10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2008
OR
o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 333-12892

MISSION COMMUNITY BANCORP

(Exact name of registrant as specified in its charter)

California	77-0559736
State or other jurisdiction of	I.R.S. Employer
incorporation or organization	Identification No.

581 Higuera St., San Luis Obispo, California  93401

(Address of principal executive offices)

(805) 782-5000

Issuer’s telephone number

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:  1,120,576 shares of common stock outstanding as of May 8, 2008.

Mission Community Bancorp

March 31, 2008

Index

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
Condensed Consolidated Balance Sheets at March 31, 2008, December 31, 2007 and March 31, 2007		3
Condensed Consolidated Statements of Income for the Three-Month Periods Ended March 31, 2008 and 2007		4
Condensed Consolidated Statements of Changes of Shareholders’ Equity for the Three-Month Periods Ended March 31, 2008 and 2007		5
Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2008 and 2007		6
Notes to Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4T.	Controls and Procedures	23
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Submission of Matters to a Vote of Security Holders	24
Item 5.	Other Information	24
Item 6.	Exhibits	25

2

PART I

ITEM 1.     FINANCIAL STATEMENTS

Mission Community Bancorp and Subsidiary
Condensed Consolidated Balance Sheets
Unaudited
	(dollars in thousands)
	March 31, 2008			December 31, 2007			March 31, 2007
Assets
Cash and due from banks	$	1,989		$	2,212		$	2,145
Federal funds sold	2,140			3,315			215
Total cash and cash equivalents	4,129			5,527			2,360
Interest-bearing deposits in other banks	550			550			550
Investment securities available for sale	28,206			17,124			16,110
Loans held for sale	615			3,012			728
Loans, net of unearned income	130,532			123,416			126,608
Less allowance for loan losses	(1,356		)	(1,150		)	(1,027		)
Net loans	129,176			122,266			125,581
Federal Home Loan Bank stock and other stock, at cost	2,038			2,021			1,371
Premises and equipment	3,523			3,537			3,686
Company owned life insurance	2,310			2,289			2,226
Accrued interest and other assets	1,992			2,003			1,879
Total Assets	$	172,539		$	158,329		$	154,491
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand	$	21,758		$	23,165		$	22,817
Money market, NOW and savings	40,083			32,630			36,682
Time certificates of deposit	57,954			56,638			61,514
Total deposits	119,795			112,433			121,013
Other borrowings	28,200			28,200			16,900
Junior subordinated debt securities	3,093			3,093			3,093
Accrued interest and other liabilities	1,261			1,465			1,157
Total liabilities	152,349			145,191			142,163
Shareholders’ Equity:
Preferred stock - Series A (100,000 shares issued and outstanding)	392			392			392
Preferred stock - Series B (20,500 shares issued and outstanding)	192			192			192
Preferred stock - Series C (50,000 shares issued and outstanding)	500			500			500
Common stock - 10,000,000 shares authorized; Issued and outstanding: 1,120,576 at March 31, 2008; 689,232 at December 31, 2007; and 673,399 at March 31, 2007	14,193			7,126			6,859
Additional paid-in capital	119			108			73
Retained earnings	4,606			4,712			4,337
Accumulated other comprehensive income - unrealized appreciation(depreciation) on available-for-sale securities, net of tax	188			108			(25		)
Total shareholders’ equity	20,190			13,138			12,328
Total Liabilities and Shareholders’ Equity	$	172,539		$	158,329		$	154,491

The accompanying notes are an integral part of these consolidated financial statements.

3

Mission Community Bancorp and Subsidiary
Condensed Consolidated Statements of Income
Unaudited	(in thousands, except per share data)
		For the Three Months Ended
		March 31, 2008			March 31, 2007
Interest Income
Interest and fees on loans		$	2,429		$	2,643
Interest on investment securities		212			171
Other interest income		94			37
Total interest income		2,735			2,851
Interest Expense
Interest on money market, NOW and savings deposits		202			244
Interest on time certificates of deposit		605			718
Other interest expense		366			254
Total interest expense		1,173			1,216
Net interest income		1,562			1,635
Provision for loan losses		220			—
Net interest income after provision for loan losses		1,342			1,635
Non-interest income
Service charges on deposit accounts		70			56
Gain on sale of loans		30			59
Brokered loan fees		—			—
Loan servicing fees, net of amortization		25			21
Grants and awards		—			13
Other income and fees		31			21
Total non-interest income		156			170
Non-interest expense
Salaries and employee benefits		962			877
Occupancy expenses		121			148
Furniture and equipment		113			112
Data processing		132			113
Professional fees		91			56
Marketing and business development		33			76
Office supplies and expenses		57			55
Insurance and regulatory assessments		49			52
Loan and lease expenses		21			23
Other expenses		141			113
Total non-interest expense		1,720			1,625
Income (loss) before income taxes		(222		)	180
Income tax expense (credit)		(116		)	52
Net income (loss)		$	(106	)	$	128
Net income (loss) applicable to common stock		$	(93	)	$	109
Per Common Share Data:
Net Income (Loss) – Basic		$	(0.10	)	$	0.16
Net Income (Loss) – Diluted		$	(0.10	)	$	0.15
Average common shares outstanding - basic		913,718			673,399
Average common shares outstanding - diluted		N/A			719,072

The accompanying notes are an integral part of these consolidated financial statements.

4

Mission Community Bancorp and Subsidiary

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited - - dollars in thousands)

														Accumulated
						Additional								Other
	Preferred		Common Stock			Paid-In		Comprehensive			Retained			Comprehensive
	Stock		Shares	Amount		Capital		Income			Earnings			Income(Loss)			Total
Balance at January 1, 2007	$	1,084	673,399	$	6,859	$	61				$	4,209		$	(59	)	$	12,154
Stock-based compensation						12											12
Comprehensive income:
Net income								$	128		128						128
Net unrealized gain on available-for-sale securities, net of taxes of $24	—		—	—		—		34			—			34			34
Total comprehensive income								$	162
Balance at March 31, 2007	$	1,084	673,399	$	6,859	$	73				$	4,337		$	(25	)	$	12,328
Balance at January 1, 2008	$	1,084	689,232	$	7,126	$	108				$	4,712		$	108		$	13,138
Exercise of stock options and related tax benefit of $25			20,700	232													232
Issuance of common stock in public offering, net of offering expenses			410,644	6,835													6,835
Stock-based compensation						11											11
Comprehensive income (loss):
Net income (loss)								$	(106	)	(106		)				(106		)
Net unrealized gain on available-for-sale securities, net of taxes of $55	—		—	—		—		80			—			80			80
Total comprehensive income (loss)								$	(26	)
Balance at March 31, 2008	$	1,084	1,120,576	$	14,193	$	119				$	4,606		$	188		$	20,190

The accompanying notes are an integral part of these consolidated financial statements.

5

Mission Community Bancorp and Subsidiary

Condensed Consolidated Statements of Cash Flows

	(Unaudited - dollars in thousands)
		For the Three Months Ended
		March 31, 2008			March 31, 2007
Operating Activities
Net income (loss)		$	(106	)	$	128
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		89			89
Accretion of discount on securities and loans, net		(38		)	(29		)
Provision for credit losses		220			—
Stock-based compensation		11			12
Gain on loan sales		(31		)	(59		)
Increase in company-owned life insurance		(21		)	(19		)
Other, net		(267		)	71
Proceeds from loan sales		3,034			285
Loans originated for sale		(105		)	(1,125		)
Net cash provided by (used in) operating activities		2,786			(647		)
Investing Activities
Net change in Federal Home Loan Bank and other stock		—			(48		)
Purchase of available-for-sale securities		(12,880		)	—
Proceeds from maturities, calls and paydowns of available-for-sale securities		1,941			363
Proceeds from sales of available-for-sale securities		—			—
Net increase in loans		(7,600		)	(3,605		)
Purchases of premises and equipment		(79		)	(51		)
Proceeds from sale of fixed assets		5			—
Net cash used in investing activities		(18,613		)	(3,341		)
Financing Activities
Net increase (decrease) in demand deposits and savings accounts		6,046			(3,425		)
Net increase in time deposits		1,316			158
Net decrease in other borrowings		—			(500		)
Proceeds from issuance of common stock in public offering, net		6,835			—
Proceeds from exercise of stock options		232			—
Net cash provided by (used in) financing activities		14,429			(3,767		)
Net decrease in cash and cash equivalents		(1,398		)	(7,755		)
Cash and cash equivalents at beginning of year		5,527			10,115
Cash and cash equivalents at end of period		$	4,129		$	2,360
Supplemental disclosures of cash flow information:
Interest paid		$	1,160		$	1,273
Taxes paid		28			—

The accompanying notes are an integral part of these consolidated financial statements.

6

Mission Community Bancorp and Subsidiary

Notes to Condensed Consolidated Financial Statements

Note 1 – Basis of Presentation and Management Representations

The unaudited consolidated financial statements include accounts of Mission Community Bancorp (“the Company”) and its subsidiary, Mission Community Bank (“the Bank”) and the Bank’s subsidiary, Mission Community Development Corporation.  All material inter-company balances and transactions have been eliminated.

These financial statements have been prepared in accordance with the Securities and Exchange Commission’s rules and regulations for quarterly reporting and, therefore, do not necessarily include all information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles.  These financial statements should be read in conjunction with the Company’s Form 10-KSB for the year ended December 31, 2007, which was filed on March 28, 2008.

Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.  In the opinion of management, the unaudited financial statements for the three-month periods ended March 31, 2008 and 2007 reflect all adjustments, consisting only of normal recurring accruals and provisions, necessary for a fair presentation of the Company’s financial position and results of operations.  Certain 2007 amounts have been reclassified to conform to the 2008 presentation.

Note 2 – Stock Based Compensation

The Company has one stock option plan, which is more fully described in Note I to the consolidated financial statements in the Company’s Annual Report on Form 10-KSB.  On January 1, 2006, the Company implemented Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment (“SFAS 123R”), which addresses accounting for equity-based compensation arrangements, including employee stock options.  SFAS 123R replaced SFAS 123 and superseded Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and the related guidance.

The Company adopted the “modified prospective method,” where stock-based compensation expense is recorded beginning on the adoption date and prior periods are not restated.  Under this method, compensation expense is recognized using the fair value based method for all new awards granted after January 1, 2006.  Additionally, compensation expense for unvested options that were outstanding at December 31, 2005, is recognized over the requisite service period based on the fair value of those options as previously calculated under the pro forma disclosures of SFAS 123.  During the three-month periods ended March 31, 2008 and 2007, the Bank recognized pre-tax stock-based compensation expense of $10 thousand and $12 thousand, respectively, as a result of adopting SFAS 123R.  As of March 31, 2008, the Company has unvested options outstanding with unrecognized compensation expense totaling $74 thousand, which is scheduled to be recognized as follows (in thousands):

April 1 through December 31, 2008	$	32
2009	42
Total unrecognized compensation cost	$	74

7

Note 3 — Operating Segments

The Company has only one reportable operating segment—commercial banking.  The commercial banking segment provides traditional banking services such as checking and savings accounts, time certificates of deposit and loans.

Note 4 — Recent Accounting Pronouncements

In September 2006 the FASB issued Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.  SFAS No. 157 establishes three broad methods of determining fair value at times other than the purchase or sale of an asset or liability:

·Level 1—Quoted prices in active markets for identical assets or liabilities

·Level 2—Estimates based on significant other observable inputs that market participants would use in pricing the asset or liability

·Level 3—Estimates based on significant unobservable inputs that reflect the entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

When feasible, Level 1 pricing would be preferable to Level 2, and Level 3 pricing would only be used if neither Level 1 nor Level 2 pricing methods were considered appropriate.  SFAS No. 157 is effective beginning with the 2008 calendar year.

