10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

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 incorporation)	(I.R.S. Employer Identification No.)

3380 S. 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 þNo o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 or Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

þ Yes oNo

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

  Yes oNo þ

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:  7,855,066 shares of common stock outstanding as of November 2, 2012.

Page 1 of 54

Mission Community Bancorp

September 30, 2012

Index

PART I – FINANCIAL INFORMATION
Item 1.  Financial Statements (Unaudited)	3
Condensed Consolidated Balance Sheets at September 30, 2012 and December 31, 2011	3
Condensed Consolidated Statements of Operations for the Three-Month and Nine-Month Periods Ended September 30, 2012 and 2011	4
Consolidated Statements of Comprehensive Income (Loss) for the Three-Month and Nine-Month Periods Ended September 30, 2012 and 2011	5
Condensed Consolidated Statements of Changes of Shareholders’ Equity for the Nine-Month Period Ended September 30, 2012	5
Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2012 and 2011	6
Notes to Consolidated Financial Statements	7
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.  Controls and Procedures	49
PART II – OTHER INFORMATION
Item 1.  Legal Proceedings	50
Item 1A.  Risk Factors	50
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.  Defaults Upon Senior Securities	50
Item 4.  Mine Safety Disclosures	50
Item 5.  Other Information	50
Item 6.  Exhibits	51

Page 2 of 54

PART I

Item 1.   Financial Statements

Mission Community Bancorp and Subsidiaries

Condensed Consolidated Balance Sheets

Unaudited

(dollars in thousands)

	September 30, 2012			December 31, 2011
Assets
Cash and due from banks	$	21,197		$	61,621
Certificates of deposit in other banks		5,176			3,592
Investment securities available for sale		147,066			128,310
Loans held for sale		3,490			3,720
Loans, net of unearned income		233,537			229,949
Less allowance for loan and lease losses		(4,100	)		(3,326	)
Net loans		229,437			226,623
Federal Home Loan Bank stock and other investments, at cost		6,699			3,926
Premises and equipment		15,977			16,282
Other real estate owned		1,463			5,220
Company owned life insurance		7,958			7,786
Core deposit intangible asset, net of accumulated amortization		2,866			3,170
Accrued interest and other assets		1,988			3,062
Total Assets	$	443,317		$	463,312
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing demand	$	125,778		$	105,105
Money market, NOW and savings		153,332			156,273
Time certificates of deposit		110,298			149,196
Total deposits		389,408			410,574
Other borrowings		3,800			-
Junior subordinated debt securities		5,576			5,491
Accrued interest and other liabilities		2,667			4,271
Warrant liability		-			5,184
Total liabilities		401,451			425,520
Mezzanine financing:
Redeemable Bancorp-issued preferred stock, Series A, B and C; liquidation value of $1,205		1,205			1,205
Redeemable subsidiary-issued preferred stock; liquidation value of $4,800 at September 30, 2012, and $7,000 at December 31, 2011		4,800			7,000
Shareholders' equity:
Common stock - 50,000,000 shares authorized; issued and outstanding: 7,855,066 at September 30, 2012 and 7,755,066 at December 31, 2011		41,325			40,825
Additional paid-in capital		8,730			3,505
Accumulated deficit		(16,487	)		(16,438	)
Accumulated other comprehensive income		2,293			1,695
Total shareholders' equity		35,861			29,587
Total Liabilities and Shareholders' Equity	$	443,317		$	463,312

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

Page 3 of 54

Mission Community Bancorp and Subsidiaries

Condensed Consolidated Statements of Operations

Unaudited

(dollars in thousands, except per share data)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
Interest Income
Interest and fees on loans	$	3,739		$	1,785		$	12,389		$	5,271
Interest on investment securities		696			470			2,035			1,350
Other interest income		17			6			85			22
Total interest income		4,452			2,261			14,509			6,643
Interest Expense
Interest on money market, NOW and savings deposits		71			86			212			305
Interest on time certificates of deposit		149			217			601			693
Other interest expense		82			25			246			80
Total interest expense		302			328			1,059			1,078
Net interest income		4,150			1,933			13,450			5,565
Provision for loan and lease losses		225			300			675			300
Net interest income after provision for loan and lease losses		3,925			1,633			12,775			5,265
Non-interest income
Service charges on deposit accounts		236			114			691			312
Gain on sale of SBA-guaranteed loans		-			31			8			172
Net gains(losses) on disposition of other loans held for sale		685			209			711			255
Loan servicing fees, net of amortization		37			38			119			97
Gain on sale or call of available-for-sale securities		407			4			934			4
Gain(loss) or writedown of other real estate owned and premises and equipment		(170	)		(94	)		(458	)		(71	)
Change in fair value of warrant liability		(11	)		248			68			1,207
Other income and fees		128			138			341			260
Total non-interest income		1,312			688			2,414			2,236
Non-interest expense
Salaries and employee benefits		2,237			1,601			7,090			4,364
Occupancy expenses		431			341			1,353			993
Furniture and equipment		162			120			597			346
Data processing		464			276			1,805			739
Professional fees		265			369			1,000			902
Marketing and business development		96			47			312			140
Office supplies and expenses		145			66			537			192
Insurance and regulatory assessments		162			86			485			312
Loan and lease expenses		56			42			246			202
Other real estate expenses		89			15			238			113
Provision for unfunded loan commitments		25			180			25			180
Amortization of core deposit intangible asset		101			-			303			-
Other expenses		244			178			744			495
Total non-interest expense		4,477			3,321			14,735			8,978
Income (loss) before income taxes		760			(1,000	)		454			(1,477	)
Income tax expense		-			1			3			6
Net income (loss)	$	760		$	(1,001	)	$	451		$	(1,483	)
Less dividends on preferred stock		151			64			500			192
Net income (loss) attributable to common stock	$	609		$	(1,065	)	$	(49	)	$	(1,675	)
Per Common Share Data:
Net income (loss) - basic	$	0.08		$	(0.15	)	$	(0.01	)	$	(0.24	)
Net income (loss) - diluted	$	0.08		$	(0.15	)	$	(0.01	)	$	(0.24	)
Average common shares outstanding - basic		7,855,066			7,094,274			7,792,292			7,094,274
Average common shares outstanding - diluted		7,855,066			N/A			7,792,292			N/A

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

Page 4 of 54

Mission Community Bancorp and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited - dollars in thousands)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
Net income (loss)	$	760		$	(1,001	)	$	451		$	(1,483	)
Other comprehensive income:
Unrealized gains arising during the period on available-for-sale securities, net of taxes of $-0-		565			809			1,532			1,734
Less reclassification adjustment for securities gains included in net income		(407	)		(4	)		(934	)		(4	)
Other comprehensive income		158			805			598			1,730
Comprehensive income (loss)	$	918		$	(196	)	$	1,049		$	247

Mission Community Bancorp and Subsidiaries

Condensed Consolidated Statement of Changes in Shareholders' Equity

(Unaudited - dollars in thousands)

	Common Stock				Additional Paid-In		Accumulated			Accumulated Other Comprehensive
	Shares		Amount		Capital		Deficit			Income		Total
Balance at December 31, 2011, as previously reported		7,755,066	$	40,825	$	2,375	$	(16,438	)	$	1,695	$	28,457
Adjustment to net contribution from shareholder recognized in additional paid-in capital for Santa Lucia merger		-		-		1,130		-			-		1,130
Balance at January 1, 2012, as adjusted		7,755,066	$	40,825	$	3,505	$	(16,438	)	$	1,695	$	29,587
Exercise of common stock warrants		100,000		500									500
Dividends declared on subsidiary-issued preferred stock								(500	)				(500	)
Stock-based compensation						109							109
Cancellation of warrants accounted for as liabilities						5,116							5,116
Net income								451					451
Other comprehensive income		-		-		-		-			598		598
Balance at September 30, 2012		7,855,066	$	41,325	$	8,730	$	(16,487	)	$	2,293	$	35,861

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

Page 5 of 54

Mission Community Bancorp and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited - dollars in thousands)

	For the Nine Months Ended
	September 30, 2012			September 30, 2011
Operating Activities
Net income (loss)	$	451		$	(1,483	)
Adjustments to reconcile net income (loss) income to net cash provided by (used in) operating activities:
Depreciation		695			379
Accretion of discount on securities and loans, net		1,016			431
Amortization of core deposit intangible asset		303			-
Accretion of discount on assets acquired in merger		(2,186	)		-
Amortization of discount on liabilities assumed in merger		84			-
Provision for loan and lease losses		675			300
Provision for losses on unfunded loan commitments		25			180
Stock-based compensation		109			105
Gain on sale or call of available-for-sale securities		(934	)		(4	)
Gain on sale of loans		(8	)		(172	)
Gains on disposition of loans held for sale		(711	)		(255	)
Change in the fair value of warrant liability		(68	)		(1,207	)
Net losses and writedowns of fixed assets or other real estate owned		458			71
Increase in company-owned life insurance		(172	)		(68	)
Other, net		538			(66	)
Proceeds from loan sales		101			1,917
Loans originated for sale		-			(1,988	)
Net cash provided by (used in) operating activities		376			(1,860	)
Investing Activities
Net (increase) decrease in deposits in other banks		(1,584	)		248
Purchase of available-for-sale securities		(106,091	)		(26,652	)
Proceeds from maturities, calls and paydowns of available-for-sale securities		33,021			13,180
Proceeds from sales of available-for-sale securities		54,788			-
Net increase in loans held for investment		(6,971	)		(3,950	)
Net decrease in loans held for sale		3,962			3,878
Net (increase) decrease in Federal Home Loan Bank and other stock		(2,751	)		272
Purchases of premises and equipment		(431	)		(227	)
Additional investments in other real estate owned		-			(111	)
Proceeds from sale of premises and equipment		21			-
Proceeds from sale of other real estate owned		4,780			2,574
Net cash used in investing activities		(21,256	)		(10,788	)
Financing Activities
Net increase in demand deposits and savings accounts		17,732			11,327
Net (decrease) increase in time deposits		(38,898	)		6,979
Net Increase (decrease) in other borrowings		1,600			(349	)
Additional costs of 2010 shareholder rights offering		-			(40	)
Proceeds from exercise of common stock warrants		500			-
Payment of dividends on preferred stock		(478	)		(192	)
Net cash (used in) provided by financing activities		(19,544	)		17,725
Net (decrease) increase in cash and cash equivalents		(40,424	)		5,077
Cash and cash equivalents at beginning of period		61,621			10,817
Cash and cash equivalents at end of period	$	21,197		$	15,894
Non-cash changes:
Change in unrealized gains on available-for-sale securities		598			1,729
Loans reclassified to held for sale		4,583			-
Real estate acquired by foreclosure		1,462			1,286
Adjustments to net contribution from shareholder recognized in additional paid-in capital for Santa Lucia merger		1,130			-
Cancellation of warrants accounted for as liabilities		(5,116	)		-
Supplemental disclosures of cash flow information:
Interest paid		1,249			1,086
Taxes paid		3			4

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

Page 6 of 54

Mission Community Bancorp and Subsidiary

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1 – Basis of Presentation and Management Representations

The unaudited consolidated financial statements include accounts of Mission Community Bancorp (“the Company”) and its subsidiaries, Mission Community Bank (“the Bank”) and Mission Asset Management, Inc. (“MAM”), 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-K for the year ended December 31, 2011, which was filed on March 30, 2012.

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 and nine-month periods ended September 30, 2012 and 2011 reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position and results of operations.

The Bank has been organized as a single reporting segment and operates five branches in the Central Coast area of California (in San Luis Obispo, Santa Barbara and Ventura counties, which include the cities of San Luis Obispo, Paso Robles, Atascadero, Arroyo Grande and Santa Maria).  In addition, the Bank operates a loan production office in San Luis Obispo, with a primary focus on Small Business Administration (“SBA”) lending, and a Food and Agriculture Division, operating through a loan production office in Oxnard, California.

The Bank’s primary source of revenue is providing real estate, commercial and industrial (including SBA-guaranteed loans) and agricultural loans to customers, who are predominately small and middle-market businesses and individuals.

The Bank’s deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to applicable legal limits.

Certain reclassifications have been made to prior period balances to conform to classifications in 2012, with no impact to previously reported net loss or shareholders’ equity.

Note 2 – Stock Based Compensation Plans

The Company has three stock compensation plans—the 1998 Stock Option Plan, the 2008 Stock Incentive Plan and the 2011 Equity Incentive Plan (the “2011 Plan”)—which are more fully described in Note J to the consolidated financial statements in the Company’s Annual Report on Form 10-K.

Page 7 of 54

The 2011 Plan provides for the issuance of both “incentive” and “nonqualified” stock options, restricted stock awards, stock appreciation rights and stock awards.  Awards under the 2011 Plan may be made to salaried officers and employees of the Company and its affiliates, to non-employee directors of the Company and its affiliates, and to consultants providing services to the Company and its affiliates.  Awards under the 2011 Plan may be granted on such terms and conditions as are established by the Board of Directors or an authorized Committee of the Board of Directors in its discretion.  Awards may be granted as performance-based compensation under section 162(m) of the Internal Revenue Code.

The Company determines the fair value of options granted on the date of grant using a Black-Scholes-Merton option pricing model, which uses assumptions based on expected option life, expected stock volatility and the risk-free interest rate. The expected volatility assumptions used by the Company are based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected life of the Company’s stock options. The Company bases its expected life assumption on its historical experience and on the terms and conditions of the stock options it grants to employees. The risk-free rate is based on the U.S. Treasury yield curve for the periods within the contractual life of the options in effect at the time of the grant. The Company also makes assumptions regarding estimated forfeitures that will impact the total compensation expenses recognized.

No options were granted in the nine months ended September 30, 2012.  The fair values of options granted in the nine months ended September 30, 2011, were estimated on the date of grant using the following assumptions:

Date of grant	1/25/2011			4/4/2011			7/26/2011
Number of options granted		20,000			20,000			20,000
Exercise price	$	5.00		$	5.00		$	5.00
Market price of common stock	$	3.65		$	3.61		$	3.55
Expected stock price volatility		37.4	%		37.3	%		36.2	%
Expected option life (years)		6			6			6
Risk-free interest rate		2.32	%		2.53	%		2.07	%
Weighted average fair value of all options granted during the period:
3 months ended 9/30/11							$	1.03
9 months ended 9/30/11							$	1.06

Page 8 of 54

During the three-month periods ended September 30, 2012 and 2011, the Company recognized pre-tax stock-based compensation expense of $36,000 and $36,000, respectively.  For the nine-month periods ended September 30, 2012 and 2011, stock-based compensation expense was recognized totaling $109,000 and $105,000, respectively.As of September 30, 2012, the Company has unvested options outstanding with unrecognized compensation expense totaling $197,000, which is scheduled to be recognized as follows (in thousands):

October 1 through December 31, 2012	$	35
2013		85
2014		29
2015		29
2016		19
Total unrecognized compensation cost	$	197

No options outstanding were “in the money” as of September 30, 2012.

The following table summarizes information about stock option activity for the nine months ended September 30, 2012:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of In-the-Money Options
Outstanding at beginning of period		297,219		$	7.84
Options granted		-
Options exercised		-
Options expired unexercised		(9,500	)		11.30
Options forfeited		(19,819	)		20.48
Outstanding at end of period		267,900		$	6.78		7.9	$	-
Options exercisable at end of period		122,338		$	8.76		7.2	$	-
Options Vested or Expected to Vest		267,900		$	6.78		7.9	$	-

Page 9 of 54

Note 3 — Investment Securities

Investment securities have been classified in the consolidated balance sheets as available for sale according to management’s intent.  The amortized cost of securities and their approximate fair values as of the balance sheet dates were as follows:

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2012:
U.S. Government agencies	$	42,686	$	561	$	-		$	43,247
Residential mortgage-backed securities		68,968		1,527		(16	)		70,479
Municipal securities		16,445		202		(55	)		16,592
Corporate debt securities		3,026		4		(6	)		3,024
Asset-backed securities		13,647		77		-			13,724
	$	144,772	$	2,371	$	(77	)	$	147,066

December 31, 2011:
U.S. Government agencies	$	26,098	$	331	$	(12	)	$	26,417
Residential mortgage-backed securities		88,209		1,122		(38	)		89,293
Municipal securities		4,820		239		(2	)		5,057
Corporate debt securities		2,059		-		(4	)		2,055
Asset-backed securities		5,429		79		(20	)		5,488
	$	126,615	$	1,771	$	(76	)	$	128,310

The scheduled maturities of investment securities at September 30, 2012, were as follows.  Actual maturities may differ from contractual maturities because some investment securities may allow the right to call or prepay the obligation with or without call or prepayment penalties.

