10-Q

As Filed with the Securities & Exchange Commission on May 13, 2004

SECURITIES & EXCHANGE COMMISSION

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2004.

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             

SEC File Number: 0-30106

PACIFIC CONTINENTAL CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

OREGON	93-1269184
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

111 West 7th Avenue

Eugene, Oregon 97401

(address of Principal Executive Offices) (Zip Code)

(541) 686-8685

(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 Exchange Act 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  x    No  ¨

Indicate whether the Registrant is an accelerated filer (as defined by Exchange Act Rule 12b-2).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:

Common Stock, $1.00 par value, outstanding as of April 30, 2004: 6,835,050

PACIFIC CONTINENTAL CORPORATION

FORM 10-Q

QUARTERLY REPORT

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Income: Three months ended March 31, 2004 and March 31, 2003	3
	Consolidated Statements of Comprehensive Income Three months ended March 31, 2004 and March 31, 2003	4
	Consolidated Balance Sheets: March 31, 2004, December 31, 2003 and March 31, 2003	5
	Consolidated Statements of Cash Flows: Three months ended March 31, 2004 and March 31, 2003	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Market Risk and Balance Sheet Management	13
Item 4.	Controls and Procedures	13
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	none
Item 2.	Changes in Securities	none
Item 3.	Defaults Upon Senior Securities	none
Item 4.	Submission of Matters to a Vote of Security Holders	none
Item 5.	Other Information	none
Item 6.	Exhibits and Reports on Form 8-K	14
SIGNATURES		15

Page 2

CONSOLIDATED INCOME STATEMENT

Amounts in $ 000’s

(Unaudited)

	Quarter ended March 31,
	2004		2003
Interest income
Loans	$	6,467	$	6,330
Securities		214		103
Dividends from Federal Home Loan Bank		24		36
Federal funds sold		9		8
		6,714		6,477
Interest expense
Deposits		705		754
Federal Home Loan Bank term borrowings		305		300
Federal funds purchased		10		39
		1,020		1,093
Net interest income		5,694		5,384
Provision for loan losses		100		600
Net interest income after provision		5,594		4,784
Noninterest income
Service charges on deposit accounts		416		386
Other fee income, principally bankcard processing		327		253
Loan servicing		49		87
Mortgage banking income and gains on sales of loans		209		575
Gain (loss) on sale of securities		0		0
Other		75		63
		1,077		1,364
Noninterest expense
Salaries and employee benefits		2,360		2,238
Premises and equipment		412		392
Bankcard processing		100		91
Business development		243		311
Other		762		766
		3,877		3,798
Income before income taxes		2,794		2,350
Provision for income taxes		1,070		904
Net income	$	1,724	$	1,446
Earnings per share
Basic	$	0.25	$	0.22
Diluted	$	0.25	$	0.21

Page 3

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Amounts in $ 000’s

(Unaudited)

	Quarter ended March 31,
	2004			2003
Net income	$	1,724		$	1,446
Unrealized gains (losses) on Investment Securities Unrealized gains (losses) arising during the period		272			(81	)
Reclassification for (gains) losses included in statement of income		0			0
		272			(81	)
Income tax (expense) benefit		(105	)		31
Net unrealized gains (losses) on securities available for sale		167			(50	)
Comprehensive income (loss)	$	1,891		$	1,396

Page 4

CONSOLIDATED BALANCE SHEET

Amounts in $ 000’s

(Unaudited)

	Mar. 31, 2004		Dec. 31, 2003			Mar. 31, 2003
ASSETS
Cash and due from banks	$	15,473	$	24,149		$	15,401
Federal funds sold		422		1,387			9,192
Total cash and cash equivalents		15,895		25,536			24,593
Securities available-for-sale		29,346		30,029			11,046
Loans held for sale		1,630		1,958			3,568
Loans, less allowance for loan losses		369,636		348,894			333,060
Interest receivable		1,614		1,586			1,530
Federal Home Loan Bank stock		2,762		2,738			2,649
Property, net of accumulated depreciation		12,958		13,060			13,311
Foreclosed assets		371		411			664
Deferred income taxes		146		250			145
Other assets		800		1,337			426
Total assets		435,158		425,799			390,992
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing demand		123,429		125,576			106,820
Savings and interest-bearing checking		189,983		176,016			145,800
Time $100,000 and over		21,620		27,961			39,626
Other time		24,123		26,546			29,630
Total deposits		359,155		356,099			321,876
Federal funds purchased		5,000		0			0
Federal Home Loan Bank term borrowings		26,000		26,000			30,000
Accrued interest and other payables		1,167		1,466			1,349
Total liabilities		391,322		383,565			353,225
Stockholders’ equity
Common stock		6,823		6,790			5,054
Surplus		20,052		19,829			21,041
Retained earnings		16,824		15,645			11,646
Accumulated other comprehensive loss		137		(30	)		26
		43,836		42,234			37,767
Total liabilities and stockholders’ equity	$	435,158	$	425,799		$	390,992

Page 5

CONSOLIDATED STATEMENTS OF CASH FLOWS

Amounts in $ 000’s

(Unaudited)

	For three months ended March 31,
	2004			2003
Cash flows from operating activity:
Net income	$	1,724		$	1,446
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		227			214
Provision for loan losses		100			600
Change in loans held for sale		328			1,979
Gain on sales of loans		0			(130	)
Change in interest receivable and other assets		678			430
Change in payables and other liabilities		(298	)		134
Other adjustments		(452	)		(114	)
Net cash provided by operating activities		2,307			4,559
Cash flows from investing activities
Proceeds from sales and maturities of securities		774			3,343
Purchase of securities		0			(3,665	)
Loans made net of principal collections		(20,907	)		(20,747	)
Proceeds from sale of loans		0			7,940
Purchase of property		(125	)		(284	)
Net cash used in investing activities		(20,259	)		(13,413	)
Cash flows from financing activities
Net increase in deposits		3,055			11,967
Increase (decrease) in fed funds purchased		5,000			(9,000	)
Increase in Federal Home Loan Bank borrowings		0			7,000
Proceeds from stock options exercised		256			128
Dividends paid		(545	)		(455	)
Net cash provided by financing activities		7,766			9,640
Net decrease in cash and cash equivalents		(9,641	)		1,241
Cash and cash equivalents, beginning of period		25,536			23,352
Cash and cash equivalents, end of period	$	15,895		$	24,593

Page 6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A complete set of Notes to Consolidated Financial Statements is a part of the Bank’s Form 10-K filed March 16, 2004. The notes below are included because of material changes in the financial statements or to provide the reader with additional information not otherwise available. All numbers in the following notes are expressed in dollar thousands, except per share data.

1. Basis of Presentation

The accompanying interim condensed consolidated financial statements include the accounts of Pacific Continental Corporation (the “Company”), a bank holding company, and its wholly-owned subsidiary, Pacific Continental Bank (the “Bank”) and the Bank’s wholly owned subsidiaries, PCB Services Corporation (which owns and operates bank-related real estate) and PCB Loan Services Corporation (presently inactive). All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying condensed consolidated financial statements have been prepared by the Company without audit and in conformity with generally accepted accounting principles in the United States of America for interim financial information. The financial statements include all adjustments and normal accruals, which the Company considers necessary for a fair presentation of the results of operations for such interim periods. In preparing the condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, as of the date of the balance sheets and income and expenses for the periods. Actual results could differ from those estimates.

The balance sheet data as of December 31, 2003 was derived from audited financial statements, but does not include all disclosures contained in the Company’s 2003 Form 10-K.

The interim condensed consolidated financial statements should be read in conjunction with the December 31, 2003 consolidated financial statements, including the notes thereto, included in the Company’s 2003 Form 10-K.