The Bank has one security in its available-for-sale portfolio that has been assessed as “impaired” since 2004.  Prior to January 1, 2008, the Bank has used a pricing method for this security that would be considered Level 2 pricing under SFAS No. 157.  Upon adoption of SFAS No. 157 in 2008, the Bank concluded that Level 3 pricing was more appropriate for this security, given the lack of observable inputs to the estimation process.  This change in estimate resulted in a reduction in the fair value of this security by $168 thousand as of January 1, 2008.  Because this security remains in the available-for-sale portfolio, this change in estimate was included in other comprehensive income but had no effect on reported net income.

The following table presents information regarding the methods used to measure fair value for those balance sheet items presented at fair value:

(In thousands - March 31, 2008)

	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Available-for-sale securities	$	—	$	28,154	$	52	$	28,206

8

(In thousands)

	Fair Value Measurements for Available-for-Sale Securities Using Significant Unobservable Inputs (Level 3)
Beginning balance 12/31/07	$	—
Transfers into Level 3	227
Unrealized gains (losses) included in other comprehensive income (loss)	(168		)
Purchases	—
Settlements	—
Paydowns and maturities	(7		)
Ending Balance 3/31/08	$	52
Total unrealized gains (losses) for the period relating to assets still held at the reporting date	$	(168	)

In February 2007 the FASB issued Statement of Financial Accounting Standards No. 159 (“SFAS No. 159”), The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115, which permits the Bank, beginning in 2008, to make an irrevocable choice to measure many financial instruments and certain other items at fair value, on an instrument-by-instrument basis.  Upon adoption of SFAS No. 159 in 2008, the Bank did not change the valuation of any of its existing cost-based financial instruments to fair value, and did not reclassify any of its available-for-sale securities to trading securities.

9

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

Forward-Looking Statements

Some matters discussed in this Form 10-Q may be “forward-looking statements” within the meaning of the Private Litigation Reform Act of 1995 and therefore may involve risks, uncertainties and other factors which may cause our actual results to be materially different from the results expressed or implied by our forward-looking statements.  These statements generally appear with words such as “anticipate,” “believe,” “estimate,” “may,” “intend,” and “expect.”  Although management believes that the assumptions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.  Factors that could cause actual results to differ from results discussed in forward-looking statements include, but are not limited to: economic conditions (both generally and in the markets where the Bank operates); competition from other providers of financial services offered by the Bank; government regulation and legislation; changes in interest rates; material unforeseen changes in the financial stability and liquidity of the Bank’s credit customers; and other risks detailed in the Company’s filings with the Securities and Exchange Commission, all of which are difficult to predict and which may be beyond the control of the Company or the Bank.  The Company undertakes no obligation to revise forward-looking statements to reflect events or changes after the date of this discussion or to reflect the occurrence of unanticipated events.

Overview of Results of Operations and Financial Condition

·The Company incurred a net loss of $(106) thousand for the first quarter of 2008, as compared with $128 thousand in net income for the same three-month period of 2007. The factors resulting in this quarterly loss will be discussed below.

·Net interest income for the three-month period ended March 31, 2008 decreased by $73 thousand, or 4%, from the comparable period in 2007, due primarily to a decrease in the net interest margin of 61 basis points.  The net interest margin decrease is attributable primarily to the reduction in the prime lending rate by 3.00% over the past year.  In order to retain deposits in a competitive market, the Bank has been unable to reduce deposit rates to the same degree over that period, placing a squeeze on the net interest margin.

·The provision for loan losses increased by $220 thousand from the first quarter of 2007 to the first quarter of 2008, due to loan growth, an increase in the level of non-accrual loans and management’s assessment of the appropriate level for the allowance for loan losses.

·For the three months ended March 31, 2008, non-interest income decreased by $14 thousand, or 8%, from the same period in 2007, primarily due to reduced sales of SBA-guaranteed loans in 2008.

·Non-interest expense increased by $95 thousand, or 6%, for the three months ended March 31, 2008, as compared to the first quarter of 2007, principally due to increased costs for salaries and benefits in 2008.

10

·Total assets increased by $14.2 million, or 9.0%, from December 31, 2007.  Total loans increased by $4.7 million, or 3.7%, from December 31, 2007 to March 31, 2008 (a 15% annualized rate), while deposits increased by $7.4 million, or 6.6% (26% annualized).

·On February 15, 2008, the Company issued 410,644 new common shares in a public offering for gross cash proceeds of $7.4 million ($18.00 per share).  After deducting offering expenses, the net proceeds to the Company was $6.8 million.  Shortly after closing on this stock offering, the Company invested $6.4 million of the net proceeds into increasing the capital of the Bank.

Income Summary

For the three months ended March 31, 2008, the Company incurred a net loss of $(106) thousand, a decrease of $234 thousand as compared with the $128 thousand in net income for the same three-month period of 2007.  Return on average assets (annualized) was a negative (0.25)% for the first quarter of 2008, as compared with a positive 0.34% for the first quarter of 2007.  Annualized return on average equity was (2.64)% for the first quarter of 2008 as compared with 4.24% for the comparable 2007 period.

Income (loss) before income taxes for the first quarter of 2008 was down $402 thousand from the comparable 2007 period.  The income statement components of these variances are as follows:

Pre-Tax Income Variance Summary

(In thousands)

	Effect on Pre-Tax Income Increase (Decrease)
	Three Months
Change from 2007 to 2008 in:
Net interest income	$	(73	)
Provision for loan losses	(220		)
Non-interest income	(14		)
Non-interest expense	(95		)
Change in income before income taxes	$	(402	)

These variances will be explained in the discussion below.

Net Interest Income

Net interest income is the largest source of the Bank’s operating income.  For the three-month period ended March 31, 2008, net interest income was $1.562 million, a decrease of $73 thousand, or 4% from the comparable period in 2007.

The net interest margin (net interest income as a percentage of average interest earning assets) was 4.07% for the three-month period ended March 31, 2008, a decrease of 61 basis points as compared to the same period in 2007.  The decrease in the net interest margin in 2008 was principally attributable to the reduction in the prime lending rate by 3.00% from January 2007 to March 2008.  In order to retain deposits in a competitive market, the Bank has been unable to reduce deposit rates to the same degree over that period, placing a squeeze on the net interest margin.

11

The following table shows the relative impact of changes in average balances of interest earning assets and interest bearing liabilities, and interest rates earned and paid by the Company and the Bank on those assets and liabilities for the three-month periods ended March 31, 2008 and 2007:

Net Interest Analysis

(Dollars in thousands)

	For the Three Months Ended
	March 31, 2008							March 31, 2007
	Average					Average		Average					Average
	Balance			Interest		Rate		Balance			Interest		Rate
ASSETS
Interest-earning assets:
Loans, net of unearned income*	$	127,860		$	2,429	7.70	%*	$	124,856		$	2,643	8.65	%*
Investment securities*	19,016			212		4.84	%*	16,231			171		4.49	%*
Federal funds sold	5,862			47		3.23	%	1,124			15		5.33	%
Other interest income	5,341			47		3.55	%	1,884			22		4.83	%
Total interest-earning assets / interest income	158,079			2,735		7.05	%	144,095			2,851		8.11	%
Non-interest-earning assets:
Allowance for loan losses	(1,164		)					(1,027		)
Cash and due from banks	2,417							2,374
Premises and equipment	3,540							3,712
Other assets	4,486							4,646
Total assets	$	167,358						$	153,800
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand accounts	$	16,962		106		2.52	%	$	12,269		90		2.96	%
Savings deposits	21,342			96		1.81	%	24,015			154		2.60	%
Certificates of deposit	57,697			605		4.22	%	60,069			718		4.85	%
Total interest-bearing deposits	96,001			807		3.38	%	96,353			962		4.05	%
Federal funds purchased	—			—		—		16			—		6.35	%
Federal Home Loan Bank advances	28,225			305		4.35	%	15,806			185		4.76	%
Subordinated debt	3,093			61		7.89	%	3,093			69		8.99	%
Total borrowed funds	31,318			366		4.70	%	18,915			254		5.45	%
Total interest-bearing liabilities / interest expense	127,319			1,173		3.71	%	115,268			1,216		4.28	%
Non-interest-bearing liabilities:
Non-interest-bearing deposits	22,532							24,984
Other liabilities	1,368							1,306
Total liabilities	151,219							141,558
Shareholders’ equity	16,139							12,242
Total liabilities and shareholders’ equity	$	167,358						$	153,800
Net interest-rate spread						3.34	%						3.83	%
Impact of non-interest-bearing sources and other changes in balance sheet composition						0.73	%						0.85	%
Net interest income / margin on earning assets				$	1,562	4.07	%**				$	1,635	4.68	%**

*Yields on municipal securities and loans have been adjusted to their fully-taxable equivalents

** Net interest income as a % of earning assets

12

Shown in the following table are the relative impacts on net interest income of changes in the average outstanding balances (volume) of earning assets and interest bearing liabilities and the rates earned and paid by the Bank and the Company on those assets and liabilities for the three- month periods ended March 31, 2008 and 2007.  Changes in interest income and expense that are not attributable specifically to either rate or volume are allocated proportionately among both variances.

Rate / Volume Variance Analysis

(In thousands)

	Three Months Ended March 31, 2008
	Compared to 2007
	Increase (Decrease)
	in interest income and expense
	due to changes in:
	Volume			Rate			Total
Interest-earning assets:
Loans, net of unearned income	$	62		$	(276	)	$	(214	)
Investment securities	31			10			41
Federal funds sold	40			(8		)	32
Other interest income	32			(7		)	25
Total increase in interest income	165			(281		)	(116		)
Interest-bearing liabilities:
Transaction accounts	30			(14		)	16
Savings deposits	(16		)	(42		)	(58		)
Certificates of deposit	(28		)	(85		)	(113		)
Total interest-bearing deposits	(14		)	(141		)	(155		)
Federal funds purchased	—			—			—
FHLB advances	135			(15		)	120
Subordinated debt	—			(8		)	(8		)
Total borrowed funds	135			(23		)	112
Total increase in interest expense	121			(164		)	(43		)
Increase in net interest income	$	44		$	(117	)	$	(73	)

The table above reflects the impact of lower yields received on loans due to the reduction in the prime rate over the past year, while growth in the balances of loans and other interest-earning assets have had a positive, albeit lesser, impact.  On the liability side, the rate reductions have also had a beneficial effect, but not enough to offset the reduction in loan yields.

Based on current economic forecasts, the Bank anticipates that short-term interest rates may continue to decline until at least mid-year 2008.  Due to the Bank’s asset-sensitive position, management expects a moderate decline in the general level short-term interest rates to result in a slight decline in the Bank’s net interest margin.

Provision for Loan Losses

The Bank recorded a $220 thousand provision for loan losses for the three months ended March 31, 2008.  No provision was recorded in the first quarter of 2007.  The Bank had $21 thousand of charge-offs and $7 thousand of recoveries for the first three months of 2008, as compared with no charge-offs and $1 thousand of recoveries for the first three months of 2007.  The ratio of allowance for loan losses to total loans was 1.03% at March 31, 2008, as compared to 0.81% a year ago and 0.91% as of December 31, 2007.

