##### Table of Contents



UNITED STATES 
    SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    March 31,
    2011oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number:
    001-33803
  WESTERN LIBERTY
    BANCORP
 (Exact name of registrant as
    specified in its charter)
  Delaware

26-0469120(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)    8363 W. Sunset
    Road, Suite 350, Las Vegas, Nevada 89113(702) 966-7400
 (Address, including zip code,
    and telephone number, including area code, of registrants
    principal executive offices)
  þ o
  Regulation S-T o o
  Rule 12b-2
  Large accelerated filer
    o


Accelerated filer
    o



Smaller reporting company
    þ



Non-accelerated filer
    o   Rule 12b-2 o þ




---



##### 



WESTERN
    LIBERTY BANCORP
  TABLE OF
    CONTENTS
   
 PART I.

FINANCIAL INFORMATIONItem 1.

Financial Statements


3Condensed Consolidated Balance Sheets as of March
    31, 2011 and December 31, 2010 (unaudited)


3Condensed Consolidated Statements of Operations
    for the three months ended March 31, 2011 and 2010
    (unaudited)


4Condensed Consolidated Statements of Cash Flows
    for the three months ended March 31, 2011 and 2010
    (unaudited)


5Notes to Condensed Consolidated Financial
    Statements (unaudited)


6Item 2.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


27Item 3.

Quantitative and Qualitative Disclosures About
    Market Risk


37Item 4.

Controls and Procedures


37PART II.

OTHER INFORMATIONItem 1.

Legal Proceedings


38Item 1A.

Risk Factors


38Item 2.

Unregistered Sales of Equity Securities and Use
    of Proceeds


38Item 3.

Defaults Upon Senior Securities


38Item 4.

(Removed and Reserved)


38Item 5.

Other Information


38Item 6.

Exhibits


38Signatures


39Exhibit 31.1


40Exhibit 31.2


41Exhibit 32.1


42Exhibit 32.2


43EX-31.1EX-31.2EX-32.1EX-32.2   2




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION  ITEM 1.
    FINANCIAL
    STATEMENTS  WESTERN
    LIBERTY BANCORP
  CONDENSED CONSOLIDATED BALANCE SHEETS
     (UNAUDITED)
 ($ in 000s)
  March 31,


December 31,2011


2010ASSETSCash and due from banks

$
8,749


$
11,675Money market funds


52,206



52,206Interest-bearing deposits in banks


29,488



39,346Cash and cash equivalents


90,443



103,227Certificates of deposits


16,784



26,889Securities, available for sale


1,345



1,819Securities, held to maturity (fair value of $3,745 and $5,287,
    respectively)


3,737



5,314Loans, net of allowance ($1,290 and $36, respectively)


100,917



106,223Premises and equipment, net


1,120



1,228Other real estate owned, net


5,444



3,406Goodwill


5,633



5,633Other intangibles, net


744



768Accrued interest receivable and other assets


2,624



3,039Total assets

$
228,791


$
257,546LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Non-interest bearing demand

$
51,847


$
67,087Interest bearing:


79,966



93,199Total deposits


131,813



160,286Contingent consideration


1,816



1,816Accrued interest payable and other liabilities


1,604



1,615Total liabilities


135,233



163,717Stockholders Equity:Preferred stock, $.0001 par value; 1,000,000 shares
    authorized; 
    None issued or outstandingCommon stock, $.0001 par value; 100,000,000 shares
    authorized;
    15,088,023 issued and outstanding


1



1Additional paid-in capital


117,458



117,317Accumulated deficit


(23,898
)


(23,489
)Accumulated other comprehensive loss, net


(3
)


Total stockholders equity


93,558



93,829Total liabilities and stockholders equity

$
228,791


$
257,546    3




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##### Table of Contents



WESTERN
    LIBERTY BANCORPCONDENSED CONSOLIDATED STATEMENTS
    OF OPERATIONS  (UNAUDITED)For the Three Months Ended March 31, 2011 and 2010
    ($ in 000s except per share data)
 Service1st BankPredecessorFor the ThreeFor the Three Months Ended