Page 7

2. Stock Option Plans

The Company applies the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock issued to Employees, in accounting for its stock option plans. Accordingly, no stock-based employee compensation expense is reflected in net income as all options were granted at an exercise price equal to the market value of the underlying common stock on the date of the grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the optional fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

	For the Quarter Ended
	March 31, 2004			March 31, 2003
Net income – as reported	$	1,724		$	1,446
Deduct total stock-based employee compensation expense determined under fair value for all awards, net of related tax effects		(127	)		(90	)
Net income – pro forma	$	1,597		$	1,356
Earnings per share
Basic – as reported	$	0.25		$	0.22
Basic – pro forma	$	0.23		$	0.20
Diluted – as reported	$	0.25		$	0.21
Diluted – pro forma	$	0.23		$	0.20

3. Loans

Major classifications of loans at March 31, 2004, December 31, 2003, and March 31, 2003 are as follows:

	March 31, 2004			December 31, 2003			March 31, 2003
Commercial loans	$	91,847		$	89,128		$	97,385
Real estate loans		272,981			255,150			232,956
Consumer loans		11,745			11,424			9,139
		376,573			355,702			339,480
Deferred loan origination fees		(1,677	)		(1,583	)		(1,437	)
		374,896			354,119			338,043
Allowance for loan losses		(5,260	)		(5,225	)		(4,983	)
	$	369,636		$	348,894		$	333,060

Allowance for loan losses

	2004			2003
Balance, January 1	$	5,225		$	4,403
Provision charged to income		100			600
Loans (charged) recovered against allowance		(65	)		(20	)
Balance, March 31	$	5,260		$	4,983

The recorded investment in restructured and other impaired loans totaled $3,199 and $6,669 at March 31, 2004 and 2003, respectively. The specific valuation allowance for loan losses related to these impaired loans was approximately $687 and $362 at March 31, 2004 and 2003, respectively and is included in the ending allowances shown above. The average recorded investment in impaired loans was approximately $3,200 and $7,000 during the first quarter 2004 and 2003, respectively. Interest income recognized on restructured and impaired loans was $30 in both the first quarter 2004 and 2003, respectively.

A substantial portion of the loan portfolio is collateralized by real estate, and is, therefore, susceptible to changes in local market conditions. Management believes that the loan portfolio is diversified among industry groups. It is management’s opinion that the allowance for loan losses is adequate to absorb known and inherent risks in the loan portfolio. However, actual results may differ from estimates.

Page 8

4. Self-Insured Healthcare Plans

The Bank began self-insuring employee related healthcare benefits during 2004. The Bank limits individual and aggregate exposure through a reinsurance program. Annual expenses associated with the plan are expected to be approximately $813 with estimated maximum exposure of $985. These amounts are not materially different from the Bank’s historical healthcare insurance costs. The self-insured liability for claims and expenses is determined using actuarial estimates and historical experience. A third-party administrator is used to process claims.

Item 2. Management’s Discussion and Analysis

The following discussion contains a review of Pacific Continental Corporation and its wholly owned subsidiary Pacific Continental Bank operating results and financial condition for the first quarter of 2004. When warranted, comparisons are made to the same period in 2003 and to the previous year ended December 31, 2003. The discussion should be read in conjunction with the financial statements (unaudited) and related notes contained elsewhere in this report. The reader is assumed to have access to the Company’s Form 10-K for the previous year ended December 31, 2003, which contains additional statistics and explanations. All numbers, except per share data, are expressed in thousands of dollars.

In addition to historical information, this report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). This statement is included for the express purpose of availing Pacific Continental Corporation of the protections of the safe harbor provisions of the PSLRA. The forward-looking statements contained in this report are subject to factors, risks, and uncertainties that may cause actual results to differ materially from those projected. Important factors that might cause such material differences include, but are not limited to, those discussed in this section of the report. In addition, the following items are among the factors that could cause actual results to differ materially from the forward-looking statements in this report: general economic conditions, including their impact on capital expenditures; business conditions in the banking industry; recent world events and their impact on interest rates, businesses and customers; the regulatory environment; new legislation; heightened national security risks including acts of terrorism and potential for war; vendor quality and efficiency; employee retention factors; rapidly changing technology and evolving banking industry standards; competitive standards; competitive factors, including increased competition with community, regional, and national financial institutions; fluctuating interest rate environments; and similar matters. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of the statement. Pacific Continental Corporation undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this report. Readers should carefully review the risk factors described in this and other documents we file from time to time with the Securities and Exchange Commission.

Page 9

HIGHLIGHTS

	For the quarter ended March 31
	2004			2003			% Growth
Net income	$	1,724		$	1,446		19	%
Earnings per share
Basic	$	0.25		$	0.22		14	%
Diluted	$	0.25		$	0.21		19	%
Assets, period-end	$	435,158		$	390,992		11	%
Deposits, period-end	$	359,154		$	321,876		12	%
Return on assets		1.62	%		1.53	%
Return on equity		15.94	%		15.54	%

Per share data for 2003 was retroactively adjusted to reflect the 4-for-3 stock split declared during the third quarter 2003. In addition, first quarter 2003 noninterest income and noninterest expense has been reclassified to reflect a change in the Company’s method of reporting merchant bankcard processing fees to enable consistent presentation of the financial results.

The Company earned $1,724 in the first quarter 2004, a 19% increase over net income of $1,446 for the same quarter last year. The improvement in income was the result of loan and deposit growth, and marked improvement in credit quality, which resulted in a decline in the provision for loan losses. Improvement in these areas was partially offset by a decline in revenues generated from the origination of residential mortgages. These trends are expected to continue throughout 2004.

Assets and deposits at March 31, 2004 showed growth rates of 11% and 12%, respectively over March 31, 2003. Core deposits, which are defined as demand deposits, interest checking, money market account, and time deposits taken in locally, constitute 95% of March 31, 2004 outstanding deposits. Demand deposits were $123,429 or 34% of total deposits at March 31, 2004.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is the primary source of the Company’s revenue. Net interest income is the difference between interest income derived from earnings assets, principally loans, and the interest expense associated with interest bearing liabilities, principally deposits. The volume and mix of earnings assets and funding sources, market rates of interest, demand for loans, and the availability of deposits affect net interest income.

Net interest income prior to the provision for loan loss, in the first quarter of 2004 increased $311, or 6%, over same period in 2003. This increase was the result of growth of earning assets as the net interest margin in first quarter 2004 fell from the same quarter last year. Average earning assets in the current quarter increased 12% from $352,413 in the first quarter 2003 to $396,051 in the first quarter 2004.

Net interest margin as a percentage of earning assets was 5.78% in the first quarter of 2004 compared to 6.20% in the same time period in 2003. However, the net interest margin in the current quarter declined slightly from the 5.83% net interest margin the Bank averaged for the last six months of 2003. Earning asset yields in the current quarter were 6.82% compared to 7.45% last year, a decline of 63 basis points. Cost of liabilities fell by 21 basis points during the same time period from 1.28% to 1.07%. Costs of interest-bearing liabilities have remained stable over the past nine months as the current low interest rate environment has resulted in a practical floor on rates paid for a significant portion of the Bank’s deposits.

Page 10

A detailed comparison of interest income and interest expense between first quarter 2004 and first quarter 2003 shows that interest income increased by $237. Increased volume of earning assets improved interest income by $672, which was offset by lower yields on earning assets reducing interest income by $435. Also contributing to the increase in net interest income in the first quarter 2004 was a decline in interest expense of $74 from the same quarter last year. Changes in the mix of interest-bearing liabilities reduced interest expense by $19, and lower rates on interest-bearing liabilities reduced interest expense by $55 when compared to the same quarter last year.

The Company’s outlook with respect to its net interest margin for the remainder of 2004 is stable to slightly higher when compared to the net interest margin achieved during the first quarter 2004 as a portion of the Bank’s wholesale funding matures and can be refinanced at lower rates. This outlook is predicated on an expectation that the current interest rate environment prevails through the remainder of 2004. During the next six months, $13,000 of Federal Home Loan long-term advances with an average rate of 5.10% will mature along with approximately $8,200 in national market time deposits with an average rate of 3.70%. The Company expects these maturities to improve the net interest margin by 10 to 15 basis points during the last half of 2004, which is expected to offset potential declines in loan yields.

