | 11,833 |   |   |   | 24,324 |   |   |   | 23,870 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Real                estate and other assets owned expense, net      |   |                                                                     | 195    |   |                                                                   |   | (177 | ) |   |   | 358 |   |   |   | (71 | ) |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Total                non-interest expense                           |   |                                                                     | 12,098 |   |                                                                   |   | 11,656 |   |   |   | 24,682 |   |   |   | 23,799 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Income                before provision for income taxes             |   |                                                                     | 10,062 |   |                                                                   |   | 11,435 |   |   |   | 21,433 |   |   |   | 22,169 |   |
| Provision                for income taxes                           |   |                                                                     | 4,024  |   |                                                                   |   | 4,689 |   |   |   | 8,658 |   |   |   | 9,091 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| NET                INCOME                                           |   | $                                                                        | 6,038  |   |                                                                   | $      | 6,746 |   |   | $ | 12,775 |   |   | $ | 13,078 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                earnings per share                             |   | $                                                                        | 1.10   |   |                                                                   | $      | 1.22 |   |   | $ | 2.32 |   |   | $ | 2.34 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                earnings per share                           |   | $                                                                        | 1.08   |   |                                                                   | $      | 1.18 |   |   | $ | 2.26 |   |   | $ | 2.28 |   |
|                                                                |   |                                                                     |   |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends                declared per share of common stock         |   | $                                                                        | 0.16   |   |                                                                   | $      | 0.15 |   |   | $ | 0.32 |   |   | $ | 0.30 |   |
|                                                                |   |

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Table          of Contents

| **IMPERIAL                CAPITAL BANCORP, INC. AND                SUBSIDIARIES**                                 |   |
|-------------------------------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                STATEMENTS OF CASH FLOWS**                                                          |   |
| **(Unaudited)**                                                                                                   |   |
|                                                                                                              |   |
|                                                                                                              |   | **For                the Six Months Ended****June                30,** |   |
|                                                                                                              |   | **2007** |   |   | **2006** |   |
|                                                                                                              |   | **(in                thousands)** |   |
| Cash                Flows From Operating Activities:                                                              |   |   |   |   |   |   |
| Net                Income                                                                                         |   | $ | 12,775 |   |   | $ | 13,078 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities:   |   |   |   |   |   |   |   |   |
| Depreciation                and amortization of premises and equipment                                            |   |   | 1,495 |   |   |   | 1,349 |   |
| Amortization                of premium on purchased loans                                                         |   |   | 2,798 |   |   |   | 2,349 |   |
| Accretion                of deferred loan origination fees, net of costs                                          |   |   | (1,389 | ) |   |   | (1,728 | ) |
| Provision                for loan losses                                                                          |   |   | 1,250 |   |   |   | 2,250 |   |
| Other,                net                                                                                         |   |   | (1,657 | ) |   |   | (998 | ) |
| Decrease                (increase) in interest receivable                                                         |   |   | 223 |   |   |   | (1,036 | ) |
| Decrease                in other assets                                                                           |   |   | 369 |   |   |   | 149 |   |
| Decrease                in accounts payable and other liabilities                                                 |   |   | (8,157 | ) |   |   | (13,235 | ) |
|                                                                                                              |   |   |   |   |   |   |   |   |
| Net                cash provided by operating                activities                                           |   |   | 7,707 |   |   |   | 2,178 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |
| Cash                Flows From Investing Activities:                                                              |   |   |   |   |   |   |   |   |
| Purchases                of investment securities available-for-sale                                              |   |   | (59,029 | ) |   |   | (14,863 | ) |
| Proceeds                from maturity and calls of investment securities                available-for-sale        |   |   | 43,288 |   |   |   | 14,235 |   |
| Purchases                of investment securities held-to-maturity                                                |   |   | — |   |   |   | (7,771 | ) |
| Proceeds                from the maturity and redemption of investment securities                held-to-maturity |   |   | 17,991 |   |   |   | 24,138 |   |
| Purchase                of stock in Federal Home Loan Bank                                                        |   |   | — |   |   |   | (2,800 | ) |
| Purchase                of loans                                                                                  |   |   | (47,343 | ) |   |   | (226,436 | ) |
| Other                (increases) decreases in loans, net                                                          |   |   | (74,853 | ) |   |   | 112,549 |   |
| Cash                paid for capital expenditures                                                                 |   |   | (2,483 | ) |   |   | (1,921 | ) |
|                                                                                                              |   |   |   |   |   |   |   |   |
| Net                cash used in investing                activities                                               |   |   | (122,429 | ) |   |   | (102,869 | ) |
|                                                                                                              |   |   |   |   |   |   |   |   |
| Cash                Flows From Financing Activities:                                                              |   |   |   |   |   |   |   |   |
| Proceeds                and excess tax benefits from exercise of employee stock                options            |   |   | 2,462 |   |   |   | 314 |   |
| Cash                paid to acquire treasury stock                                                                |   |   | (7,124 | ) |   |   | (7,356 | ) |
| Cash                paid for dividends                                                                            |   |   | (1,675 | ) |   |   | (832 | ) |
| Increase                in deposit accounts                                                                       |   |   | 99,022 |   |   |   | 75,581 |   |
| Net                (repayments of) proceeds from short-term borrowings                                            |   |   | (3,498 | ) |   |   | 31,795 |   |
| Proceeds                from long-term borrowings                                                                 |   |   | 100,000 |   |   |   | 89,869 |   |
| Repayments                of long-term borrowings                                                                 |   |   | (68,240 | ) |   |   | (38,330 | ) |
|                                                                                                              |   |   |   |   |   |   |   |   |
| Net                cash provided by financing                activities                                           |   |   | 120,947 |   |   |   | 151,041 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |
| Net                increase in cash and cash                equivalents                                           |   |   | 6,225 |   |   |   | 50,350 |   |
| Cash                and cash equivalents at                beginning of period                                    |   |   | 30,448 |   |   |   | 93,747 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents at                end of period                                          |   | $ | 36,673 |   |   | $ | 144,097 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |
| Supplemental                Cash Flow Information:                                                                |   |   |   |   |   |   |   |   |
| Cash                paid during the period for interest                                                           |   | $ | 80,597 |   |   | $ | 58,405 |   |
| Cash                paid during the period for income taxes                                                       |   | $ | 7,337 |   |   | $ | 9,816 |   |
| Non-Cash                Investing and Financing Transactions:                                                     |   |   |   |   |   |   |   |   |
| Loans                transferred to other real estate and other assets owned                                      |   | $ | 11,134 |   |   | $ | 1,747 |   |
| Cash                dividends declared but not yet paid                                                           |   | $ | 836 |   |   | $ | 832 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |

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Table          of Contents

**IMPERIAL      CAPITAL BANCORP, INC. AND SUBSIDIARIES**

**NOTESTO      THE UNAUDITED CONSOLIDATED FINANCIAL      STATEMENTS**

**NOTE      1 – BASIS OF PRESENTATION**

**NOTE      2 – ACCOUNTING FOR STOCK-BASED COMPENSATION**

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Table          of Contents

|                                       |   | **Weighted-Average                Assumptions****for                Option Grants** |
|--------------------------------------------|--------|-------------------------------------------------------------------------------------|
|                                       |   | **2007**                                                                            |   | **2006** |
|                                       |   |                                                                                |   |   |
| Dividend                Yield              |   | 1.18%                                                                               |   | 1.20% |
| Expected                Volatility         |   | 23.83%                                                                              |   | 22.94% |
| Risk-Free                Interest Rates    |   | 4.72%                                                                               |   | 5.00% |
| Expected                Lives              |   | Five                Years                                                           |   | Five                Years |
| Weighted-Average                Fair Value |   | $14.49                                                                              |   | $13.32 |

**NOTE      3 – EARNINGS PER SHARE**

|                                                             |   | **Net                Income**                            |    |   | **Weighted-****Average                Shares****Outstanding** |   |   | **Per****Share****Amount** |   |
|------------------------------------------------------------------|--------|----------------------------------------------------------|---------|--------|---------------------------------------------------------------|--------|--------|----------------------------|--------|
|                                                             |   | **(in                thousands, except per share data)** |    |
| **For                the Three Months Ended June 30,**           |   |                                                     |    |   |                                                          |   |   |                       |   |
| **2007**                                                         |   |                                                     |    |   |                                                          |   |   |                       |   |
| Basic                EPS                                         |   | $                                                        | 6,038   |   |                                                          |   | 5,489  |                       |   | $ | 1.10 |   |
| Effect                of dilutive stock options                  |   |                                                     | — |   |                                                          |   | 124    |                       |   |   | (0.02 | ) |
| Diluted                EPS                                       |   | $                                                        | 6,038   |   |                                                          |   | 5,613  |                       |   | $ | 1.08 |   |
|                                                             |   |                                                     |    |   |                                                          |   |   |                       |   |   |   |   |
| **2006**                                                         |   |                                                     |    |   |                                                          |   |   |                       |   |   |   |   |
| Basic                EPS                                         |   | $                                                        | 6,746   |   |                                                          |   | 5,550  |                       |   | $ | 1.22 |   |
| Effect                of dilutive stock options                  |   |                                                     | — |   |                                                          |   | 147    |                       |   |   | (0.04 | ) |
| Diluted                EPS                                       |   | $                                                        | 6,746   |   |                                                          |   | 5,697  |                       |   | $ | 1.18 |   |
|   **For                the Six Months Ended June 30,** |   |                                                     |    |
| **2007**                                                         |   |                                                     |    |   |                                                          |   |   |                       |   |   |   |   |
| Basic                EPS                                         |   | $                                                        | 12,775  |   |                                                          |   | 5,509  |                       |   | $ | 2.32 |   |
| Effect                of dilutive stock options                  |   |                                                     | — |   |                                                          |   | 139    |                       |   |   | (0.06 | ) |
| Diluted                EPS                                       |   | $                                                        | 12,775  |   |                                                          |   | 5,648  |                       |   | $ | 2.26 |   |
|                                                             |   |                                                     |    |   |                                                          |   |   |                       |   |   |   |   |
| **2006**                                                         |   |                                                     |    |   |                                                          |   |   |                       |   |   |   |   |
| Basic                EPS                                         |   | $                                                        | 13,078  |   |                                                          |   | 5,587  |                       |   | $ | 2.34 |   |
| Effect                of dilutive stock options                  |   |                                                     | — |   |                                                          |   | 144    |                       |   |   | (0.06 | ) |
| Diluted                EPS                                       |   | $                                                        | 13,078  |   |                                                          |   | 5,731  |                       |   | $ | 2.28 |   |