Months EndedMarch 31, 2011


March 31, 2010


March 31, 2010Interest and dividend income:Loans, including fees

$
3,782


$



$
1,972Securities, taxable and other


66



2



235Total interest and dividend income


3,848



2



2,207Interest expense:Deposits


112







417Total interest expense


112







417Net interest income


3,736



2



1,790Provision for loan losses


1,364







1,518Net interest income after provision for loan losses


2,372



2



272Non-interest income:Service charges


78







119Other


43







31Total non-interest income


121







150Non-interest expenseSalaries and employee benefits


793



75



1,046Occupancy, equipment and depreciation


374







428Computer service charges


77







66Federal deposit insurance


152







116Legal and professional fees


936



855



655Advertising and business development


20







28Insurance


71



74



21Telephone


26







24Printing and supplies


142



105



8Stock-based compensation


141



631



Provision for unfunded commitments


(133
)






(297
)Other


303



16



144Total non-interest expense


2,902



1,756



2,239Net loss

$
(409
)

$
(1,754
)

$
(1,817
)Comprehensive loss

$
(406
)

$
(1,754
)

$
(1,812
)Basic loss per common share

$
(0.03
)

$
(0.16
)

$
(36.48
)Diluted loss per common share

$
(0.03
)

$
(0.16
)

$
(36.48
)Weighted average common shares outstanding  basic


15,088,023



10,959,169



49,811Weighted average common shares outstanding  diluted


15,088,023



10,959,169



49,811    4




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##### Table of Contents



WESTERN
    LIBERTY BANCORPCONDENSED CONSOLIDATED STATEMENTS
    OF CASH FLOWS  (UNAUDITED)For the Three Months Ended March 31, 2011 and 2010
    ($ in 000s)
 Service1st BankPredecessorFor the ThreeFor the Three Months Ended


Months EndedMarch 31, 2011


March 31, 2010


March 31, 2010Cash flow from operating activitiesNet (loss) income

$
(409
)

$
(1,754
)

$
(1,817
)Adjustments to reconcile net (loss) income to net cash used in
    operating activitiesStock-based compensation


141



631



131Accretion of loan discount, net


(2,248
)






Amortization of core deposit intangible


24







Provision of loan losses


1,364







1,518Depreciation of premises and equipment


108







135Amortization of securities premiums/discounts, net


81







5Changes in operating assets and liabilitiesAccrued interest receivable and other assets


415



1



94Accrued expenses and other liabilities


(11
)


(370
)


(383
)Net cash used in operating activities


(535
)


(1,492
)


(317
)Cash flow from investing activitiesPurchases of certificates of deposit










(20,147
)Proceeds from maturities of certificates of deposit


10,105







5,145Purchases of securities available for sale










(1,000
)Proceeds from maturities of securities available for sale










2,500Proceeds from principal paydowns of securities available for sale


452







Proceeds from maturities of securities held to maturity


1,500







2,009Proceeds from principal payments of securities held to maturity


15







Purchase of premises and equipment










(56
)Proceeds from loan sale


2,975







Net decrease in loans


1,177







4,071Net cash provided by (used in) investing activities


16,224







(7,478
)Cash flow from financing activitiesNet increase (decrease) in deposits


(28,473
)






311Net cash provided by (used in) financing activities


(28,473
)






311Net decrease in cash and equivalents


(12,784
)


(1,492
)


(7,484
)Cash and cash equivalents, beginning of period


103,227



87,969



49,633Cash and cash equivalents, end of period

$
90,443


$
86,477


$
42,149Supplemental disclosures of cash flow information:Cash payments for:
    Interest paid to depositors

$
107






$
447Supplemental schedule of non-cash investing activities:
    Loans transferred to other real estate owned

$
2,038






$
    5




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##### Table of Contents



Western
    Liberty Bancorp
 Notes to
    Unaudited Condensed Consolidated Financial Statements  Note 1.
    NATURE OF
    BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES  Nature of
    business
      Basis
    of Presentation
    Form 10-K
  Predecessors
   6