Provision for Loan Losses

Below is a summary of the Company’s allowance for loan losses for the first three months of 2004:

	2004
Balance, December 31, 2003	$	5,225
Provision charged to income		100
Loans charged off		(77	)
Recoveries credited to allowance		12
Balance, March 31, 2004	$	5,260

The first quarter 2004 provision for loan losses was $100, compared to $600 for the same quarter last year. The larger provision for loan losses for the first quarter 2003 was based upon uncertainties related to impaired loans, internally classified loans, and anticipated foreclosures. As the year 2003 unfolded, the Bank was able to resolve the uncertainties surrounding these loans through foreclosures and sales of collateral as well as planned exits of weaker credits. The Company anticipates the provision for loan losses for the second quarter 2004 will be reduced from provisions made during the second quarter 2003.

The allowance for loan losses at March 31, 2004 was 1.40% of period end loans compared to 1.46% at both December 31, 2003 and March 31, 2003, respectively. The allowance at March 31, 2004 includes $687 in specific allowance (included in the ending allowance above) for impaired loans, which total $3,199. Impaired loans include $1,303 nonaccrual loans and one restructured and performing loan of $1,896. At December 31, 2003, the Company had $3,168 of restructured and impaired loans with a specific allowance of $628 assigned. At March 31, 2003, the Company had $6,669 of restructured and impaired loans with a specific allowance of $362 assigned.

During the first quarter 2004, the Bank continued progress with regard to certain foreclosed assets. In February 2004, the Bank sold a commercial real estate property that was carried as foreclosed assets at December 31, 2003. The sale resulted in a one-time gain of $24. At March 31, 2004, one property remained in foreclosed assets, a single-family residence valued at $371, which is presently being actively marketed.

The following table shows a summary of nonaccrual loans, loans past due 90 days or more and still accruing interest, and other real estate owned for the periods covered in this report:

	Mar. 31, 2004			Dec. 31, 2003			Mar. 31, 2003
Nonaccrual loans	$	1,481		$	1,506		$	5,014
90 days past due and accruing interest		132			545			39
Total nonperforming loans		1,613			2,051			5,053
Nonperforming loans guaranteed by government		(160	)		(233	)		(241	)
Net nonperforming loans		1,453			1,818			4,812
Foreclosed assets		371			411			664
Total nonperforming assets, net of guaranteed	$	1,824		$	2,229		$	5,476

Page 11

Noninterest Income

Noninterest income decreased $288 or 21% in the first quarter of 2004 when compared to the same period in 2003. First quarter 2004 noninterest income was negatively impacted by two factors: a significant slow down in the origination of residential mortgages due to higher residential mortgage rates; and a decline on gains on sales of commercial real estate loans. Noninterest income from the origination of residential mortgages declined $234 or 53% from first quarter 2003 although during the month of March 2004, originations increased as long-term interest rates temporarily fell. In addition to the decline in mortgage revenues during the first quarter 2004, the Company took no gains from the sale of commercial real estate loans. In the first quarter 2003, sales of commercial real estate loans contributed $130 in noninterest income. The reduction in income in these two areas was partially offset by increases of 8% in account service charges and other fees and a 46% increase in merchant bankcard revenues.

The Company anticipates that for the year 2004 due to continued expectation of reduced income from residential mortgage originations that noninterest income will be flat with or slightly lower than noninterest income reported for the year 2003. However, anticipated loan growth and corresponding growth in net interest income will more than offset any decline in noninterest income.

Noninterest Expense

Noninterest expense in the first quarter 2004 was $3,877, an increase of $78 or 2% over the same period in 2003. Salaries and employee benefits accounted for most of the increase, up $123 or 5% from the previous year, reflecting personnel costs for bankers added during 2003. Equipment expense and professional services also showed modest increases when compared to first quarter 2003 up 8% and 4%, respectively. Growth in these noninterest expense categories was offset by a 28% or $72 decrease in advertising expense and a $20 decline in one-time expenses related to the January 2003 opening of the KOIN Center office in Portland, Oregon.

The Company expects the growth rate of noninterest expenses to be well below anticipated asset growth. While expense growth is expected to slow in 2004, the Company anticipates increased advertising expense as the Bank’s new branding campaign is fully implemented, which includes the introduction of media advertising in the Portland market. In addition, the Company anticipates increased expenses related to compliance with Section 404 of Sarbannes-Oxley in terms of staff, software, and professional services. However, expense increases in these areas will be offset by anticipated declines in legal fees related to problem loans and in other real estate expense. For the full year 2003, approximately $520 in other real estate expense was recorded, entirely related to three motel properties, which will not recur in 2004.

LIQUIDITY

Liquidity is the term used to define the Company’s ability to meet its financial commitments. The Company maintains sufficient liquidity to ensure funds are available for both lending needs and the withdrawal of deposit funds. The Company derives liquidity primarily through core deposit growth, the maturity of investment securities, and loan payments. Core deposits include demand, interest checking, money market, savings and local time deposits. Additional liquidity is provided through sales of loans, access to national CD markets, public deposits and both secured and unsecured borrowings. Core deposits represented 95% of total deposits at March 31, 2004 compared to 88% at March 31, 2003. Historically, due to seasonal construction and economic activity and client payment of various tax obligations, the Company experiences a decline or slower growth of core deposits during the first quarter of each year. However, during the first quarter 2004, the Company experienced an $11,000 increase in core deposits from December 31, 2003, while last year during the same three month period, the Company showed a $5,000 decline in core deposits. During the quarter, the Company grew outstanding loans by $20,500. Loan growth during the quarter was funded primarily through growth in core deposits.

Page 12

The Bank has a borrowing limit with the Federal Home Loan Bank of Seattle (the “FHLB”) equal to 25% of total assets. At March 31, 2004, the borrowing line was approximately $109,000. At March 31, 2004, there was $31,000 advanced on this line. The borrowing line at the FHLB is limited to discounted pledged collateral. FHLB stock, funds on deposit with the FHLB, and loans are pledged as collateral to the FHLB. In addition to the borrowing line at the FHLB, the Bank has established unsecured overnight lines totaling $39,000 with various correspondent banks and the Federal Reserve Bank of San Francisco. At the end of the quarter, all $39,000 of the overnight lines with correspondent banks were available to the Bank. Other sources of liquidity available to the bank included $17,000 in funding available through the State of Oregon time deposit program with community banks and a portion of the Bank’s loan portfolio, which contains in excess of $24,000 in marketable government guaranteed loans.

CAPITAL RESOURCES

Capital is the shareholder’s investment in the Company. Capital grows through the retention of earnings and the issuance of new stock through the exercise of incentive options and decreases through the payment of dividends and share repurchase programs. Capital formation allows the Company to grow assets and provides flexibility in times of adversity.

Banking regulations require the Company to maintain minimum levels of capital. The Company manages its capital to maintain a “well capitalized” designation (the FDIC’s highest rating). At March 31, 2004, the Company’s total capital to risk weighted assets was 12.06%, compared to 11.47% at March 31, 2003.

The Company’s board of directors reviews its dividend considerations so that cash dividends, when and if declared by the Company, would typically be paid in mid-March, June, September, and December of each year. On February 11, 2004, the Company declared its first quarter dividend of $0.08 per share paid on March 15, 2004 to shareholders of record on February 27, 2003. The Company expects to maintain the $0.08 per share dividend per quarter during 2004, which would result in an annual dividend of $0.32 per 0share, which would equate to a 17% increase over the prior year, when adjusted for the 4-for-3 stock split declared in September 2003.

The Company projects that earnings retention and existing capital will be sufficient to fund anticipated asset growth and shareholder dividends, while maintaining a well-capitalized designation from the FDIC.

Item 3. Quantitative and Qualitative Disclosures on Market Risk

There has been no material change in the Bank’s exposure to market risk. Readers are referred to the Bank’s Form 10-K and the Annual Report to Shareholders for the period ending December 31, 2003, for specific discussion.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c)) as of a date within 90 days before the filing date of this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s current disclosure controls and procedures are effective and timely, providing them with material information relating to the Company required to be disclosed in the reports we file or submit under the Exchange Act.