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**NOTE      4 – COMPREHENSIVE INCOME**

|                                                                                                                                                                                                                                                                                                                                                                    |   | **Three                Months Ended** |   |   | **Six                Months Ended** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                    |   | **June                30,**           |   |   | **June                30,**         |   |
|                                                                                                                                                                                                                                                                                                                                                                    |   | **2007**                              |   |   | **2006**                            |   |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                    |   | **(in                thousands)**     |   |
|                                                                                                                                                                                                                                                                                                                                                                    |   |                                  |   |   |                                |   |   |   |   |   |   |   |
| Net                Income                                                                                                                                                                                                                                                                                                                                               |   | $                                     | 6,038  |   |                                | $      | 6,746 |   |   | $ | 12,775 |   |   | $ | 13,078 |   |
| Other                comprehensive loss:                                                                                                                                                                                                                                                                                                                                |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Change                in net unrealized loss on investment securities available-for-sale,                net of                tax benefit of $557 and $51 for the three months ended June 30, 2007                and                2006, respectively, and $313 and $48 for the six months ended June                30,                2007 and 2006, respectively. |   |                                  | (835   | )      |                                |   | (76 | ) |   |   | (469 | ) |   |   | (70 | ) |
|                                                                                                                                                                                                                                                                                                                                                                    |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                Income                                                                                                                                                                                                                                                                                                                                     |   | $                                     | 5,203  |   |                                | $      | 6,670 |   |   | $ | 12,306 |   |   | $ | 13,008 |   |

**NOTE      5 – IMPAIRED LOANS RECEIVABLE**

**NOTE      6 – NEW ACCOUNTING PRONOUNCEMENTS**

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**NOTE      7 – BUSINESS SEGMENT INFORMATION**

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|                                                   |   | **Lending**                                         |    |   |                         |   |   |             |   |
|--------------------------------------------------------|--------|-----------------------------------------------------|---------|--------|------------------------------|--------|--------|------------------|--------|
|                                                   |   | **Operations**                                      |    |   | **All                Other** |   |   | **Consolidated** |   |
|                                                   |   | **(in                thousands)**    |    |
| **For                the three months ended June 30,** |   |                                                |    |   |                         |   |   |             |   |
| ** 2007**                                         |   |                                                |    |   |                         |   |   |             |   |
|  Revenues                from external customers  |   | $                                                   | 63,260  |   |                         | $      | 566    |             |   | $ | 63,826 |   |
|  Total                interest income             |   |                                                | 62,539  |   |                         |   | 444    |             |   |   | 62,983 |   |
|  Total                interest expense            |   |                                                | 39,078  |   |                         |   | 2,088  |             |   |   | 41,166 |   |
|  Net                income                        |   |                                                | 7,480   |   |                         |   | (1,442 | )                |   |   | 6,038 |   |
|                                                   |   |                                                |    |   |                         |   |   |             |   |   |   |   |
| ** 2006**                                         |   |                                                |    |   |                         |   |   |             |   |   |   |   |
|  Revenues                from external customers  |   | $                                                   | 56,441  |   |                         | $      | (74    | )                |   | $ | 56,367 |   |
|  Total                interest income             |   |                                                | 55,632  |   |                         |   | 128    |             |   |   | 55,760 |   |
|  Total                interest expense            |   |                                                | 29,750  |   |                         |   | 2,026  |             |   |   | 31,776 |   |
|  Net                income                        |   |                                                | 8,504   |   |                         |   | (1,758 | )                |   |   | 6,746 |   |
|                                                   |   |                                                |    |   |                         |   |   |             |   |   |   |   |
|                                                   |   |                                                |    |   |                         |   |   |             |   |   |   |   |
| **For                the six months ended June 30,**   |   |                                                |    |   |                         |   |   |             |   |   |   |   |
| ** 2007**                                         |   |                                                |    |   |                         |   |   |             |   |   |   |   |
|  Revenues                from external customers  |   | $                                                   | 126,958 |   |                         | $      | 916    |             |   | $ | 127,874 |   |
|  Total                interest income             |   |                                                | 125,606 |   |                         |   | 709    |             |   |   | 126,315 |   |
|  Total                interest expense            |   |                                                | 76,343  |   |                         |   | 4,166  |             |   |   | 80,509 |   |
|  Net                income                        |   |                                                | 16,047  |   |                         |   | (3,272 | )                |   |   | 12,775 |   |
|                                                   |   |                                                |    |   |                         |   |   |             |   |   |   |   |
| ** 2006**                                         |   |                                                |    |   |                         |   |   |             |   |   |   |   |
|  Revenues                from external customers  |   | $                                                   | 108,369 |   |                         | $      | 143    |             |   | $ | 108,512 |   |
|  Total                interest income             |   |                                                | 106,894 |   |                         |   | 294    |             |   |   | 107,188 |   |
|  Total                interest expense            |   |                                                | 56,310  |   |                         |   | 3,984  |             |   |   | 60,294 |   |
|  Net                income                        |   |                                                | 16,302  |   |                         |   | (3,224 | )                |   |   | 13,078 |   |