(in thousands)	Available-for-Sale Securities
	Amortized Cost		Fair Value
Within one year	$	6,939	$	6,963
Due in one year to five years		32,979		33,034
Due in five years to ten years		39,207		39,877
Due in greater than ten years		65,647		67,192
	$	144,772	$	147,066

Page 10 of 54

Investment securities in a temporary unrealized loss position as of each balance sheet date are shown in the following table, based on the length of time they have been continuously in an unrealized loss position:

(in thousands)	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2012:
Residential mortgage-backed securities	$	9,601	$	16	$	-	$	-	$	9,601	$	16
Municipal securities		4,986		55		-		-		4,986		55
Corporate debt securities		1,994		6		-		-		1,994		6
	$	16,581	$	77	$	-	$	-	$	16,581	$	77

December 31, 2011:
U.S. Government agencies	$	2,082	$	12	$	-	$	-	$	2,082	$	12
Residential mortgage-backed securities		9,731		38		-		-		9,731		38
Municipal securities		240		2		-		-		240		2
Corporate debt securities		1,055		4		-		-		1,055		4
Asset-backed securities		1,585		20		-		-		1,585		20
	$	14,693	$	76	$	-	$	-	$	14,693	$	76

As of September 30, 2012, the Company held 22 securities that had been in an unrealized loss position for less than 12 months.  No securities have been in an unrealized loss position for 12 months or longer as of September 30, 2012.  The unrealized losses relate principally to changes in market interest rate conditions.  All of the securities continue to pay as scheduled.  When analyzing the issuer’s financial condition, management considers the length of time and extent to which the market value has been less than cost; the historical and implied volatility of the security; the financial condition of the issuer of the security; and the Bank’s intent and ability to hold the security to recovery.  As of September 30, 2012, management does not have the intent to sell these securities nor does it believe it is more likely than not that it will be required to sell these securities before maturity or the recovery of amortized cost basis.  Based on the Bank’s evaluation of the above and other relevant factors, the Bank does not believe the securities that are in an unrealized loss position as of September 30, 2012, are other than temporarily impaired.

No securities were sold in the first nine months of 2011.  Gains totaling $407,000 were recognized in the third quarter of 2012 on sales of $29,692,000 of securities. For the first nine months of 2012 gains of $934,000 were recognized on sales of $54,788,000 of available-for-sale securities.

As of September 30, 2012, investment securities carried at $8,670,000 were pledged to secure public deposits, as required by law.  Investment securities carried at $16,695,000 as of September 30, 2012, were pledged to secure borrowing facilities from the Federal Home Loan Bank of San Francisco.

Page 11 of 54

Note 4 — Loans

The Company’s loan portfolio consists primarily of loans to borrowers within the Central Coast area of California.  Although the Company seeks to avoid concentrations of loans to a single industry or based upon a single class of collateral, real estate and real estate associated businesses are among the principal industries in the Company’s market area and, as a result, the loan and collateral portfolios are concentrated in those industries and in that geographic area.

The following table shows the composition of the Company’s loans by type:

Loan Composition
(Dollars in thousands)
	September 30, 2012					December 31, 2011
Type of Loan	Amount		Percentage			Amount		Percentage
Construction and land development	$	11,695		4.9	%	$	18,022		7.6	%
Commercial real estate - owner-occupied		69,410		29.3	%		70,153		30.0	%
Commercial real estate - non-owner-occupied		75,020		31.7	%		64,382		27.6	%
Residential real estate		32,120		13.6	%		32,609		14.0	%
All other real estate loans		7,764		3.3	%		2,321		1.0	%
Commercial and industrial loans		32,826		13.8	%		30,176		12.9	%
Agricultural loans		3,369		1.4	%		9,272		4.0	%
Municipal loans		2,352		1.0	%		2,393		1.0	%
Leases, net of unearned income		1,277		0.5	%		2,323		1.0	%
Consumer loans		1,194		0.5	%		2,018		0.9	%
Total loans	$	237,027		100.0	%	$	233,669		100.0	%

The table above includes loans held for sale as follows:

Loans Held for Sale*
(Dollars in thousands)
	September 30, 2012					December 31, 2011
Type of Loan	Amount		% of Total Loans			Amount		% of Total Loans
Commercial	$	278		0.1	%	$	115		0.1	%
Real estate		1,656		0.7	%		3,030		1.3	%
Construction and land development		1,556		0.7	%		575		0.2	%
Total loans held for sale	$	3,490		1.5	%	$	3,720		1.6	%

* Consists of all loans held at Mission Asset Management, Inc. and SBA-guaranteed loans held for sale at Mission Community Bank

Loans and leases, other than those held for sale, are carried at the principal amount outstanding, net of any deferred loan origination fee income and deferred direct loan origination costs, and net of any unearned interest on discounted loans.  A separate allowance for loan and lease losses is provided for loans held for investment.  Loans held for sale, including $1,174,000 of impaired loans, are carried at the lower of cost or fair value, with no allowance for loan losses.

Page 12 of 54

As of September 30, 2012, and December 31, 2011, loans totaling $198,553,000 and $98,111,000, respectively, were pledged to secure borrowings and potential borrowing facilities from the Federal Home Loan Bank of San Francisco.

Note 5 — Credit Quality and the Allowance for Loan and Lease Losses

An allowance for loan and lease losses is provided for loans held for investment (i.e., not held for sale).  Loans held for sale are carried on the consolidated balance sheets at the lower of cost or fair value, therefore no related allowance for loan losses is provided.

Following is a summary of the changes in the allowance for loan and lease losses for the three-month and nine-month periods ended September 30:

(in thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Balance at beginning of period	$	3,781		$	3,182		$	3,326		$	3,198
Provision for loan and lease losses charged to expense		225			300			675			300
Loans charged off		(22	)		(360	)		(144	)		(460	)
Recoveries on loans previously charged off		116			42			243			126
Balance at end of period	$	4,100		$	3,164		$	4,100		$	3,164

Page 13 of 54

Changes in the allowance for loan and lease losses for the three-month and nine-month periods ended September 30, 2012 and 2011, are shown below disaggregated by portfolio segment:

	Three Months Ended September 30, 2012
Loan Portfolio Segment	Balance at Beginning of Period		Provision for Loan Losses Charged (Credited) to Expense			Less Loans Charged Off			Plus Recoveries on Loans Previously Charged Off		Balance at End of Period
Construction and land development	$	366	$	(97	)	$	-		$	-	$	269
Commercial real estate - owner-occupied		505		85			-			28		618
Commercial real estate - non-owner-occupied		883		73			-			-		956
Residential real estate		658		154			-			-		812
All other real estate loans		6		33			-			-		39
Commercial and industrial loans		1,197		70			-			13		1,280
Consumer and all other loans and lease financing		134		(76	)		(22	)		75		111
Unallocated		32		(17	)		-			-		15
Totals	$	3,781	$	225		$	(22	)	$	116	$	4,100

	Three Months Ended September 30, 2011
Loan Portfolio Segment	Balance at Beginning of Year		Provision for Loan Losses Charged (Credited) to Expense			Less Loans Charged Off			Plus Recoveries on Loans Previously Charged Off		Balance at End of Period
Construction and land development	$	123	$	11		$	-		$	-	$	134
Commercial real estate - owner-occupied		393		(74	)		(22	)		-		297
Commercial real estate - non-owner-occupied		714		188			(125	)		-		777
Residential real estate		516		29			(69	)		35		511
All other real estate loans		4		-			-			-		4
Commercial and industrial loans		1,037		383			(115	)		4		1,309
Consumer and all other loans and lease financing		113		(39	)		(29	)		3		48
Unallocated		282		(198	)		-			-		84
Totals	$	3,182	$	300		$	(360	)	$	42	$	3,164

	Nine Months Ended September 30, 2012
Loan Portfolio Segment	Balance at Beginning of Period		Provision for Loan Losses Charged (Credited) to Expense			Less Loans Charged Off			Plus Recoveries on Loans Previously Charged Off		Balance at End of Period
Construction and land development	$	157	$	112		$	-		$	-	$	269
Commercial real estate - owner-occupied		253		335			-			30		618
Commercial real estate - non-owner-occupied		675		281			-			-		956
Residential real estate		640		172			-			-		812
All other real estate loans		4		35			-			-		39
Commercial and industrial loans		1,363		(70	)		(101	)		88		1,280
Consumer and all other loans and lease financing		124		(95	)		(43	)		125		111
Unallocated		110		(95	)		-			-		15
Totals	$	3,326	$	675		$	(144	)	$	243	$	4,100

	Nine Months Ended September 30, 2011
Loan Portfolio Segment	Balance at Beginning of Year		Provision for Loan Losses Charged (Credited) to Expense			Less Loans Charged Off			Plus Recoveries on Loans Previously Charged Off		Balance at End of Period
Construction and land development	$	531	$	(397	)	$	-		$	-	$	134
Commercial real estate - owner-occupied		164		144			(21	)		10		297
Commercial real estate - non-owner-occupied		697		205			(125	)		-		777
Residential real estate		501		114			(153	)		49		511
All other real estate loans		4		-			-			-		4
Commercial and industrial loans		1,021		350			(123	)		61		1,309
Consumer and all other loans and lease financing		124		(44	)		(38	)		6		48
Unallocated		156		(72	)		-			-		84
Totals	$	3,198	$	300		$	(460	)	$	126	$	3,164

Page 14 of 54

The Company assigns asset quality (i.e., risk) ratings to all loans except pools of homogeneous loans and those asset quality ratings are continuously reviewed and updated by management at least quarterly or as conditions dictate.  These asset quality ratings are also subject to semi-annual examination by independent specialists engaged by the Company, and also by its regulators.  During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which borrowers operate and the fair values of collateral securing these loans.  These credit quality indicators are used to assign an asset quality rating to each individual loan.  The asset quality ratings can be grouped into five major categories, defined as follows:

  Pass –  A pass loan meets all of the Company’s underwriting criteria and provides adequate protection for the Bank through the paying capacity of the borrower and/or the value and marketability of the collateral.

Special Mention –  A special mention loan has potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Company’s credit position at some future date.  Special Mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

  Substandard –  A substandard loan is not adequately protected by the current sound worth and paying capacity of the borrower or the value of the collateral pledged, if any.  Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.  Substandard loans have a high probability of payment default, or they have other well defined weaknesses, and are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization.

  Doubtful –  Loans classified doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

  Loss –  Loans classified as loss are considered uncollectible and are of such little value that their continuance as bankable assets is not warranted.  Loans classified as loss are charged off immediately.

Page 15 of 54

The following table shows the Company’s loan portfolio (excluding loans held for sale) allocated by management’s internal asset quality ratings as of the dates indicated:

Loans by Asset Quality Rating (excluding loans held for sale*)	Asset Quality Ratings
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Total Loans
As of September 30, 2012:
Construction and land development	$	9,455	$	100	$	585	$	-	$	10,140
Commercial real estate - owner-occupied		62,593		-		5,831		-		68,424
Commercial real estate - non-owner-occupied		71,595		2,409		1,178		-		75,182
Residential real estate		28,621		-		2,284		185		31,090
All other real estate		7,732		-		32		-		7,764
Commercial and industrial		34,122		324		3,765		-		38,211
Consumer and all other loans and lease financing		2,726		-		-		-		2,726
Total loans, net of unearned income	$	216,844	$	2,833	$	13,675	$	185	$	233,537

As of December 31, 2011:
Construction and land development	$	13,931	$	157	$	3,359	$	-	$	17,447
Commercial real estate - owner-occupied		68,899		-		4,566		-		73,465
Commercial real estate - non-owner-occupied		49,139		5,154		5,116		-		59,409
Residential real estate		27,672		491		3,365		-		31,528
All other real estate		1,895		138		-		-		2,033
Commercial and industrial		32,154		250		6,841		88		39,333
Consumer and all other loans and lease financing		6,734		-		-		-		6,734
Total loans, net of unearned income	$	200,424	$	6,190	$	23,247	$	88	$	229,949

* Loans held for sale consists of all loans held at Mission Asset Management, Inc. and SBA-guaranteed loans held for sale at Mission Community Bank

Page 16 of 54

The following table shows an aging analysis of the loan portfolio (excluding loans held for sale) as of the dates indicated.  Also shown are loans on non-accrual, those that are past due and still accruing interest and troubled debt restructurings:

(in thousands)
			Commercial Real Estate										Consumer and All
	Construction and Land Development		Owner-Occupied		Non-Owner-Occupied		Residential Real Estate		All Other Real Estate		Commercial and Industrial		Other Loans and Leases		Total Loans
As of September 30, 2012:
Recorded Balance of Loans Past Due:
30-59 Days	$	-	$	59	$	-	$	158	$	-	$	427	$	174	$	818
60-89 Days		268		1,000		-		-		-		57		-		1,325
90+ Days		-		771		-		185		-		265		-		1,221
Total Past Due		268		1,830		-		343		-		749		174		3,364
Loans in Current Payment Status		9,872		66,594		75,182		30,747		7,764		37,462		2,552		230,173
Total Loans	$	10,140	$	68,424	$	75,182	$	31,090	$	7,764	$	38,211	$	2,726	$	233,537
Loans 90+ Days Past Due and Accruing1	$	-	$	-	$	-	$	-	$	-	$	120	$	7	$	127
Accruing Troubled Debt Restructurings		-		-		-		-		-		711		-		711
Loans in Non-accrual Status		317		2,267		866		851		32		1,608		-		5,941

As of December 31, 2011:
Recorded Balance of Loans Past Due:
30-59 Days	$	492	$	594	$	-	$	-	$	-	$	549	$	-	$	1,635
60-89 Days		-		-		-		423		-		220		-		643
90+ Days		1,323		1,033		21		147		-		627		-		3,151
Total Past Due		1,815		1,627		21		570		-		1,396		-		5,429
Loans in Current Payment Status		15,632		71,838		59,388		30,958		2,033		37,937		6,734		224,520
Total Loans	$	17,447	$	73,465	$	59,409	$	31,528	$	2,033	$	39,333	$	6,734	$	229,949
Loans 90+ Days Past Due and Accruing1	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Accruing Troubled Debt Restructurings		-		-		-		-		-		-		-		-
Loans in Non-accrual Status		2,031		1,429		122		1,296		-		2,107		-		6,985

1 Includes pooled loans acquired with deteriorated credit quality.  Management evaluates estimated cash flows subsequent to acquisition.  If cash flows have not decreased, the pooled acquired loans remain in performing status.

The Company considers a loan to be impaired when it is probable that the Company will be unable to collect all amounts due (principal and interest) according to the contractual terms of the loan agreement.  Loans for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are generally considered to be troubled debt restructurings (“TDR’s”). TDR’s typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms.  Both non-accrual loans and TDR’s are generally considered to be impaired.

Concessions granted in TDR’s typically are intended to reduce the borrower’s cash requirements, such as an extension of the payment terms or a change in the interest rate charged.  TDR’s with extended payment terms are accounted for as impaired until adequate performance is established.  A reduction in the interest rate for a borrower experiencing financial difficulties would result in a change to TDR status if the restructured loan yield is below the yield for a new loan with comparable risk. TDR’s with below-market rates are considered impaired until fully collected.   TDR’s may be reported as non-accrual, rather than TDR, if they are not performing under the restructured terms or if adequate payment performance under the restructured terms has yet to be established.

Ten troubled debt restructurings totaling $1,853,000 were effected in the first nine months of 2012 and one for $7,000 in the first nine months of 2011.  One troubled debt restructuring for $711,000 was in accruing status and less than 90 days past due as of September 30, 2012; none were accruing as of December 31, 2011.  The Bank has no commitments to lend additional funds under loans classified as troubled debt restructurings as of September 30, 2012.

Page 17 of 54

Following are summaries of the investment in loans (by impairment method, excluding loans held for sale) as of the dates indicated, including the related allowance for loan losses and cash-basis income recognized:

(in thousands)
			Commercial Real Estate										Consumer and All
	Construction and Land Development		Owner-Occupied		Non-Owner-Occupied		Residential Real Estate		All Other Real Estate		Commercial and Industrial		Other Loans and Leases		Unallocated		Total Loans
Loans Held for Investment as of September 30, 2012:
Recorded Investment:
Impaired Loans With an Allowance Recorded	$	214	$	-	$	765	$	897	$	-	$	293	$	-			$	2,169
Impaired Loans With No Allowance Recorded		372		1,893		-		-		-		823		-				3,088
Total Loans Individually Evaluated For Impairment		586		1,893		765		897		-		1,116		-				5,257
Loans Collectively Evaluated For Impairment		7,079		49,524		62,865		25,655		7,764		35,964		2,543				191,394
Loans Acquired With Deteriorated Credit Quality		2,475		17,007		11,552		4,538		-		1,131		183				36,886
Total Loans Held for Investment	$	10,140	$	68,424	$	75,182	$	31,090	$	7,764	$	38,211	$	2,726			$	233,537
Unpaid Principal Balance:
Impaired Loans With An Allowance Recorded	$	223	$	-	$	765	$	901	$	-	$	120	$	-			$	2,009
Impaired Loans With No Allowance Recorded		378		2,025		-		-		-		817		-				3,220
Total Loans Individually Evaluated For Impairment		601		2,025		765		901		-		937		-				5,229
Loans Collectively Evaluated For Impairment		7,079		49,524		62,865		25,655		7,764		35,964		2,543				191,394
Loans Acquired With Deteriorated Credit Quality		6,288		18,749		13,251		6,498		-		2,914		187				47,887
Total Loans Held for Investment	$	13,968	$	70,298	$	76,881	$	33,054	$	7,764	$	39,815	$	2,730			$	244,510
Related Allowance for Loan and Lease Losses:
Impaired Loans With An Allowance Recorded	$	86	$	-	$	79	$	213	$	-	$	126	$	-			$	504
Impaired Loans With No Allowance Recorded		-		-		-		-		-		-		-				-
Total Loans Individually Evaluated For Impairment		86		-		79		213		-		126		-				504
Loans Collectively Evaluated For Impairment		183		618		877		599		39		1,154		111	$	15		3,596
Loans Acquired With Deteriorated Credit Quality		-		-		-		-		-		-		-				-
Total Loans Held for Investment	$	269	$	618	$	956	$	812	$	39	$	1,280	$	111	$	15	$	4,100
For the Nine Months Ended September 30, 2012:
Average Recorded Investment in Impaired Loans:
Impaired Loans With An Allowance Recorded	$	103	$	145	$	191	$	318	$	-	$	366	$	-			$	1,123
Impaired Loans With No Allowance Recorded		229		1,447		-		-		-		558		-				2,234
Total Loans Individually Evaluated For Impairment	$	332	$	1,592	$	191	$	318	$	-	$	924	$	-			$	3,357
Interest Income Recognized on Impaired Loans:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	-	$	-			$	-
Impaired Loans With No Allowance Recorded		13		-		-		38		-		6		-				57
Total Loans Individually Evaluated For Impairment	$	13	$	-	$	-	$	38	$	-	$	6	$	-			$	57