Changes in Internal Controls

There have not been any significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. We are not aware of any significant deficiencies or material weaknesses, therefore no corrective actions were taken.

Page 13

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

3.1	Amended and Restated Articles of Incorporation
3.2	Amended and Restated Bylaws
31.1	302 Certification, Hal Brown, President and Chief Executive Officer
31.2	302 Certification, Michael A. Reynolds, Senior Vice President and Chief Financial Officer
32	Certifications Pursuant to 18 U.S.C. Section 1350

(b) Reports on Form 8-K

A Report on Form 8-K was filed by Pacific Continental Corporation on January 21, 2004 that announced earnings for the fourth quarter and year-end December 31, 2003.

Page 14

SIGNATURES

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

	PACIFIC CONTINENTAL CORPORATION
	(Registrant)
Dated May 13, 2004	/s/ Hal Brown
	Hal Brown
	President and Chief Executive Officer
Dated May 13, 2004	/s/ Michael A. Reynolds
	Michael A. Reynolds
	Senior Vice President and Chief Financial Officer

Page 15

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

PACIFIC CONTINENTAL CORPORATION

ARTICLE I.

NAME

The name of this corporation is PACIFIC CONTINENTAL CORPORATION.

ARTICLE II.

REGISTERED OFFICE

The registered office and the principal place of business of the corporation is 111 West 7^th Street, Eugene, Lane County, Oregon.

ARTICLE III.

DURATION

The duration of this corporation will be perpetual.

ARTICLE IV.

PURPOSE

The purpose for which this corporation is formed is to engage in any business activity now or hereafter permissible by the laws of the State of Oregon and the United States.

ARTICLE V.

CAPITALIZATION

The aggregate number of shares which this corporation will have authority to issue is twenty-five million (25,000,000) shares of no par value per share common stock and twenty thousand (20,000) shares of no par value per share preferred stock.

A. The preferred stock will have the following preferences, rights and limitations:

1. Each share of preferred stock will be entitled to a dividend from funds legally available for the payment thereof which will have priority to the payment of dividends on common stock.

2. The dividend on preferred shares will be cumulative on a daily basis from the date of issue of such shares. So long as there are any accrued but unpaid dividends on the preferred shares, there will be no distribution to or on behalf of the common shares, either by way of dividend, purchase thereof by the corporation, or otherwise.

3. Upon the dissolution of the corporation, each share of preferred stock will receive out of the assets of the corporation the amount determined by the Board of Directors for the applicable series and no more in priority to payment on the common shares.

4. Preferred shares will be convertible into shares of common stock but only if authorized by the Board of Directors of the corporation for the applicable series and upon the terms and conditions adopted by the Board of Directors.

5. Preferred shares will have no vote on any matter except on those matters which by law a vote cannot be denied.

6. The holders of preferred shares will have no preemptive rights as to preferred or common shares.

B. The common stock will have the following preferences, rights and limitations:

1. The common shares will have full voting rights. each share to entitle the holder thereof to one vote.

2. After all cumulative but unpaid dividends on preferred shares have been paid or set apart for payment, the holders of the common shares will be entitled to receive dividends from funds legally available for the payment thereof, but only when and as such dividends will be declared by the Board of Directors.

3. Upon the dissolution of the corporation, after payment in full to the holders of preferred shares of the sums which such holders are entitled to receive, the holders of common shares will receive and be paid all remaining assets of the corporation.

4. The common shares will have no preemptive rights as to either the preferred shares, or as to the common shares into which the preferred shares may be convertible, or any other common shares or options for common shares

C. The preferred shares may be divided into and issued in series. Each series will be so designated by the Board of Directors as to distinguish the shares thereof from the shares of all other series and classes. All preferred shares will be identical, except as to the following relative rights and preferences, as to which there may be variations between different series:

1. The rate of dividend.

2. Whether shares can be redeemed, and if so, the redemption price and the terms and conditions of redemption.

3. The amount payable upon shares in event of voluntary or involuntary liquidation.

4. Sinking fund provisions, if any, for the redemption or purchase of shares.

5. The terms and conditions, if any, on which shares may be converted.

Authority is expressly vested in the Board of Directors to divide any or all of preferred shares into series and within the limitations set forth by law and in these Articles of Incorporation, fix and determine the relative rights and preferences of the shares of any series so established by resolution or resolutions setting forth the designation of the series and fixing and determining the relative rights and preferences thereof. Any such resolution or resolutions will be adopted by the Board of Directors before any shares of that series are issued. The Board of Directors may, from time to time, increase the number of preferred shares of any then existing series by making all unissued preferred shares a part of such series. The Board

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of Directors may decrease (but not below the number of such shares then outstanding) the number of preferred shares of any then existing series by requiring that all unissued shares previously assigned to such series will no longer constitute a part thereof. The Board of Directors is hereby empowered to classify or reclassify any unissued preferred shares by fixing or altering the terms thereof in respect of the above mentioned particulars and by assigning the same to an existing newly created series from time to time before the issuance of such shares.

ARTICLE VI.

INDEMNIFICATION AND DIRECTOR LIABILITY

Section 1 – Definitions. As used in this Article:

(a) The term “Egregious Conduct” by a person will mean acts or omissions that involve intentional misconduct or a knowing violation of law, participation in any transaction from which the person will personally receive a benefit in money, property, or services to which the person is not legally entitled, an unlawful distribution under the Oregon Bank Act, and conduct for which the person is adjudged liable to the corporation.

(b) The term “Finally Adjudged” will mean stated in a judgment by a court having jurisdiction, from which there is no further right to appeal.

(c) The term “Director” will mean any person who is a director of the corporation and any person who, while a director of the corporation, is serving at the request of the corporation as a director, officer, manager, partner, trustee, employee, or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, or other enterprise, or is a fiduciary or party in interest in relation to any employee benefit plan covering any employee of the corporation or of any employer in which it has an ownership interest; and “conduct as a Director” will include conduct while a Director is acting in any of such capacities.

(d) The term “Officer-Director” will mean any person who is simultaneously both an officer and director of the corporation and any person who, while simultaneously both an officer and director of the corporation, is serving at the request of the corporation as a director, officer, manager, partner, trustee, employee, or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, or other enterprise, or is a fiduciary or party in interest in relation to any employee benefit plan covering any employee of the corporation or of any employer in which it has an ownership interest; and “conduct as an Officer-Director” will include conduct while such a person is acting as an officer of the corporation or in any of such other capacities.

(e) The term “Subsidiary Corporation” will mean any corporation or limited liability company at least eighty percent of the voting interests of which is held beneficially by this corporation.

(f) The term “Subsidiary Outside Director” will mean any person who, while not principally employed by this corporation or any Subsidiary Corporation, is a director or manager of a Subsidiary Corporation and any such person who, while a director or manager of a Subsidiary Corporation, is serving at the request of such corporation as a director, officer, manager, partner, trustee, employee, or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, or other enterprise, or is a fiduciary or party in interest in relation to any employee benefit plan covering any employee of such corporation or of any employer in which it has an ownership interest; and “conduct as a Subsidiary Outside Director” will include conduct while such a person is acting in any of such capacities.

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Section 2 – Liability of Directors. No Director, Officer-Director, former Director or former Officer-Director will be personally liable to the corporation or its shareholders for monetary damages for conduct as a Director or Officer-Director occurring after the effective date of this Article unless the conduct is Finally Adjudged to have been Egregious Conduct.

Section 3 – Liability of Subsidiary Outside Directors. No Subsidiary Outside Director or former Subsidiary Outside Director will be personally liable in any action brought directly by this corporation as a shareholder of the Subsidiary Corporation or derivatively on behalf of the Subsidiary Corporation (or by any shareholder of this corporation double-derivatively on behalf of this corporation and the Subsidiary Corporation) for monetary damages for conduct as a Subsidiary Outside Director occurring after the effective date of this Article unless the conduct is Finally Adjudged to have been Egregious Conduct.