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##### Table of Contents



Use of
    estimates in the preparation of financial statements
    Reclassifications
    Loans
          case-by-case
   7




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##### Table of Contents



8




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##### Table of Contents



Interest
    and fees on loans
          Other
    real estate acquired through foreclosure
    Goodwill
    and other intangible assets
      Stock
    compensation plans
   9




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##### Table of Contents



Fair
    value measurement
    Fair
    values of financial instruments
      Certificates
    of deposit
    Securities
    Loans
    Impaired
    loans
    Accrued
    interest receivable and payable
   10




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##### Table of Contents



Restricted
    stock
    Deposit
    liabilities
    Off-balance
    sheet instruments
    Loss per
    share
    Form 10-K
  Recent
    accounting pronouncements
  2010-06, Improving Disclosure about Fair Value Measurements i.e
  Adoption
    of New Accounting Standards
   11




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##### Table of Contents



Note 2.
    BUSINESS
    COMBINATION        1 32
 12




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##### Table of Contents



Note 3.
    FAIR
    VALUE          Fair
    value on a recurring basis
    Securities
    available for sale
    Fair Value Measurements at March 31, 2011Quoted Prices inActive Markets for


Significant Other


Significant($ in 000s)




Identical Assets


Observable Inputs


Unobservable InputsDescription

Total


(Level 1)


(Level 2)


(Level 3)Securities available for saleCollateralized Mortgage Obligation Securities-commercial

$
1,345


$



$
1,345


$
  13




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##### Table of Contents



Fair Value Measurements at December 31, 2010For the Three Months Ended March 31, 2011Quoted Prices inActive Markets for

Significant Other

Significant($ in 000s)



Identical Assets

Observable Inputs

Unobservable InputsDescription

Total

(Level 1)

(Level 2)

(Level 3)Securities available for saleCollateralized Mortgage Obligation Securities-commercial

$
1,819


$



$
1,819


$
   Fair
    value on a nonrecurring basis
    Fair Value Measurements at March 31, 2011Quoted Prices inActive Markets for


Significant Other


Significant($ in 000s)




Identical Assets


Observable Inputs


Unobservable InputsDescription

Total


(Level 1)


(Level 2)


(Level 3)Impaired loansCommercial real estate

$
1,218










$
1,218Other real estate owned


5,444











5,444$
6,662


$



$



$
6,662   Fair Value Measurements at December 31, 2010Quoted Prices inActive Markets for


Significant Other


SignificantIdentical Assets


Observable Inputs


Unobservable InputsDescription

Total


(Level 1)


(Level 2)


(Level 3)Impaired loansConstruction, land development and other land

$
3,220










$
3,220Commercial real estate


1,648











1,648Residential real estate


2,900











2,900Commercial and Industrial


3,670











3,670Other real estate owned


3,406











3,406$
14,844


$



$



$
14,844   Impaired
    loans
   14




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##### Table of Contents



Other
    real estate owned
    Fair
    value of financial instruments
      March 31, 2011


December 31, 2010($ in 000s)

Carrying Amount


Fair Value


Carrying Amount


Fair ValueFinancial Assets:Cash and cash equivalents

$
90,443


$
90,443


$
103,227


$
103,227Certificates of deposits


16,784



16,784



26,889



26,889Securities available for sale


1,345



1,345



1,819



1,819Securities held to maturity


3,737



3,745



5,314



5,287Loans, net


100,917



100,340



106,223



106,223Accrued interest receivable


417



417



447



447Financial Liabilities:Deposits

$
131,813


$
131,813


$
160,286


$
160,286Accrued interest payable


38



38



35



35   Loan
    Commitments
   15




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##### Table of Contents



Note 4.
    SECURITIES    March 31, 2011Gross


GrossAmortized


Unrealized


Unrealized


FairSecurities Available for Sale

Cost


Gains


Losses


ValueCollateralized Mortgage Obligation Securities-commercial

$
1,348


$



$
(3
)

$
1,345$
1,348


$



$
(3
)