Page 18 of 54

(in thousands)			Commercial Real Estate										Consumer and All
	Construction and Land Development		Owner-Occupied		Non-Owner-Occupied		Residential Real Estate		All Other Real Estate		Commercial and Industrial		Other Loans and Leases		Unallocated		Total Loans
Loans Held for Investment as of December 31, 2011:
Recorded Investment:
Impaired Loans With an Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	396	$	-			$	396
Impaired Loans With No Allowance Recorded		-		1,028		-		-		-		423		-				1,451
Total Loans Individually Evaluated For Impairment		-		1,028		-		-		-		819		-				1,847
Loans Collectively Evaluated For Impairment		11,617		57,980		42,406		27,103		2,033		34,519		6,547				182,205
Loans Acquired With Deteriorated Credit Quality		5,830		14,457		17,003		4,425		-		3,995		187				45,897
Total Loans Held for Investment	$	17,447	$	73,465	$	59,409	$	31,528	$	2,033	$	39,333	$	6,734			$	229,949
Unpaid Principal Balance:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	443	$	-			$	443
Impaired Loans With No Allowance Recorded		-		1,045		-		-		-		518		-				1,563
Total Loans Individually Evaluated For Impairment		-		1,045		-		-		-		961		-				2,006
Loans Collectively Evaluated For Impairment		11,617		57,980		42,406		27,103		2,033		34,519		6,547				182,205
Loans Acquired With Deteriorated Credit Quality		9,981		16,350		18,954		5,129		-		6,132		191				56,737
Total Loans Held for Investment	$	21,598	$	75,375	$	61,360	$	32,232	$	2,033	$	41,612	$	6,738			$	240,948
Related Allowance for Loan and Lease Losses:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	81	$	-			$	81
Impaired Loans With No Allowance Recorded		-		-		-		-		-		-		-				-
Total Loans Individually Evaluated For Impairment		-		-		-		-		-		81		-				81
Loans Collectively Evaluated For Impairment		157		253		675		640		4		1,282		124	$	110		3,245
Loans Acquired With Deteriorated Credit Quality		-		-		-		-		-		-		-				-
Total Loans Held for Investment	$	157	$	253	$	675	$	640	$	4	$	1,363	$	124	$	110	$	3,326
For the Year Ended December 31, 2011:
Average Recorded Investment in Impaired Loans:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	224	$	-			$	224
Impaired Loans With No Allowance Recorded		-		1,011		-		-		-		341		-				1,352
Total Loans Individually Evaluated For Impairment	$	-	$	1,011	$	-	$	-	$	-	$	565	$	-			$	1,576
Interest Income Recognized on Impaired Loans:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	-	$	-			$	-
Impaired Loans With No Allowance Recorded		-		-		-		-		-		-		-				-
Total Loans Individually Evaluated For Impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-			$	-

The amount of the allowance for loan losses provided for impaired loans represents the aggregate amount by which the recorded investment in each impaired loan exceeds its fair value.  Fair value for this purpose is determined by computing either the present value of expected future cash flows discounted at the loan’s effective interest rate or, if repayment is expected solely from the collateral, the fair value of the underlying collateral less estimated costs to sell, based on current appraisals.  In some cases, impaired loans are partially charged off, such that there is no excess of the recorded investment over the fair value of the loan, as determined above.

Changes in the accretable discount for loans purchased with credit quality deterioration follows:

	Nine Months Ended
(in thousands)	September 30,
	2012
Balance at beginning of period	$	3,289
Measurement period adustments to Santa Lucia Bank fair values		(428	)
Accretion to interest income		(844	)
Loans reclassified to held for sale		(355	)
Loans charged off		-
Transfers from non-accretable discount to accretable		125
Balance at end of period	$	1,787

Page 19 of 54

Note 6 —Common and Preferred Stock and Earnings (Loss) per Share

Common Stock

On April 27, 2010, there was an initial closing (the “Initial Closing”) under the Securities Purchase Agreement dated December 22, 2009, as amended (the “Securities Purchase Agreement”), by and between the Company and Carpenter Fund Manager GP, LLC (the “Manager”) on behalf of and as General Partner of Carpenter Community BancFund, L.P., Carpenter Community BancFund-A, L.P. and Carpenter Community BancFund—CA, L.P.  (the “Investors”).   At the Initial Closing the Investors purchased, for an aggregate purchase price of $10 million, 2,000,000 shares of the common stock of the Company paired with warrants to purchase 2,000,000 shares of the common stock.  On June 15, 2010, the Investors purchased, for an aggregate purchase price of $15 million, 3,000,000 additional shares of common stock and warrants to purchase 3,000,000 shares of common stock in the second closing under the Securities Purchase Agreement (the “Second Closing”).  The warrants issued in the Initial Closing and in the Second Closing (collectively referred to herein as the “2010 Warrants”) were issued for a term of five years from issuance at an exercise price of $5.00 per share and contained customary anti-dilution provisions.

The Company used a substantial majority of the proceeds from the First and Second Closings to enable a newly-formed wholly-owned subsidiary of the Company, Mission Asset Management, Inc., to purchase from the Bank certain non-performing loans and other real estate owned assets.

The Securities Purchase Agreement further provided that the Company would conduct a rights offering to its existing shareholders, pursuant to which each shareholder was offered the right to purchase 15 additional shares of common stock, paired with a warrant (the “Public Warrants”), for each share held, at a price of $5.00 per unit of common stock and warrant (five-year term and $5.00 exercise price).  The rights offering closed on December 15, 2010, with 748,672 shares and Public Warrants to purchase an additional 748,672 shares of common stock being issued. Net proceeds from the rights offering totaled $3,527,000.  Effective October 1, 2012, the expiration date of the Public Warrants was extended by the Company from December 17, 2015 to March 21, 2017.  No other terms or conditions of the Public Warrant were modified and no consideration was received for such extension of expiration date.

Bancorp-Issued Preferred Stock

As a result of a change in control in 2010, the Company is likely to lose its status as a Community Development Financial Institution (“CDFI”), which may trigger redemption provisions of some or all of the Company’s Series A and C preferred stock.  Therefore, those series of preferred stock are carried at their redemption values in the consolidated balance sheets and are classified as mezzanine financing rather than equity.

On December 28, 2011, after receiving the required regulatory approvals, the Company redeemed 100% of the Series D (TARP) preferred stock.

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Mission Asset Management, Inc. Preferred Stock and Company Warrants

 On October 21, 2011, for an aggregate purchase price of $10 million, Mission Asset Management, Inc. issued 10,000 shares of its newly authorized Series A Non-Cumulative Perpetual Preferred Stock (“MAM Preferred Stock”) and the Company issued warrants to purchase an aggregate of 2,202,641 shares of the Company’s common stock (the “2011 Warrants”).  The 2011 Warrants were issued for a term of 10 years from issuance at an exercise price of $4.54 per share.  In December 2011, 660,792 of the 2011 Warrants were exercised and $3,000,000 of the MAM Preferred Stock was liquidated.  In June 2012 an additional 100,000 of the 2011 Warrants were exercised and $600,000 of the MAM Preferred Stock was liquidated, and in September 2012 another $1,600,000 was liquidated.  These preferred shares include redemption provisions that are outside the control of the Company.  Accordingly, these preferred shares are presented as mezzanine financing at their redemption value of $4,800,000 as of September 30, 2012.

In addition to customary anti-dilution provisions, the 2010 Warrants and the 2011 Warrants referred to above contain certain anti-dilution features that have caused these warrants to be reflected as derivative liabilities pursuant to ASC 815—at their fair values—in the consolidated balance sheets rather than as components of equity.  Subsequent changes in their fair values are recognized as gains or losses through non-interest income, which impacts net loss and loss per share in the consolidated statement of operations.  In March 2012 all 2010 Warrants and substantially all of the 2011 Warrants (i.e., those issued to the Investors) were cancelled and replaced with 6,487,800 warrants having approximately the equivalent aggregate fair value as the cancelled warrants but without the anti-dilution features that call for derivative accounting treatment.  Accordingly, $4,955,000 (the fair value of the cancelled warrants immediately prior to cancellation) was transferred from warrant liability to additional paid-in capital in March 2012.  In September 2012 the remaining 153,876 of the 2011 Warrants were cancelled and replaced with 171,980 warrants having identical terms as those issued in March 2012 and aggregate fair value equivalent to the cancelled warrants.

Activity in the Company’s outstanding warrants follows:

	Shares			Weighted Average Exercise Price
Outstanding January 1, 2011		5,748,672			5.00
Warrants granted in 2011		2,202,641		$	4.54
Warrants exercised in 2011		(660,792	)		4.54
Outstanding December 31, 2011		7,290,521		$	4.90
Warrants granted in 2012		6,659,780		$	5.00
Warrants cancelled in 2012		(6,541,849	)		4.89
Warrants exercised in 2012		(100,000	)		5.00
Outstanding September 30, 2012		7,308,452		$	5.00

Prior to the Initial Closing, the Manager was the largest shareholder of the Company, beneficially owning 333,334 shares of the common stock of the Company or 24.7% of the issued and outstanding shares.  As of September 30, 2012, following the Second Closing, the rights offering, the 2011 warrants exercise, and the 2012 warrants exercise, the Manager is the beneficial owner of 6,028,179 shares of the common stock of the Company (not including warrants), or 76.7% of the issued and outstanding shares.

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Earnings (Loss) per Share

The following table shows the calculation of earnings (loss) per common share and the allocation of the Company’s net loss among common stock and the various classes of preferred stock:

(in thousands, except per share data)	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2012		2011			2012			2011
Net income (loss)	$	760	$	(1,001	)	$	451		$	(1,483	)
Less dividends on preferred stock:
Non-convertible subsidiary-issued preferred stock		151		-			500			-
TARP preferred stock (Series D)		-		64			-			192
Net income allocated to all classes of preferred stock		151		64			500			192
Net income (loss) attributable to common stock	$	609	$	(1,065	)	$	(49	)	$	(1,675	)
Average common shares outstanding		7,855,066		7,094,274			7,792,292			7,094,274
Dilutive effect of outstanding stock options		-		-			-			-
Average common shares used for diluted EPS		7,855,066		7,094,274			7,792,292			7,094,274
Basic earnings (loss) per common share	$	0.08	$	(0.15	)	$	(0.01	)	$	(0.24	)
Diluted earnings (loss) per common share	$	0.08	$	(0.15	)	$	(0.01	)	$	(0.24	)

No dilutive effect of outstanding stock options (and therefore no change to earnings (loss) per common share) has been presented for the three months ended September 30, 2011, or for either of the nine-month periods presented, because the result would be anti-dilutive.

Note 7 —Income taxes

Due to a limitation on the Company’s ability to recognize deferred tax assets, no federal income tax expense or benefit was recognized for the nine-month periods ended September 30, 2012 and 2011.

Note 8 — Fair Value Measurement

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of September 30, 2012 and December 31, 2011, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

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

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· 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.  Valuation techniques include management’s judgment, which may be a significant factor.

For some assets or liabilities, the inputs used to measure fair value may fall into more than one level of the fair value hierarchy.  In such cases, the asset or liability is identified based on the lowest level input that is significant to the fair value measurement.  The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the asset or liability.

No warrants were subject to fair value accounting as of September 30, 2012.  The following assumptions were used in the Black-Scholes simulation model to determine the fair value of the warrant liability for the 2011 and 2010 warrants as of December 31, 2011:

	As of December 31, 2011
	Warrants Granted in
	2011			June 2010			April 2010
Outstanding common stock warrants subject to fair value accounting		1,541,849			3,000,000			2,000,000
Warrant exercise price	$	4.54		$	5.00		$	5.00
Market price of common stock	$	3.35		$	3.35		$	3.35
Average risk-free interest rate		1.89	%		0.36	%		0.36	%
Average expected volatility		33.57	%		44.01	%		45.07	%
Average expected life (in years)		9.81			3.46			3.32
Expected dividend yield		0.00	%		0.00	%		0.00	%

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Assets and liabilities measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements Using
September 30, 2012	Level 1		Level 2		Level 3		Total
Available for sale securities:
U.S. Government agencies	$	-	$	43,247	$	-	$	43,247
Residential mortgage-backed securities		-		70,479		-		70,479
Municipal securities		-		16,592		-		16,592
Corporate debt securities		-		3,024		-		3,024
Asset-backed securities		-		13,724		-		13,724
Total available-for-sale securities		-		147,066		-		147,066
Loans held for sale		-		-		3,490		3,490
Warrant liability		-		-		-		-
Total net assets measured at fair value on a recurring basis	$	-	$	147,066	$	3,490	$	150,556

December 31, 2011
Available for sale securities:
U.S. Government agencies	$	-	$	26,417	$	-		$	26,417
Residential mortgage-backed securities		-		89,293		-			89,293
Municipal securities		-		5,057		-			5,057
Corporate debt securities		-		2,055		-			2,055
Asset-backed securities		-		5,488		-			5,488
Total available-for-sale securities		-		128,310		-			128,310
Loans held for sale		-		-		3,720			3,720
Warrant liability		-		-		(5,184	)		(5,184	)
Total net assets measured at fair value on a recurring basis	$	-	$	128,310	$	(1,464	)	$	126,846

The fair value of securities available for sale equals quoted market prices, if available.  If quoted market prices are not available, fair value is determined using quoted market prices for similar securities.  There were no changes in the valuation techniques used during 2012 or 2011 and there were no transfers into or out of Levels 1, 2 or 3 of the fair value hierarchy during the nine months ended September 30, 2012.

Loans held for sale that are measured at fair value on a recurring basis consist of all loans held by the company’s MAM subsidiary.  Those loans are carried at the lower of cost or fair value and, accordingly, have been subject to recurring fair value adjustments.  Fair value for those loans is determined by assessing the probability of borrower default using historical payment performance and available cash flows to the borrower, then projecting the amount and timing of cash flows to MAM, including collateral liquidation if repayment weaknesses exist.

Management monitors the availability of observable market data to assess the appropriate classifications of financial instruments within the fair value hierarchy.  Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another.  In such instances, the transfer is reported at the beginning of the reporting period.

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Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings.

Assets and liabilities measured at fair value on a non-recurring basis are summarized below:

(in thousands)	Fair Value Measurements Using								Current Period Gains
September 30, 2012	Level 1		Level 2		Level 3		Total		(Losses)
Financial assets measured at fair value on a non-recurring basis:
Impaired loans, net of specific reserves--
Construction and land development	$	-	$	-	$	500	$	500	$	(86	)
Commercial real estate - owner-occupied		-		-		1,893		1,893		-
Commercial real estate - non-owner-occupied		-		-		686		686		(79	)
Residential real estate		-		-		684		684		(213	)
All other real estate		-		-		-		-		-
Commercial and industrial		-		-		990		990		(60	)
Consumer and all other loans and lease financing		-		-		-		-		-
Total impaired loans, net of charge-offs and specific reserves	$	-	$	-	$	4,753	$	4,753	$	(438	)
Non-financial assets measured at fair value on a non-recurring basis:
Other real estate owned	$	-	$	-	$	1,463	$	1,463	$	(458	)

	Fair Value Measurements Using								Full Year Gains
December 31, 2011	Level 1		Level 2		Level 3		Total		(Losses)
Financial assets measured at fair value on a non-recurring basis:
Impaired loans, net of specific reserves--
Commercial and industrial	$	-	$	-	$	521	$	521	$	(145	)
Residential real estate	$	-	$	-	$	-		-	$	(87	)
Commercial real estate - non-owner-occupied		-		-		-		-		(116	)
Construction and land development		-		-		-		-		(21	)
Total impaired loans, net of charge-offs and specific reserves	$	-	$	-	$	521	$	521	$	(369	)
Non-financial assets measured at fair value on a non-recurring basis:
Other real estate owned	$	-	$	-	$	5,220	$	5,220	$	(113	)

The following methods were used to estimate the fair value of each class of assets above.  The fair value of impaired loans is based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral less estimated costs to sell if repayment is expected solely from the collateral.  Collateral values are estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria.  Collateral-dependent impaired loans are categorized as Level 3 due to ongoing real estate conditions resulting in inactive market data which, in turn, required the use of unobservable inputs and assumptions in fair value measurements.  Impaired loans were measured and reported at fair value through specific valuation allocations of the allowance for loan and lease losses and/or partial charge-offs of the impaired loans.

The fair value of other real estate owned is based on the values obtained through property appraisals, which can include observable and unobservable inputs.  Other real estate owned fair values are categorized as Level 3 due to ongoing real estate conditions resulting in inactive market data which required the use of unobservable inputs and assumptions in fair value measurements.