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

**Application      of Critical Accounting Policies and Accounting Estimates**

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Table          of Contents

**RESULTS      OF OPERATIONS**

**Three      Months Ended June 30, 2007 Compared to Three Months Ended June 30,      2006**

**Executive      Summary**

**Net      Interest Income and Margin**

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Table          of Contents

|                                                                                          |   | **For                the Three Months Ended June 30,** |      |
|-----------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|-----------|
|                                                                                          |   | **2007**                                               |      |   | **2006** |   |
|                                                                                          |   | **Average                Balance**                     |      |   | **Income/****Expense** |   |   | **Yield/****Rate** |   |   | **Average                Balance** |   |   | **Income/****Expense** |   |   | **Yield/****Rate** |   |
|                                                                                          |   | **(dollars                in thousands)**              |      |
| **Assets**                                                                                    |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                and investment securities                                                 |   | $                                                      | 365,701   |   |   | $ | 4,519 |   |   |   | 4.96 | % |   | $ | 428,488 |   |   | $ | 4,678 |   |   |   | 4.38 | % |
| Loans                receivable:                                                              |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                loans                                                                    |   |                                                   | 3,080,233 |   |   |   | 58,464 |   |   |   | 7.61 | % |   |   | 2,636,187 |   |   |   | 51,082 |   |   |   | 7.77 | % |
|                                                                                          |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                interest earning assets                                                  |   |                                                   | 3,445,934 |   |   | $ | 62,983 |   |   |   | 7.33 | % |   |   | 3,064,675 |   |   | $ | 55,760 |   |   |   | 7.30 | % |
| Non-interest                earning assets                                                    |   |                                                   | 80,514    |   |   |   |   |   |   |   |   |   |   |   | 68,229 |   |   |   |   |   |   |   |   |   |
| Allowance                for loan losses                                                      |   |                                                   | (46,218   | ) |   |   |   |   |   |   |   |   |   |   | (45,951 | ) |   |   |   |   |   |   |   |   |
| Total                assets                                                                   |   | $                                                      | 3,480,230 |   |   |   |   |   |   |   |   |   |   | $ | 3,086,953 |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                and Shareholders’ Equity**                                 |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                bearing deposit accounts:                                             |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                bearing demand                                                        |   | $                                                      | 25,246    |   |   | $ | 246 |   |   |   | 3.91 | % |   | $ | 30,541 |   |   | $ | 211 |   |   |   | 2.77 | % |
| Money                market and passbook                                                      |   |                                                   | 230,458   |   |   |   | 2,871 |   |   |   | 5.00 | % |   |   | 212,145 |   |   |   | 2,307 |   |   |   | 4.36 | % |
| Time                certificates                                                              |   |                                                   | 1,843,336 |   |   |   | 24,368 |   |   |   | 5.30 | % |   |   | 1,540,731 |   |   |   | 17,255 |   |   |   | 4.49 | % |
| Total                interest bearing deposit                accounts                         |   |                                                   | 2,099,040 |   |   |   | 27,485 |   |   |   | 5.25 | % |   |   | 1,783,417 |   |   |   | 19,773 |   |   |   | 4.45 | % |
| FHLB                advances and other borrowings                                             |   |                                                   | 1,023,291 |   |   |   | 11,593 |   |   |   | 4.54 | % |   |   | 965,379 |   |   |   | 9,977 |   |   |   | 4.15 | % |
| Junior                subordinated debentures                                                 |   |                                                   | 86,600    |   |   |   | 2,088 |   |   |   | 9.67 | % |   |   | 86,600 |   |   |   | 2,026 |   |   |   | 9.38 | % |
| Total                interest bearing liabilities                                             |   |                                                   | 3,208,931 |   |   | $ | 41,166 |   |   |   | 5.15 | % |   |   | 2,835,396 |   |   | $ | 31,776 |   |   |   | 4.50 | % |
| Non-interest                bearing demand accounts                                           |   |                                                   | 10,377    |   |   |   |   |   |   |   |   |   |   |   | 13,362 |   |   |   |   |   |   |   |   |   |
| Other                non-interest bearing liabilities                                         |   |                                                   | 34,727    |   |   |   |   |   |   |   |   |   |   |   | 30,937 |   |   |   |   |   |   |   |   |   |
| Shareholders’                equity                                                     |   |                                                   | 226,195   |   |   |   |   |   |   |   |   |   |   |   | 207,258 |   |   |   |   |   |   |   |   |   |
| Total                liabilities and                shareholders’                equity |   | $                                                      | 3,480,230 |   |   |   |   |   |   |   |   |   |   | $ | 3,086,953 |   |   |   |   |   |   |   |   |   |
| Net                interest spread *(1)*                                                      |   |                                                   |      |   |   |   |   |   |   |   | 2.18 | % |   |   |   |   |   |   |   |   |   |   | 2.80 | % |
|                                                                                          |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income before provision for                loan losses            |   |                                                   |      |   |   | $ | 21,817 |   |   |   |   |   |   |   |   |   |   | $ | 23,984 |   |   |   |   |   |
| Net                interest margin *(2)*                                                      |   |                                                   |      |   |   |   |   |   |   |   | 2.54 | % |   |   |   |   |   |   |   |   |   |   | 3.14 | % |
|                                                                                          |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| *(1)* | *Average                yield on interest earning assets minus average rate paid on interest                bearing liabilities.* |
|-------|-----------------------------------------------------------------------------------------------------------------------------------|

| *(2)* | *Net                interest income divided by total average interest earning                assets.* |
|-------|-------------------------------------------------------------------------------------------------------|