Section 4 – Mandatory Indemnification of Directors. Subject to Sections 7 and 8 of this Article, the corporation will indemnify any person who is, or is threatened to be made, a party to any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and whether formal or informal, and whether by or in the right of the corporation or its shareholders or by any other party, by reason of the fact that the person is or was a Director, Officer-Director, or Subsidiary Outside Director against judgments, penalties or penalty taxes, fines, settlements (even if paid or payable to the corporation or its shareholders or to a Subsidiary Corporation) and reasonable expenses, including attorneys’ fees, actually incurred in connection with such action, suit or proceeding unless the liability and expenses were on account of conduct Finally Adjudged to be Egregious Conduct.

Section 5 – Advancing Expenses. Except as prohibited by Sections 7 and 8 of this Article, the reasonable expenses, including attorneys’ fees, of a Director, Officer-Director, Subsidiary Outside Director, or person formerly serving in any such capacities, incurred in connection with an action, suit or proceeding in which the individual is entitled to indemnification under Section 4 will be paid or reimbursed by the corporation, upon request of such person, in advance of the final disposition of such action, suit or proceeding upon receipt by the corporation of a written, unsecured promise by the person to repay such amount if it will be Finally Adjudged that the person is not eligible for indemnification. All expenses incurred by such person in connection with such action, suit or proceeding will be considered reasonable unless Finally Adjudged to be unreasonable.

Section 6 – Procedure. Except as required by Sections 7 and 8 of this Article, no action by the Board of Directors, the shareholders, independent counsel, or any other person or persons will be necessary or appropriate to the determination of the corporation’s indemnification obligation under this Article in any specific case, to the determination of the reasonableness of any expenses incurred by a person entitled to indemnification under this Article, nor to the authorization of indemnification in any specific case.

Section 7 – Exception for Internal Claims. Notwithstanding anything else in these Articles, the corporation will not be obligated to indemnify any person for any expenses, including attorneys’ fees, incurred to assert any claim against the corporation (except a claim to enforce rights to indemnification) or any person related to or associated with it, including any person who would be entitled hereby to indemnification in connection with the claim.

Section 8 – Exception for State Law. Notwithstanding anything else in these Articles, the corporation will not be obligated to indemnify any person for any expenses, including attorneys’ fees, incurred as a result of any action listed in ORS §60.047 (2)(d).

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Section 9 – Exception for Regulatory Claims.

(a) Regulatory Proceedings Generally. Notwithstanding anything else in these Articles, indemnification of any Director, Officer-Director or Subsidiary Outside Director, or any person formerly serving in any such capacities, and advancement of expenses in connection with either an administrative proceeding or a civil action instituted by a federal banking agency (“Regulatory Proceedings”) will be governed by this Section.

(b) Banking Regulations Defined. The term “Banking Regulations” will mean any state or federal laws or regulations applicable to the corporation, or any formal policies adopted by a regulatory agency having jurisdiction over the corporation.

(c) Indemnification in Regulatory Proceedings. The corporation will provide indemnification and advancement of expenses in connection with Regulatory Proceedings to the extent permitted, and in the manner prescribed by Banking Regulations. Insurance and other means to ensure payment of costs and expenses in Regulatory Proceedings may be obtained or provided to the extent permitted and in the manner prescribed by Banking Regulations.

Section 10 – Enforcement of Rights. The corporation will indemnify any person granted indemnification rights under this Article against any reasonable expenses incurred by the person to enforce such rights.

Section 11 – Set-off of Claims. Any person granted indemnification rights herein may directly assert such rights in set-off of any claim raised against the person by or in the right of the corporation and will be entitled to have the same tribunal which adjudicates the corporation’s claim adjudicate the person’s entitlement to indemnification by the corporation.

Section 12 – Continuation of Rights. The indemnification rights provided in this Article will continue as to a person who has ceased to be a Director, Officer-Director, or Subsidiary Outside Director and will inure to the benefit of the heirs, executors, and administrators of such person.

Section 13 – Effect of Amendment or Repeal. Any amendment or repeal of this Article will not adversely affect any right or protection of a Director, Officer-Director, or Subsidiary Outside Director or person formerly serving in any of such capacities existing at the time of such amendment or repeal with respect to acts or omissions occurring prior to such amendment or repeal.

Section 14 – Severability of Provisions. Each of the substantive provisions of this Article is separate and independent of the others, so that if any provision hereof will be held to be invalid or unenforceable for any reason, such invalidity or unenforceability will not affect the validity or enforceability of the other provisions.

ARTICLE VII.

FAIR PRICE PROVISION

Section 1. For purposes of this Article:

(a) An interested shareholder transaction means any transaction between a corporation, or any subsidiary thereof, and an interested shareholder of such corporation or an affiliated person to an interested shareholder, that must be authorized pursuant to applicable law by a vote of the shareholders.

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(b) An interested shareholder:

1. Includes any person or group of affiliated persons who beneficially own twenty percent or more of the outstanding voting shares of a corporation. An affiliated person is any person who either acts jointly or in concert with, or directly or indirectly controls, is controlled by, or is under common control with another person; and

2. Excludes any person who, in good faith and not for the purpose of circumventing this Article, is an agent, custodial bank, broker, nominee, or trustee for another person, if such other person is not an interested shareholder under Section 1(b)(1) of this Article.

Section 2. Except as provided in Section 3 of this Article, an interested shareholder transaction must be approved by the affirmative vote of the holders of two-thirds of the shares entitled to be counted under this Section 2, or if any class of shares is entitled to vote thereon as a class, then by the affirmative vote of two-thirds of the shares of each class entitled to be counted under this Section 2 and of the total shares entitled to be counted under this Section 2. All outstanding shares entitled to vote under applicable law or the Articles of Incorporation will be entitled to be counted under this Section 2, except shares owned by or voted under the control of an interested shareholder may not be counted to determine whether shareholders have approved a transaction for purposes of this Section 2. The vote of the shares owned by or voted under the control of an interested shareholder, however, will be counted in determining whether a transaction is approved under other provisions of applicable law and for purposes of determining a quorum.

Section 3. This Article will not apply to a transaction:

(a) Approved by a majority vote of the board of directors. For such purpose, the vote of directors whose votes are otherwise entitled to be counted under the Articles of Incorporation and applicable law who are directors or officers of, or have a material financial interest in, an interested shareholder, or who were nominated for election as a director as a result of an arrangement with an interested shareholder and first elected as a director within twenty-four months of the proposed transaction, will not be counted in determining whether the transaction is approved by such directors; or

(b) In which a majority of directors whose votes are entitled to be counted under Section 3(a) determines that the fair market value of the consideration to be received by noninterested shareholders for shares of any class of which shares are owned by any interested shareholder is not less than the highest fair market value of the consideration paid by any interested shareholder in acquiring shares of the same class within twenty-four months of the proposed transaction.

Section 4. This Article may be amended or repealed only by the affirmative vote of the holders of two-thirds of the shares entitled to be counted under this Section 4. All outstanding shares entitled to vote under applicable law or the Articles of Incorporation will be entitled to be counted under this Section 4, except shares owned by or voted under the control of an interested shareholder may not be counted to determine whether shareholders have voted to approve the amendment or repeal. The vote of the shares owned by or voted under the control of an interested shareholder, however, will be counted in determining whether the amendment or repeal is approved under other provisions of applicable law and for purposes of determining a quorum.

Section 5. The requirements imposed by this Article are to be in addition to, and not in lieu of, requirements imposed on any transaction by any provision of applicable law, or any other provision of the Articles of Incorporation, or the Bylaws or otherwise.

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ARTICLE VIII.