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The following table presents a reconciliation of net assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the first nine months of 2012 and 2011:

(in thousands)	Level 3 Securities Available for Sale, Loans Held for Sale and Warrant Liability
	Nine Months Ended September 30
	2012			2011
Balance at beginning of year	$	(1,464	)	$	10,086
Net increase (decrease) in SBA loans held for sale		(115	)		232
Loans held for sale transfered into Level 3		4,283			-
Settlements - principal reductions in loans held for sale		(1,857	)		(4,252	)
Loan participations sold to related party		(1,952	)		-
Loans held for sale transferred to other real estate owned		(589	)		(1,069	)
Loans held for sale valuation reserve		-			(75	)
Cancellation of warrants accounted for as liabilities		5,116			-
Changes in fair value of warrant liability		68			1,207
Balance at end of period	$	3,490		$	6,129

“Settlements” in the above table relate to actual cash payments received from borrowers on loans held for sale and do not represent refinancings or write-downs to fair value.  The following methods and assumptions were used to estimate the fair value of significant financial instruments that are not carried at fair value in the consolidated balance sheet:

Financial Assets.  The carrying amounts of cash and short-term investments are considered to approximate fair value.  Short-term investments include federal funds sold and interest bearing deposits with other banks.  For investment securities, fair values are based on quoted market prices, where available.  If quoted market prices are not available, fair values are estimated using other observable data, which may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other factors.  The fair value of loans (including loans held for sale) are estimated using a combination of techniques, including discounting estimated future cash flows and quoted market prices of similar instruments, where available, and are considered to be within Level 2.  Impaired loans are within Level 3 of the fair value hierarchy.  The carrying value of accrued interest receivable approximates fair value.  The carrying amount of FHLB and FRB stock approximate their fair value.

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Financial Liabilities.  The carrying amounts of deposit liabilities payable on demand and short-term borrowed funds are considered to approximate fair value.  For fixed maturity (i.e., time) deposits, which are within Level 2 of the fair value hierarchy, fair value is estimated by discounting estimated future contractual cash flows using currently offered rates for deposits of similar remaining maturities.  The fair value of junior subordinated debt securities (Level 2) is based on rates currently available to the Bank for debt with similar terms and remaining maturities.

Off-Balance Sheet Financial Instruments.  The fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements.  The fair value of these financial instruments is not material.

The estimated fair value of financial instruments is summarized as follows:

(in thousands)	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and due from banks	$	21,197	$	21,197	$	61,621	$	61,621
Interest-bearing deposits in other banks		5,176		5,176		3,592		3,592
Investment securities		147,066		147,066		128,310		128,310
Loans held for sale		3,490		3,490		3,720		3,720
Loans, net of allowance for loan and lease losses		229,437		225,338		226,623		224,721
Federal Home Loan Bank and other stocks		6,699		6,699		3,926		3,926
Accrued interest receivable		1,353		1,353		1,450		1,450
Financial Liabilities:
Deposits		389,408		389,641		410,574		411,323
Other borrowings		3,800		3,800		-		-
Junior subordinated debt securities		5,576		4,188		5,491		4,527
Accrued interest payable		140		140		330		330
Warrant liability		-		-		5,184		5,184

Note 9 — Business Combination

On October 21, 2011, Santa Lucia Bank, Atascadero, California (“SL Bank”), was merged with and into the Bank (the "Bank Merger") under an Agreement and Plan of Merger by and among Bancorp, the Bank, Carpenter Fund Manager GP, LLC (“Carpenter”), as General Partner of Carpenter Community BancFund L.P. and Carpenter Community BancFund-A., L.P. (the “Funds”), Santa Lucia Bancorp (“SL Bancorp”), the parent holding company of SL Bank and SL Bank.  For Bancorp and the Bank, this transaction is accounted for based on transactions between entities under common control, as our largest shareholder acquired SL Bancorp immediately prior to the Bank Merger and contributed Santa Lucia Bank to the Company.

The Bank Merger was undertaken to increase the Company’s market share in its primary market—San Luis Obispo County and northern Santa Barbara County.  The combined bank had $455 million in assets and $414 million in deposits immediately following the Bank Merger and continues to operate under the Mission Community Bank name, with full-service branch offices in San Luis Obispo and Santa Barbara counties in the cities of San Luis Obispo, Paso Robles, Atascadero, Arroyo Grande and Santa Maria.  With the acquisition, the Company has initiated a strategic plan intended to build the premier California Central Coast banking franchise.  This initiative is designed to capitalize on the distinctive characteristics of the Central Coast banking markets in San Luis Obispo, Santa Barbara and Ventura counties.

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SL Bank’s results of operations have been included in the Company’s results beginning October 22, 2011.  The excess of the fair value of net assets of $906,000 arising from the acquisition was recognized in additional paid-in capital in the fourth quarter of 2011.  The fair values of assets acquired and liabilities assumed are subject to adjustment during the first twelve months after the acquisition date if additional information becomes available to indicate a more accurate or appropriate value for an asset or liability.  Assets that were particularly susceptible to adjustment included certain loans, other real estate owned and certain premises and equipment.  During the first quarter of 2012, management recorded a $428,000 increase in loans, based on the estimated fair value of certain loans.  In the second quarter of 2012, management recorded a $569,000 increase in the fair value of premises and equipment and a $194,000 increase in the fair value of other real estate owned, based on real estate appraisals.  Also in the second quarter of 2012, a $61,000 decrease to accrued interest receivable on investments was recorded.  These measurement period adjustments have been presented on a retrospective basis, consistent with applicable accounting guidance.  As of September 30, 2012, the Company does not expect any more measurement period adjustments.  The following table summarizes the adjusted estimated fair value of assets acquired and liabilities assumed recognized as of the acquisition date (in thousands):

Recognized amounts of identifiable assets acquired and liabilities assumed:
Financial assets--
Cash and cash equivalents	$	53,998
Investment securities		21,487
Loans		122,374
Federal Home Loan Bank and other stocks		1,574
Company-owned life insurance		4,690
Other financial assets		1,024
Total financial assets		205,147
Premises and equipment		13,591
Other real estate owned		2,742
Identifiable intangible assets		3,237
Other assets		289
Total assets	$	225,006
Financial liabilities:
Deposits		(220,102	)
Junior subordinated debt securities		(2,380	)
Other financial liabilities		(162	)
Total financial liabilities		(222,644	)
Other liabilities		(325	)
Total liabilities	$	(222,969	)
Identifiable net assets acquired / net contribution from shareholder	$	2,037

The following table presents pro forma information as if the acquisition had occurred on January 1, 2011.  The pro forma information includes adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the transaction, depreciation expense on property acquired, and interest expense on deposits acquired.  The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date.

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	Three Months Ended			Nine Months Ended
	September 30,			September 30,
(in thousands)	2011			2011
Interest income	$	5,564		$	16,919
Non-interest income		790			2,787
Net (loss)		(577	)		(756	)
Basic and diluted loss per share	$	(0.12	)	$	(0.21	)

Note 10 — Recent Accounting Pronouncements

Fair Value Measurement

In May 2011, FASB issued Accounting Standards Update (“ASU”) ASU 2011-04, Fair Value Measurement (Topic 820) – Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRS.  ASU 2011-04 amends Topic 820, Fair Value Measurements and Disclosures, to converge the fair value measurement guidance under U.S. generally accepted accounting principles and International Financial Reporting Standards.  ASU 2011-04 clarifies the application of existing fair value measurement requirements, changes certain principles in Topic 820 and requires additional fair value disclosures.  ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011.  Adoption of ASU 2011-04 in the quarter ended March 31, 2012, did not have a significant on the Company’s consolidated financial statements.

Comprehensive Income

In June 2011, FASB issued ASU 2011-05, Comprehensive Income (Topic 220) – Presentation of Comprehensive Income.  ASU 2011-05 amends Topic 220, Comprehensive Income, to require that all nonowner changes in shareholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements.  Additionally, ASU 2011-05 requires entities to present, on the face of the financial statements, reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement or statements where the components of net income and the components of other comprehensive income are presented.  The option to present components of other comprehensive income as part of the statement of changes in shareholders’ equity was eliminated.  ASU 2011-05 is effective for interim and annual periods beginning after December 15, 2011.  Additionally, in December 2011, FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Reclassification of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05.  ASU 2011-12 defers the effective date for the changes in ASU 2011-05 that specifically refer to the presentation of the effects of reclassification adjustments out of accumulated other comprehensive income on the components of net income and other comprehensive income on the face of the financial statements for all periods presented.  ASU 2011-12 reinstates the requirements of the presentation of reclassifications out of accumulated other comprehensive income that were in place before the issuance of ASU 2011-05.  The Company will continue to disclose the effects of reclassifications in the footnotes to the financial statements.  The effective date for ASU 2011-12 is the same as for ASU 2011-05.  Neither ASU 2011-05 nor ASU 2011-12 had a significant impact on the consolidated financial statements.

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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 earned $760 thousand for the third quarter of 2012, as compared with a net loss of $(1,001) thousand for the third quarter of 2011.  Net income applicable to common stock was $609 thousand in the most recent quarter, as compared to a net loss applicable to common stock of $(1,065) thousand for the same period in 2011.

· For the first nine months of 2012 the Company earned $451 thousand, as compared with a net loss of $(1,483) thousand for the first nine months of 2011.  Net loss applicable to common stock was $(49) thousand in the first nine months of 2012, as compared to a net loss applicable to common stock of $(1,675) thousand for the same period in 2011.

· A $225 thousand provision for loan and lease losses was recorded in the third quarter of 2012, and $675 thousand for the nine months.  For the third quarter and first nine months of 2011 the Company recorded a $300 thousand provision for loan and lease losses.

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· Net interest income for the three-month period ended September 30, 2012, was $4.150 million, an increase of $2.217 million from the same period in 2011.  For the nine months, net interest income was $13.450 million, as compared to $5.565 million for the first nine months of 2011.  The increase in net interest income was primarily due to the acquisition of Santa Lucia Bank in the fourth quarter of 2011.

· The net interest margin (net interest income as a percentage of average interest earning assets) increased by 50 basis points, to 3.99%, for the three-month period ended September 30, 2012, as compared to the same period in 2011.  For the nine month periods, the net interest margin increased by 80 basis points, from 3.47% in 2011 to 4.27% in the first nine months of 2012.

· For the three months ended September 30, 2012, non-interest income increased by $624 thousand from the same period in 2011.  For the nine months, non-interest income increased by $178 thousand.  These increases were primarily from gains on the disposition of loans held for sale and on sales of securities, which were partially offset by decreased income from changes in the fair value of warrant liability

· Non-interest expense increased by $1.156 million for the third quarter of 2012, as compared to the same quarter in 2011.  Principal factors relating to the increase were overall increases in salaries and benefits and other operating costs in 2012 with an asset size approximately double that of a year earlier, additional officers hired over the past year in preparation for planned growth, additional software and network management costs related to integrating Santa Lucia Bank, and amortization of the core deposit intangible asset.

· Total assets decreased by $20.0 million (4.3 %) from December 31, 2011 to September 30, 2012.  A $21.2 million decrease in deposits, due to a significant number of higher-cost certificates of deposits maturing and not rolling over, combined with an $18.8 million increase in securities, contributed to a $40.4 million decrease in cash over the nine-month period.

· Non-performing assets decreased from $13.6 million as of December 31, 2011 to $9.8 million on September 30, 2012, primarily due to sales of foreclosed real estate.

Income Summary

For the third quarter of 2012, the Company’s net income was $760 thousand, as compared with a net loss of $(1.001) million for the third quarter of 2011.  Net income applicable to common stock was $609 thousand in the most recent quarter, as compared to a net loss applicable to common stock of $(1.065) million for the same period in 2011.

Return on average assets (annualized) was 0.67% for the third quarter of 2012, as compared with a loss on average assets of (1.74)% for the third quarter of 2011.  Annualized return on average equity was 8.45% for the third quarter of 2012 as compared with an annualized loss on average equity of (11.52)% for the comparable 2011 period.

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For the nine months, annualized return on average assets was 0.13%, as compared with a loss on average assets of (0.89)% for the same period in 2011.   Annualized loss on average equity was (1.82)%, as compared with a loss on average equity of (5.79)% for the first nine months of 2011.

Net Interest Income

Net interest income is the largest source of the Bank’s operating income.  For the three-month period ended September 30, 2012, net interest income was $4.150 million, an increase of $2.217million from the same period in 2011, primarily due to the Santa Lucia Bank acquisition.  In addition to the increase in net interest income due to the higher volume of assets and liabilities from that acquisition, the net interest margin for the second quarter of 2012 includes $490 thousand of discount accretion on the assets acquired and liabilities assumed ($2.158 million for the nine months).

The net interest margin (net interest income as a percentage of average interest earning assets) was 3.99%, for the three-month period ended September 30, 2012, an increase of 0.50% over the same period in 2011.  For the nine month periods, the net interest margin increased by 80 basis points, from 3.47% in 2011 to 4.27% in the first nine months of 2012.  Discount accretion mentioned in the previous paragraph accounts for 50 basis points of the increase in net interest margin for the three months and 70 basis points of the increase for the nine months.

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The following tables show 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 and nine-month periods ended September 30, 2012 and 2011:

Consolidated Net Interest Analysis

(Dollars in thousands)
	For the Three Months Ended
	September 30, 2012								September 30, 2011
	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
ASSETS
Interest-earning assets:
Loans, net of unearned income*	$	223,299		$	3,738		6.66	% *	$	119,026		$	1,785		5.95	% *
Investment securities*		166,351			696		1.67	% *		89,818			470		2.07	% *
Other interest income		24,076			18		0.29	%		10,858			6		0.20	%
Total interest-earning assets / interest income		413,726			4,452		4.28	%		219,702			2,261		4.08	%
Non-interest-earning assets:
Allowance for loan losses		(3,949	)							(3,124	)
Cash and due from banks		6,887								1,666
Premises and equipment		16,080								3,101
Other assets		16,025								7,141
Total assets	$	448,769							$	228,486
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
Transaction accounts	$	27,142		$	10		0.15	%	$	12,029		$	14		0.45	%
Savings and Money Market deposit accounts		128,308			60		0.19	%		57,606			72		0.50	%
Certificates of deposit		115,881			150		0.51	%		86,986			217		0.99	%
Total interest-bearing deposits		271,331			220		0.32	%		156,621			303		0.77	%
Federal Home Loan Bank advances		2,495			1		0.23	%		22			-		0.11	%
Trust preferred securities		5,559			81		5.76	%		3,093			25		3.24	%
Total borrowed funds		8,054			82		4.05	%		3,115			25		3.22	%
Total interest-bearing liabilities / interest expense		279,385			302		0.43	%		159,736			328		0.81	%
Non-interest-bearing liabilities:
Non-interest-bearing deposits		124,080								28,880
Other liabilities		9,522								5,393
Total liabilities		412,987								194,009
Shareholders' equity		35,782								34,477
Total liabilities and shareholders' equity	$	448,769							$	228,486
Net interest-rate spread							3.85	%							3.27	%
Impact of non-interest-bearing sources and other changes in balance sheet composition							0.14	%							0.22	%
Net interest income / margin on earning assets				$	4,150		3.99	% **				$	1,933		3.49	% **

*No taxable-equivalent adjustment has been made on municipal securities and loans because no tax benefits are currently being recognized by the Company. Net loan accretion and fees (costs) included in loan interest income for the three-month periods ended September 30, 2012 and 2011, were $490 thousand and $13 thousand, respectively.

** Net interest income as a % of earning assets

Page 33 of 54

Consolidated Net Interest Analysis

(Dollars in thousands)
	For the Nine Months Ended
	September 30, 2012								September 30, 2011
	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
ASSETS
Interest-earning assets:
Loans, net of unearned income*	$	228,782		$	12,389		7.23	% *	$	118,740		$	5,271		5.94	% *
Investment securities*		151,103			2,035		1.80	% *		82,725			1,350		2.18	% *
Other interest income		40,467			85		0.28	%		12,733			22		0.23	%
Total interest-earning assets / interest income		420,352			14,509		4.61	%		214,198			6,643		4.15	%
Non-interest-earning assets:
Allowance for loan losses		(3,678	)							(3,200	)
Cash and due from banks		3,986								1,608
Premises and equipment		15,892								3,160
Other assets		16,642								7,696
Total assets	$	453,194							$	223,462
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand accounts	$	27,084		$	32		0.16	%	$	11,613		$	52		0.60	%
Savings and Money Market deposit accounts		128,817			180		0.19	%		54,714			253		0.62	%
Certificates of deposit		128,694			601		0.62	%		86,986			693		1.07	%
Total interest-bearing deposits		284,595			813		0.38	%		153,313			998		0.87	%
Other short-term borrowings		4			-		1.09	%		127			4		4.75	%
Federal Home Loan Bank advances		1,343			3		0.24	%		7			-		0.11	%
Trust preferred securities		5,531			243		5.87	%		3,093			76		3.27	%
Total borrowed funds		6,878			246		4.77	%		3,227			80		3.32	%
Total interest-bearing liabilities / interest expense		291,473			1,059		0.49	%		156,540			1,078		0.92	%
Non-interest-bearing liabilities:
Non-interest-bearing deposits		116,772								27,090
Other liabilities		11,807								5,594
Total liabilities		420,052								189,224
Shareholders' equity		33,142								34,238
Total liabilities and shareholders' equity	$	453,194							$	223,462
Net interest-rate spread							4.12	%							3.23	%
Impact of non-interest-bearing sources and other changes in balance sheet composition							0.15	%							0.24	%
Net interest income / margin on earning assets				$	13,450		4.27	% **				$	5,565		3.47	% **

*No taxable-equivalent adjustment has been made on municipal securities and loans because no tax benefits are currently being recognized by the Company. Loan accretion and loan fees (net of loan origination costs) included in loan interest income for the nine-month periods ended September 30, 2012 and 2011, were $2,158 thousand and $(701) thousand, respectively.