$
1,345   Gross


GrossAmortized


Unrecognized


Unrecognized


FairSecurities Held to Maturity

Cost


Gains


Losses


ValueCorporate Debt Securities

$
3,101


$
5


$



$
3,106Small Business Administration Loan Pools


636



3







639$
3,737


$
8


$



$
3,745   December 31, 2010Gross

GrossAmortized

Unrealized

Unrealized

FairSecurities Available for Sale

Cost

Gains

Losses

ValueCollateralized Mortgage Obligation Securities-commercial

$
1,819


$



$



$
1,819$
1,819


$



$



$
1,819   Gross


GrossAmortized


Unrecognized


Unrecognized


FairSecurities Held to Maturity

Cost


Gains


Losses


ValueCorporate Debt Securities

$
4,663


$



$
(27
)

$
4,636Small Business Administration Loan Pools


651











651$
5,314


$



$
(27
)

$
5,287      16




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##### Table of Contents



March 31, 2011Less Than Twelve Months


Over Twelve MonthsGross





GrossUnrealized


Fair


Unrealized


Fair(Losses)


Value


(Losses)


ValueSecurities Available for SaleCollateralized Mortgage ObligationSecurities  commercial


(3
)


1,345







$
(3
)

$
1,345


$



$
Securities Held to MaturityCorporate Debt Securities














Small Business Administration Loan Pools














$



$



$



$
   December 31, 2010Less Than Twelve Months


Over Twelve MonthsGross





GrossUnrealized


Fair


Unrealized


Fair(Losses)


Value


(Losses)


ValueSecurities Available for SaleCollateralized Mortgage ObligationSecurities  commercial














$



$



$



$
Securities Held to MaturityCorporate Debt Securities


(27
)


4,636







Small Business Administration Loan Pools














$
(27
)

$
4,636


$



$
   other-than-temporarily-impaired
    Amortized Cost


Fair ValueSecurities available for saleDue in one year or less

$
964


$
961Due after one year through five years


384



384$
1,348


$
1,345  17




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##### Table of Contents



Amortized Cost


Fair ValueSecurities held to maturityDue in one year or less

$
1,549


$
1,552Due after one year through five years


1,552



1,554Small Business Administration loan pools


636



639$
3,737


$
3,745   Note 5.
    LOANS    March 31,


December 31,($ in 000s)

2011


2010Construction, land development and other land

$
4,619


$
5,923Commercial real estate


53,416



54,975Residential real estate


3,980



9,247Commercial and industrial


40,041



35,946Consumer


131



131Plus: net deferred loan costs


20



37102,207



106,259Less: allowance for loan losses


(1,290
)


(36
)$
100,917


$
106,223     Construction,LandCommercial


Residential





Development,($ in 000s)

Commercial


Real Estate


Real Estate


Consumer


Other Land


TotalBeginning balance, December 31, 2010

$
36


















$
36Provision for loan losses


512



421



136



1



294



1,364Recoveries






4















4Loan charge-offs


















(114
)


(114
)Balance, March 31, 2011

$
548


$
425


$
136


$
1


$
180


$
1,290     March 31, 2011($ in 000s)

Amount


% of loansAllowance for Loan and Lease Losses:
    Loans Secured by Real EstateConstruction, land development and other land

$
180



4.51
%Commercial real estate


425



52.22
%Residential real estate (including multi-family)


136



3.89
%Total loans secured by real estate


741



60.62
%Commercial and industrial


548



39.25
%Consumer


1



0.13
%Total allowance for loan losses


1,290



100.00
%  18




---



##### Table of Contents



Construction,LandCommercial


Residential





Development,($ in 000s)

Commercial


Real Estate


Real Estate


Consumer


Other Land


TotalMarch 31, 2011Allowance for loan losses:Ending allowance balance attributed to loans:Individually evaluated for impairment