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The provision for loan losses and allowance for loan losses reflect management’s consideration of the various risks in the loan portfolio.  Additional discussion of loan quality and the allowance for loan losses is provided in the Asset Quality, Potential Problem Loans and Allowance for Loan and Lease Losses sections of this report.

Non-Interest Income

Non-interest income represents service charges on deposit accounts and other non-interest related charges and fees, including fees from the sale of loans.  For the three-month period ended March 31, 2008, non-interest income was $156 thousand, a decrease of $14 thousand, or (8)%, from the same period in 2007.

The following table shows the major components of non-interest income:

Non-Interest Income

(In thousands)

	For the Three Months Ended March 31,
	$ Amount				Change
	2008		2007		$			%
Service charges on deposit accounts	$	70	$	56	$	14		25	%
Gain on sale of loans	30		59		(29		)	-49	%
Loan servicing fees, net of amortization	25		21		4			19	%
Grants and awards	—		13		(13		)	-100	%
Other income and fees	31		21		10			48	%
Total non-interest income	$	156	$	170	$	(14	)	-8	%

The Bank typically derives a substantial portion of its non-interest income from the sale of loans, most of which are SBA-guaranteed loans.  Loan sale activity has been sluggish so far in 2008, but is expected to increase in the second and third quarters.  Approximately half of the $615 thousand of loans held for sale as of March 31, 2008, will not be eligible for sale until the third quarter of 2008, either because they are not adequately seasoned or the loans are not fully funded.

In 2005 the Company received a $135,000 CDFI technical assistance grant to help offset any costs associated with providing additional services to the un- and under-banked in its target market area.  By December 31, 2006, the Company had incurred qualifying expenses totaling $100 thousand.  That portion of the grant was recognized in non-interest income in 2006.  An additional $13 thousand of qualifying expenditures was incurred in the first quarter of 2007, and that amount is reflected as grants and awards income in the table above.

The majority of the service charge income relates to NSF fee income and other fees not directly assessed on deposit accounts.  Many of the Bank’s deposit products and services have low or no fees, and the Bank does not expect to change this strategy in the near future.

Non-Interest Expense

Non-interest expense represents salaries and benefits, occupancy expenses, professional expenses, outside services, and other miscellaneous expenses necessary to conduct business.

Non-interest expenses increased by $95 thousand or 6% for the three months ended March 31, 2008, as compared to the first quarter of 2007.

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The following table shows the major components of non-interest expenses:

Non-Interest Expense

(In thousands)

	For the Three Months Ended March 31,
	$ Amount				Change
	2008		2007		$			%
Salaries and employee benefits	$	962	$	877	$	85		10	%
Occupancy expenses	121		148		(27		)	-18	%
Furniture and equipment	113		112		1			1	%
Data processing	132		113		19			17	%
Professional fees	91		56		35			63	%
Marketing and business development	33		76		(43		)	-57	%
Office supplies and expenses	57		55		2			4	%
Insurance and regulatory assessments	49		52		(3		)	-6	%
Loan and lease expenses	21		23		(2		)	-9	%
Other	141		113		28			25	%
Total non-interest expense	$	1,720	$	1,625	$	95		6	%

The increase in salaries and employee benefits—the principal reason for the increase in non-interest expense—is due to increased staffing levels (up 6% from the first quarter of 2007), as well as normal annual salary increases (average salary increase of 4%).   The increases in staffing are related to the implementation of Bank’s business banking expansion plan.  Increased professional fees are legal fees related to loan workouts and general corporate matters, as well as costs of compliance with the internal control reporting mandated by the Sarbanes-Oxley Act of 2002.  Occupancy expense was down in the first quarter of 2008 due to the termination in July 2007 of a land lease in San Luis Obispo where the Bank intended to build a new administrative and main office.  The Bank now expects to lease a yet-to-be-constructed building on the same property, with no rent payments to be made until the building is substantially complete.  In order to contain expenses this quarter, we have made a substantial reduction in marketing costs.

Income Taxes

Income tax expense for the three months ended March 31, 2008, was a negative $(116) thousand, compared with a positive $52 thousand for the same period in 2007.  The effective tax rate (income tax expense as a percentage of pre-tax income) for the first quarter of 2008 was 52.3%, compared with 28.9% for the same period in 2007.  The disparity between the effective tax rates in 2008 as compared to 2007 is primarily due to tax-exempt income on municipal securities and loans comprising a larger proportion of pre-tax income(loss) in 2008 as compared to 2007.

Balance Sheet Analysis

At March 31, 2008, consolidated assets totaled $172.5 million, as compared with $158.3 million at December 31, 2007, and $154.5 million at the end of 2007’s first quarter.  This represents an increase of $14.2 million (a 36% annual rate) since December of 2007.  Total loans increased $4.7 million (a 15% annual rate) over that period, while deposits increased $7.4 million (26% annualized) and shareholders’ equity increased $7.1 million over that same period.  Approximately half of the growth in earning assets and total assets, and nearly all of the growth in shareholders’ equity in the most recent quarter was the result of the closing of a secondary public offering of the Company’s common stock in February 2008.  See the Capital Ratios section of this report.

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The following table shows balance sheet growth trends over the past five quarters:

Balance Sheet Growth

(dollars in thousands)

	Increase(Decrease) From Previous Quarter End*
	March 31, 2008				December 31, 2007					September 30, 2007					June 30, 2007					March 31, 2007
	$		%		$			%		$			%		$			%		$			%
Total Assets	$	14,210	36.1	%	$	(4,195	)	-10.2	%	$	6,108		15.5	%	$	1,925		5.0	%	$	(3,678	)	-9.4	%
Earning Assets	14,625		39.9	%	(3,420		)	-9.0	%	5,981			16.4	%	646			1.8	%	(2,624		)	-7.2	%
Loans	4,718		15.0	%	4,100			13.3	%	(2,691		)	-8.5	%	(2,316		)	-7.3	%	4,537			15.0	%
Deposits	7,362		26.3	%	(14,462		)	-45.2	%	8,708			29.2	%	(2,826		)	-9.4	%	(3,268		)	-10.7	%
Borrowings	—		0.0	%	9,550			203.2	%	(3,000		)	-55.0	%	4,750			112.7	%	(500		)	-11.7	%
Shareholders’ Equity	7,052		215.9	%	340			10.5	%	394			12.6	%	76			2.5	%	175			5.8	%

*Percentages shown as annualized rates

Loans

The following table shows the composition of our loan portfolio by type of loan:

Loan Portfolio Composition

(Dollars in thousands)

	March 31, 2008				December 31, 2007					March 31, 2007
Type of Loan	Amount		Percentage		Amount			Percentage		Amount		Percentage
Commercial	$	27,321	20.8	%	$	26,491		20.9	%	$	18,873	14.8	%
Agricultural	130		0.1	%	122			0.1	%	113		0.1	%
Municipal loans	2,787		2.1	%	2,789			2.2	%	3,418		2.7	%
Real estate	77,528		59.1	%	72,009			57.0	%	68,257		53.6	%
Construction	20,382		15.6	%	22,513			17.8	%	34,125		26.8	%
Consumer	2,999		2.3	%	2,504			2.0	%	2,550		2.0	%
Total loans	$	131,147	100.0	%	$		126,428	100.0	%	$	127,336	100.0	%

The table shows that loan growth in the first three months of 2008 has occurred primarily in commercial and real estate loans, while construction loans activity has declined.

Asset Quality

Non-accrual loans totaled $2.4 million at March 31, 2008, as compared to $2.0 million at December 31, 2007 and $373 thousand at March 31, 2007.

The $2.4 million of non-accrual loans as of March 31, 2008, includes a $1.9 million purchased participation in a construction loan for an affordable housing project in San Diego.  Management is working closely with the Management of the originating bank to determine the most effective action plan for the resolution of this loan.

As of March 31, 2008, $201 thousand of the non-accrual loans were SBA-guaranteed loans, with $193 thousand of the total guaranteed by the SBA.

Except for one investment security on which the accrual of interest has been discontinued (see the Investments section below), the Bank and the Company had no other non-performing assets as of March 31, 2008 and 2007.

Management classifies loans as non-accrual when principal or interest is past due 90 days based on the contractual terms of the loan, unless the loan is well-secured and in the process of collection.  Loans that are not past-due 90 days or more will also be classified as non-accrual when, in the opinion of management, there exists a reasonable doubt as to the full and timely

16

collection of either principal or interest.  Once a loan is classified as non-accrual, it may not be reclassified as an accruing loan until all principal and interest payments are brought current and the loan is considered to be collectible as to both principal and interest.

The following table presents information about the Company’s non-performing loans, including quality ratios as of March 31, 2008, December 31, 2007 and March 31, 2007:

Non-Performing Assets

(in thousands)

	March 31			December 31			March 31
	2008			2007			2007
Loans in nonaccrual status	$	2,442		$	1,988		$	373
Loans past due 90 days or more and accruing	14			68			—
Restructured loans	—			—			—
Total nonperforming loans	2,456			2,056			373
Other real estate owned	—			—			—
Total nonperforming assets	$	2,456		$	2,056		$	373
Allowance for loan losses	$	1,356		$	1,150		$	1,027
Asset quality ratios:
Non-performing assets to total assets	1.42		%	1.30		%	0.24		%
Non-performing loans to total loans	1.87		%	1.63		%	0.29		%
Allowance for loan losses to total loans	1.03		%	0.91		%	0.81		%
Allowance for loan losses to total non-performing loans	55		%	56		%	275		%

The $2.5 million of non-performing loans as of March 31, 2008, are supported by $193 thousand of SBA loan guarantees.

Potential Problem Loans

At March 31, 2008, the Bank had approximately $8.4 million of loans that were not classified as non-performing but for which known information about the borrower’s financial condition caused management to have concern about the ability of the borrowers to comply with the repayment terms of the loans.  This represents a $5.6 million increase from the $2.8 million of potential problem loans at December 31, 2007.  The $8.4 million of potential problem loans are supported by $2.0 million of SBA loan guarantees.  Potential problem loans were identified through the ongoing loan review process.  These loans are subject to continuing management attention and are considered in the determination of the allowance for loan losses.

Credit quality, as measured by loan delinquencies and by the Bank’s internal risk grading system, has deteriorated somewhat in the first quarter of 2008, and there can be no assurances that new problem loans will not develop in future periods.  A decline in economic conditions in the Bank’s market area or other factors could adversely impact individual borrowers or the loan portfolio in general.  The Bank has well defined underwriting standards and expects to continue with prompt collection efforts and loan workouts, as necessary, but deteriorating economic conditions, uncertainties or other unforeseen changes may cause one or more borrowers to experience problems in the coming months, resulting in increased loan delinquencies.

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Allowance for Loan and Lease Losses

The allowance for loan and lease losses (“ALLL”) at March 31, 2008 totaled $1.356 million, an increase of $206 thousand, or 72% (annualized), from December 31, 2007.  The ratio of ALLL to total loans at March 31, 2008, was 1.03%, up from 0.91% at December 31, 2007, and 0.81% at March 31, 2007.  At March 31, 2008 and 2007, the ratio of ALLL to total non-performing loans was 55% and 275%, respectively.