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|                                                                                   |   | **For                the Three Months Ended****June                30, 2007 and 2006** |   |
|----------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|--------|
|                                                                                   |   | **Increase                (Decrease) Due to:**                                         |   |
|                                                                                   |   | **Rate**                                                                               |   |   | **Volume** |   |   | **Total** |   |
|                                                                                   |   | **(in                thousands)**                                                      |   |
| Interest                and fees earned from:                                          |   |                                                                                   |   |   |   |   |   |   |   |
| Cash                and investment securities                                          |   | $                                                                                      | 576    |   |   | $ | (735 | ) |   | $ | (159 | ) |
| Loans                                                                                  |   |                                                                                   | (1,070 | ) |   |   | 8,452 |   |   |   | 7,382 |   |
|                                                                                   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |
|   Total                (decrease)                increase in interest income |   |                                                                                   | (494   | ) |   |   | 7,717 |   |   |   | 7,223 |   |
|                                                                                   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Interest                paid on:                                                       |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Deposit                accounts                                                        |   |                                                                                   | 3,886  |   |   |   | 3,826 |   |   |   | 7,712 |   |
| FHLB                advances and other borrowings                                      |   |                                                                                   | 987    |   |   |   | 629 |   |   |   | 1,616 |   |
| Junior                subordinated debentures                                          |   |                                                                                   | 62     |   |   |   | — |   |   |   | 62 |   |
|                                                                                   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Total                increase in interest expense                                      |   |                                                                                   | 4,935  |   |   |   | 4,455 |   |   |   | 9,390 |   |
|                                                                                   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |
| (Decrease)                increase in net interest income                              |   | $                                                                                      | (5,429 | ) |   | $ | 3,262 |   |   | $ | (2,167 | ) |

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**Provision      for Loan Losses**

| ·   | the                  risk characteristics of various classifications of                  loans; |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | general                  portfolio trends relative to asset and portfolio                  size; |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | asset                  categories; |
|--------------------|------------------------------------|

| ·   | potential                  credit and geographic                  concentrations; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | delinquency                  trends and nonaccrual loan levels; |
|--------------------|-----------------------------------------------------------------|

| ·   | historical                  loss experience and risks associated with changes in economic,                  social and                  business conditions; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                  underwriting standards in effect when the loan was                  made. |
|--------------------|------------------------------------------------------------------------------------------------|

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**Non-Interest      Income**

**Non-Interest      Expense**

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Table          of Contents

**Six      Months Ended June 30, 2007 Compared to Six Months Ended June 30,      2006**

**Executive      Summary**

**Net      Interest Income and Margin**

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Table          of Contents

|                                                                                          |   | **For                the Six Months Ended June 30,** |      |
|-----------------------------------------------------------------------------------------------|--------|------------------------------------------------------|-----------|
|                                                                                          |   | **2007**                                             |      |   | **2006** |   |
|                                                                                          |   | **Average                Balance**                   |      |   | **Income/****Expense** |   |   | **Yield/****Rate** |   |   | **Average                Balance** |   |   | **Income/****Expense** |   |   | **Yield/****Rate** |   |
|                                                                                          |   | **(dollars                in thousands)**            |      |
| **Assets**                                                                                    |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                and investment securities                                                 |   | $                                                    | 369,433   |   |   | $ | 9,088 |   |   |   | 4.96 | % |   | $ | 418,229 |   |   | $ | 8,969 |   |   |   | 4.32 | % |
| Loans                receivable:                                                              |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                loans                                                                    |   |                                                 | 3,042,421 |   |   |   | 117,227 |   |   |   | 7.77 | % |   |   | 2,591,345 |   |   |   | 98,219 |   |   |   | 7.64 | % |
|                                                                                          |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                interest earning assets                                                  |   |                                                 | 3,411,854 |   |   | $ | 126,315 |   |   |   | 7.47 | % |   |   | 3,009,574 |   |   | $ | 107,188 |   |   |   | 7.18 | % |
| Non-interest                earning assets                                                    |   |                                                 | 77,969    |   |   |   |   |   |   |   |   |   |   |   | 66,869 |   |   |   |   |   |   |   |   |   |
| Allowance                for loan losses                                                      |   |                                                 | (46,396   | ) |   |   |   |   |   |   |   |   |   |   | (45,322 | ) |   |   |   |   |   |   |   |   |
| Total                assets                                                                   |   | $                                                    | 3,443,427 |   |   |   |   |   |   |   |   |   |   | $ | 3,031,121 |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                and Shareholders’ Equity**                                 |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                bearing deposit accounts:                                             |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                bearing demand                                                        |   | $                                                    | 24,825    |   |   | $ | 434 |   |   |   | 3.53 | % |   | $ | 33,328 |   |   | $ | 458 |   |   |   | 2.77 | % |
| Money                market and passbook                                                      |   |                                                 | 226,647   |   |   |   | 5,589 |   |   |   | 4.97 | % |   |   | 206,321 |   |   |   | 4,219 |   |   |   | 4.12 | % |
| Time                certificates                                                              |   |                                                 | 1,832,487 |   |   |   | 48,050 |   |   |   | 5.29 | % |   |   | 1,503,404 |   |   |   | 32,294 |   |   |   | 4.33 | % |
| Total                interest bearing deposit                accounts                         |   |                                                 | 2,083,959 |   |   |   | 54,073 |   |   |   | 5.23 | % |   |   | 1,743,053 |   |   |   | 36,971 |   |   |   | 4.28 | % |
| FHLB                advances and other borrowings                                             |   |                                                 | 1,000,576 |   |   |   | 22,270 |   |   |   | 4.49 | % |   |   | 950,113 |   |   |   | 19,339 |   |   |   | 4.10 | % |
| Junior                subordinated debentures                                                 |   |                                                 | 86,600    |   |   |   | 4,166 |   |   |   | 9.70 | % |   |   | 86,600 |   |   |   | 3,984 |   |   |   | 9.28 | % |
| Total                interest bearing liabilities                                             |   |                                                 | 3,171,135 |   |   | $ | 80,509 |   |   |   | 5.12 | % |   |   | 2,779,766 |   |   | $ | 60,294 |   |   |   | 4.37 | % |
| Non-interest                bearing demand accounts                                           |   |                                                 | 11,007    |   |   |   |   |   |   |   |   |   |   |   | 13,927 |   |   |   |   |   |   |   |   |   |
| Other                non-interest bearing liabilities                                         |   |                                                 | 36,132    |   |   |   |   |   |   |   |   |   |   |   | 31,269 |   |   |   |   |   |   |   |   |   |
| Shareholders’                equity                                                     |   |                                                 | 225,153   |   |   |   |   |   |   |   |   |   |   |   | 206,159 |   |   |   |   |   |   |   |   |   |
| Total                liabilities and                shareholders’                equity |   | $                                                    | 3,443,427 |   |   |   |   |   |   |   |   |   |   | $ | 3,031,121 |   |   |   |   |   |   |   |   |   |
| Net                interest spread *(1)*                                                      |   |                                                 |      |   |   |   |   |   |   |   | 2.35 | % |   |   |   |   |   |   |   |   |   |   | 2.81 | % |
|                                                                                          |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income before provision for                loan losses            |   |                                                 |      |   |   | $ | 45,806 |   |   |   |   |   |   |   |   |   |   | $ | 46,894 |   |   |   |   |   |
| Net                interest margin *(2)*                                                      |   |                                                 |      |   |   |   |   |   |   |   | 2.71 | % |   |   |   |   |   |   |   |   |   |   | 3.14 | % |
|                                                                                          |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| *(1)* | *Average                yield on interest earning assets minus average rate paid on interest                bearing liabilities.* |
|-------|-----------------------------------------------------------------------------------------------------------------------------------|