$
3


$
274


$



$



$



$
277Collectively evaluated for impairment


394



74



136



1



180



785Acquired with deteriorated credit quality


151



77















228Total ending allowance balance

$
548


$
425


$
136


$
1


$
180


$
1,290Loans:Loans individually evaluated for impairment

$
45


$
1,148


$



$



$



$
1,193Loans collectively evaluated for impairment


37,102



47,783



3,976



133



2,143



91,137Loans acquired with deteriorated credit quality


2,970



4,437











2,470



9,877Total ending loans balance

$
40,117


$
53,368


$
3,976


$
133


$
4,613


$
102,207December 31, 2010Allowance for loan losses:Ending allowance balance attributed to loans:Individually evaluated for impairment

$



$



$



$



$



$
Collectively evaluated for impairment


36



















36Acquired with deteriorated credit quality






















Total ending allowance balance

$
36


$



$



$



$



$
36Loans:Loans individually evaluated for impairment

$



$



$



$



$



$
Loans collectively evaluated for impairment


30,917



50,449



3,988



133



1,006



86,493Loans acquired with deteriorated credit quality


5,421



4,458



5,257







4,630



19,766Total ending loans balance

$
36,338


$
54,907


$
9,245


$
133


$
5,636


$
106,259  19




---



##### Table of Contents



March 31, 2011Percent of








Percent ofImpaired





Total


Reserve





Total($ in 000s)

Balance


%


Loans


Balance


%


AllowanceConstruction, land development and other land loans

$
1,060



20.16
%


1.04
%










Commercial real estate


2,793



53.11
%


2.73
%


351



69.50
%


27.21
%Residential real estate (1-4 family)






















Commercial and industrial


1,406



26.73
%


1.38
%


154



30.50
%


11.94
%Consumer






















Total impaired loans

$
5,259



100.00
%


5.15
%

$
505



100.00
%


39.15
%December 31, 2010Percent of








Percent ofImpaired





Total


Reserve





Total($ in 000s)

Balance


%


Loans


Balance


%


AllowanceConstruction, land development and other land loans

$
3,220



28.15
%


3.03
%










Commercial real estate


1,648



14.41
%


1.55
%










Residential real estate (1-4 family)


2,900



25.35
%


2.73
%










Commercial and industrial


3,670



32.09
%


3.46
%










Consumer






















Total impaired loans

$
11,438



100.00
%


10.77
%










     March 31, 2011Over 90 days($ in 000s)

Nonaccrual


and accruingConstruction, land development and other land

$
428


$
308Commercial real estate


2,371



Residential real estate






Commercial and industrial


1,406



152Consumer






Total

$
4,205


$
460   December 31, 2010Over 90 days($ in 000s)

Nonaccrual


and accruingConstruction, land development and other land

$
2,632


$
Commercial real estate


1,224



Residential real estate


2,900



Commercial and industrial


3,670



Consumer






Total

$
10,426


$
  20




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##### Table of Contents



March 31, 2011($ in 000s)

30 to 89 days


Over 90 days


Total Past DueConstruction, land development and other land

$
850


$
308


$
1,158Commercial real estate


466







466Residential real estate










Commercial and industrial


60



1,255



1,315Consumer










Total

$
1,376


$
1,563


$
2,939   December 31, 2010($ in 000s)

30 to 89 days


Over 90 days


Total Past DueConstruction, land development and other land

$



$
2,518


$
2,518Commercial real estate






1,003



1,003Residential real estate






2,900



2,900Commercial and industrial


3,108



38



3,146Consumer










Total

$
3,108


$
6,459


$
9,567     Special
    Mention
    Substandard
    Doubtful
     21




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##### Table of Contents



March 31, 2011($ in 000s)

Pass


Special Mention


Substandard


Doubtful


TotalConstruction, land development and other land

$
1,727


$



$
2,886


$



$
4,613Commercial real estate


44,511



2,807



6,050







53,368Residential real estate


1,032







2,944







3,976Commercial and industrial


34,496



375



4,303



943



40,117Consumer


133















133Total

$
81,899


$
3,182


$
16,183


$
943


$
102,207   December 31, 2010($ in 000s)