The following table provides an analysis of the changes in the ALLL for the three-month periods ended March 31, 2008 and 2007:

Allowance for Loan and Lease Losses

(dollars in thousands)

	Three Months Ended
	March 31,
	2008			2007
Balance at beginning of period	$	1,150		$	1,026
Provision for loan losses	220			—
Loans charged off	(21		)	—
Recoveries of previous charge-offs	7			1
Net recoveries (charge-offs)	(14		)	1
Balance at end of period	$	1,356		$	1,027
Allowance for loan losses as a percentage of:
Period end loans	1.03		%	0.81		%
Non-performing loans	55		%	275		%
As a percentage of average loans (annualized):
Net charge-offs (recoveries)	0.04		%	0.00		%
Provision for loan losses	0.69		%	0.00		%

The Bank makes provisions for loan losses when required to bring the total allowance for loan and lease losses to a level deemed appropriate for the level of risk in the loan portfolio.  At least quarterly, management conducts an assessment of the overall quality of the loan portfolio and general economic trends in the local market.  The determination of the appropriate level for the allowance is based on that review, considering such factors as historical experience, the volume and type of lending conducted, the amount of and identified potential loss associated with specific nonperforming loans, regulatory policies, general economic conditions, and other factors related to the collectibility of loans in the portfolio.

Based on its quarterly review, management believes that the allowance for loan losses at March 31, 2008, is sufficient to absorb losses inherent in the loan portfolio.  This assessment is based upon the best available information and does involve uncertainty and matters of judgment.  Accordingly, the adequacy of the allowance cannot be determined with precision and could be susceptible to significant change in future periods.

In addition, management has established a reserve for undisbursed loan commitments.  As of March 31, 2008, this reserve totaled $55,000 and is included in other liabilities in the consolidated balance sheet.

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Investments

Included in the Bank’s investment securities portfolio is a collateralized mortgage obligation (“CMO”) originally issued by a manufactured housing company on the East Coast.  The parent company of the issuer filed for bankruptcy in November 2002 and securities issued by the company have been downgraded to “D” by the Standard and Poor’s rating agency.  To date, the Bank has received all scheduled interest payments but none of the scheduled principal payments.

Management receives monthly reports from JP Morgan that provide detailed information on delinquency, losses and other factors.  This information is used to project, as realistically as possible, the probable loss.  Management reviews this calculation monthly.  In 2004 the Bank established a specific loss reserve for this security of $254 thousand and placed the security in non-accrual status, with interest payments going to the reserve.  As of March 31, 2008, the book value of the security was $52 thousand ($322 thousand amortized cost less the loss reserve, which totals $270 thousand).

While management has made a best effort to determine the probable loss on this security, no assurances can be given that future changes in the underlying collateral and payments will not materially affect the value of this security with either positive or negative changes.  However, management will continue to closely monitor this investment and, if needed, recognize additional write-downs.

Excluding the impaired CMO referred to above, all securities in the Bank’s investment portfolio are rated Aa2 or higher.  The portfolio consists of a mixture of fixed-rate mortgage-backed securities (55%), floating-rate mortgage-backed securities (10%), fixed-rate US agency securities (16%), fixed-rate tax-exempt municipal securities (13%) and fixed-rate CMO’s (6%).  None of the mortgage-backed securities are backed by “sub-prime” mortgages.  None of the Bank’s municipal securities may be called before 2011.  The average life of the portfolio is projected to be 4.4 years, with a duration of 3.7 years.

Deposits

Deposits are the primary source of funding for lending and investing needs.  Total deposits were $119.8 million as of March 31, 2008, as compared with $112.4 million at December 31, 2007, and $121.0 million at March 31, 2007.

The Bank generally prices deposits at or above the median rate by classification based on periodic interest rate surveys in the local market.  The Bank continues to use an Investor Savings product that pays higher rates than normal savings, similar to money market accounts, as a special product unique in the Bank’s market, but management also expects to see the relative percentage of Investor Savings to total deposits to continue to decline.  In conjunction with its business banking focus, the Bank began offering a business money market deposit account—the Premier Business Money Market account—in the fourth quarter of 2007.  To date, this product has been well-received in the local market and has been responsible for most of the growth in deposits in the first quarter of 2008.  Management expects to continue to develop unique deposit products to enhance its local deposit-gathering capabilities.

In August 2005 the Bank launched a new suite of deposit products: the Mission Community Club program.  The Community Club provides new bank customers with free checking, higher-than-normal yields on savings accounts and certificates of deposit, and attractive interest rates on

19

credit cards.  In exchange for the generation of new core deposit account balances, the Bank supported five local non-profit organizations with grants of $5,000 each in the second quarter of 2006, and another five non-profit organizations in 2007.

During 2006 the Bank began to capitalize on its status as one of only two banks in San Luis Obispo county participating in the Certificate of Deposit Account Registry Service (“CDARS”) program. This program permits the Bank’s customers to place all of their certificates of deposit at one institution—Mission Community Bank—and have those deposits fully-insured by the FDIC, up to $50 million.  The CDARS program acts as a clearinghouse, matching deposits from one institution in the CDARS network of over 1,800 banks with another, so funds that a customer places with the Bank essentially remain on the Bank’s balance sheet.  As of March 31, 2008, the Bank had issued $6.1 million of certificates of deposit to local customers through the CDARS program.

While the Bank focuses mainly on its local market areas, it has also been able to attract non-local (“brokered”) certificates of deposit at market rates.  At December 31, 2007 and March 31, 2008 the Bank had $4.8 million and $4.8 million in brokered deposits, respectively, exclusive of the locally-generated CDARS deposits referred to above.  Management expects that brokered deposits will continue to be used in 2008 and 2009 if locally-generated deposits are insufficient to fund loan growth.

Borrowings

In addition to the Company’s junior subordinated debt securities, the Bank has borrowed from, and expects to continue to have borrowings from, the Federal Home Loan Bank of San Francisco (“FHLB”).  Interest rates and terms for FHLB borrowings are generally more favorable than the rates for similar term certificates of deposit.

As of March 31, 2008, borrowings from the FHLB totaled $28.2 million, with a weighted average interest rate of 4.25%.  Of the $28.2 million, $3.0 million was borrowed for 10 years to offset a specific pool of the Bank’s fixed rate loans maturing in 2013.  Another $2.5 million was borrowed for five years to “match-fund” a pool of fixed rate loans maturing in 2009.  During the second quarter of 2007, $6 million of short-term brokered deposits were replaced with $3 million of FHLB advances maturing in 2009 and another $3 million maturing in 2010.  The remaining $16.7 million was borrowed to meet shorter-term funding needs and matures on various dates from December 2008 through December 2009.

Capital Ratios

The following table shows the Bank’s capital ratios, as calculated under regulatory guidelines, compared to the regulatory minimum capital ratios and the regulatory minimum capital ratios needed to qualify as a “well-capitalized” institution at March 31, 2008, December 31, 2007, and March 31, 2007:

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Mission Community Bank

Capital Ratios

(dollars in thousands)

					Amount of Capital Required
					To Be				To Be Adequately
	Actual				Well-Capitalized				Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of March 31, 2008:
Total Capital (to Risk-Weighted Assets)	$	22,925	15.59	%	$	14,703	10.0	%	$	11,762	8.0	%
Tier 1 Capital (to Risk-Weighted Assets)	$	21,514	14.63	%	$	8,822	6.0	%	$	5,881	4.0	%
Tier 1 Capital (to Average Assets)	$	21,514	12.48	%	$	8,618	5.0	%	$	6,894	4.0	%
As of December 31, 2007:
Total Capital (to Risk-Weighted Assets)	$	16,324	11.74	%	$	13,899	10.0	%	$	11,119	8.0	%
Tier 1 Capital (to Risk-Weighted Assets)	$	15,119	10.88	%	$	8,340	6.0	%	$	5,560	4.0	%
Tier 1 Capital (to Average Assets)	$	15,119	9.47	%	$	7,979	5.0	%	$	6,383	4.0	%
As of March 31, 2007:
Total Capital (to Risk-Weighted Assets)	$	15,591	11.31	%	$	13,782	10.0	%	$	11,026	8.0	%
Tier 1 Capital (to Risk-Weighted Assets)	$	14,509	10.53	%	$	8,269	6.0	%	$	5,513	4.0	%
Tier 1 Capital (to Average Assets)	$	14,509	9.45	%	$	7,676	5.0	%	$	6,141	4.0	%

On June 13, 2007, the Company filed a registration statement on Form SB-2 (amended July 24, 2007) with respect to a best efforts offering of between 166,667 and 597,000 shares of its common stock at a price of $18.00 per share in a secondary public offering.  The registration became effective on August 13, 2007.  On February 15, 2008, the Company closed the offering, issuing 410,644 new common shares for gross cash proceeds of $7.4 million.  After deducting offering expenses, the net proceeds to the Company was $6.8 million.  Shortly after closing on this stock offering, the Company invested $6.4 million of the net proceeds into increasing the capital of the Bank.  The Bank plans to use the bulk of this new capital to support future growth of the Bank, particularly the new Hispanic Banking Division and planned expansion into Santa Maria in northern Santa Barbara county.

In addition, the Company has entered into an agreement for a private placement of approximately 225,000 additional shares of common stock at a purchase price of $18.00 per share, subject to regulatory approvals and certain other conditions precedent.  This private placement is expected to be completed in the second quarter of 2008.

Liquidity

The Bank’s liquidity, which primarily represents the ability to meet fluctuations in deposit levels and provide for customers’ credit needs, is managed through various funding strategies that reflect the maturity structures of the sources of funds and the assets being funded.  The Bank’s liquidity is further augmented by payments of principal and interest on loans and increases in short-term liabilities such as demand deposits and short-term certificates of deposit.  Short-term investments, primarily federal funds sold, is the primary means for providing immediate liquidity.  The Bank had $2.1 million in federal funds sold on March 31, 2008, and $0.2 million on March 31, 2007.

In order to meet the Bank’s liquidity requirements, the Bank endeavors to maintain appropriate liquidity and loans-to-deposits ratios.  The liquidity ratio is the sum of cash and deposits at other banks, federal funds sold, and unpledged available-for-sale securities, divided by total deposits (calculated using monthly average balances).  For the month of March 2008, the Bank’s liquidity ratio was 17.1% and the loans-to-deposits ratio was 109%.

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The Bank also considers current and potential FHLB borrowings in assessing its liquidity position, as well as short-term, back-up lines of credit from correspondent banks.  Potential FHLB borrowings as of March 2008 totaled $11.2 million and correspondent bank lines of credit total $11.5 million.

Off-Balance-Sheet Arrangements

In the normal course of business, the Bank enters into financial commitments to meet the financing needs of its customers, including commitments to extend credit and standby letters of credit.  Those instruments involve, to varying degrees, elements of credit and interest rate risk not recognized in the consolidated balance sheet.

As of the dates indicated, the Bank had the following outstanding financial commitments whose contractual amount represents credit risk:

Loan Commitments

(in thousands)

	March 31		December 31		March 31
	2008		2007		2007
Commitments to Extend Credit	$	27,901	$	28,608	$	31,466
Standby Letters of Credit	499		693		631
	$	28,400	$	29,301	$	32,097

The Bank’s exposure to credit loss in the event of nonperformance on commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments as it does for loans reflected in the financial statements.  The effect on the Bank’s revenues, expenses, cash flows and liquidity from the unused portion of commitments to provide credit cannot be reasonably predicted, as there is no guarantee the lines of credit will ever be used.

Effects of Inflation and Economic Issues

A financial institution’s asset and liability structure is substantially different from that of an industrial firm in that primarily all assets and liabilities of a bank are monetary in nature, with relatively little investments in fixed assets or inventories.  Inflation has an important impact on the growth of total assets and the resulting need to increase equity capital at higher than normal rates in order to maintain an appropriate equity to assets ratio.  Management believes that the impact of inflation on financial results depends on the Company’s ability to react to changes in interest rates and, by such reaction, reduce the inflationary impact on performance.  Management has attempted to structure the mix of financial instruments and manage interest rate sensitivity in order to minimize the potential adverse effects of inflation or other market forces on net interest income and, therefore, earnings and capital.