| *(2)* | *Net                interest income divided by total average interest earning                assets.* |
|-------|-------------------------------------------------------------------------------------------------------|

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Table          of Contents

|                                                      |   | **For                the Six Months Ended****June                30, 2007 and 2006** |   |
|-----------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|
|                                                      |   | **Increase                (Decrease) Due to:**                                       |   |
|                                                      |   | **Rate**                                                                             |   |   | **Volume** |   |   | **Total** |   |
|                                                      |   | **(in                thousands)**                                                    |   |
| Interest                and fees earned from:             |   |                                                                                 |   |   |   |   |   |   |   |
| Cash                and investment securities             |   | $                                                                                    | 1,236  |   |   | $ | (1,117 | ) |   | $ | 119 |   |
| Loans                                                     |   |                                                                                 | 1,693  |   |   |   | 17,315 |   |   |   | 19,008 |   |
|                                                      |   |                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Total                increase in interest income          |   |                                                                                 | 2,929  |   |   |   | 16,198 |   |   |   | 19,127 |   |
|                                                      |   |                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Interest                paid on:                          |   |                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Deposit                accounts                           |   |                                                                                 | 9,091  |   |   |   | 8,011 |   |   |   | 17,102 |   |
| FHLB                advances and other borrowings         |   |                                                                                 | 1,881  |   |   |   | 1,050 |   |   |   | 2,931 |   |
| Junior                subordinated debentures             |   |                                                                                 | 182    |   |   |   | — |   |   |   | 182 |   |
|                                                      |   |                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Total                increase in interest expense         |   |                                                                                 | 11,154 |   |   |   | 9,061 |   |   |   | 20,215 |   |
|                                                      |   |                                                                                 |   |   |   |   |   |   |   |   |   |   |
| (Decrease)                increase in net interest income |   | $                                                                                    | (8,225 | ) |   | $ | 7,137 |   |   | $ | (1,088 | ) |

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**Provision      for Loan Losses**

**Non-Interest      Income**

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**Non-Interest      Expense**

**FINANCIAL      CONDITION**

**CREDIT      RISK**

**Nonperforming      Assets, Other Loans of Concern and Allowance for Loan      Losses**

|                                                                                                 |   | **June                30,****2007**       |    |   | **December                31,****2006** |   |
|------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|--------|-----------------------------------------|--------|
|                                                                                                 |   | **(dollars                in thousands)** |    |
| Nonaccrual                loans:                                                                     |   |                                      |    |   |                                    |   |
| Real                estate                                                                           |   | $                                         | 24,830  |   |                                    | $      | 14,091 |   |
| Franchise                                                                                            |   |                                      | — |   |                                    |   | 4,549 |   |
| Entertainment                finance                                                                 |   |                                      | 28      |   |                                    |   | 7,614 |   |
| Total                nonaccrual loans                                                                |   |                                      | 24,858  |   |                                    |   | 26,254 |   |
| Other                real estate and other assets owned, net                                         |   |                                      | 17,774  |   |                                    |   | 6,729 |   |
| Total                nonperforming assets                                                            |   |                                      | 42,632  |   |                                    |   | 32,983 |   |
| Performing                troubled debt restructurings                                               |   |                                      | 7,912   |   |                                    |   | 7,994 |   |
| Total                nonperforming assets and performing troubled debt                restructurings |   | $                                         | 50,544  |   |                                    | $      | 40,977 |   |
|                                                                                                 |   |                                      |    |   |                                    |   |   |   |
| Nonaccrual                loans to total loans                                                       |   |                                      | 0.80    | %      |                                    |   | 0.88 | % |
| Allowance                for loan losses to nonaccrual loans                                         |   |                                      | 172.98  | %      |                                    |   | 175.40 | % |
| Nonperforming                assets to total assets                                                  |   |                                      | 1.20    | %      |                                    |   | 0.97 | % |