Pass


Special Mention


Substandard


Doubtful


TotalConstruction, land development and other land

$
1,006


$



$
4,630


$



$
5,636Commercial real estate


47,643



2,806



4,296



162



54,907Residential real estate


3,988







5,257







9,245Commercial and industrial


30,677



240



4,483



938



36,338Consumer


133















133Total

$
83,447


$
3,046


$
18,666


$
1,100


$
106,259   Purchased
    Loans
    ($ in 000s)

March 31, 2011


December 31, 2010Construction, land development and other land

$
2,470


$
4,630Commercial real estate


4,437



4,458Residential real estate






5,257Commercial and industrial


2,970



5,421Balance December 31, 2010

$
9,877


$
19,766        22




---



##### Table of Contents



case-by-case
    ($ in 000s)

Yield Discount


Credit DiscountBalance, December 31, 2010

$
539


$
9,317Accreted to income


(147
)


(1,549
)Other changes, net






(91
)Balance, March 31, 2011

$
392


$
7,677     Note 6.
    GOODWILL
    AND INTANGIBLES          March 31,($ in 000s)

2011Balance at beginning of period

$
768Amortization expense


(24
)Balance at end of period

$
744Gross carrying amount

$
784Accumulated amortization


(40
)Net book value

$
744  23




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##### Table of Contents



Note 7.
    OTHER
    REAL ESTATE ACQUIRED THROUGH FORECLOSURE    Three Months Ended($ in 000s)

March 31, 2011Balance, beginning of period

$
3,406Additions


2,038Dispositions


Valuation adjustments in the period


Balance, end of period

$
5,444     Note 8.
    DEPOSITS    March 31,


December 31,($ in 000s)

2011


2010Demand deposits,
    non-interest
    bearing

$
51,847


$
67,087NOW and money market accounts


39,721



56,509Savings deposits


1,031



1,273Time certificates, $100 or more


33,335



30,498Other time certificates


5,879



4,919Total

$
131,813


$
160,286   Note 9.
    STOCK-BASED
    COMPENSATION  Form 10-K.
  Note 10.
    REGULATORY
    MATTERS     24




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##### Table of Contents



March 31, 2011To Be Well CapitalizedMinimum Required for


Under Prompt Corrective


Minimum Required UnderActual


Capital Adequacy Purposes


Action Regulations


Regulatory Agreements($ in millions)

Amount


Ratio


Amount


Ratio


Amount


Ratio


Amount


RatioTotal capital (to risk-weighted assets)Consolidated

$
88.6



71.7
%

$
9.9



8.0
%


N/A



N/A



N/A



N/AService1st Bank

$
38.1



33.7
%

$
9.0



8.0
%

$
11.3



10.0
%

$
13.5



12.0
%Tier 1 capital (to
    risk-weighted
    assets)Consolidated

$
87.2



70.6
%

$
4.9



4.0
%


N/A



N/A



N/A



N/AService1st Bank

$
36.7



32.5
%

$
4.5



4.0
%

$
6.8



6.0
%

$




N/ATier 1 capital (to average assets)Consolidated

$
87.2



33.0
%

$
10.6



4.0
%


N/A



N/A



N/A



N/AService1st Bank

$
36.7



21.8
%

$
6.7



4.0
%

$
8.4



5.0
%

$
16.9



10.0
%   December 31, 2010To Be Well CapitalizedMinimum Required for


Under Prompt Corrective


Minimum Required UnderActual


Capital Adequacy Purposes


Action Regulations


Regulatory Agreements($ in millions)