San Luis Obispo County continues to have one of the lowest unemployment rates in California, yet real estate values have declined somewhat in 2007 and 2008.  After several years of strong appreciation, residential and commercial sale activity has slowed over the past two years.  There can be no assurance that the economy will continue to be strong or that real estate values will return to pre-2006 levels in the short term.  As such, the Bank closely monitors credit quality, interest rate risk and operational expenses.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4T.Controls and Procedures

The Company’s Chief Executive Officer and its Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e) promulgated under the Exchange Act, as of the end of the period covered by this report (the “Evaluation Date”) have concluded that as of the Evaluation Date, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company would be made known to them by others within the Company, particularly during the period in which this report was being prepared.  Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s internal controls over financial reporting in the first quarter of 2008.

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PART II - OTHER INFORMATION

Item 1.Legal  Proceedings

There are no material legal proceedings to which the Company is a party or to which any of its property is subject.

Item 1A.Risk Factors

Not applicable.

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

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.

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Item 6.Exhibits

Exhibit Index:

Exhibit #		Page
2.1	Plan of Reorganization and Agreement of Merger dated as of October 4, 2000 (A)
3.1	Restated Articles of Incorporation (J)
3.2	Certificate of Amendment to Articles of Incorporation (L)
3.3	Bylaws (B)
4.1	Certificate of Determination for Series A Non-Voting Preferred Stock (B)
4.2	Certificate of Determination for Series B Non-Voting Preferred Stock (B)
4.3	Certificate of Determination for Series C Non-Voting Preferred Stock (D)
4.4	Purchase Agreement dated October 10, 2003, by and among Registrant, Mission Community Capital Trust I, and Bear Stearns & Co., Inc. (E)
4.5	Indenture dated as of October 14, 2003 by and between Registrant and Wells Fargo Bank, National Association, as trustee (E)
4.6	Declaration of Trust Mission Community Capital Trust I dated October 10, 2003 (E)
4.7	Amended and Restated Declaration of Trust of Mission Community Capital Trust I dated October 14, 2003 by and among the Registrant, Wells Fargo Delaware Trust Company, as Trustee, and Anita M. Robinson and William C. Demmin, as Administrators (E)
4.8	Guarantee Agreement dated October 14, 2003 between Registrant, as Guarantor, and Wells Fargo Bank, National Association, as Guarantee Trustee (E)
4.9	Fee Agreement dated October 14, 2003 by and among the Registrant, Wells Fargo Delaware Trust Co., Bear Stearns & Co., Inc. and Mission Community Capital Trust I (E)
10.1	Purchase and Sale Agreement and Lease dated January, 1997, as amended (B)
10.2	Intentionally omitted
10.3	Lease Agreement – Paso Robles (B)
10.4	Lease Agreement – San Luis Obispo (B)
10.5	Lease Agreement – Arroyo Grande (B)
10.6	1998 Stock Option Plan, as amended (B)
10.7	Lease Agreement – 569 Higuera, San Luis Obispo (D)
10.8	Lease Agreement – 671 Tefft Street, Nipomo CA (C)
10.9	Intentionally omitted
10.10	Lease Agreement – 3480 S. Higuera, San Luis Obispo (F)
10.11	Salary Protection Agreement — Mr. Pigeon (G)
10.12	Salary Protection Agreement — Mr. Judge (H)
10.13	Second Amended and Restated Employment Agreement dated August 28, 2006 between Anita M. Robinson and Mission Community Bank (J)
10.14	Employment Agreement dated June 3, 2007 between Brooks Wise and Mission Community Bank (J)
10.15	Financial Advisory Services Agreement dated January 4, 2007 between the Company and Seapower Carpenter Capital, Inc. (K)

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Exhibit #		Page
10.16	Common Stock Repurchase Agreement dated August 10, 2007 between Fannie Mae and the Company (M)
10.17	Build-to-Suit Lease Agreement between Walter Bros. construction Co., Inc. and Mission Community Bank for property at South Higuera Street and Prado Road in San Luis Obispo, California (N)
10.18	Lease Agreement – 1670 South Broadway, Santa Maria (O)
10.19	Mission Community Bancorp 2008 Stock Incentive Plan
31.1	Certification of CEO pursuant to Section 302 of Sarbanes Oxley Act
31.2	Certification of CFO pursuant to Section 302 of Sarbanes Oxley Act
32.1	Certification of CEO pursuant to Section 906 of Sarbanes Oxley Act
32.2	Certification of CFO pursuant to Section 906 of Sarbanes Oxley Act

(A)Included in the Company’s Form 8-K filed on December 18, 2000

(B)Included in the Company’s Form 10-KSB filed on April 2, 2001

(C)Included in the Company’s Form 10-QSB filed August 12, 2002

(D)Included in the Company’s Form 10-QSB filed on November 12, 2002

(E)Included in the Company’s Form 8-K filed on October 21, 2003

(F)Included in the Company’s Form 10-QSB filed on August 10, 2004

(G)Included in the Company’s Form 8-K filed on January 19, 2005

(H)Included in the Company’s Form 8-K filed on February 17, 2005

(I)Included in the Company’s Form 10-QSB filed on August 14, 2006

(J)Included in the Company’s Form 8-K filed on June 13, 2007

(K)Included in the Form SB-2 Registration Statement of the Company filed on June 13, 2007

(L)Included in Pre-Effective Amendment No. 1 to the Form SB-2 Registration Statement of the Company filed on July 24, 2007

(M)Included in the Company’s Form 8-K filed on August 14, 2007

(N)Included in the Company’s Form 8-K filed on October 23, 2007

(O)Included in the Company’s Form 10-KSB filed on March 28, 2008

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Signatures

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MISSION COMMUNITY BANCORP
By:	/s/ Anita M. Robinson
ANITA M. ROBINSON
President and Chief Executive Officer
Dated:		May 15, 2008
By:	/s/ Ronald B. Pigeon
RONALD B. PIGEON
Executive Vice President and Chief Financial Officer
Dated:		May 15, 2008

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EX-10.19

Exhibit 10.19

MISSION COMMUNITY BANCORP

2008 STOCK INCENTIVE PLAN
Adopted February 25, 2008

Section 1.Purpose

The purpose of the Mission Community Bancorp 2008 Stock Incentive Plan (the “Plan”) is to (i) encourage selected employees and directors of Mission Community Bancorp (the “Company”) and its subsidiaries to acquire a proprietary and vested interest in the growth and performance of the Company; (ii) generate an increased incentive to contribute to the Company’s future success and prosperity, thus enhancing the value of the Company for the benefit of shareholders; and (iii) enhance the ability of the Company and its subsidiaries to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability of the Company depend.

Section 2.Definitions

For purposes of the Plan, the following terms have the following meanings:

(a)“Award” means any award under the Plan, including any Option, Tandem SAR, Stand-Alone SAR, Restricted Stock Award, or share of Phantom Stock.

(b)“Award Agreement” means, with respect to each Award, the signed written agreement between the Company and the Participant setting forth the terms and conditions of the Award.

(c)“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

(d)“Fair Market Value” means the fair market value of the Common Stock as determined by the Board of Directors in good faith in accordance with any reasonable valuation method, consistent with all applicable requirements under the Code or other applicable laws, and regulations promulgated thereunder.

(e)“Holder” means the holder of a Restricted Stock Award granted under Section 7.

(f)“Incentive Option” means any Option intended to be and designated as an “incentive stock option” within the meaning of Section 422 of the Code.

(g)“Issue Date” shall mean the date established by the Board of Directors on which Certificates representing shares of Restricted Stock shall be issued by the Company pursuant to the terms of Section 7(b).

(h)“Nonqualified Stock Option” means any Option that is not an Incentive Option.

(i)“Option” means an option granted under Section 6.

(j)“Optionee” means the holder of an Option granted under Section 6.

(k)“Participant” means an employee or director who is selected by the Board of Directors to receive an Award under the Plan.

(l)A share of “Phantom Stock” shall mean the right, granted pursuant to Section 10, to receive in cash the Fair Market Value of a share of Stock.

(m)“Restricted Stock” or “Restricted Stock Award” means an Award of Stock subject to restrictions, as more fully described in Section 7.

(n)“Restriction Period” means the period determined by the Board of Directors under Section 7(b).

(o)“Stand-Alone SAR” shall mean a stock appreciation right granted pursuant to Section 9, which is not related to any Option.

(p)“Stock” means the Common Stock, no par value, of the Company, and any successor security.

(q)“Tandem SAR” shall mean a stock appreciation right granted pursuant to Section 8, which is related to an Option.

(r)“Terminating Event” means: (i) the acquisition of more than fifty percent (50%) of the value or voting power of the Company’s stock or that of its wholly owned subsidiary, Mission Community Bank (the “Bank”) by a person (including an entity) or group; (ii) the acquisition in a period of twelve (12) months or less of at least thirty-five percent (35%) of the Bank’s or the Company’s stock by a person or group; (iii) the replacement of a majority of the Bank’s or the Company’s board of directors in a period of twelve (12) months or less by directors who were not endorsed by a majority of the current board members; or (iv) the acquisition in a period of twelve (12) months or less of forty percent (40%) or more of the Company’s assets by an unrelated entity.

(s)“Termination” means, for purposes of the Plan, with respect to a Participant, that (a) if the Participant is a director of the Company, he or she has ceased to be, for any reason, a director and (b) if the Participant is an employee, he or she has ceased to be, for any reason, employed by the Company or a subsidiary.

(t)“Termination for Cause” in the case of an employee, shall mean termination for malfeasance or gross misfeasance in the performance of duties, conviction of illegal activity in connection therewith, any conduct seriously detrimental to the interests of the Company or a subsidiary corporation, or removal pursuant to the exercise of regulatory authority by the Board of Governors of the Federal Reserve System (the “FRB”) or any applicable bank supervisory agency; and, in any event, the determination of the Board of Directors with respect thereto shall be final and conclusive.  In the case of a director, Termination for Cause shall mean removal pursuant to Sections 302 or 304 of the California Corporations Code or removal pursuant to the exercise of regulatory authority by the FRB or any applicable bank supervisory agency.

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(u)“Vesting Date” means, for an Option or a portion of an Option, the first date on which the Option or such portion may be exercised by the Optionee and, for shares of Restricted Stock, the date on which the shares cease to be forfeitable and become freely transferable shares in the hands of the Participant.

Section 3.Administration

(a)General.  This Plan shall be administered by the Board of Directors of the Company (the “Board of Directors”).  The Board of Directors may, in its sole discretion, from time to time, delegate such power and authority over the administration of the Plan as the Board of Directors deems appropriate to a committee composed of not fewer than three (3) directors of the Company.  Nothing contained herein shall prevent the Board of Directors from delegating to such Committee full power and authority over the administration of the Plan.  As used herein, the term “Board of Directors” shall refer either to the Board of Directors itself or to a duly authorized committee thereof, as appropriate.

Any action of the Board of Directors with respect to administration of the Plan shall be taken pursuant to a majority vote of its members; provided, however, that with respect to action by the Board of Directors in granting an option or other award to an individual director, such action must be authorized by the required number of directors without counting the interested director, who shall abstain as to any vote on his or her option or award.  An interested director may be counted in determining the presence of a quorum at a meeting of the Board of Directors where such action will be taken.