CONSIDERATION OF NON-MONETARY FACTORS

The Board of Directors of the corporation, when evaluating any offer of another party to (a) make a tender or exchange offer for any equity security of the corporation, (b) merge or consolidate the corporation with another corporation, or (c) purchase or otherwise acquire all or substantially all of the properties and assets of the corporation, will, in connection with the exercise of its judgment in determining what is in the best interests of the corporation and its stockholders, give due consideration to all relevant factors, including without limitation the social and economic effects on the employees, customers, suppliers, and other constituents of the corporation and its subsidiaries and on the communities in which the corporation and its subsidiaries operate or are located.

ARTICLE IX.

BOARD OF DIRECTORS

Section 1. The Board of Directors will consist of not fewer than six individuals. The exact number will be fixed by the Bylaws and may be changed from time to time in the manner provided in the Bylaws.

Section 2. The Board of Directors will be divided into three classes: Class 1, Class 2, and Class 3. Each such Class will consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board of Directors. Each director will serve for a term ending on the date of the third annual meeting of shareholders following the annual meeting at which such director was elected.

Section 3. In the event of an increase or decrease in the authorized number of directors, (a) each director then serving as such will nevertheless continue as a director of the Class in which he or she is a member until the expiration of his or her current term, or his or her earlier resignation, removal from office or death, and (b) the newly created or eliminated directorships resulting from such increase or decrease will be apportioned by the Board of Directors among the three Classes of directors so as to maintain such Classes as nearly equal as possible.

Section 4. No director may be removed from office without cause except by a vote of two-thirds of the shares then entitled to vote at an election of directors. Except as otherwise provided by law, cause for removal will exist only if the Board of Directors has reasonable grounds to believe that the corporation has suffered or will suffer substantial injury as a result of the gross negligence or dishonesty of the director whose removal is proposed.

ARTICLE X.

AMENDMENT TO ARTICLES

Section 1. The corporation reserves the right to amend, alter, change or repeal any provision of its Articles of Incorporation to the extent permitted by the laws of the State of Oregon. All rights of shareholders are granted subject to this reservation.

Section 2. The Board of Directors will have full power to adopt, alter, amend or repeal the Bylaws of the corporation or to adopt new Bylaws. Nothing herein, however, will deny the concurrent power of the shareholders to adopt, alter, amend or repeal the Bylaws.

* * * * *

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I, the undersigned, declare under the penalties of perjury that I have examined the foregoing and to the best of my knowledge and belief, it is true, correct and complete.

DATED this 20^th day of April, 2004.

PACIFIC CONTINENTAL CORPORATION
By	/s/ Hal Brown
	Hal Brown, President and CEO

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EX-3.2

Exhibit 3.2

AMENDED AND RESTATED BYLAWS OF

PACIFIC CONTINENTAL CORPORATION

April 20, 2004

Table of Contents

ARTICLE I.	SHAREHOLDERS	1
SECTION 1.	ANNUAL MEETINGS	1
SECTION 2.	ADJOURNED MEETINGS	1
SECTION 3.	SPECIAL MEETINGS	1
SECTION 4.	PLACE OF MEETINGS	1
SECTION 5.	NOTICE OF MEETINGS	1
SECTION 6.	QUORUM	1
SECTION 7.	SHAREHOLDERS OF RECORD	2
SECTION 8.	VOTING OF SHARES	2
SECTION 9.	PROXIES	3
SECTION 10.	BUSINESS AT MEETING	3
ARTICLE II.	DIRECTORS	3
SECTION 1.	NUMBER	3
SECTION 2.	ORGANIZATION	4
SECTION 3.	MEETINGS	4
SECTION 4.	SPECIAL MEETINGS	4
SECTION 5.	PLACE OF MEETINGS	4
SECTION 6.	WAIVER OF NOTICE	4
SECTION 7.	QUORUM	4
SECTION 8.	DUTIES OF THE CHAIRMAN OF THE BOARD OF DIRECTORS	5
SECTION 9.	DUTIES OF THE VICE CHAIRMAN OF THE BOARD OF DIRECTORS	5
SECTION 10.	OTHER DUTIES OF DIRECTORS	5
SECTION 11.	RETIREMENT OF DIRECTORS	5
SECTION 12.	VACANCIES	5
SECTION 13.	COMPENSATION	5
SECTION 14.	NOMINATION OF DIRECTORS	6
ARTICLE III.	OFFICERS	7
SECTION 1.	DESIGNATION AND QUALIFICATION	7
SECTION 2.	TERM	7
SECTION 3.	REMOVAL	7
SECTION 4.	DUTIES OF THE PRESIDENT	7
SECTION 5.	DUTIES OF THE VICE PRESIDENT	7
SECTION 6.	DUTIES OF THE SECRETARY	8
SECTION 7.	DUTIES OF OTHER OFFICERS	8
SECTION 8.	OFFICIAL BONDS	8

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ARTICLE IV.	CORPORATE SEAL	8
SECTION 1.	SEAL	8
ARTICLE V.	CERTIFICATES AND TRANSFER OF SHARES	8
SECTION 1.	CERTIFICATES FOR SHARES	8
SECTION 2.	STOCK TRANSFERS	8
SECTION 3.	LOST, STOLEN OR DESTROYED CERTIFICATES	8
ARTICLE VI.	AMENDMENTS	9
SECTION 1.	AMENDMENT OF BYLAWS	9

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BYLAWS OF

PACIFIC CONTINENTAL CORPORATION

ARTICLE I. SHAREHOLDERS

SECTION 1. ANNUAL MEETINGS. An annual meeting of the shareholders will be held in the State of Oregon within one hundred twenty (120) days after the close of the fiscal year of the corporation. At the annual meeting, the shareholders will elect a Board of Directors and transact any other business that may legally come before the meeting.

SECTION 2. ADJOURNED MEETINGS. If for any cause an election of directors is not held at the annual meeting provided for in Section 1, such meeting may be adjourned to a future date.

SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders may be called by the President, by a majority of the Board of Directors, or the holders of not less than ten percent (10%) of the outstanding capital stock of the corporation. The record date for determining shareholders entitled to entitled to demand a special meeting is the date the first shareholder signs a demand. The Board of Directors will have the authority to designate the time and place of such a meeting. No business other than that stated in the notice of the meeting will be transacted at any special meeting.

SECTION 4. PLACE OF MEETINGS. Meetings of the shareholders will be held at the principal office of the corporation or any other place designated by the Board of Directors.

SECTION 5. NOTICE OF MEETINGS. Written or printed notice stating the place, date and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, will be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Secretary, the Board of Directors or the persons calling the meeting, to each shareholder of record entitled to vote at the meeting. If mailed, the notice will be deemed to be given when deposited in the United States mail, with postage prepaid, addressed to the shareholder at that shareholder’s address as it appears on the stock transfer books of the corporation.

SECTION 6. QUORUM.

a. A majority of the shares entitled to vote, represented in person or by proxy, will constitute a quorum for the transaction of business at any shareholders’ meeting. If a person attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened, the shares held by that person or represented by a proxy given to that person will not be included for purposes of determining whether a quorum is present. The persons present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough persons to leave less than a quorum.

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b. In the absence of a quorum, a majority of the shares represented in person or by proxy may adjourn the meeting from time to time until a quorum will attend. Any business that might have been transacted at the original meeting may be transacted at the adjourned meeting if a quorum exists.

SECTION 7. SHAREHOLDERS OF RECORD. The persons entitled to receive notice of and to vote at any shareholders’ meeting or any adjournment thereof will be those persons designated as shareholders in the stock transfer books of the corporation on the date of mailing of the notice of the meeting or on such other date as determined in advance by the Board of Directors, which date will be not more than seventy (70) nor less than ten (10) days before the meeting. Such a determination of shareholders entitled to vote at any meeting of shareholders will apply to any adjournment thereof.