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|                                                                                  |   | **For                the Six****Months                Ended****June                30,****2007** |   |   | **For                the Year****Ended****December                31,****2006** |   |   | **For                the Six Months Ended****June                30,****2006** |   |
|---------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------|--------|
|                                                                                  |   | **(dollars                in thousands)**                                                        |   |
|                                                                                  |   |                                                                                             |   |   |                                                                            |   |   |                                                                           |   |
| Balance                at beginning of period                                         |   | $                                                                                                | 46,049 |   |                                                                            | $      | 43,817 |                                                                           |   | $ | 43,817 |   |
| Provision                for loan losses                                              |   |                                                                                             | 1,250  |   |                                                                            |   | 5,000  |                                                                           |   |   | 2,250 |   |
| Charge-offs                                                                           |   |                                                                                             | (4,848 | )      |                                                                            |   | (4,134 | )                                                                              |   |   | (533 | ) |
| Recoveries                                                                            |   |                                                                                             | 549    |   |                                                                            |   | 1,366  |                                                                           |   |   | 1,121 |   |
| Net                (charge-offs) recoveries                                           |   |                                                                                             | (4,299 | )      |                                                                            |   | (2,768 | )                                                                              |   |   | 588 |   |
|                                                                                  |   |                                                                                             |   |   |                                                                            |   |   |                                                                           |   |   |   |   |
| Balance                at end of period                                               |   | $                                                                                                | 43,000 |   |                                                                            | $      | 46,049 |                                                                           |   | $ | 46,655 |   |
|                                                                                  |   |                                                                                             |   |   |                                                                            |   |   |                                                                           |   |   |   |   |
| Allowance                for loan losses as a percentage of                loans, net |   |                                                                                             | 1.38   | %      |                                                                            |   | 1.53   | %                                                                              |   |   | 1.74 | % |

**Liquidity**

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**Capital      Resources**

**Item      3. Quantitative and Qualitative      Disclosures      About Market Risk**

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**Item      4. Controls and Procedures**

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**PART      II - OTHER INFORMATION**

**Item      1.    Legal      Proceedings**

**Item      1A.    Risk      Factors**

**Item        2.    Unregistered Sales of        Equity Securities and Use of Proceeds**

|     **Period**                            |   | **Total                Number of Shares Purchased** |    |   | **Average                Price Paid per Share** |   |    | **Total                Number of Shares Purchased as Part of Publicly Announced Plans or                Programs** |   |   | **Maximum                Number of Shares that May Yet Be Purchased Under the Plans or                Programs(1)** |   |
|---------------------------------------------------------------|--------|----------------------------------------------------------|---------|--------|-------------------------------------------------|--------|---------|--------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------|--------|
| April                1, 2007 to April                30, 2007 |   |                                                     | 17,600  |   |                                            | $      | 51.22   |                                                                                                               |   |   | 17,600                                                                                                              |   |   |   | 264,386 |   |
| May                1, 2007 to May                31, 2007     |   |                                                     | 101,000 |   |                                            |   | 51.98   |                                                                                                               |   |   | 101,000                                                                                                             |   |   |   | 163,386 |   |
| June                1, 2007 to June                30, 2007   |   |                                                     | — |   |                                            |   | — |                                                                                                               |   |   | —                                                                                                             |   |   |   | 163,386 |   |
| Total                                                         |   |                                                     | 118,600 |   |                                            | $      | 51.87   |                                                                                                               |   |   | 118,600                                                                                                             |   |   |   | 163,386 |   |

**Item      3.    Defaults      Upon Senior Securities**

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

**Item      5.    Other      Information**

**Item      6.    Exhibits**

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**SIGNATURES**

|                                               | **IMPERIAL                CAPITAL BANCORP, INC.**   |   |
|----------------------------------------------------|-----------------------------------------------------|--------|
|                                               |                                                |   |
| Date:                August 9,                2007 | /s/                George W. Haligowski             |   |
|                                               | George                W. Haligowski                 |   |
|                                               | Chairman                of the Board, President and |   |
|                                               | Chief                Executive Officer              |   |

| Date:                August 9,                2007 | /s/                Timothy M. Doyle            |   |
|----------------------------------------------------|------------------------------------------------|--------|
|                                               | Timothy                M. Doyle                |   |
|                                               | Executive                Managing Director and |   |
|                                               | Chief                Financial Officer         |   |