(b)Authority.  The Board of Directors shall grant Awards to eligible participants.  In particular and without limitation, the Board of Directors, subject to the terms of the Plan, shall:

(i)select the eligible participants to whom Awards may be granted;

(ii)determine whether and to what extent Awards are to be granted under the Plan;

(iii)determine the number of shares to be covered by each Award granted under the Plan; and

(iv)determine the terms and conditions of any Award granted under the Plan based upon factors determined by the Board of Directors.

(c)Board of Directors Determinations Binding.  Subject to the express provisions of the Plan, the Board of Directors shall have the authority to construe and interpret the Plan, any Award and any Award Agreement; to define the terms used therein; to prescribe, amend, and rescind rules and regulations relating to administration of the Plan, to determine the duration and purposes of leaves of absence which may be granted to Participants without constituting a termination of their employment for purposes of the Plan; and to make all other determinations necessary or advisable for administration of the Plan.  Any determination made by the Board of Directors pursuant to the provisions of the Plan with respect to any Award shall be made in its sole discretion at the time of the grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time.  Determinations of the Board of the Directors on

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matters referred to in this section shall be final and conclusive, and shall be binding on all persons, including the Company and Participants.

Section 4.Stock Subject to Plan

(a)Shares Available for Awards.  The total number of shares of the Company’s authorized but unissued Stock reserved and available for issuance pursuant to Awards under this Plan shall be 168,086 shares plus a number of additional shares equal to 15% of the shares of common stock that may be issued by the Company between March 31, 2008 and December 31, 2008, other than shares issued in connection with the exercise of stock options or the conversion or repurchase of outstanding preferred shares; provided, however, that no more than a total of 168,086 shares may be issued with respect to incentive stock options issued under the Plan.  If any Option terminates or expires without being exercised in full, or if any shares of Stock subject to a Restricted Stock Award are forfeited, or if an Award otherwise terminates without a payment being made to the Participant in the form of Stock, the shares issuable under such Option or Award shall again be available for issuance in connection with Awards.  Any Award under this Plan shall be governed by the terms of the Plan and any applicable Award Agreement.

(b)Adjustments.  In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split or other change in corporate structure affecting the Stock without receipt of consideration by the Company, such substitution or adjustments shall be made in the aggregate number of shares of Stock reserved for issuance under the Plan, in the number and exercise price of shares subject to outstanding Options, and in the number of shares subject to other outstanding Awards, as may be determined to be appropriate by the Board of Directors, in its sole discretion; provided, however, that no fractional shares of Stock shall be issued under the Plan on account of any such adjustment.

Section 5.Eligibility

Awards may be granted to all employees, officers (whether or not they are also directors) and non-employee directors of the Company and its subsidiaries.  However, directors of the Company or a subsidiary corporation who are not also officers or employees of the Company or a subsidiary corporation are not eligible to receive Incentive Options under the Plan, but only other types of Awards.

Section 6.Stock Options

(a)Types.  Any Option granted under the Plan shall be in such form as the Board of Directors may from time to time approve.  The Board of Directors shall have the authority to grant to any eligible Participant Incentive Options, Nonqualified Stock Options or both types of Options.

(b)Incentive Options.  Incentive Options may be granted only to employees of the Company or a Subsidiary.  Any portion of an Option that is not designated as, or does not qualify as, an Incentive Option shall constitute a Nonqualified Stock Option.

(c)Terms and Conditions.  Options granted under the Plan shall be subject to the following terms and conditions:

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(i)Option Term.  Each Option and all rights or obligations thereunder shall expire on such date as the Board of Directors may determine, but not later than ten (10) years from the date such Option is granted, and shall be subject to earlier termination as provided elsewhere in the Plan.  As to any Incentive Option granted to an Optionee who, immediately before the option is granted, owns beneficially more than ten percent (10%) of the outstanding stock of the Company (whether acquired upon exercise of Options or otherwise), such option must not be exercisable by its terms after five (5) years from the date of its grant.

(ii)Grant Date.  The time an Option is granted, sometimes referred to as the date of grant, shall be the day of the action of the Board of Directors described in Section 3(a) hereof, provided that Optionees do not have the ability to further negotiate the terms of their grants, and provided further that the material terms of the grants are communicated to Optionees within a relatively short period of time following the Board’s action.  In addition, if required by applicable accounting rules, the date of grant will not be deemed to occur unless any shareholder approvals required for the grant of an option under the Plan or applicable amendments thereto have been obtained.  In addition, if appropriate resolutions of the Board of Directors indicate that an Option is to be granted as of and on some future date, the time such Option is granted shall be such future date.  If action by the Board of Directors is taken by the unanimous written consent of its members, the action of the Board of Directors shall be deemed to be at the time the last Board member signs the consent, subject to the same requirements concerning communication with Optionees set forth in the first sentence of this Section 6(a)(ii).

(iii)Exercise Price.  The exercise price per share of stock subject to each Option shall be determined by the Board of Directors but shall not be less than one hundred percent (100%) of the Fair Market Value of such stock at the time such Option is granted.  As to any Incentive Option granted to an Optionee who, immediately before the Option is granted, owns beneficially more than ten percent (10%) of the outstanding stock of the Company, the purchase price must be at least one hundred ten percent (110%) of the Fair Market Value of the stock at the time when such Option is granted.  The purchase price of any shares purchased shall be paid in full in cash at the time of each such purchase.

(iv)Exercisability.  Each Option shall be exercisable in such installments, which need not be equal, and upon such conditions as the Board of Directors shall determine; provided, however, that if an Optionee shall not in any given installment period purchase all of the shares which such Optionee is entitled to purchase in such installment period, such Optionee’s right to purchase any shares not purchased in such installment period shall continue until the expiration of such Option.  No Option or installment thereof shall be exercisable except with respect to whole shares, and fractional share interests shall be disregarded except that they may be accumulated in accordance with the next preceding sentence.

(v)Limit on Exercisability.  The aggregate fair market value (determined as of the time the Option is granted) of the stock for which any officer or employee may be granted Incentive Options which are first exercisable during any one calendar year (under all Incentive Stock Option Plans of the Company and its subsidiaries) shall not exceed One Hundred Thousand Dollars ($100,000).

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(vi)Method of Exercise; Payment.  Options may be exercised by ten (10) days written notice delivered to the Company stating the number of shares with respect to which the Option is being exercised, together with cash in the amount of the purchase price for such shares.  No fewer than ten (10) shares may be purchased at one time unless the number purchased is the total number which may be purchased under the Option.

Options may also be exercised by delivering to the Company (i) an exercise notice instructing the Company to deliver the certificates for the shares purchased to a designated brokerage firm which shall sell the stock in the market as soon as the Option is exercised; and (ii) a copy of irrevocable instructions delivered to the brokerage firm to sell the shares acquired upon exercise of the Option and to deliver to the Company from the sale proceeds sufficient cash to pay the exercise price and applicable withholding taxes arising as a result of the exercise, with the balance of the sales proceeds, if any, after payment of any broker’s commission, to be credited to the Optionee’s brokerage account.

(vii)Compliance With Applicable Laws.  No shares of Common Stock shall be issued upon exercise of any Option, and an Optionee shall have no right or claim to such shares, unless and until: (i) payment in full as provided hereinabove has been received by the Company; (ii) in the opinion of the counsel for the Company, all applicable requirements of law and of regulatory bodies having jurisdiction over such issuance and delivery have been fully complied with; and (iii) if required by federal or state law or regulation, the Optionee shall have paid to the Company the amount, if any, required to be withheld on the amount deemed to be compensation to the Optionee as a result of the exercise of his or her Stock Option, or made other arrangements satisfactory to the Company, in its sole discretion, to satisfy applicable income tax withholding requirements.

(viii)Cessation of Employment; Disability.  Except as provided in Subsections 6(c)(i) above, if an Optionee ceases to be employed by or to serve as a director of the Company or a subsidiary corporation for any reason other than death, disability, or cause such Optionee’s Option shall expire thirty (30) days thereafter, and during such period after such Optionee ceases to be an employee or director, such Option shall be exercisable only as to those shares with respect to which installments, if any, had accrued as of the date on which the Optionee ceased to be employed by or ceased to serve as a director of the Company or such subsidiary corporation.  Except as provided in Subsections 6(c)(i) above or 6(c)(ix) below, if an Optionee ceases to be employed by or ceases to serve as a director of the Company or a subsidiary corporation by reason of disability (within the meaning of Section 22(e)(3) of the Code), such Optionee’s Option shall expire not later than one (1) year thereafter, and during such period after such Optionee ceases to be an employee or director such Option shall be exercisable only as to those shares with respect to which installments, if any, had accrued as of the date on which the Optionee ceased to be employed by or ceased to serve as a director of the Company or such subsidiary corporation.

(ix)Termination of Employment for Cause.  If an Optionee’s employment by or service as a director of the Company or a subsidiary corporation is terminated for Cause, such Optionee’s Option shall expire immediately; provided, however, that the Board of Directors may, in its sole discretion, within thirty (30) days of such termination, waive the expiration of the Option by giving written notice of such waiver to the Optionee at such Optionee’s last known

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address.  In the event of such waiver, the Optionee may exercise the Option only to such extent, for such time, and upon such terms and conditions as if such Optionee had ceased to be employed by or ceased to serve as a director of the Company or such subsidiary corporation upon the date of such termination for a reason other than Cause, disability, or death.

(x)Death of Optionee.  Except as provided in Subsection 6(c)(i) above, if any Optionee dies while employed by or serving as a director of the Company or a subsidiary corporation or during the 30-day or one-year period referred to in Subsection 6(c)(viii) above, such Optionee’s Option shall expire one (1) year after the date of such death.  After such death but before such expiration, the persons to whom the Optionee’s rights under the Option shall have passed by Will or by the applicable laws of descent and distribution shall have the right to exercise such Option to the extent that installments, if any, had accrued as of the date of such Optionee’s death.

Section 7.Restricted Stock Awards

(a)General.  Restricted Stock Awards may be issued hereunder to Participants, for no cash consideration or for such amount as the Board of Directors in its discretion shall determine, either alone or in addition to other Awards granted under the Plan. The provisions of Restricted Stock Awards need not be the same with respect to each recipient.  The Board of Directors may provide upon grant of a Restricted Stock Award that any shares of Restricted Stock that may be purchased by the Holder in cash and are subsequently forfeited by the Holder prior to the Vesting Date therefor shall be reacquired by the Company at the purchase price originally paid therefor by the Holder, if applicable.

(b)Issue Date and Vesting Date.  At the time of the grant of a Restricted Stock Award, the Board of Directors shall establish an Issue Date or Issue Dates and a Vesting Date or Vesting Dates with respect to such shares.  The Board of Directors may provide upon grant of a Restricted Stock Award that different numbers or portions of the shares subject to the Award shall have different Vesting Dates.  The Board of Directors also may provide that the Vesting Dates will be accelerated upon the subsequent occurrence of such event (e.g., early retirement of the Holder) as the Board of Directors may specify.  The Board of Directors also may establish upon grant of a Restricted Stock Award that some or all of the shares subject thereto shall be subject after the Vesting Date to additional restrictions upon transfer or sale, although not to forfeiture.