** Net interest income as a % of earning assets

Excluding the merger-related discount accretion from the above tables, the average rates for the first nine months of 2012 would have been as follows: loans 5.96%; total interest-earning assets 3.92%; certificates of deposit 0.73%; total interest-bearing deposits 0.43%; trust preferred securities 1.80%; total interest-bearing liabilities 0.45%; and net interest margin 3.60%.

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Shown in the following tables are the relative impacts on net interest income of changes in the average outstanding balances (volume) of earning assets and interest bearing liabilities, together with changes in the rates earned and paid by the Bank and the Company on those assets and liabilities, for the three-month and nine-month periods ended September 30, 2012 and 2011.  Changes in interest income and expense that are not attributable specifically to either rate or volume are allocated proportionately among both variances.

Consolidated Rate / Volume Variance Analysis

(In thousands)	Three Months Ended September 30, 2012 Compared to 2011
	Increase (Decrease) in interest income and expense due to changes in:
	Volume		Rate			Total
Interest-earning assets:
Loans, net of unearned income	$	1,724	$	229		$	1,953
Investment securities		335		(109	)		226
Other interest income		9		3			12
Total increase (decrease) in interest income		2,068		123			2,191
Interest-bearing liabilities:
Transaction accounts		9		(13	)		(4	)
Savings deposits		52		(64	)		(12	)
Certificates of deposit		58		(125	)		(67	)
Total interest-bearing deposits		119		(202	)		(83	)
FHLB advances		1		-			1
Trust preferred securities		28		28			56
Total borrowed funds		29		28			57
Total increase (decrease) in interest expense		148		(174	)		(26	)
Increase (decrease) in net interest income	$	1,920	$	297		$	2,217

Page 35 of 54

Consolidated Rate / Volume Variance Analysis

(In thousands)
	Nine Months Ended September 30, 2012 Compared to 2011
	Increase (Decrease) in interest income and expense due to changes in:
	Volume			Rate			Total
Interest-earning assets:
Loans, net of unearned income	$	5,753		$	1,365		$	7,118
Investment securities		954			(269	)		685
Other interest income		57			6			63
Total increase in interest income		6,764			1,102			7,866
Interest-bearing liabilities:
Transaction accounts		36			(56	)		(20	)
Savings deposits		185			(258	)		(73	)
Certificates of deposit		259			(351	)		(92	)
Total interest-bearing deposits		480			(665	)		(185	)
Other short-term borrowings		(2	)		(2	)		(4	)
FHLB advances		3			-			3
Trust preferred securities		83			84			167
Total borrowed funds		84			82			166
Total increase (decrease) in interest expense		564			(583	)		(19	)
Increase in net interest income	$	6,200		$	1,685		$	7,885

The tables above show the effect of the significantly higher volume of assets and liabilities from the acquisition, as well as the impact of lower rates paid on deposit accounts.

Based on current economic forecasts, the Bank anticipates that short-term interest rates will remain at a very low level through 2013 and 2014.  If so, we expect to see certificate of deposit rates continue to decline, although the pace of that decline is expected to slow.  With loan rates remaining relatively stable, this decrease in deposit rates should result in a slight improvement in our net interest margin.  In the early stage of the next cycle of rising interest rates we would expect to see deposits reprice somewhat faster than loans, as “floors” (minimum rates) have been implemented on approximately 83% of the variable rate loan portfolio, or approximately $116 million in loans.  Many of those floor rates are currently higher than the rate would be without the imposition of the floor.  As a result, that portion of the variable rate loan portfolio will not generate a material increase in interest income until the prime rate increases by at least 50 basis points from its current level.  The remaining 17% of variable rate loans will respond to rising rates more quickly.  A potential risk to the net interest margin would be any additional loans that might be placed in non-accrual status in the coming months.  Additional non-accrual loans would put downward pressure on the net interest margin.

Page 36 of 54

Provision for Loan Losses

The Bank recorded a $225 thousand provision for loan losses for the three months ended September 30, 2012, and $675 thousand for the nine months then ended, as compared with a $300 thousand loan loss provision for both the third quarter and first nine months of 2011.

Loan charge-offs totaled $22 thousand (with $116 thousand in recoveries) for the third quarter of 2012, as compared with $360 thousand of charge-offs and $42 thousand of recoveries for the same period in 2011.  For the first nine months of 2012, charge-offs totaled $144 thousand (with $243 thousand of recoveries), as compared to $460 thousand of charge-offs and $126 thousand of recoveries for the first nine months of 2011.  The ratio of allowance for loan losses to total loans was 1.73% at September 30, 2012, as compared with 1.42% as of December 31, 2011.

The Bank makes provisions for loan losses when required to bring the total allowance for loan losses to a level deemed appropriate for the risk in the loan portfolio. The determination of the appropriate level for the allowance is based on such factors as historical loss experience, the volume and type of lending conducted, the amount of nonperforming loans, regulatory standards, general economic conditions, and other factors related to the collectability of loans in the portfolio.

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 gains and servicing fees from the sale of loans and gains or losses on sales of securities and other real estate owned.  For the three-month period ended September 30, 2012, non-interest income was $1.312 million, an increase of $624 thousand from the same period in 2011.  For the first nine months of 2012, non-interest income was $2.414 million, as compared to $2.236 million for the same period in 2011.

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

 Non-Interest Income

(In thousands)	For the Three Months Ended September 30,												For the Nine Months Ended September 30,
	$ Amount						Change						$ Amount						Change
	2012			2011			$				%			2012			2011		$				%
Service charges on deposit accounts	$	236		$	114		$	122			107	%	$	691		$	312		$	379			121	%
Gain on sale of SBA-guaranteed loans		-			31			(31	)		-100	%		8			172			(164	)		-95	%
Net gains(losses) on disposition of other loans held for sale		685			209			476			228	%		711			255			456			179	%
Loan servicing fees, net of amortization		37			38			(1	)		-3	%		119			97			22			23	%
Gain on sale or call of available-for-sale securities		407			4			403			10075	%		934			4			930			23250	%
Net gains(losses) or writedowns of fixed assets or other real estate		(170	)		(94	)		(76	)	nm				(458	)		(71	)		(387	)	nm
Change in fair value of warrant liability		(11	)		248			(259	)		-104	%		68			1,207			(1,139	)		-94	%
Other income and fees		128			138			(10	)		-7	%		341			260			81			31	%
Total non-interest income	$	1,312		$	688		$	624			91	%	$	2,414		$	2,236		$	178			8	%

nm - not meaningful

The increase in the third quarter was primarily due $403 thousand in gains on sales of securities and an additional $476 thousand in gains on the resolution of loans held for sale, which were partially offset by decreased income from changes in the fair value of warrant liability.  The increase in non-interest income for the nine-month period was primarily due to gains on sales of securities and increased service charges (mainly due to the Santa Lucia acquisition), partially offset by decreased income from changes in the fair value of warrant liability.

Non-Interest Expense

Non-interest expense represents salaries and benefits, occupancy expenses, professional fees, outside services, and other miscellaneous expenses necessary to conduct business.  Non-interest expenses increased by $1.156 million, or 35%, for the three months ended September 30, 2012, as compared to the third quarter of 2011.  For the nine months, non-interest expense increased by $5.757 million, or 64%, as compared to the first nine months of 2011.

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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 September 30,										For the Nine Months Ended September 30,
	$ Amount				Change						$ Amount				Change
	2012		2011		$				%			2012		2011	$				%
Salaries and employee benefits	$	2,237	$	1,601	$	636			40	%	$	7,090	$	4,364	$	2,726			62	%
Occupancy expenses		431		341		90			26	%		1,353		993		360			36	%
Furniture and equipment		162		120		42			35	%		597		346		251			73	%
Data processing		464		276		188			68	%		1,805		739		1,066			144	%
Professional fees		265		369		(104	)		-28	%		1,000		902		98			11	%
Marketing and business development		96		47		49			104	%		312		140		172			123	%
Office supplies and expenses		145		66		79			120	%		537		192		345			180	%
Insurance and regulatory assessments		162		86		76			88	%		485		312		173			55	%
Loan and lease expenses		56		42		14			33	%		246		202		44			22	%
Other real estate expenses		89		15		74			493	%		238		113		125			111	%
Provision for unfunded loan commitments		25		180		(155	)		-86	%		25		180		(155	)		-86	%
Amortization of core deposit intangible asset		101		-		101		nm				303		-		303		nm
Other		244		178		66			37	%		744		495		249			50	%
Total non-interest expense	$	4,477	$	3,321	$	1,156			35	%	$	14,735	$	8,978	$	5,757			64	%

 nm = not meaningful

The increase in non-interest expense was principally from:

· Salaries and benefits, due to employees added with the Santa Lucia acquisition, as well as additional officers hired over the past year in preparation for planned growth,

· Software and network management costs, due to the integration of Santa Lucia Bank, including necessary system upgrades (included in data processing expenses in the table above),  and

· Overall increases in operating costs in 2012 with an asset size approximately double that of a year earlier.

Partially offsetting these increased expenses were reductions in the provision for unfunded loan commitments ($155 thousand decrease) and in professional fees related to the Santa Lucia Bank acquisition—a decrease of $298 thousand for the first nine months of 2012 as compared to the same period in 2011, and a decrease of $216 thousand for the third quarter of 2012 as compared to the third quarter of 2011.

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Income Taxes

Due to a limitation on the Company’s ability to recognize deferred tax assets, no federal income tax benefit and minimal tax expense was recognized for the first nine months of 2012 and 2011.

Balance Sheet Analysis

At September 30, 2012, consolidated assets totaled $443.3 million, as compared with $463.3 million at December 31, 2011.  This represents a decrease of $20.0 million (4.3%) over the past nine months.  Total loans increased $3.4 million, or 1.5%, over that period, while securities and cash equivalents decreased $20.1 million (10.4%), deposits decreased $21.2 million (5.2%) and shareholders’ equity increased $6.3 million, or 21.2%.  The increase in shareholders’ equity was primarily due to additional paid-in capital transferred from the warrant liability for warrants cancelled during the first quarter.  See also the Capital section of this report.

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
	September 30, 2012					June 30, 2012					March 31, 2012					December 31, 2011					September 30, 2011
	$			%		$			%		$			%		$			%		$			%
Total Assets	$	(15,659	)	-3.4	%	$	1,202		0.3	%	$	(5,538	)	-1.2	%	$	228,665		97.5	%	$	9,378		4.2	%
Earning Assets		(20,495	)	-4.8	%		1,300		0.3	%		(2,210	)	-0.5	%		200,547		89.4	%		9,092		4.2	%
Loans		13,395		6.0	%		(2,278	)	-1.0	%		(7,699	)	-3.3	%		114,382		95.9	%		2,991		2.6	%
Deposits		(19,237	)	-4.7	%		3,365		0.8	%		(5,294	)	-1.3	%		219,028		114.3	%		9,266		5.1	%
Borrowings		3,800		-			-		-			-		-			-		-			-		-
Shareholders' Equity		963		2.8	%		1,038		3.1	%		4,273		14.4	%		(3,443	)	-10.4	%		(223	)	-0.7	%

Page 40 of 54

Loans

The following table shows the composition of our loans by type of loan (including loans held for sale):

 Loan Composition

(Dollars in thousands)
	September 30, 2012					December 31, 2011
Type of Loan	Amount		Percentage			Amount		Percentage
Construction and land development	$	11,695		4.9	%	$	18,022		7.6	%
Commercial real estate - owner-occupied		69,410		29.3	%		70,153		30.0	%
Commercial real estate - non-owner-occupied		75,020		31.7	%		64,382		27.6	%
Residential real estate		32,120		13.6	%		32,609		14.0	%
All other real estate loans		7,764		3.3	%		2,321		1.0	%
Commercial and industrial loans		32,826		13.8	%		30,176		12.9	%
Agricultural loans		3,369		1.4	%		9,272		4.0	%
Municipal loans		2,352		1.0	%		2,393		1.0	%
Leases, net of unearned income		1,277		0.5	%		2,323		1.0	%
Consumer loans		1,194		0.5	%		2,018		0.9	%
Total loans	$	237,027		100.0	%	$	233,669		100.0	%

The table shows a $3.4 million increase in loans outstanding since December 31, 2011—primarily due new commercial real estate loans, partially offset by loan pay-downs.

Asset Quality

Non-accrual loans (including loans held for sale) totaled $7.5 million at September 30, 2012, as compared to $8.6 million at December 31, 2011 and $7.2 million at September 30, 2011 (before the Santa Lucia merger).

Management classifies loans as non-accrual when principal or interest is past due 90 days or more 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 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.

Restructured loans are those loans with concessions in interest rates or repayment terms due to financial difficulties of the borrower.  Foreclosed real estate represents real estate acquired in satisfaction of loans through foreclosure or other means and is carried on an individual asset basis at the lower of the recorded investment in the related loan or the estimated fair value of the property, less selling expenses.

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The following table presents information about the Company’s non-performing loans, including quality ratios as of September 30, 2012; December 31, 2011 and September 30, 2011:

 Non-Performing Assets*

(in thousands)	September 30 2012			December 31 2011			September 30 2011
Loans in nonaccrual status:
Nonaccrual loans held for investment	$	5,941		$	6,557		$	2,472
Nonaccrual loans held for sale**		1,580			1,997			4,731
Loans past due 90 days or more and accruing		127			-			-
Restructured loans in accruing status		711			-			-
Total nonperforming loans		8,359			8,554			7,203
Foreclosed real estate		1,113			4,626			1,489
Total nonperforming assets	$	9,472		$	13,180		$	8,692
Real estate held by parent company		350			400			400
Total nonperforming loans and other real estate owned	$	9,822		$	13,580		$	9,092
Allowance for loan and lease losses allocated to impaired loans	$	504		$	81		$	112
Allowance for loan and lease losses allocated to loans held for sale**		-			-			-
Allowance for loan and lease losses allocated to all other loans		3,596			3,245			3,052
Total allowance for loan and lease losses	$	4,100		$	3,326		$	3,164
Asset quality ratios:
Non-performing assets to total assets		2.14	%		2.84	%		3.70	%
Excluding loans held for sale**		1.79	%		2.43	%		1.76	%
Non-performing loans to total loans		3.53	%		3.66	%		6.04	%
Excluding loans held for sale**		2.90	%		2.85	%		2.26	%
Allowance for loan and lease losses to total loans		1.73	%		1.42	%		2.65	%
Excluding loans held for sale**		1.76	%		1.45	%		2.90	%
Allowance for loan and lease losses to total non-performing loans		49	%		39	%		44	%
Excluding non-performing loans held for sale**		60	%		51	%		128	%

 *  Table combines bank and non-bank subsidiaries

 ** Loans held for sale consists of all loans held at Mission Asset Management, Inc. and SBA-guaranteed loans held for sale at Mission Community Bank.  Loans held for sale are carried at fair value.

For comparison, ratios in the table above are presented both with and without loans held for sale.  Although declining, the level of non-performing loans continues to be high by historical standards, due to the significant downturn in the economy and reduction in real estate collateral values over the past three years.  The $8.4 million of non-performing loans as of September 30, 2012, includes $911 thousand of SBA-guaranteed loans, which are supported by $817 thousand of SBA loan guarantees.  The remaining $7.5 million of non-performing loans are loans which management has determined to be impaired.  A determination of impairment is one of expected payment nonperformance, but not necessarily probability of loss.  Based on a loan-by-loan analysis of collateral values or the present value of estimated cash flows, the extent of the impairment of those impaired loans in excess of amounts already charged off is estimated to be $504 thousand, and has been provided in the allowance for loan and lease losses.

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Nonperforming assets (which are comprised of nonperforming loans and foreclosed real estate) at September 30, 2012 were $9.8 million, a decrease of $3.8 million from the $13.6 million balance at December 31, 2011.  Foreclosed real estate represents real property taken by the Bank from the borrower either through foreclosure or through a deed in lieu of foreclosure, and is carried at the lesser of cost or fair market value, less estimated selling costs.

The following table provides a summary of the change in the balance of other real estate owned for the nine months ended September 30, 2012:

Other Real Estate Owned
(dollars in thousands)	Nine Months Ended September 30, 2012
Balance of foreclosed real estate at beginning of year, as previously reported	$	4,626
Adjustment to fair value of other real estate acquired in Santa Lucia merger		194
Real estate held by parent company		400
Total other real estate owned at beginning of year, as adjusted	$	5,220
Foreclosures during the period		1,461
Sales of other real estate to related party		(1,697	)
Sales of other real estate to unrelated parties		(2,772	)
Writedowns on other real estate, net of gains on sale		(749	)
Balance of other real estate owned at end of period	$	1,463

Potential Problem Loans

At September 30, 2012, the Company had approximately $7.7 million of loans that were not categorized as non-performing but for which known information about the borrower’s financial condition caused management to have concern about the ability of the borrower to comply with the repayment terms of the loan.

Potential problem loans were identified through the ongoing loan review process and are subject to continuing management attention.  Management has provided in the allowance for loan and lease losses for potential losses related to these loans, based on an evaluation of current market conditions, loan collateral, other secondary sources of repayment and cash flow generation.