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**EXHIBIT      INDEX**

| **Regulation                S-K Exhibit Number** |   | **Document**                                                                                                                                                                                                                                                                                              |   | **Reference                to Prior Filling or Exhibit Number Attached                Hereto** |
|--------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------|
|                                             |   |                                                                                                                                                                                                                                                                                                      |   |                                                                                           |
| 3.1                                              |   | Certificate                of Incorporation                                                                                                                                                                                                                                                               |   | 3.1                                                                                            |
| 3.2                                              |   | Bylaws,                as amended                                                                                                                                                                                                                                                                         |   | ***                                                                                            |
| 4                                                |   | Instruments                Defining the Rights of Security Holders, Including                Indentures                                                                                                                                                                                                   |   | **********                                                                                     |
| 10.1                                             |   | 2005                Re-Designated, Amended and Restated Stock Option Plan For Nonemployee                Directors (“NEDP”)                                                                                                                                                                   |   | *****                                                                                          |
| 10.2                                             |   | 2005                Re-Designated, Amended and Restated Employee Stock Incentive Plan                (“ESIP”)                                                                                                                                                                                 |   | ********                                                                                       |
| 10.3a                                            |   | Nonqualified                (Non-Employer Securities) Deferred Compensation Plan                                                                                                                                                                                                                          |   | ********                                                                                       |
| 10.3b                                            |   | Nonqualified                (Employer Securities Only) Deferred Compensation Plan                                                                                                                                                                                                                         |   | ********                                                                                       |
| 10.4                                             |   | Supplemental                Salary Savings Plan                                                                                                                                                                                                                                                           |   | *                                                                                              |
| 10.5a                                            |   | Amended                and Restated Employment Agreement with George W.                Haligowski                                                                                                                                                                                                         |   | ********                                                                                       |
| 10.5b                                            |   | Non-Competition                and Non-Solicitation Agreement with George W. Haligowski                                                                                                                                                                                                                   |   | ********                                                                                       |
| 10.610.710.810.9                                 |   | Change                in Control Severance Agreement with Norval L. BruceChange                in Control Severance Agreement with Timothy M. DoyleChange                in Control Severance Agreement with Lyle C. LodwickChange                in Control Severance Agreement with Phillip E. Lombardi |   | ***********************************                                                            |
| 10.10                                            |   | Recognition                and Retention Plan                                                                                                                                                                                                                                                             |   | **                                                                                             |
| 10.11                                            |   | Voluntary                Retainer Stock and Deferred Compensation Plan for Outside                Directors                                                                                                                                                                                               |   | ****                                                                                           |
| 10.12                                            |   | Amended                and Restated Supplemental Executive Retirement Plan                                                                                                                                                                                                                                |   | ********                                                                                       |
| 10.13                                            |   | Amended                and Restated ITLA Capital Corporation Rabbi Trust                Agreement                                                                                                                                                                                                         |   | *********                                                                                      |
| 10.14                                            |   | Amended                and Restated Salary Continuation Plan                                                                                                                                                                                                                                              |   | ********                                                                                       |
| 10.15                                            |   | Form                of Incentive Stock Option Agreement under ESIP                                                                                                                                                                                                                                        |   | ******                                                                                         |
| 10.1610.17                                       |   | Form                of Non-Qualified Stock Option Agreement under the ESIPForm                of Non-Qualified Stock Option Agreement under the NEDP                                                                                                                                                      |   | *************                                                                                  |
| 10.18                                            |   | Description                of Named Executive Officer Salary, Bonus and Perquisite Arrangements                for 2007                                                                                                                                                                                   |   | ***********                                                                                    |
| 10.19                                            |   | Description                of Director Fee Arrangements                                                                                                                                                                                                                                                   |   | ***********                                                                                    |
| 11                                               |   | Statement                Regarding Computation of Per Share Earnings                                                                                                                                                                                                                                      |   | Not                Required                                                                    |
| 13                                               |   | Annual                Report to Security Holders                                                                                                                                                                                                                                                          |   | None                                                                                           |
| 18                                               |   | Letter                Regarding Change in Accounting Principles                                                                                                                                                                                                                                           |   | None                                                                                           |
| 21                                               |   | Subsidiaries                of the Registrant                                                                                                                                                                                                                                                             |   | Not                Required                                                                    |
| 22                                               |   | Published                Report Regarding Matters Submitted to Vote of Security                Holders                                                                                                                                                                                                    |   | None                                                                                           |
| 23.1                                             |   | Consent                of Ernst & Young LLP                                                                                                                                                                                                                                                           |   | Not                Required                                                                    |
| 24                                               |   | Power                of Attorney                                                                                                                                                                                                                                                                          |   | None                                                                                           |
| 31.1                                             |   | Rule                13a-14(a)/15d-14(a) Certification of Chief Executive                Officer                                                                                                                                                                                                           |   | 31.1                                                                                           |
| 31.2                                             |   | Rule                13a-14(a)/15d-14(a) Certification of Chief Financial                Officer                                                                                                                                                                                                           |   | 31.2                                                                                           |
| 32                                               |   | Section                1350 Certifications of Chief Executive Officer and Chief Financial                Officer                                                                                                                                                                                          |   | 32                                                                                             |

| *                                                   | Filed                as an exhibit to Imperial’s Registration Statement on Form S-1 (File No.                33-96518) filed with the Commission on September 1, 1995, pursuant                to                Section 5 of the Securities Act of 1933. |
|-----------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *                *                                  | Filed                as an exhibit to the Company’s Registration Statement on Form S-4 (File                No. 333-03551) filed with the Commission on May 10, 1996, pursuant                to                Section 5 of the Securities Act of 1933.  |
| *                *                *                 | Filed                as an exhibit to the Company’s Form 10-Q for the quarter ended June 30,                2000 (File No. 0-26960).                                                                                                                      |
| *                *                * *               | Filed                as an exhibit to Amendment No. Two to the Company’s Registration Statement                on Form S-4 (File No. 333-03551) filed with the Commission on June                19,                1996.                                 |
| *                *                * * *             | Filed                as an appendix to the Company’s definitive proxy materials filed on June                27, 2005.                                                                                                                                    |
| *                *                * * * *           | Filed                as an exhibit to the Company’s Current Report on Form 8-K filed on August                9, 2005.                                                                                                                                    |
| *                *                * * * * *         | Filed                as an exhibit to the Company’s Current Report on Form 8-K filed on                November 4, 2005.                                                                                                                                  |
| *                *                * * * * * *       | Filed                as an exhibit to the Company’s Current Report on Form 8-K filed on                February 24, 2006.                                                                                                                                 |
| *                *                * * * * * * *     | Filed                as an exhibit to the Company’s Form 10-Q for the quarter ended June 30,                2006.                                                                                                                                         |
| *                *                * * * * * * * *   | The                Company hereby agrees to furnish the SEC, upon request, copies of                the                instruments defining the rights of the holders of each issue of the                Company's long-term debt.                             |
| *                *                * * * * * * * * * | Filed                as an exhibit to the Company’s Form 10-K for the year ended December 31,                2006.                                                                                                                                        |

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