(c)Issuance of Certificates.  Reasonably promptly after the Issue Date with respect to shares of Restricted Stock, the Company shall cause to be issued a stock certificate, registered in the name of the Participant to whom such shares were granted, evidencing such shares; provided, that the Company shall not cause such a stock certificate to be issued unless it has received a stock power duly endorsed in blank with respect to such shares.  Each such stock certificate shall bear the following legend:

“The transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions (including forfeiture provisions and restrictions against transfer) contained in the Mission Community Bancorp 2008 Stock Incentive Plan and related Award Agreement, and such rules, regulations and interpretations as Mission Community

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Bancorp’s Board of Directors may adopt.  Copies of the Plan, Award Agreement and rules, regulations and interpretations, if any, are on file at the principal executive office of Mission Community Bancorp, 581 Higuera Street, San Luis Obispo, California 93401.”

Such legend shall not be removed until such shares vest pursuant to the terms hereof.

Each certificate issued pursuant to this Section 7(c) together with the stock powers relating to the shares of Restricted Stock evidenced by such certificate, shall be held by the Company unless the Board of Directors determines otherwise.

(d)Consequences of Vesting.  Upon the vesting of a share of Restricted Stock pursuant to the terms of the Plan and the applicable Award Agreement, the restrictions on transfer described in Section 7(c) shall cease to apply to such share.  Reasonably promptly after a share of Restricted Stock vests, the Company shall cause to be delivered to the Participant to whom such shares were granted, a certificate evidencing such shares, free of the legend set forth in Section 7(c).  Notwithstanding the foregoing, such share still may be subject to restrictions on transfer as a result of applicable securities laws.

(e)Dividends.  If and to the extent the Board of Directors so specifies upon grant, the Holder of shares of Restricted Stock shall be entitled to receive from the Company, after the grant date and until the Vesting Date, dividends or other distributions with respect to the shares identical or comparable in financial value to the dividends and other distributions that would have been received by the Holder had the shares not been subject to the restrictions on Restricted Stock imposed under the Plan, and the Holder shall not be required to return any such distributions to the Company in the event of forfeiture of the Restricted Stock; provided that any such dividends or distribution payable to the Holder that constitute Stock or other equity securities of the Company shall be issued in the same manner and subject to the same restrictions and conditions as apply to the shares of Restricted Stock as to which such dividends and distributions are paid.  The Board of Directors in its discretion may require that any dividends paid on shares of Restricted Stock shall be held in escrow until all restrictions on such shares have lapsed.

(f)Voting Rights.  If and to the extent the Board of Directors so specifies upon grant, the Holder of shares of Restricted Stock shall be entitled to vote or direct the voting of such shares after the grant date and until the Vesting Date.

(g)Termination.  Except to the extent otherwise provided in the Award Agreement and pursuant to this section, in the event of a Termination of employment or directorship during the Restriction Period, all shares still subject to restriction shall be forfeited by the Participant.  If the recipient has paid cash for the Award, the stock will be repurchased at the same price originally paid by the Participant.  In the event that the Company requires such a return of shares, it also shall have the right to require the return of all dividends paid on such shares, whether by termination of any escrow arrangement under which such dividends are held or otherwise, unless otherwise specified in the applicable Award Agreement.

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Section 8.Tandem SARs

The Board of Directors may grant in connection with any Option granted hereunder one or more Tandem SARs relating to a number of shares of Stock less than or equal to the number of shares of Stock subject to the related Option.  A Tandem SAR may be granted at the same time as, or, in the case of a Non-Qualified Stock Option, subsequent to the time that its related Option is granted.

(a)Benefit Upon Exercise.  The exercise of a Tandem SAR with respect to any number of shares of Stock shall entitle the Participant to a payment, for each such share, equal to the excess of (i) the Fair Market Value of a share of Stock on the exercise date over (ii) the option exercise price of the related Option. Such payment shall be made as soon as practicable after the effective date of such exercise.  The Board of Directors shall specify at the time of grant that the value of the SAR shall be paid in cash, in Stock reserved under the Plan, or a combination of both, or that the Participant can choose the method of payment at the time of exercise.

(b)Term and Exercise of Tandem SARs.

(i)A Tandem SAR shall be exercisable only if and to the extent that its related Option is exercisable.

(ii)The exercise of a Tandem SAR with respect to a number of shares of Stock shall cause the immediate and automatic cancellation of its related Option with respect to an equal number of shares. The exercise of an Option, or the cancellation, termination or expiration of an Option (other than pursuant to this Section 8(b)(ii)), with respect to a number of shares of Stock shall cause the automatic and immediate cancellation of any related Tandem SARs to the extent that the number of shares of Stock remaining subject to such Option is less than the number of shares subject to such Tandem SARs.

Tandem SARs shall be cancelled in the order in which they became exercisable.

(iii)A Tandem SAR may be exercised for all or any portion of the shares as to which it is exercisable; provided, that no partial exercise of a Tandem SAR shall be for an aggregate exercise price of the related Option of less than $1,000.  The partial exercise of a Tandem SAR shall not cause the expiration, termination or cancellation of the remaining portion thereof.

(iv)No Tandem SAR shall be assignable or transferable otherwise than together with its related Option.

(v)A Tandem SAR shall be exercised by delivering notice to the Company’s principal office, to the attention of its Secretary (or the Secretary’s designee), no less than two (2) business days in advance of the effective date of the proposed exercise. Such notice shall be accompanied by the applicable Award Agreement, shall specify the number of shares of Stock with respect to which the Tandem SAR is being exercised and the effective date of the proposed exercise and shall be signed by the Participant or other person then having the right to exercise the Option to which the Tandem SAR is related. Such notice may be withdrawn at any time prior

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to the close of business on the business day immediately preceding the effective date of the proposed exercise.

(c)Effect of Termination of Employment.  The provisions set forth in Section 6(vi) through (viii) with respect to the exercise of Options following cessation or termination of employment or service as a director shall apply as well to the exercise of Tandem SARs.

Section 9.Stand-Alone SARs

(a)Exercise Price.  The exercise price per share of a Stand-Alone SAR shall be determined by the Board of Directors at the time of grant, but shall in no event be less than the Fair Market Value of a share of Stock on the date of grant.

(b)Benefit Upon Exercise.  The exercise of a Stand-Alone SAR with respect to any number of shares of Stock shall entitle the Participant to a payment, for each such share, equal to the excess of (i) the Fair Market Value of a share of Stock on the exercise date over (ii) the exercise price of the Stand-Alone SAR. Such payments shall be made as soon as practicable.  The Board of Directors shall specify at the time of grant that the value of the SAR shall be paid in cash, in Stock reserved under the Plan, or a combination of both, or that the Participant can choose the method of payment at the time of exercise.

(c)Term and Exercise of Stand-Alone SARs.

(i)A Stand-Alone SAR shall become cumulatively exercisable as provided in the applicable Award Agreement.  The Board of Directors shall determine the vesting schedule and expiration date of each Stand-Alone SAR.

(ii)A Stand-Alone SAR may be exercised for all or any portion of the shares as to which it is exercisable; provided, that no partial exercise of a Stand-Alone SAR shall be for an aggregate exercise price of less than $1,000.  The partial exercise of a Stand-Alone SAR shall not cause the expiration, termination or cancellation of the remaining portion thereof.

(iii)A Stand-Alone SAR shall be exercised by delivering notice to the Company’s principal office, to the attention of its Secretary (or the Secretary’s designee), no less than two (2) business days in advance of the effective date of the proposed exercise.  Such notice shall be accompanied by the applicable Plan Agreement, shall specify the number of shares of Stock with respect to which the Stand-Alone SAR is being exercised, and the effective date of the proposed exercise, and shall be signed by the Participant.  The Participant may withdraw such notice at any time prior to the close of business on the business day immediately preceding the effective date of the proposed exercise.

(d)Effect of Termination of Employment.  The provisions set forth in Section 6(vi) through (viii) with respect to the exercise of Options following cessation or termination of employment or service as a director shall apply as well to the exercise of Stand-Alone SARs.

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Section 10.  Phantom Stock

(a)Vesting Date.  At the time of the grant of shares of Phantom Stock, the Board of Directors shall establish a Vesting Date or Vesting Dates with respect to such shares.  The Board of Directors may divide such shares into classes and assign a different Vesting Date for each class. Provided that all conditions to the vesting of a share of Phantom Stock imposed pursuant to Section 10(c) are satisfied, and except as provided in Section 10(d), upon the occurrence of the Vesting Date with respect to a share of Phantom Stock, such share shall vest.

(b)Benefit Upon Vesting.  Upon the vesting of a share of Phantom Stock, the Participant shall be entitled to receive in cash, within 30 days of the date on which such share vests, an amount equal to the sum of (i) the Fair Market Value of a share of Stock on the date on which such share of Phantom Stock vests and (ii) the aggregate amount of cash dividends paid with respect to a share of Stock during the period commencing on the date on which the share of Phantom Stock was granted and terminating on the date on which such share vests.

(c)Conditions to Vesting.  At the time of the grant of shares of Phantom Stock, the Board of Directors may impose such restrictions or conditions to the vesting of such shares as it, in its absolute discretion, deems appropriate. By way of example and not by way of limitation, the Board of Directors may require, as a condition to the vesting of any class or classes of shares of Phantom Stock, that the Participant or the Company achieves such performance goals as the Board of Directors may specify.

(d)Effect of Termination of Employment.  Unless the applicable Award Agreement or the Board of Directors provides otherwise, shares of Phantom Stock that have not vested, together with any dividends credited on such shares, shall be forfeited upon the Participant’s termination of employment for any reason.

(e)Compliance with Section 409A.  In the event the Board of Directors shall grant any shares of Phantom Stock, the Company shall takes such steps as may be necessary to insure that such award complies with the provisions of Section 409A of the Code.

Section 11.Terminating Events

(a)Impact of Event.  In the event of a “Terminating Event” as defined in Section 2(r), any surviving corporation or entity or acquiring corporation or entity, or affiliate of such corporation or entity, may assume any Options, Restricted Stock Awards or any other Awards outstanding under the Plan or may substitute similar awards for those outstanding under the Plan.  In the event any surviving corporation or entity or acquiring corporation or entity in a Terminating Event does not assume such Options or Awards or does not substitute similar Options or other Awards for those outstanding under the Plan, then (i) the vesting of such Options or other Awards outstanding under the Plan shall be accelerated and made fully exercisable and all restrictions thereon shall lapse ten (10) days prior to the closing of the Terminating Event; and (ii) upon the closing of the Terminating Event, any Options outstanding under the Plan shall be terminated if not exercised prior to the closing, unless the Board of Directors in its sole discretion determines prior to the effective date of the Terminating Event that all outstanding Options and the Plan itself should continue in full force and effect.  In the

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case of such a determination by the Board of Directors, or in the event that any pending Terminating Event does not occur, the Plan and all outstanding Options and other Awards thereunder shall continue in force with all original vesting schedules in effect.

(b)Notice to Participants of Terminating Event.  Not less than thirty (30) days prior to a Terminating Event, the Board of Directors shall notify each Participant of the pendancy of the Terminating Event.  With respect to Holders of Restricted Stock or Participants with Stand-Alone SARs or Phantom Stock, the notice shall simply inform such Participants of the pendancy of the Terminating Event and of the fact that the restrictions on their Restricted Stock will lapse, or that they will become entitled to their payments pursuant to their Stand-Alone SARs or Phantom Stock, on the closing of the Terminating Event.  In the case of Optionees, the notice shall inform such Optionees that their Options shall, notwithstanding the provisions of Sections 6(c)(iv) hereof, become exercisable in full and not only as to those shares with respect to which installments, if any, have then accrued, subject, however, to earlier expiration or termination as provided elsewhere in the Plan, and further subject to the condition that the Terminating Event in fact occurs.  Optionees shall then be entitled to exercise any Options or portions thereof commencing on the tenth (10th) day, and ending on the third (3rd) day, prior to the Terminating Event, or at such other times as may be specified by the Board of Directors in connection with the Terminating Event.  In the case of Participants with Tandem SARs, the notice shall inform such Participant of the need to choose between the exercise of the SAR or the underlying Option and of the fact that any remaining unexercised portion of the Option or the Tandem SAR shall lapse if not exercised within the required time period.