While credit quality as of September 30, 2012, as measured by loan delinquencies and by the Company’s internal asset quality rating system, is stable and well managed, there can be no assurances that continuing economic weakness will not lead to new problem loans in future periods.  A further decline in economic conditions in the Company’s market area or other factors could adversely impact individual borrowers or the loan portfolio in general.  The Company has well defined underwriting standards and expects to continue with prompt collection efforts, but economic uncertainties or changes may cause one or more borrowers to experience problems in the coming months.

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Allowance for Loan and Lease Losses

The allowance for loan and lease losses (“ALLL”) at September 30, 2012 totaled $4.100 million, an increase of $774 thousand from December 31, 2011.  The ratio of ALLL to total loans at September 30, 2012, was 1.73%, as compared with 1.42% at December 31, 2011.  At September 30, 2012 and 2011, the ratio of ALLL to total non-performing loans was 49% and 44%, respectively.

The following table provides an analysis of the changes in the ALLL for the three-month and nine-month periods ended September 30, 2012 and 2011:

 Allowance for Loan and Lease Losses

(dollars in thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Balance at beginning of period	$	3,781		$	3,182		$	3,326		$	3,198
Provision for loan losses		225			300			675			300
Loans charged off		(22	)		(360	)		(144	)		(460	)
Recoveries of previous charge-offs		116			42			243			126
Net (charge-offs) recoveries		94			(318	)		99			(334	)
Balance at end of period	$	4,100		$	3,164		$	4,100		$	3,164
Allowance for loan losses as a percentage of:
Period end loans, including loan held for sale		1.73	%		2.65	%		1.73	%		2.65	%
Period end loans, excluding loans held for sale*		1.76	%		2.90	%		1.76	%		2.90	%
Total non-performing loans, including loans held for sale		49	%		44	%		49	%		44	%
Non-performing loans, excluding loans held for sale*		60	%		128	%		60	%		128	%
As a percentage of average loans (annualized):
Net charge-offs (recoveries)		-0.17	%		1.07	%		-0.06	%		0.38	%
Provision for loan losses		0.40	%		1.01	%		0.39	%		0.34	%
Total loans, including loans held for sale	$	237,027		$	119,226		$	237,027		$	119,226
Loans excluding loans held for sale		233,537			109,275			233,537			109,275

 * Loans held for sale consists of all loans held at Mission Asset Management, Inc. and SBA-guaranteed loans held for sale at Mission Community Bank.  Loans held for sale are carried at fair value.

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 loss experience for each type of loan, the volume and type of lending conducted, the amount of identified potential loss associated with specific nonperforming loans, collateral values, regulatory policies, general economic conditions, and other factors related to the collectability of loans in the portfolio.

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Based on its quarterly review, management believes that the allowance for loan losses at September 30, 2012, 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 September 30, 2012, this reserve totaled $406 thousand, up from $381 thousand as of December 31, 2011.  The reserve for undisbursed loan commitments is included in other liabilities in the consolidated balance sheet.

Investments

All securities in the Bank’s investment portfolio are considered to be investment grade.  The portfolio consists of a mixture of fixed-rate US agency securities (29%), fixed-rate mortgage-backed securities (35%), floating-rate mortgage-backed securities (13%), fixed-rate tax-exempt municipal securities (11%), and other fixed-rate securities (9%) and floating-rate securities (3%).   The weighted average life of the portfolio, based on projected prepayment speeds, is 3.4 years, with a duration of 3.2 years.

Deposits

Deposits are the primary source of funding for lending and investing needs.  Total deposits were $389.4 million as of September 30, 2012, as compared with $410.6 million at December 31, 2011, and $191.5 million at September 30, 2011.

The Bank generally prices interest-bearing deposits at or slightly above the median rate by classification based on periodic interest rate surveys in the local market.  Deposit rates are then adjusted, using a deposit pricing model, to balance the cost of funds, funding needs and other asset and liability considerations.  The Net Interest Analysis and Rate/Volume Analysis earlier in this Discussion contain information regarding the average rates paid on deposits for the first nine months and third quarter of 2012 and 2011.

The Bank participates in the Certificate of Deposit Account Registry Service (“CDARS”) program.  This program permits the Bank’s customers to place their certificates of deposit at one institution—Mission Community Bank—and have those deposits fully-insured by the FDIC.  The CDARS program acts as a clearinghouse, matching deposits from one institution in the CDARS network of approximately 3,000 banks with other network banks (in increments of less than the per-depositor FDIC insurance limit), so funds that a customer places with the Bank essentially remain on the Bank’s balance sheet.  The CDARS program has become very attractive since mid-year 2008 as local depositors sought out safety, with yield often a secondary concern.  As of September 30, 2012, the Bank had issued $32.9 million of certificates of deposit to local customers through the CDARS program, as compared with $47.2 million as of December 31, 2011, and $41.1 million as of September 30, 2011.

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Borrowings

In addition to the Company’s junior subordinated debt securities, the Bank has a secured borrowing facility through the Federal Home Loan Bank of San Francisco (“FHLB”).  As of September 30, 2012 the Bank had $3.8 million of outstanding borrowings from the FHLB, as compared with no FHLB borrowings as of December 31, 2011.

Capital

Total shareholders’ equity has increased by $7.404 million or 26.0%, from December 31, 2011, to September 30, 2012.  The increase was primarily due to additional paid-in capital transferred from the warrant liability for warrants cancelled during 2012.

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 September 30, 2012, and December 31, 2011:

Mission Community Bank

Capital Ratios						Amount of Capital Required
(dollars in thousands)	Actual					To Be Well-Capitalized					To Be Adequately Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2012:
Total Capital (to Risk-Weighted Assets)	$	39,809		13.74	%	$	28,963		10.0	%	$	23,171		8.0	%
Tier 1 Capital (to Risk-Weighted Assets)	$	36,178		12.49	%	$	17,378		6.0	%	$	11,585		4.0	%
Tier 1 Capital (to Average Assets)	$	36,178		8.23	%	$	21,976		5.0	%	$	17,581		4.0	%

As of December 31, 2011:
Total Capital (to Risk-Weighted Assets)	$	36,437	13.25	%	$	27,491	10.0	%	$	21,992	8.0	%
Tier 1 Capital (to Risk-Weighted Assets)	$	32,997	12.00	%	$	16,494	6.0	%	$	10,996	4.0	%
Tier 1 Capital (to Average Assets)	$	32,997	8.19	%	$	20,145	5.0	%	$	16,116	4.0	%

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.  Cash and cash equivalents (primarily federal funds sold) are the primary means for providing immediate liquidity.  The Company had $21.2 million in cash and cash equivalents as of September 30, 2012, as compared with $61.6 million as of December 31, 2011, as a result of deploying surplus cash into the securities portfolio.

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In order to meet the Bank’s liquidity requirements, the Bank endeavors to maintain an appropriate ratio of loans to deposits, and to maintain sufficient off-balance-sheet sources of funds which may be drawn upon when needed.  As of September 30, 2012, the Company’s loans-to-deposits ratio was 60%, as compared with 56% as of December 31, 2011.  This ratio had been declining over the past several quarters, as demand for quality credits has been weak through the economic downturn.  However, new loans advanced in the third quarter, combined with a roll-off of certificates of deposit, have combined to increase this ratio as of the end of 2012’s third quarter. A low loan-to-deposit ratio indicates that the Bank has liquidity in place to meet potential needs for loan funding or deposit withdrawals.  The Bank’s sources of funding ratio, which measures available off-balance-sheet sources of funds as a percentage of total on-balance-sheet assets, was 42.5% as of September 30, 2012, as compared with 33.8% as of December 31, 2011.

One of the off-balance-sheet sources of funds is potential borrowing capacity through the FHLB.  FHLB borrowings are collateralized by loans and/or investments and can be structured over various terms ranging from overnight to ten years.  As of September 30, 2012, the Bank had $3.8 million of outstanding borrowings from the FHLB.  Interest rates and terms for FHLB borrowings are generally more favorable than the rates for similar term brokered certificates of deposit or for federal funds purchased.  The Bank has the potential (on a secured basis) to borrow from the FHLB up to approximately 25 percent of its total assets.  Based on this limitation and loans and securities pledged as of September 30, 2012, up to an additional $86.8 million could be borrowed from the FHLB if needed.  FHLB borrowings may be used from time to time when needed as part of the Bank’s normal liquidity management to fund asset growth on a cost-effective basis.  The Bank has adequate loans and securities to pledge as collateral should it need additional liquidity that cannot be funded by deposits.

The Bank also has the ability to access the Federal Reserve Board’s “Discount Window” for additional secured borrowing should the need arise.

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 sheets.

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

 Loan Commitments

(in thousands)	September 30,		December 31,		September 30,
	2012		2011		2011
Commitments to Extend Credit	$	41,334	$	38,702	$	20,547
Standby Letters of Credit		3,179		2,444		461
	$	44,513	$	41,146	$	21,008

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.  Management has established a reserve for undisbursed loan commitments.  As of September 30, 2012, this reserve totaled $406 thousand ($381 thousand as of December 31, 2011) and is included in other liabilities in the consolidated balance sheets.

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 investment 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 levels 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 endeavors 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 and Santa Barbara Counties continue to have unemployment rates (7.4% and 7.1%, respectively, as of September 2012), that are not materially lower than the nationwide rate of 7.8%, but are significantly below the California statewide seasonally-adjusted rate of 10.2%.  Unemployment in Ventura County, at 8.8%, is above the national rate but is still well below the state as a whole.  San Luis Obispo County’s rate has trended down from a high of 10.4%, while Santa Barbara County’s rate peaked at 10.5% and Ventura County’s rate had been as high as 11.3%.  The peak unemployment rate for each of these three counties was reached in January 2010.  As unemployment increased during the Great Recession, real estate values declined significantly and, after several years of strong appreciation, residential and commercial sale activity—and especially construction activity—slowed dramatically.  Although the economy, in general, and real estate, in particular, appears to be improving slowly, there can be no assurance that growth in the local economy will accelerate or that real estate values will return to pre-2006 levels in the near term.

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Item 3.               Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4.               Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports it files or submits 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 the Company in the reports that it files under the Exchange Act is accumulated and communicated to management, including the principal executive officer and the principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision of our management, including our principal executive officer and principal financial officer, the Company conducted, as of September 30, 2012, an assessment of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on that evaluation, our principal executive officer and the principal financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2012.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2012, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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.               Mine Safety Disclosures

Not applicable.

Item 5.               Other Information

None.

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Item 6.               Exhibits

Exhibit Index:

Exhibit #
2.1	Plan of Reorganization and Agreement of Merger dated as of October 4, 2000 (A)
3.1	Restated Articles of Incorporation  (I)
3.2	Certificate of Amendment to Articles of Incorporation (L)
3.3	Certificate of Amendment to Articles of Incorporation (Y)
3.4	Amended and Restated Bylaws  (DD)
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	Indenture dated as of October 14, 2003 by and between Registrant and Wells Fargo Bank, National Association, as trustee (E)
4.5	Declaration of Trust of Mission Community Capital Trust I dated  October 10, 2003 (E)
4.6	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)
4.7	Guarantee Agreement dated October 14, 2003 between Registrant, as Guarantor, and Wells Fargo Bank, National Association, as Guarantee Trustee (E)
4.8	Certificate of Determination for Series D Preferred Stock (R)
4.9	Form of Common Stock Purchase Warrant (Z)
4.10	Form of Warrant Agreement with Computershare Trust Company, N.A. for warrants issued pursuant to subscription rights (AA)
4.11	Form of Warrant Issued to Replace Warrants Issued in 2010 Private Placement (EE)
4.12	Form of Warrant Issued to Replace Warrants Issued in 2011 Private Placement (EE)
4.13	Amended and Restated Declaration of Trust, dated as of April 28, 2006, of Santa Lucia Bancorp (CA) Capital Trust (FF)
4.14	Indenture dated as of April 28, 2006, between Wells Fargo Bank, National Association, as Trustee, and Santa Lucia Bancorp (FF)
4.15	First Supplemental Indenture dated as of October 21, 2011 between Wells Fargo Bank, National Association, as trustee, and Mission Community Bancorp (FF)
4.16	Amendment No. 1 to Warrant Agreement between the Company and Computershare Trust Company, N.A. (GG)
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 – Arroyo Grande (B)
10.5	1998 Stock Option Plan, as amended (B)
10.6	Lease Agreement – 569 Higuera, San Luis Obispo (D)
10.7	Intentionally omitted
10.8	Lease Agreement – 3480  S. Higuera, San Luis Obispo (F)
10.9	Salary Protection Agreement — Mr. Pigeon (G)
10.10	Intentionally omitted

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Exhibit #
10.11	Employment Agreement dated June 3, 2007 between Brooks Wise and Mission Community Bank (J)
10.12	Financial Advisory Services Agreement dated January 4, 2007 between the Company and Seapower Carpenter Capital, Inc. (K)
10.13	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)
10.14	Lease Agreement – 1670 South Broadway, Santa Maria (O)
10.15	Mission Community Bancorp 2008 Stock Incentive Plan (P)
10.16	Amendment No. 1 to Second Amended and Restated Employment Agreement dated December 29, 2008 by and among Mission Community Bancorp, Mission Community Bank, and Anita M. Robinson (Q)
10.17	Amendment No. 1 to Employment Agreement dated December 29, 2008 by and among Mission Community Bancorp, Mission Community Bank, and Brooks W. Wise (Q)
10.18	Amended and Restated Salary Protection Agreement dated December 29, 2008 by and between Mission Community Bank and Ronald B. Pigeon (Q)
10.19	Letter Agreement dated January 9, 2009 between Mission Community Bancorp and the United States Department of Treasury, which includes the Securities Purchase Agreement—Standard Terms attached thereto, with respect to the issuance and sale of the Series D Preferred Stock (R)
10.20	Side Letter Agreement dated January 9, 2009 amending the Stock Purchase Agreement between Mission Community Bancorp and the Department of the Treasury (R)
10.21	Side Letter Agreement dated January 9, 2009 between Mission Community Bancorp and The Department of the Treasury regarding maintenance of two open seats on the Board of Directors (R)
10.22	Side Letter Agreement dated January 9, 2009 between Mission Community Bancorp and The Department of the Treasury regarding CDFI status (R)
10.23	Securities Purchase Agreement dated December 22, 2009 between the Company and Carpenter Fund Manager GP, LLC (“Securities Purchase Agreement”) (U)
10.24	Amendment No. 1 to Securities Purchase Agreement dated March 17, 2010 (V)
10.25	Amendment No. 2 to Employment Agreement of Brooks Wise dated March 22, 2010 (W)
10.26	Amendment No. 2 to Securities Purchase Agreement dated March 17, 2010 (X)
10.27	Employment Agreement dated July 1, 2010 between James W. Lokey and Mission Community Bancorp (Y)
10.28	Agreement and Plan of Merger dated as of June 24, 2011 by and among Carpenter Fund Manager GP, LLC; Mission Community Bancorp; Mission Community Bank; Santa Lucia Bancorp and Santa Lucia Bank (BB)
10.29	2011 Equity Incentive Plan (CC)
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
101	Interactive Data Files
(A) Included in the Company’s Form 8-K filed on December 18, 2000, and incorporated by reference herein. (B) Included in the Company’s Form 10-KSB filed on April 2, 2001, and incorporated by reference herein. (C) Included in the Company’s Form 10-QSB filed August 12, 2002, and incorporated by reference herein. (D) Included in the Company’s Form 10-QSB filed on November 12, 2002, and incorporated by reference herein. (E) Included in the Company’s Form 8-K filed on October 21, 2003, and incorporated by reference herein. (F) Included in the Company’s Form 10-QSB filed on August 10, 2004, and incorporated by reference herein. (G) Included in the Company’s Form 8-K filed on January 19, 2005, and incorporated by reference herein. (H) Intentionally omitted

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(I) Included in the Company’s Form 10-QSB filed on August 14, 2006, and incorporated by reference herein.

(J) Included in the Company’s Form 8-K filed on June 13, 2007, and incorporated by reference herein.

(K) Included in the Form SB-2 Registration Statement of the Company filed on June 13, 2007, and incorporated by reference herein.

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

(M) Included in the Company’s Form 8-K filed on August 14, 2007, and incorporated by reference herein.

(N) Included in the Company’s Form 8-K filed on October 23, 2007, and incorporated by reference herein.

(O) Included in the Company’s Form 10-KSB filed on March 28, 2008, and incorporated by reference herein.

(P) Included in the Company’s Form 10-Q filed on May 15, 2008, and incorporated by reference herein.

(Q)Included in the Company’s Form 8-K filed on December 30, 2008, and incorporated by reference herein.

(R)Included in the Company’s Form 8-K filed on January 14, 2009, and incorporated by reference herein.

(S)Included in the Company’s Form 10-Q filed on August 14, 2009, and incorporated by reference herein.

(T)Included in the Company’s Form 10-K filed on March 16, 2009, and incorporated by reference herein.

(U)Included in the Company’s From 8-K filed on December 24, 2009, and incorporated by reference herein.

(V)Included in the Company’s Form 8-K filed on March 22, 2010, and incorporated by reference herein.

(W)Included in the Company’s Form 8-K filed on March 26, 2010, and incorporated by reference herein.

(X)Included in the Company’s Form 8-K filed on June 1, 2010, and incorporated by reference herein.

(Y)Included in the Company’s Form 8-K filed on August 2, 2010, and incorporated by reference herein.

(Z)Included in the Company’s Form S-1 Registration Statement filed on August 31, 2010, and incorporated by reference herein.