SECTION 8. VOTING OF SHARES.

a. Each shareholder will be entitled to one (1) vote on each matter submitted to a vote at a meeting of the shareholders for each share of voting stock standing in the name of the shareholder on the stock transfer books of the corporation.

b. Shares held in the name of another corporation may be voted by such officer, agent or proxy as the bylaws of such corporation may prescribe or, in the absence of such provision, as the Board of Directors of such corporation may determine.

c. Shares held by a personal representative, administrator, executor, guardian or conservator may be voted by that person, either in person or by proxy, without a transfer of such shares into the name of that person. Shares held in the name of a trustee may be voted by the trustee, either in person or by proxy, but no trustee will be entitled to vote shares held by that trustee without a transfer of such shares into the name of the trustee.

d. Shares standing in the name of a receiver may be voted by such receiver, and shares, held by or under the control of a receiver may be voted by such receiver without the transfer thereof into that receiver’s name if authority to do so is contained in an appropriate order of the court by which such receiver was appointed.

e. A shareholder whose shares are pledged will be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee will be entitled to vote the shares so transferred.

f. Redeemable shares will not be entitled to vote on or after the date on which notice of redemption is mailed to the holders of redeemable shares and a sum sufficient to redeem such shares has been deposited with a corporation, trust company or other financial institution with irrevocable instructions and authority to pay the redemption price to the holder, upon surrender of the shares.

g. Shares of its own stock held by the corporation in a fiduciary capacity, or shares held by another corporation if a majority of the shares entitled to vote for the election of directors of such other corporation is held by the corporation, will not be voted at any meeting or

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included in determining the total number of outstanding shares at any given time, unless under the terms of the trust in which such shares are held the manner in which such shares will be voted may be determined by the trustee, by a donor or beneficiary of the trust or by some other person named in the trust and unless such shares are actually voted in the manner determined or directed by the trustee, donor, beneficiary or other person so authorized.

SECTION 9. PROXIES. A shareholder may vote in person or by proxy executed in writing by the shareholder or by the duly authorized attorney-in-fact of the shareholder. No proxy will be valid after eleven (11) months from the date of its execution unless otherwise provided in the proxy.

SECTION 10. BUSINESS AT MEETING. At an annual meeting of the shareholders, only such business will be conducted as will have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (B) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (C) otherwise properly brought before the meeting by a shareholder. For nominations or other business to be properly brought before a shareholders meeting by a shareholder pursuant to clause (C) of the preceding sentence, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation and such other business must otherwise be a proper matter for shareholder action. To be timely for purposes of advance notice requirements, a shareholder’s proposal must be delivered to the Secretary at the principal executive offices of the corporation not less than one hundred twenty (120) calendar days in advance of the first anniversary of the date the corporation’s proxy statement was mailed to shareholders for the preceding year’s annual meeting. In no event will the public announcement of an adjournment of a shareholders meeting commence a new time period for the giving of a shareholder’s notice as described above. A shareholder’s notice to the secretary must set forth as to each matter the shareholder proposes to bring before the annual meeting: (a) a brief description of the business desired to be brought before the meeting, (b) the name and address, as they appear on the corporation’s books, of the shareholder proposing such business, (c) the class number of shares of the corporation which are owned beneficially by such shareholder, (d) any material interest of the shareholder in such business, and (e) any other information that is required to be provided by the shareholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “1934 Act”) (or any successor thereto) in such shareholder’s capacity as a proponent of a shareholder proposal. Notwithstanding anything in these Bylaws to the contrary, no business will be conducted at any annual meting except in accordance with the procedures set forth in this section. The chairman of the annual meeting will, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this section, and, if the Chairman should so determine, he or she will so declare at the meeting that any such business not properly brought before the meeting will not be transacted.

ARTICLE II. DIRECTORS

SECTION 1. NUMBER. The business and affairs of the corporation will be managed and controlled by a board of eight (8) to twelve (12) directors, the exact number to be established

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by resolution of the Board of Directors. Each director will hold office in staggered terms as set forth in the Articles of Incorporation, and until that director’s successor has been elected and qualified, or until that director’s death or until that director resigns or is removed in accordance with the provisions of these bylaws. At least one-half (1/2) of the directors, at the time of their election and during their continuance in office, will be citizens of the United States and residents of the State of Oregon.

SECTION 2. ORGANIZATION. As soon as practicable after the time of their election, the directors will meet for the purpose of organization and election of a Chairman and Vice Chairman of the Board and executive officers hereinafter specified, and to conduct such other business as may come before the meeting. No director may transact any business whatsoever prior to qualifying and taking the oath of office as required by law.

SECTION 3. MEETINGS. The Board of Directors will meet on a regular basis. Each director will be charged with notice of the time and place of such regular meetings unless the time and place of such meeting is changed at a meeting in which the directors are not all present. In such case, any absent director will be entitled to the notice provided for special meetings under Section 4 of this Article. A director who is absent from a meeting of the Board of Directors may record his approval or disapproval of actions taken at that meeting by so indicating on the minutes of that meeting, and affixing his signature thereto.

SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be held from time to time upon the call of the Chairman or Vice Chairman of the Board, President, Vice President, Secretary, or upon the call of not less than one-half (1/2) of the duly elected, qualified and acting directors. Notice of such meeting will be given by the person or persons calling the meeting by mail not later than two (2) days before the time for such meeting or in person, or by telephone no later than twenty-four (24) hours before the time fixed for such meeting. The presence or consent of any director will constitute a waiver of the notice of such meeting.

SECTION 5. PLACE OF MEETINGS. Meetings of the Board of Directors will be at the registered office of the corporation or any other place designated by the Board of Directors. Meetings of the Board of Directors may he held by means of conference telephone or similar communications equipment which allows all persons participating in the meeting to hear each other. Participation in a meeting pursuant to the provisions of the preceding sentence will constitute presence in person at the meeting.

SECTION 6. WAIVER OF NOTICE. Attendance of a director at a meeting will constitute a waiver of notice of that meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting was not lawfully called or convened.

SECTION 7. QUORUM. A quorum of the Board of Directors will consist of a majority of the members of the Board of Directors. Less than a quorum may adjourn any meeting of the Board of Directors.

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SECTION 8. DUTIES OF THE CHAIRMAN OF THE BOARD OF DIRECTORS

a. Chair, whenever present, all Board Meetings.

b. Chair, whenever present, all Executive Committee Meetings.

c. Perform such other duties as the Board of Directors may, from time to time, prescribe.

SECTION 9. DUTIES OF THE VICE CHAIRMAN OF THE BOARD OF DIRECTORS. The Vice Chairman will perform the duties of the Chairman in the event of his or her absence or disqualification or inability to perform the duties of the office of Chairman.

SECTION 10. OTHER DUTIES OF DIRECTORS. The Board of Directors will have the power to establish rules and regulations for the corporation and the general or particular manner in which the business and affairs of the corporation will be conducted.

SECTION 11. RETIREMENT OF DIRECTORS. No person who has attained the age of seventy (70) will be eligible for election as a director. Each director then serving who attains the age of seventy (70) will resign from the office of director effective as of the first annual meeting of shareholders following his or her seventieth (70^th) birthday.

SECTION 12. VACANCIES. A vacancy in the Board of Directors will exist upon the death, resignation or removal of any director. Vacancies in the Board of Directors may be filled by the affirmative vote of a majority of the remaining directors, though less than a quorum, at a meeting of the Board of Directors after the vacancy occurs. Each director so elected and approved will hold office until the next shareholder meeting at which directors are elected and until such director’s qualified successor is elected and accepts office.

SECTION 13. COMPENSATION. Through board resolution, the Board of Directors will establish the amount and form of compensation consistent with the following guidance.

a. Compensation for Meetings. Each director, including inside directors, will be paid a single monthly fee for attending a regular monthly Board of Directors meeting of the corporation or for attending a regular monthly Board of Directors meeting of the corporation’s principal subsidiary, Pacific Continental Bank. Additionally, directors will be paid a fee for attending the meetings of their assigned committees, or their assigned committees of Pacific Continental Bank, and all directors will be paid for their attendance at the Asset and Liability Committee (“ALCO”), whether or not they are designated members of the ALCO Committee. Directors are excused from attending one Board of Directors meeting annually without forfeiture of the meeting fee. Directors may occasionally attend the Board of Directors meetings, or the meetings of their assigned committees, telephonically, providing they have prepared for the meeting by accessing the corporation’s private Extranet or by otherwise receiving and reviewing the meeting materials in advance. All director fees are paid the first week of the month following the month in which the fees are earned. Qualified business expenses are reimbursable upon submission of a personal expense report and the attendant documentation.