Section 12.Acceleration of Options or other Awards.

Notwithstanding the provisions of Sections 6(c)(iv), 7(b), 8(b)(i), 9(c)(i) or 10(a)  hereof or any provision to the contrary contained in any Award Agreement, the Board of Directors, in its sole discretion, may accelerate the vesting of all or any Award then outstanding.  The decision by the Board of Directors to accelerate an Award or to decline to accelerate an Award shall be final.  In the event of the acceleration of Options or SARs as the result of a decision by the Board of Directors pursuant to this Section 12, each outstanding Option or SAR so accelerated shall be exercisable for a period from and after the date of such acceleration and upon such other terms and conditions as the Board of Directors may determine in its sole discretion, provided that such terms and conditions (other than terms and conditions relating solely to the acceleration of exercisability and the related termination of an Option or SAR) may not adversely affect the rights of any Participant without the consent of the Participant so adversely affected.  Any outstanding Option or SAR which has not been exercised by the holder at the end of such period shall terminate automatically at that time.

Section 13.General Provisions

(a)Award Grants.  Any Award may be granted either alone or in addition to other Awards granted under the Plan.  Subject to the terms and restrictions set forth elsewhere in the Plan, the Board of Directors shall determine the consideration, if any, payable by the Participant for any Award and, in addition to those set forth in the Plan, any other terms and conditions of the Awards.  The Board of Directors may condition the grant or payment of any Award upon the attainment of specified performance goals or such other factors or criteria, including vesting

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based on continued service on the Board or employment, as the Board of Directors shall determine.  Performance objectives may vary from Participant to Participant and among groups of Participants and shall be based upon such Company, subsidiary, group or division factors or criteria as the Board of Directors may deem appropriate, including, but not limited to, earnings per share or return on equity.  The other provisions of Awards also need not be the same with respect to each recipient.  Unless specified otherwise in the Plan or by the Board of Directors, the date of grant of an Award shall be the date of action by the Board of Directors to grant the Award.

(b)Award Agreement.  As soon as practicable after the date of an Award grant, the Company and the Participant shall enter into a written Award Agreement identifying the date of grant, and specifying the terms and conditions of the Award.  Options and SARs are not exercisable until after execution of the Award Agreement by the Company and the Participant, but a delay in execution of the Award Agreement shall not affect the validity of the Option or SAR grant.

(c)Certificates; Transfer Restrictions.  All certificates for shares of Stock or other securities delivered under the Plan shall be subject to such stock transfer orders, legends and other restrictions as the Board of Directors may deem advisable under the rules, regulations and other requirements of the SEC, any market in which the Stock is then traded and any applicable federal, state or foreign securities law.

(d)Tax Withholding.  Whenever shares of Stock are issued or to be issued pursuant to Awards, the Company shall have the right to require the Participant to remit to the Company an amount sufficient to satisfy federal, state, local or other withholding tax requirements if, when, and to the extent required by law (whether so required to secure for the Company an otherwise available tax deduction or otherwise) prior to the delivery of any certificate or certificates for such shares.  The obligations of the Company under the Plan shall be conditional on satisfaction of all such withholding obligations and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.  With the approval of the Board, which it shall have sole discretion to grant, the Participant may elect to satisfy an applicable withholding requirement, in whole or in part, by having the Company withhold from delivery shares of Stock having a value equal to the amount of tax to be withheld. Such shares shall be valued at their fair market value on the date as of which the amount of tax to be withheld is determined.  Fractional share amounts shall be settled in cash.

(e)Notification of Election Under Section 83(b) of the Code.  If any Participant shall, in connection with the acquisition of shares of Restricted Stock under the Plan, make the election permitted under Section 83(b) of the Code (i.e., an election to include in gross income in the year of transfer the amounts specified in Section 83(b)), such Participant shall notify the Company of such election within ten days of filing notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under the authority of Section 83(b).

(f)Transferability.  No Award shall be assignable or otherwise transferable by the Participant other than by will or by the laws of descent and distribution.  During the life of a

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Participant, an Award shall be exercisable, and any elections with respect to an Award may be made, only by the Participant or the Participant’s guardian or legal representative.

(g)Adjustment of Awards; Waivers.  The Board of Directors may adjust the performance goals and measurements applicable to Awards (i) to take into account changes in law and accounting and tax rules, (ii) to make such adjustments as the Board of Directors deems necessary or appropriate to reflect the inclusion or exclusion of the impact of extraordinary or unusual items, events or circumstances in order to avoid windfalls or hardships, and (iii) to make such adjustments as the Board of Directors deems necessary or appropriate to reflect any material changes in business conditions.  In the event of hardship or other special circumstances of a Participant and otherwise in its discretion, the Board of Directors may waive in whole or in part any or all restrictions, conditions, vesting, or forfeiture with respect to any Award granted to such Participant.

(h)Non-Competition.  The Board of Directors may condition its discretionary waiver of a forfeiture, the acceleration of vesting at the time of Termination of a Participant holding any unexercised or unearned Award, the waiver of restrictions on any Award, or the extension of the expiration period to a period not longer than that provided by the Plan upon such Participant’s agreement (and compliance with such agreement) (i) not to engage in any business or activity competitive with any business or activity conducted by the Company and (ii) to be available for consultations at the request of the Company’s management, all on such terms and conditions (including conditions in addition to (i) and (ii)) as the Board of Directors may determine.

(i)Regulatory Compliance.  Each Award under the Plan shall be subject to the condition that, if at any time the Board shall determine that (i) the listing, registration or qualification of the shares of Stock upon any securities exchange or for trading in any securities market or under any state or federal law, (ii) the consent or approval of any government or regulatory body, or (iii) an agreement by the Participant with respect thereto, is necessary or desirable, then such Award shall not be consummated in whole or in part unless such listing, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Board.

(j)Rights as Shareholder.  Unless the Plan or the Board of Directors expressly specifies otherwise, an Optionee shall have no rights as a shareholder with respect to any shares covered by an Option until the stock certificates representing the shares are actually delivered to the Optionee.  Except as specified in Section 4(b), no adjustment shall be made for dividends or other rights for which the record date is prior to the date the certificates are delivered.  The rights of Holders shall be as specified in their Award Agreements, as determined by the Board of Directors in accordance with Section 7 hereof.

(k)Beneficiary Designation.  The Board of Directors, in its discretion, may establish procedures for a Participant to designate a beneficiary to whom any amounts payable in the event of the Participant’s death are to be paid.

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(l)Additional Plans.  Nothing contained in the Plan shall prevent the Company or a subsidiary from adopting other or additional compensation arrangements for its directors and employees.

(m)No Employment Rights; No Right to Directorship.  Neither the adoption of this Plan nor the grant of any Award hereunder shall (i) confer upon any employee any right to continued employment nor shall it interfere in any way with the right of the Company or a subsidiary to terminate the employment of any employee at any time; or (ii) confer upon any Participant any right with respect to continuation of the Participant’s membership on the Board or interfere in any way with provisions in the Company’s Articles of Incorporation and Bylaws relating to the election, appointment, terms of office, and removal of members of the Board.

(n)Governing Law.  The Plan and all Awards shall be governed by and construed in accordance with the laws of the State of California.

(o)Use of Proceeds.  All cash proceeds to the Company under the Plan shall constitute general funds of the Company.

(p)Assumption by Successor.  The obligations of the Company under the Plan and under any outstanding Award may be assumed by any successor corporation, which for purposes of the Plan shall be included within the meaning of “Company.”

Section 14.Amendments and Termination

The Board may amend, alter or discontinue the Plan or any Award, but no amendment, alteration or discontinuance shall be made which would impair the rights of a Participant under an outstanding Award without the Participant’s consent.  No amendment, alteration or discontinuance shall require shareholder approval unless it would:

(a)increase in the total number of shares reserved for issuance pursuant to Awards under the Plan;

(b)change the minimum option price for Options;

(c)increase the maximum term of Awards provided for herein;

(d)expand the types of awards which may be issued under the Plan; or

(e)expand the class of eligible Participants.

Any amendment or modification requiring shareholder approval shall be deemed adopted as of the date of the action of the Board of Directors effecting such amendment or modification and shall be effective immediately, unless otherwise provided therein, subject to approval thereof within twelve (12) months before or after the effective date by shareholders of the Company holding not less than a majority of the voting power of the Company.

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Section 15.Effective Date of Plan

The effective date of the Plan is February 25, 2008.

Section 16.Term of Plan

No Award shall be granted on or after February 25, 2018, but Awards granted prior to February 25, 2018 may extend beyond that date.

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EX-31.1

Exhibit 31.1

SARBANES-OXLEY ACT SECTION 302 CERTIFICATION

OF CHIEF EXECUTIVE OFFICER

I, Anita M. Robinson, Chief Executive Officer, certify that:

(1) I have reviewed this Form 10-Q of Mission Community Bancorp;

(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 small business issuer as of, and for, the periods presented in this report;

(4) The small business issuer’s other certifying officer 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer 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 small business issuer, 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the small business issuer’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

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

(5) The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’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 small business issuer’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 small business issuer’s internal control over financial reporting.

Date: May 15, 2008

/s/ Anita M. Robinson

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

SARBANES-OXLEY ACT SECTION 302 CERTIFICATION

OF CHIEF FINANCIAL OFFICER

I, Ronald B. Pigeon, Chief Financial Officer, certify that:

(1) I have reviewed this Form 10-Q of Mission Community Bancorp;

(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 small business issuer as of, and for, the periods presented in this report;

(4) The small business issuer’s other certifying officer 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer 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 small business issuer, 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the small business issuer’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

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

(5) The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’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 small business issuer’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 small business issuer’s internal control over financial reporting.

Date: May 15, 2008

/s/ Ronald B. Pigeon

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

SARBANES-OXLEY ACT SECTION 906 CERTIFICATION CHIEF EXECUTIVE OFFICER

In connection with this quarterly report on Form 10-Q of Mission Community Bancorp (“the Company”) for the period ended March 31, 2008, I, Anita M. Robinson, President and Chief Executive Officer, hereby certify pursuant to 18 U.S.C. §1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.This Form 10-Q for the period ended March 31, 2008 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 this Form 10-Q for the period ended March 31, 2008 fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  May 15, 2008
	By:	/s/ Anita M. Robinson
		Anita M. Robinson
		President and Chief Executive Officer

EX-32.2

Exhibit 32.2

SARBANES-OXLEY ACT SECTION 906 CERTIFICATION  CHIEF FINANCIAL OFFICER

In connection with this quarterly report on Form 10-Q of Mission Community Bancorp (“the Company”) for the period ended March 31, 2008, I, Ronald B. Pigeon, Executive Vice President and Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. §1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.This Form 10-Q for the period ended March 31, 2008 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 this Form 10-Q for the period ended March 31, 2008 fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2008
	By:	/s/ Ronald B. Pigeon
		Ronald B. Pigeon
		Executive Vice President
		and Chief Financial Officer