(AA)Included in Amendment No. 1 to the Company’s Form S-1 Registration Statement filed on October 1, 2010, and incorporated by reference herein.

(BB)Included in the Company’s Form 8-K filed on June 27, 2011, and incorporated by reference herein.

(CC)Included in the Company’s Form 8-K filed on September 30, 2011, and incorporated by reference herein.

(DD)Included in the Company's Form 8-K filed on March 29, 2012, and incorporated herein by reference.

(EE)Included in the Company's Form 8-K on filed on March 26, 2012, and incorporated herein by reference.

(FF)Included in the Company's Form 8-K filed on October 27, 2011, and incorporated herein by reference.

(GG)Included in the Company's Form 8-K filed on September 7, 2012, and incorporated herein by reference.

Page 53 of 54

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/ James W. Lokey

JAMES W. LOKEY

Chairman and Chief Executive Officer

Dated: November 7, 2012

By: /s/ Mark R. Ruh

MARK R. RUH

Executive Vice President and Chief Financial Officer

Dated: November 7, 2012

Page 54 of 54

EX-31.1

Exhibit 31.1

SARBANES-OXLEY ACT SECTION 302 CERTIFICATION

OF CHIEF EXECUTIVE OFFICER

I, James W. Lokey, 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 issuer as of, and for, the periods presented in this report;

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

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

Date:  November 7, 2012

/s/ James W. Lokey

Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

SARBANES-OXLEY ACT SECTION 302 CERTIFICATION

OF CHIEF FINANCIAL OFFICER

I, Mark R. Ruh, 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 issuer as of, and for, the periods presented in this report;

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

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

Date:  November 7, 2012

/s/ Mark R. Ruh

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 September 30, 2012, I, James W. Lokey, Chairman 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 September 30, 2012, 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 September 30, 2012, fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  November 7, 2012

By:	/s/ James W. Lokey
	James W. Lokey
	Chairman 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 September 30, 2012, I, Mark R. Ruh, 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 September 30, 2012, 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 September 30, 2012, fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  November 7, 2012

By:	/s/ Mark R. Ruh
	Mark R. Ruh
	Executive Vice President
	and Chief Financial Officer

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Note 5 - Credit Quality and the Allowance for Loan and Lease Losses (Detail) - Changes in the Allowance for Loan and Lease Losses (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Balance at beginning of period	$ 3,781	$ 3,182	$ 3,326	$ 3,198
Provision for loan and lease losses charged to expense	225	300	675	300
Loans charged off	(22)	(360)	(144)	(460)
Recoveries on loans previously charged off	116	42	243	126
Balance at end of period	$ 4,100	$ 3,164	$ 4,100	$ 3,164

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Note 9 - Business Combination (Detail) - Identifiable Assets Acquired and Liabilities Assumed (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Financial assets--
Cash and cash equivalents	$ 53,998
Investment securities	21,487
Loans	122,374
Federal Home Loan Bank and other stocks	1,574
Company-owned life insurance	4,690
Other financial assets	1,024
Total financial assets	205,147
Premises and equipment	13,591
Other real estate owned	2,742
Identifiable intangible assets	3,237
Other assets	289
Total assets	225,006
Financial liabilities:
Deposits	(220,102)
Junior subordinated debt securities	(2,380)
Other financial liabilities	(162)
Total financial liabilities	(222,644)
Other liabilities	(325)
Total liabilities	(222,969)
Identifiable net assets acquired / net contribution from shareholder	$ 2,037

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Note 8 - Fair Value Measurement (Detail) - Fair Value Assumptions (USD $)			12 Months Ended
	Oct. 22, 2021	Dec. 31, 2011	Dec. 31, 2011 2011 Warrants [Member]	Dec. 31, 2011 June 2010 Warrants [Member]	Dec. 31, 2011 April 2010 Warrants [Member]
Outstanding common stock warrants subject to fair value accounting (in Dollars)		$ 5,184,000	$ 1,541,849	$ 3,000,000	$ 2,000,000
Warrant exercise price (in Dollars per Item)	4.54		4.54	5.00	5.00
Market price of common stock (in Dollars per share)			$ 3.35	$ 3.35	$ 3.35
Average risk-free interest rate			1.89%	0.36%	0.36%
Average expected volatility			33.57%	44.01%	45.07%
Average expected life (in years)			9 years 295 days	3 years 167 days	3 years 116 days
Expected dividend yield			0.00%	0.00%	0.00%

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Note 9 - Business Combination (Detail) - Pro Forma Information For The Acquisition (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2011
Net (loss)	$ (577)	$ (756)
Basic and diluted loss per share (in Dollars per share)	$ (0.12)	$ (0.21)
Interest Income [Member]
Pro Forma Revenue	5,564	16,919
Non-Interest Income [Member]
Pro Forma Revenue	$ 790	$ 2,787

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Note 6 - Common and Preferred Stock and Earnings (Loss) per Share (Detail) - Activity in the Company’s Outstanding Warrants (Warrant [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Warrant [Member]
Outstanding January 1, 2011	7,290,521	5,748,672
Outstanding January 1, 2011 (in Dollars per share)	$ 4.90	$ 5.00
Outstanding	7,308,452	7,290,521
Outstanding weighted average exercise price (in Dollars per share)	$ 5.00	$ 4.90
Warrants granted	6,659,780	2,202,641
Warrants granted weighted average exercise price (in Dollars per share)	$ 5.00	$ 4.54
Warrants cancelled in 2012	(6,541,849)
Warrants cancelled in 2012 (in Dollars per share)	$ 4.89
Warrants exercised	(100,000)	(660,792)
Warrants exercised weighted average exercise price (in Dollars per share)	$ 5.00	$ 4.54

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Note 3 - Investment Securities (Detail) - Maturities of Investment Securities (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Amortized Cost [Member]
Within one year	$ 6,939
Due in one year to five years	32,979
Due in five years to ten years	39,207
Due in greater than ten years	65,647
	144,772
Fair Value [Member]
Within one year	6,963
Due in one year to five years	33,034
Due in five years to ten years	39,877
Due in greater than ten years	67,192
	$ 147,066

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Note 9 - Business Combination (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Recognized amounts of identifiable assets acquired and liabilities assumed:
Financial assets--
Cash and cash equivalents	$	53,998
Investment securities		21,487
Loans		122,374
Federal Home Loan Bank and other stocks		1,574
Company-owned life insurance		4,690
Other financial assets		1,024
Total financial assets		205,147
Premises and equipment		13,591
Other real estate owned		2,742
Identifiable intangible assets		3,237
Other assets		289
Total assets	$	225,006
Financial liabilities:
Deposits		(220,102	)
Junior subordinated debt securities		(2,380	)
Other financial liabilities		(162	)
Total financial liabilities		(222,644	)
Other liabilities		(325	)
Total liabilities	$	(222,969	)
Identifiable net assets acquired / net contribution from shareholder	$	2,037

Business Acquisition, Pro Forma Information [Table Text Block]

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
(in thousands)	2011			2011
Interest income	$	5,564		$	16,919
Non-interest income		790			2,787
Net (loss)		(577	)		(756	)
Basic and diluted loss per share	$	(0.12	)	$	(0.21	)

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Note 8 - Fair Value Measurement (Detail) - Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Impaired loans, net of specific reserves--
Current Period Gains (Losses)	$ (438)	$ (369)
Non-financial assets measured at fair value on a non-recurring basis:
Current Period Gains (Losses)	(458)	(113)
Construction and Land Development Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired loans, net of specific reserves--
Fair Value	500
Construction and Land Development Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Impaired loans, net of specific reserves--
Fair Value	500
Construction and Land Development Loans [Member]
Impaired loans, net of specific reserves--
Current Period Gains (Losses)	(86)	(21)
Commercial Real Estate Owner Occupied [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired loans, net of specific reserves--
Fair Value	1,893
Commercial Real Estate Owner Occupied [Member] | Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Impaired loans, net of specific reserves--
Fair Value	1,893
Commercial Real Estate Non Owner Occupied [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Impaired loans, net of specific reserves--
Fair Value	0
Commercial Real Estate Non Owner Occupied [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Impaired loans, net of specific reserves--
Fair Value	0
Commercial Real Estate Non Owner Occupied [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired loans, net of specific reserves--
Fair Value	686
Commercial Real Estate Non Owner Occupied [Member] | Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Impaired loans, net of specific reserves--
Fair Value	686
Commercial Real Estate Non Owner Occupied [Member]
Impaired loans, net of specific reserves--
Current Period Gains (Losses)	(79)	(116)
Residential Real Estate Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired loans, net of specific reserves--
Fair Value	684
Residential Real Estate Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Impaired loans, net of specific reserves--
Fair Value	684
Residential Real Estate Loans [Member]
Impaired loans, net of specific reserves--
Current Period Gains (Losses)	(213)	(87)
All Other Real Estate Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Impaired loans, net of specific reserves--
Fair Value	0
All Other Real Estate Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Impaired loans, net of specific reserves--
Fair Value	0
All Other Real Estate Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired loans, net of specific reserves--
Fair Value	0
All Other Real Estate Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Impaired loans, net of specific reserves--
Fair Value	0
All Other Real Estate Loans [Member]
Impaired loans, net of specific reserves--
Current Period Gains (Losses)	0
Commercial and Industrial Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired loans, net of specific reserves--
Fair Value	990	521
Commercial and Industrial Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Impaired loans, net of specific reserves--
Fair Value	990	521
Commercial and Industrial Loans [Member]
Impaired loans, net of specific reserves--
Current Period Gains (Losses)	(60)	(145)
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired loans, net of specific reserves--
Fair Value	4,753	521
Non-financial assets measured at fair value on a non-recurring basis:
Fair Value	1,463	5,220
Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Impaired loans, net of specific reserves--
Fair Value	4,753	521
Non-financial assets measured at fair value on a non-recurring basis:
Fair Value	$ 1,463	$ 5,220

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Note 5 - Credit Quality and the Allowance for Loan and Lease Losses (Detail) - Aging Analysis of the Loan Portfolio (USD $)	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Recorded Balance of Loans Past Due:
Total Loans	$ 233,537,000	$ 229,949,000
Accruing Troubled Debt Restructurings			7,000
Construction and Land Development Loans [Member]
Recorded Balance of Loans Past Due:
30-59 Days		492,000
60-89 Days	268,000
90+ Days		1,323,000
Total Past Due	268,000	1,815,000
Loans in Current Payment Status	9,872,000	15,632,000
Total Loans	10,140,000	17,447,000
Loans 90+ Days Past Due and Accruing1	0	0
Accruing Troubled Debt Restructurings	0	0
Loans in Non-accrual Status	317,000	2,031,000
Commercial Real Estate Owner Occupied [Member]
Recorded Balance of Loans Past Due:
30-59 Days	59,000	594,000
60-89 Days	1,000,000
90+ Days	771,000	1,033,000
Total Past Due	1,830,000	1,627,000
Loans in Current Payment Status	66,594,000	71,838,000
Total Loans	68,424,000	73,465,000
Loans 90+ Days Past Due and Accruing1	0	0
Accruing Troubled Debt Restructurings	0	0
Loans in Non-accrual Status	2,267,000	1,429,000
Commercial Real Estate Non Owner Occupied [Member]
Recorded Balance of Loans Past Due:
90+ Days		21,000
Total Past Due		21,000
Loans in Current Payment Status	75,182,000	59,388,000
Total Loans	75,182,000	59,409,000
Loans 90+ Days Past Due and Accruing1	0	0
Accruing Troubled Debt Restructurings	0	0
Loans in Non-accrual Status	866,000	122,000
Residential Real Estate Loans [Member]
Recorded Balance of Loans Past Due:
30-59 Days	158,000
60-89 Days		423,000
90+ Days	185,000	147,000
Total Past Due	343,000	570,000
Loans in Current Payment Status	30,747,000	30,958,000
Total Loans	31,090,000	31,528,000
Loans 90+ Days Past Due and Accruing1	0	0
Accruing Troubled Debt Restructurings	0	0
Loans in Non-accrual Status	851,000	1,296,000
All Other Real Estate Loans [Member]
Recorded Balance of Loans Past Due:
Loans in Current Payment Status	7,764,000	2,033,000
Total Loans	7,764,000	2,033,000
Loans 90+ Days Past Due and Accruing1	0	0
Accruing Troubled Debt Restructurings	0	0
Loans in Non-accrual Status	32,000
Commercial and Industrial Loans [Member]
Recorded Balance of Loans Past Due:
30-59 Days	427,000	549,000
60-89 Days	57,000	220,000
90+ Days	265,000	627,000
Total Past Due	749,000	1,396,000
Loans in Current Payment Status	37,462,000	37,937,000
Total Loans	38,211,000	39,333,000
Loans 90+ Days Past Due and Accruing1	120,000	0
Accruing Troubled Debt Restructurings	711,000	0
Loans in Non-accrual Status	1,608,000	2,107,000
Consumer and All Other Loans and Lease Financing [Member]
Recorded Balance of Loans Past Due:
30-59 Days	174,000
Total Past Due	174,000
Loans in Current Payment Status	2,552,000	6,734,000
Total Loans	2,726,000	6,734,000
Loans 90+ Days Past Due and Accruing1	7,000	0
Accruing Troubled Debt Restructurings	0	0
Total [Member]
Recorded Balance of Loans Past Due:
30-59 Days	818,000	1,635,000
60-89 Days	1,325,000	643,000
90+ Days	1,221,000	3,151,000
Total Past Due	3,364,000	5,429,000
Loans in Current Payment Status	230,173,000	224,520,000
Total Loans	233,537,000	229,949,000
Loans 90+ Days Past Due and Accruing1	127,000	0
Accruing Troubled Debt Restructurings	711,000	0
Loans in Non-accrual Status	$ 5,941,000	$ 6,985,000

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Note 4 - Loans (Detail) - Loans Held for Sale (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Loans held for sale carrying amount (in Dollars)	$ 3,490	$ 3,720
Loans held for sale percentage of total loans	1.50%	1.60%
Commercial Loan [Member]
Loans held for sale carrying amount (in Dollars)	278	115
Loans held for sale percentage of total loans	0.10%	0.10%
Real Estate Loans [Member]
Loans held for sale carrying amount (in Dollars)	1,656	3,030
Loans held for sale percentage of total loans	0.70%	1.30%
Construction and Land Development Loans [Member]
Loans held for sale carrying amount (in Dollars)	$ 1,556	$ 575
Loans held for sale percentage of total loans	0.70%	0.20%

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Note 8 - Fair Value Measurement (Detail) - The Estimated Fair Value of Financial Instruments (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financial Assets:
Cash and due from banks	$ 21,197	$ 61,621
Cash and due from banks	21,197	61,621
Interest-bearing deposits in other banks	5,176	3,592
Interest-bearing deposits in other banks	5,176	3,592
Investment securities	147,066	128,310
Investment securities	147,066	128,310
Loans held for sale	3,490	3,720
Loans held for sale	3,490	3,720
Loans, net of allowance for loan and lease losses	229,437	226,623
Loans, net of allowance for loan and lease losses	225,338	224,721
Federal Home Loan Bank and other stocks	6,699	3,926
Federal Home Loan Bank and other stocks	6,699	3,926
Accrued interest receivable	1,353	1,450
Accrued interest receivable	1,353	1,450
Financial Liabilities:
Deposits	389,408	410,574
Deposits	389,641	411,323
Other borrowings	3,800
Other borrowings	3,800
Junior subordinated debt securities	5,576	5,491
Junior subordinated debt securities	4,188	4,527
Accrued interest payable	140	330
Accrued interest payable	140	330
Warrant liability		5,184
Warrant liability		$ 5,184

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Note 6 - Common and Preferred Stock and Earnings (Loss) per Share (Detail) - Calculation of Earnings (Loss) Per Common Share (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net income (loss)	$ 760	$ (1,001)	$ 451	$ (1,483)
Net income (loss) attributable to common stock	609	(1,065)	(49)	(1,675)
Average common shares outstanding (in Shares)	7,855,066	7,094,274	7,792,292	7,094,274
Average common shares used for diluted EPS (in Shares)	7,855,066	7,094,274	7,792,292	7,094,274
Basic earnings (loss) per common share (in Dollars per share)	$ 0.08	$ (0.15)	$ (0.01)	$ (0.24)
Diluted earnings (loss) per common share (in Dollars per share)	$ 0.08	$ (0.15)	$ (0.01)	$ (0.24)
Non-Convertible Subsidiary Issued-Preferred [Member]
Net income (loss)	151		500
TARP Preferred (Series D) [Member]
Net income (loss)		64		192
Preferred Stock [Member]
Net income (loss)	$ 151	$ 64	$ 500	$ 192

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Note 1 - Basis of Presentation and Management Representations

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1 – Basis of Presentation and Management Representations

The unaudited consolidated financial statements include accounts of Mission Community Bancorp (“the Company”) and its subsidiaries, Mission Community Bank (“the Bank”) and Mission Asset Management, Inc. (“MAM”), 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-K for the year ended December 31, 2011, which was filed on March 30, 2012.

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 and nine-month periods ended September 30, 2012 and 2011 reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position and results of operations.

The Bank has been organized as a single reporting segment and operates five branches in the Central Coast area of California (in San Luis Obispo, Santa Barbara and Ventura counties, which include the cities of San Luis Obispo, Paso Robles, Atascadero, Arroyo Grande and Santa Maria).  In addition, the Bank operates a loan production office in San Luis Obispo, with a primary focus on Small Business Administration (“SBA”) lending, and a Food and Agriculture Division, operating through a loan production office in Oxnard, California.