Amount


Ratio


Amount


Ratio


Amount


Ratio


Amount


RatioTotal capital (to risk-weighted assets)Consolidated

$
87.8



68.8
%

$
10.2



8.0
%


N/A



N/A



N/A



N/AService1st Bank

$
36.3



31.0
%

$
9.4



8.0
%

$
11.7



10.0
%

$
14.1



12.0
%Tier 1 capital (to
    risk-weighted
    assets)Consolidated

$
87.4



68.4
%

$
5.1



4.0
%


N/A



N/A



N/A



N/AService1st Bank

$
35.9



30.6
%

$
4.7



4.0
%

$
7.0



6.0
%

$




N/ATier 1 capital (to average assets)Consolidated

$
87.4



30.5
%

$
11.5



4.0
%


N/A



N/A



N/A



N/AService1st Bank

$
35.9



18.1
%

$
7.9



4.0
%

$
9.9



5.0
%

$
19.8



10.0
%    25




---



##### Table of Contents



Note 11.
    LEGAL
    CONTINGENCIES   26




---



##### Table of Contents



ITEM 2.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  You should read the following discussion and analysis in
    conjunction with unaudited condensed consolidated financial
    statements in Part I, Item 1 of this Quarterly Report
    on
    Form 10-Q
    and our combined and consolidated financial statements and
    related notes thereto included in or incorporated into
    Part II, Item 8 of our Annual Report on
    Form 10-K
    and the Risk Factors included in Part I, Item 1A of
    our Annual Report on
    Form 10-K
    , as well as other cautionary statements and risks described
    elsewhere in this Quarterly Report on
    Form 10-Q
    and our Annual Report on
    Form 10-K
    .
    Forward-Looking
    Statements
  Form 10-Q Form 10-Q,
  Overview
  Business of WLBC:
  SBA
   27




---



##### Table of Contents



Summary
    of Results of Operations and Financial Condition
    Results
    of Operations for the Three Months Ended March 31,
    2011
   28




---



##### Table of Contents



For the Three MonthsEnded March 31, 2011InterestAverage


Income/($ in 000s)

Balance


Expense


YieldunauditedINTEREST EARNING ASSETS:Securities, taxable and other

$
97,992


$
67



0.27
%Portfolio loans(1)


105,618



3,782



14.52
%Total interest-earnings assets/interest income


203,610



3,849



7.67
%NON-INTEREST EARNING ASSETS:Cash and due from banks


8,427Allowance for loan losses


(83
)Other assets


14,298Total assets

$
226,252LIABILITIES AND STOCKHOLDERS EQUITY INTEREST-BEARING
    LIABILITIES:Interest checking

$
10,140



7



0.28
%Money Markets


24,825



33



0.54
%Savings


1,177



1



0.34
%Time deposits under $100,000


5,244



11



0.85
%Time deposits $100,00 and over


31,587



58



0.74
%Short-term borrowings


3,667



2



0.22
%Total interest-bearing liabilities/interest expense


76,640



112



0.59
%Non-interest-bearing demand deposits


53,308Accrued interest on deposits and other liabilities


2,641Total liabilities


132,589Stockholders equity


93,663Total liabilities and stockholders equity

$
226,252Net interest income and interest rate spread(2)





$
3,737



7.08
%Net interest margin(3)










7.44
%Ratio of Average Interest-Earning Assets to Interest-Bearing
    Liabilities


266
%     (1)
    
    Average balance includes nonaccrual loans of approximately
    $4,205 for 2011. Net loan costs of $20 are included in the yield
    computation for 2011.(2)
    
    Net interest spread represents the average yield earned on
    interest earning assets less the average rate paid on interest
    bearing liabilities.(3)
    
    Net interest margin represents net interest income as a
    percentage of average interest-earning assets.  interest-bearing
 29




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##### Table of Contents



Non-Interest
    Income
    Three Months Ended($ in thousands)

March 31, 2011


December 31, 2010


March 31, 2010Service charge income

$
78


$
57


$
Other non-interest income


43



51



$
121


$
108


$
    30




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##### Table of Contents



Non-Interest
    Expense
    Three Months EndedMarch 31,


December 31,


March 31,($ in thousands)

2011


2010


2010Salaries and employee benefits

$
793


$
1,284


$
75Occupancy, equipment and depreciation


374



269



Computer service charges


77



51



Federal deposit insurance


152



90



Professional fees


936



1,177



855Advertising and business development


20



7



Insurance


71



600



74Telephone


26



19



Stationary and supplies


142



41



105Stock-based compensation


141



2,357



631Other


170



480



16$
2,902


$
6,375


$
1,756       Income
    Taxes
    Supplemental
    Results of Operation Information for Predecessors
    Service1st
    Bank of Nevada
  Results
    of Operations
       31