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b. Director Bonus. Based on the corporation’s consolidated financial results, directors are eligible to participate in a director performance bonus program. Only directors serving at year-end are eligible for the director performance bonus. Performance bonuses are proportionately adjusted to reflect partial service during the fiscal year with each month served contributing one-twelfth (1/12) of the full amount. Performance bonuses are paid after the year-end by resolution of the Board of Directors.

Directors are expected to attend a minimum of 75% of the aggregate of (i) the total number of meetings of the Boards of Directors, and (ii) the total number of meetings held by all the committees on which they serve. Directors failing to meet the minimum attendance requirement will not be eligible for the director performance bonus.

c. Compensation Amount. Consistent with the provisions of its charter, the corporation’s compensation committee will recommend to the Board of Directors the amount and form of compensation to be paid to directors for meeting attendance and director bonus opportunity. In making its recommendations, the committee may consider the unique responsibilities and duties of the chairs and committee members and may recommend different compensation levels based on committee membership and positions held.

SECTION 14. NOMINATION OF DIRECTORS. Only persons who are nominated in accordance with the procedures set forth in this section will be eligible for election as directors. Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of shareholders by or at the direction of the Board of Directors or by any shareholder of the corporation entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in this section. Such nominations, other than those made by or at the direction of the Board of Directors, must be in writing and delivered to the Secretary at the principal executive offices of the corporation not less than one hundred twenty (120) calendar days in advance of the first anniversary of the date the corporation’s proxy statement was mailed to shareholders for the preceding year’s annual meeting. In no event will the public announcement of an adjournment of a shareholders meeting commence a new time period for the giving of a shareholder’s notice as described above. Such shareholder’s notice must set forth (i) as to each person whom the shareholder proposes to nominate for election or re-election as a director: (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares of the corporation which are beneficially owned by such person, (D) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the shareholder, and (E) any other information relating to such person that is required to be disclosed in solicitations of proxies for elections of directors, or is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (or any successor thereto) (including without limitation such person’s written consent to being name in the proxy statement, if any, as a nominee and to serving as a director if elected); and (ii) as to such shareholder giving notice: (X) the name and address, as they appear on the corporation’s books, of the shareholder, (Y) the class and number of shares of the corporation which are owned beneficially by such shareholder, and (Z) any other information that is required to be provided by the shareholder pursuant to

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Regulation 14A under the 1934 Act (or any successor thereto) in such shareholder’s capacity as a proponent of a shareholder nomination. At the request of the Board of Directors, any person nominated by a shareholder for election as a director will furnish to the secretary of the corporation that information required to be set forth in the shareholder’s notice of nomination which pertains to the nominee. No person will be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this section. Upon the receipt of a shareholder nomination made in accordance with the procedures prescribed by these Bylaws, such nomination shall be evaluated by the corporation’s Governance/Nominating Committee (or any successor thereto) in accordance with its evaluation procedures, in order to determine whether such nominee should be included in the slate of persons recommended by the Board of Directors to the Corporation’s shareholders for election at the next annual meeting. The Chairman of the meeting will, if the facts warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedures prescribed by these Bylaws, and if the Chairman so determines, he or she will so declare at the meeting, and the defective nomination will be disregarded.

ARTICLE III. OFFICERS

SECTION 1. DESIGNATION AND QUALIFICATION. The officers of the corporation will be a President, who will also be a director, one (1) or more vice presidents, a Secretary and all other necessary officers who may, at any time, be elected by the Board of Directors.

SECTION 2. TERM. Each officer will hold office until the successor for that officer has been elected and qualified or until such officer’s death, resignation, or removal in accordance with the provisions of these Bylaws. The Board of Directors will fill any vacancy occurring in any such office.

SECTION 3. REMOVAL. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors, with or without cause, whenever in its judgment the best interests of the corporation will thereby be served. Such removal will be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent will not, of itself, create contract rights.

SECTION 4. DUTIES OF THE PRESIDENT. It will be the duty of the President to preside at all meetings of the shareholders and to preside at all meetings of the directors in the absence of the Chairman of the Board. The President will be the chief executive officer of the corporation. The President will perform all such other duties as the Board of Directors may, from time to time, prescribe or as maybe required by law.

SECTION 5. DUTIES OF THE VICE PRESIDENT. Each Vice President will have such powers and duties as may be assigned by the Board of Directors. One Vice President will be designated by the Board, in the absence of the President, to perform all the duties of the President.

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SECTION 6. DUTIES OF THE SECRETARY. The Secretary will be responsible for keeping accurate minutes of all meetings of the corporation’s Board of Directors and shareholders. The Secretary will be custodian of the corporate seal, if any, and the records of the corporation. The Secretary will perform such other duties as the Board of Directors may, from time to time, prescribe or as may be required by law.

SECTION 7. DUTIES OF OTHER OFFICERS. Other officers appointed by the Board of Directors will exercise such powers and perform such duties as pertaining to their specific offices, or as may otherwise be conferred upon, or assigned to them by the Board of Directors or the President of the corporation. The Board of Directors may authorize an officer to appoint one or more officers or assistant officers.

SECTION 8. OFFICIAL BONDS. Satisfactory bonds for the faithful performance of duties may be required for all officers and employees. Such bonds will be approved by the Board of Directors.

ARTICLE IV. CORPORATE SEAL

If the Board of Directors elects to use a corporate seal for the corporation, such seal will be a circle, in the margin of which will appear the words “Pacific Continental Corporation, Eugene, Oregon”, and in the center the words “Corporate Seal.”

ARTICLE V. CERTIFICATES AND TRANSFER OF SHARES

SECTION 1. CERTIFICATES FOR SHARES. The shares of stock of the corporation may be represented by stock certificates; in such event, the President or Vice President and the Secretary of the corporation will sign each certificate. Such signatures may be manual, facsimile, engraved, printed or impressed. Each certificate for shares will state upon its face all information required by law or otherwise determined to be necessary or appropriate.

SECTION 2. STOCK TRANSFERS. Shares of stock will be transferable on the books of the corporation, and a transfer book will be kept in which all transfers of stock will be recorded. Every person becoming a shareholder by such transfer will, in proportion to his or her shares, succeed to all rights of the prior holder of such shares. The Board of Directors may impose conditions upon the transfer of the stock reasonably calculated to simplify the work of the corporation for stock transfers, voting at shareholder meetings, and related matters, and to protect it against fraudulent transfers.

SECTION 3. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event a certificate is lost, stolen or destroyed, the President, Secretary, or other authorized officer may, upon satisfactory proof of such loss, theft or destruction, and upon receipt of satisfactory indemnity from the shareholder, authorized the issuance of a new certificate.

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ARTICLE VI. AMENDMENTS

These bylaws may be altered, amended or repealed by a majority vote of the Board of Directors at any regular meeting of the Board of Directors or any special meeting called for that purpose.

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These Amended and Restated Bylaws, which supercede and replace all previous Bylaws of the corporation, were adopted by a resolution of the Board of Directors, effective March 11, 2004.

DATED the 11th day of March, 2004.

/s/ Hal Brown

Hal Brown,

President and CEO

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Hal Brown, President and Chief Executive Officer of Pacific Continental Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pacific Continental Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 13, 2004

/s/ Hal Brown

Hal Brown,

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Michael A. Reynolds, Senior Vice President and Chief Financial Officer of Pacific Continental Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pacific Continental Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 13, 2004

/s/ Michael A. Reynolds

Michael A. Reynolds,

Senior Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Pacific Continental Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Hal M. Brown, Chief Executive Officer, and Michael A. Reynolds, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Hal Brown	/s/ Michael A. Reynolds
Hal Brown	Michael A. Reynolds
Chief Executive Officer	Chief Financial Officer