---



##### Table of Contents



Financial
    Condition
  Assets
    Cash
    and Cash Equivalents
    Investment
    Securities and Certificates of Deposits held at other
    Banks
       32




---



##### Table of Contents



Loans
           33




---



##### Table of Contents



March 31,


December 31,($ in thousands)

2011


2010Nonaccrual loans:Loans Secured by Real EstateConstruction, land development and other land loans

$
428


$
2,632Commercial real estate


2,371



1,224Residential real estate (1-4 family)


0



2,900Total loans secured by real estate


2,799



6,756Commercial and industrial


1,406



3,670Consumer


0



0Total nonaccrual loans


4,205



10,426Past due (90 days) loans and accruing interest:Loans Secured by Real Estate Construction, land development and
    other land loans

$
308


$
0Commercial real estate


0



0Residential real estate (1-4 family)


0



0Total loans secured by real estate


308



0Commercial and industrial


152



0Consumer


0



0Total past due loans accruing interest


460



0Total nonperforming loans(1)


4,665



10,426Other real estate owned (OREO)


5,444



3,406Total nonperforming assets

$
10,109


$
13,832Non-Performing loans as a percentage of total portfolio loans


4.56%



9.81%Non-Performing assets as a percentage of total assets


4.42%



5.37%Allowance for loan losses as a percentage of nonperforming loans


27.65%



0.35%     (1)
    
    There are no nonperforming restructured loans that have not
    already been presented in nonaccrual. Certain loans that have
    demonstrated compliance with the restructured loan terms for
    more than six months have been returned to performing status as
    a result of the sustained performance.  OREO
    Deposits
       34




---



##### Table of Contents



Capital
    Resources
    and/or
    de novo
 35




---



##### Table of Contents



To Be AdequatelyCapitalized UnderRegulatoryCapital Ratios:

WLBC


Service1st


AgreementMarch, 31, 2011Tier 1 equity to average assets


33.0
%


21.8
%


10.0
%Tier 1 risk-based capital ratio


70.6
%


32.5
%


6.0
%Total risk-based capital ratio


71.7
%


33.7
%


12.0
%December 31, 2010Tier 1 equity to average assets


30.5
%


18.1
%


10.0
%Tier 1 risk-based capital ratio


68.4
%


30.6
%


6.0
%Total risk-based capital ratio


68.8
%


31.0
%


12.0
%   Liquidity
    and Asset/Liability Management
          Commitments and Contingencies
   36




---



##### Table of Contents



March 31,

December 31,($ in 000s)

2011

2010Commitments to extend credit

$
12,520


$
18,504Standby commercial letters of credit

$
577


$
590     Application
    of Critical Accounting Policies and Estimates
  Form 10-K Form 10-K
  ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Form 10-K
  ITEM 4.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e) Form 10-Q.
 37




---



##### Table of Contents



Changes
    in Internal Control over Financial Reporting
  Form 10-Q
 PART II 
    OTHER INFORMATION ITEM 1.
    LEGAL
    PROCEEDINGS    ITEM 1A.
    RISK
    FACTORS  Form 10-K
  ITEM 2.
    UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS    ITEM 3.
    DEFAULTS
    UPON SENIOR SECURITIES    ITEM 4.
    (REMOVED
    AND RESERVED)  ITEM 5.
    OTHER
    INFORMATION    ITEM 6.
    EXHIBITS  Form 10-Q.
  ExhibitNumber

Description31
.1

Certification of Principal Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200231
.2

Certification of Principal Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200232
.1

Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200232
.2

Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002  38




---



##### Table of Contents



SIGNATURES    WESTERN LIBERTY BANCORP
  William
    E. Martin
   Title:
    Chief Executive Officer     WESTERN LIBERTY BANCORP
  George
    A. Rosenbaum Jr.
   Title:
    Chief Financial Officer    39