The Bank’s primary source of revenue is providing real estate, commercial and industrial (including SBA-guaranteed loans) and agricultural loans to customers, who are predominately small and middle-market businesses and individuals.

The Bank’s deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to applicable legal limits.

Certain reclassifications have been made to prior period balances to conform to classifications in 2012, with no impact to previously reported net loss or shareholders’ equity.

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Note 5 - Credit Quality and the Allowance for Loan and Lease Losses (Detail) - Impaired Loans (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Jun. 30, 2012	Sep. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Impaired Loans With an Allowance Recorded	$ 2,169	$ 396
Impaired Loans With No Allowance Recorded	3,088	1,451
Total Loans Individually Evaluated For Impairment	5,257	1,847
Loans Collectively Evaluated For Impairment	191,394	182,205
Loans Acquired With Deteriorated Credit Quality	36,886	45,897
Total Loans Held for Investment	233,537	229,949
Impaired Loans With An Allowance Recorded	2,009	443
Impaired Loans With No Allowance Recorded	3,220	1,563
Total Loans Individually Evaluated For Impairment	5,229	2,006
Loans Collectively Evaluated For Impairment	191,394	182,205
Loans Acquired With Deteriorated Credit Quality	36,886	45,897
Total Loans Held for Investment	4,100	3,326	3,781	3,164	3,182	3,198
Impaired Loans With An Allowance Recorded	1,123	224
Impaired Loans With No Allowance Recorded	2,234	1,352
Total Loans Individually Evaluated For Impairment	3,357	1,576
Impaired Loans With An Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	57	0
Total Loans Individually Evaluated For Impairment	57	0
Unpaid Principal Balance [Member] | Construction and Land Development [Member]
Loans Collectively Evaluated For Impairment	7,079	11,617
Loans Acquired With Deteriorated Credit Quality	6,288	9,981
Total Loans Held for Investment	13,968	21,598
Loans Collectively Evaluated For Impairment	7,079	11,617
Loans Acquired With Deteriorated Credit Quality	6,288	9,981
Unpaid Principal Balance [Member] | Owner Occupied [Member]
Loans Collectively Evaluated For Impairment	49,524	57,980
Loans Acquired With Deteriorated Credit Quality	18,749	16,350
Total Loans Held for Investment	70,298	75,375
Loans Collectively Evaluated For Impairment	49,524	57,980
Loans Acquired With Deteriorated Credit Quality	18,749	16,350
Unpaid Principal Balance [Member] | Non Owner Occupied [Member]
Loans Collectively Evaluated For Impairment	62,865	42,406
Loans Acquired With Deteriorated Credit Quality	13,251	18,954
Total Loans Held for Investment	76,881	61,360
Loans Collectively Evaluated For Impairment	62,865	42,406
Loans Acquired With Deteriorated Credit Quality	13,251	18,954
Unpaid Principal Balance [Member] | Residential Real Estate [Member]
Loans Collectively Evaluated For Impairment	25,655	27,103
Loans Acquired With Deteriorated Credit Quality	6,498	5,129
Total Loans Held for Investment	33,054	32,232
Loans Collectively Evaluated For Impairment	25,655	27,103
Loans Acquired With Deteriorated Credit Quality	6,498	5,129
Unpaid Principal Balance [Member] | All Other Real Estate [Member]
Loans Collectively Evaluated For Impairment	7,764	2,033
Total Loans Held for Investment	7,764	2,033
Loans Collectively Evaluated For Impairment	7,764	2,033
Unpaid Principal Balance [Member] | Commerical and Industrial [Member]
Loans Collectively Evaluated For Impairment	35,964	34,519
Loans Acquired With Deteriorated Credit Quality	2,914	6,132
Total Loans Held for Investment	39,815	41,612
Loans Collectively Evaluated For Impairment	35,964	34,519
Loans Acquired With Deteriorated Credit Quality	2,914	6,132
Unpaid Principal Balance [Member] | Consumer and All Other Loans and Leases [Member]
Loans Collectively Evaluated For Impairment	2,543	6,547
Loans Acquired With Deteriorated Credit Quality	187	191
Total Loans Held for Investment	2,730	6,738
Loans Collectively Evaluated For Impairment	2,543	6,547
Loans Acquired With Deteriorated Credit Quality	187	191
Unpaid Principal Balance [Member]
Loans Collectively Evaluated For Impairment	191,394	182,205
Loans Acquired With Deteriorated Credit Quality	47,887	56,737
Total Loans Held for Investment	244,510	240,948
Loans Collectively Evaluated For Impairment	191,394	182,205
Loans Acquired With Deteriorated Credit Quality	47,887	56,737
No Allowance Recorded [Member] | Construction and Land Development [Member]
Impaired Loans With An Allowance Recorded	86
No Allowance Recorded [Member] | Non Owner Occupied [Member]
Impaired Loans With An Allowance Recorded	79
No Allowance Recorded [Member] | Residential Real Estate [Member]
Impaired Loans With An Allowance Recorded	213
No Allowance Recorded [Member] | All Other Real Estate [Member]
Impaired Loans With An Allowance Recorded	0
No Allowance Recorded [Member] | Commerical and Industrial [Member]
Impaired Loans With An Allowance Recorded	126
No Allowance Recorded [Member] | Consumer and All Other Loans and Leases [Member]
Impaired Loans With An Allowance Recorded	0
No Allowance Recorded [Member]
Impaired Loans With An Allowance Recorded	504
Individually Evaluated for Impairment [Member] | Construction and Land Development [Member]
Total Loans Individually Evaluated For Impairment	86	0
Individually Evaluated for Impairment [Member] | Owner Occupied [Member]
Total Loans Individually Evaluated For Impairment		0
Individually Evaluated for Impairment [Member] | Non Owner Occupied [Member]
Total Loans Individually Evaluated For Impairment	79	0
Individually Evaluated for Impairment [Member] | Residential Real Estate [Member]
Total Loans Individually Evaluated For Impairment	213	0
Individually Evaluated for Impairment [Member] | All Other Real Estate [Member]
Total Loans Individually Evaluated For Impairment	0	0
Individually Evaluated for Impairment [Member] | Commerical and Industrial [Member]
Total Loans Individually Evaluated For Impairment	126	81
Individually Evaluated for Impairment [Member] | Consumer and All Other Loans and Leases [Member]
Total Loans Individually Evaluated For Impairment	0	0
Individually Evaluated for Impairment [Member]
Total Loans Individually Evaluated For Impairment	504	81
Collectively Evaluated for Impairment [Member] | Construction and Land Development [Member]
Loans Collectively Evaluated For Impairment	183	157
Collectively Evaluated for Impairment [Member] | Owner Occupied [Member]
Loans Collectively Evaluated For Impairment	618	253
Collectively Evaluated for Impairment [Member] | Non Owner Occupied [Member]
Loans Collectively Evaluated For Impairment	877	675
Collectively Evaluated for Impairment [Member] | Residential Real Estate [Member]
Loans Collectively Evaluated For Impairment	599	640
Collectively Evaluated for Impairment [Member] | All Other Real Estate [Member]
Loans Collectively Evaluated For Impairment	39	4
Collectively Evaluated for Impairment [Member] | Commerical and Industrial [Member]
Loans Collectively Evaluated For Impairment	1,154	1,282
Collectively Evaluated for Impairment [Member] | Consumer and All Other Loans and Leases [Member]
Loans Collectively Evaluated For Impairment	111	124
Collectively Evaluated for Impairment [Member] | Unallocated [Member]
Loans Collectively Evaluated For Impairment	15	110
Collectively Evaluated for Impairment [Member]
Loans Collectively Evaluated For Impairment	3,596	3,245
Acquired with Deteriorated Credit Quality [Member] | Construction and Land Development [Member]
Loans Acquired With Deteriorated Credit Quality		0
Acquired with Deteriorated Credit Quality [Member] | Owner Occupied [Member]
Loans Acquired With Deteriorated Credit Quality		0
Acquired with Deteriorated Credit Quality [Member] | Non Owner Occupied [Member]
Loans Acquired With Deteriorated Credit Quality		0
Acquired with Deteriorated Credit Quality [Member] | Residential Real Estate [Member]
Loans Acquired With Deteriorated Credit Quality		0
Acquired with Deteriorated Credit Quality [Member] | All Other Real Estate [Member]
Loans Acquired With Deteriorated Credit Quality	0	0
Acquired with Deteriorated Credit Quality [Member] | Commerical and Industrial [Member]
Loans Acquired With Deteriorated Credit Quality		0
Acquired with Deteriorated Credit Quality [Member] | Consumer and All Other Loans and Leases [Member]
Loans Acquired With Deteriorated Credit Quality	0	0
Acquired with Deteriorated Credit Quality [Member]
Loans Acquired With Deteriorated Credit Quality		0
Allowance Recorded [Member] | Construction and Land Development [Member]
Impaired Loans With An Allowance Recorded		0
Allowance Recorded [Member] | Owner Occupied [Member]
Impaired Loans With An Allowance Recorded		0
Allowance Recorded [Member] | Non Owner Occupied [Member]
Impaired Loans With An Allowance Recorded		0
Allowance Recorded [Member] | Residential Real Estate [Member]
Impaired Loans With An Allowance Recorded		0
Allowance Recorded [Member] | All Other Real Estate [Member]
Impaired Loans With An Allowance Recorded		0
Allowance Recorded [Member] | Commerical and Industrial [Member]
Impaired Loans With An Allowance Recorded		81
Allowance Recorded [Member] | Consumer and All Other Loans and Leases [Member]
Impaired Loans With An Allowance Recorded		0
Allowance Recorded [Member]
Impaired Loans With An Allowance Recorded		81
Construction and Land Development [Member]
Impaired Loans With an Allowance Recorded	214	0
Impaired Loans With No Allowance Recorded	372	0
Total Loans Individually Evaluated For Impairment	586	0
Loans Collectively Evaluated For Impairment	7,079	11,617
Loans Acquired With Deteriorated Credit Quality	2,475	5,830
Total Loans Held for Investment	10,140	17,447
Impaired Loans With An Allowance Recorded	223	0
Impaired Loans With No Allowance Recorded	378	0
Total Loans Individually Evaluated For Impairment	601	0
Loans Collectively Evaluated For Impairment	7,079	11,617
Loans Acquired With Deteriorated Credit Quality	2,475	5,830
Total Loans Held for Investment	269	157
Impaired Loans With An Allowance Recorded	103	0
Impaired Loans With No Allowance Recorded	229	0
Total Loans Individually Evaluated For Impairment	332	0
Impaired Loans With An Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	13	0
Total Loans Individually Evaluated For Impairment	13	0
Owner Occupied [Member]
Impaired Loans With an Allowance Recorded		0
Impaired Loans With No Allowance Recorded	1,893	1,028
Total Loans Individually Evaluated For Impairment	1,893	1,028
Loans Collectively Evaluated For Impairment	49,524	57,980
Loans Acquired With Deteriorated Credit Quality	17,007	14,457
Total Loans Held for Investment	68,424	73,465
Impaired Loans With An Allowance Recorded		0
Impaired Loans With No Allowance Recorded	2,025	1,045
Total Loans Individually Evaluated For Impairment	2,025	1,045
Loans Collectively Evaluated For Impairment	49,524	57,980
Loans Acquired With Deteriorated Credit Quality	17,007	14,457
Total Loans Held for Investment	618	253
Impaired Loans With An Allowance Recorded	145	0
Impaired Loans With No Allowance Recorded	1,447	1,011
Total Loans Individually Evaluated For Impairment	1,592	1,011
Impaired Loans With An Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	0	0
Non Owner Occupied [Member]
Impaired Loans With an Allowance Recorded	765	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	765	0
Loans Collectively Evaluated For Impairment	62,865	42,406
Loans Acquired With Deteriorated Credit Quality	11,552	17,003
Total Loans Held for Investment	75,182	59,409
Impaired Loans With An Allowance Recorded	765	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	765	0
Loans Collectively Evaluated For Impairment	62,865	42,406
Loans Acquired With Deteriorated Credit Quality	11,552	17,003
Total Loans Held for Investment	956	675
Impaired Loans With An Allowance Recorded	191	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	191	0
Impaired Loans With An Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	0	0
Residential Real Estate [Member]
Impaired Loans With an Allowance Recorded	897	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	897	0
Loans Collectively Evaluated For Impairment	25,655	27,103
Loans Acquired With Deteriorated Credit Quality	4,538	4,425
Total Loans Held for Investment	31,090	31,528
Impaired Loans With An Allowance Recorded	901	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	901	0
Loans Collectively Evaluated For Impairment	25,655	27,103
Loans Acquired With Deteriorated Credit Quality	4,538	4,425
Total Loans Held for Investment	812	640
Impaired Loans With An Allowance Recorded	318	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	318	0
Impaired Loans With An Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	38	0
Total Loans Individually Evaluated For Impairment	38	0
All Other Real Estate [Member]
Impaired Loans With an Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	0	0
Loans Collectively Evaluated For Impairment	7,764	2,033
Loans Acquired With Deteriorated Credit Quality	0	0
Total Loans Held for Investment	7,764	2,033
Impaired Loans With An Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	0	0
Loans Collectively Evaluated For Impairment	7,764	2,033
Loans Acquired With Deteriorated Credit Quality	0	0
Total Loans Held for Investment	39	4
Impaired Loans With An Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	0	0
Impaired Loans With An Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	0	0
Commerical and Industrial [Member]
Impaired Loans With an Allowance Recorded	293	396
Impaired Loans With No Allowance Recorded	823	423
Total Loans Individually Evaluated For Impairment	1,116	819
Loans Collectively Evaluated For Impairment	35,964	34,519
Loans Acquired With Deteriorated Credit Quality	1,131	3,995
Total Loans Held for Investment	38,211	39,333
Impaired Loans With An Allowance Recorded	120	443
Impaired Loans With No Allowance Recorded	817	518
Total Loans Individually Evaluated For Impairment	937	961
Loans Collectively Evaluated For Impairment	35,964	34,519
Loans Acquired With Deteriorated Credit Quality	1,131	3,995
Total Loans Held for Investment	1,280	1,363
Impaired Loans With An Allowance Recorded	366	224
Impaired Loans With No Allowance Recorded	558	341
Total Loans Individually Evaluated For Impairment	924	565
Impaired Loans With An Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	6	0
Total Loans Individually Evaluated For Impairment	6	0
Consumer and All Other Loans and Leases [Member]
Impaired Loans With an Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	0	0
Loans Collectively Evaluated For Impairment	2,543	6,547
Loans Acquired With Deteriorated Credit Quality	183	187
Total Loans Held for Investment	2,726	6,734
Impaired Loans With An Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	0	0
Loans Collectively Evaluated For Impairment	2,543	6,547
Loans Acquired With Deteriorated Credit Quality	183	187
Total Loans Held for Investment	111	124
Impaired Loans With An Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	0	0
Impaired Loans With An Allowance Recorded	0	0
Impaired Loans With No Allowance Recorded	0	0
Total Loans Individually Evaluated For Impairment	0	0
Unallocated [Member]
Total Loans Held for Investment	$ 15	$ 110

XML

Note 2 - Stock Based Compensation Plans (Detail) - Unrecognized Compensation Expense (USD $)	3 Months Ended			9 Months Ended		12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share based compensation	$ 35,000	$ 36,000	$ 36,000	$ 109,000	$ 105,000	$ 19,000	$ 29,000	$ 29,000	$ 85,000
Total unrecognized compensation cost		$ 197,000		$ 197,000

XML

Note 2 - Stock Based Compensation Plans (Detail) - Fair Value Options Granted (USD $)	9 Months Ended			3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012 Grant Date 01-25-2011 [Member]	Sep. 30, 2012 Grant Date 04-04-2011 [Member]	Sep. 30, 2011 Grant Date 07-26-2011 [Member]	Sep. 30, 2011 Grant Date 07-26-2011 [Member]	Sep. 30, 2012 Grant Date 07-26-2011 [Member]
Number of options granted (in Shares)	0	20,000	20,000			20,000
Exercise price		$ 5.00	$ 5.00			$ 5.00
Market price of common stock		$ 3.65	$ 3.61			$ 3.55
Expected stock price volatility		37.40%	37.30%			36.20%
Expected option life (years)		6 years	6 years			6 years
Risk-free interest rate		2.32%	2.53%			2.07%
Weighted average fair value of all options granted during the period				$ 1.03	$ 1.06

XML

Note 5 - Credit Quality and the Allowance for Loan and Lease Losses (Detail) - Accretable Discount for Loans Purchased (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Balance at beginning of period	$ 3,289
Balance at end of period	1,787
Measurement period adustments to Santa Lucia Bank fair values	(428)
Accretion to interest income	(844)
Loans reclassified to held for sale	(355)
Transfers from non-accretable discount to accretable	$ 125

XML

Note 2 - Stock Based Compensation Plans (Detail) - Stock Option Activity (USD $)	9 Months Ended
	Sep. 30, 2012
Outstanding at beginning of period	297,219
Outstanding at beginning of period (in Dollars per share)	$ 7.84
Outstanding at end of period	267,900
Outstanding at end of period (in Dollars per share)	$ 6.78
Outstanding at end of period	7 years 328 days
Options exercisable at end of period	122,338
Options exercisable at end of period (in Dollars per share)	$ 8.76
Options exercisable at end of period	7 years 73 days
Options Vested or Expected to Vest	267,900
Options Vested or Expected to Vest (in Dollars per share)	$ 6.78
Options Vested or Expected to Vest	7 years 328 days
Options granted	0
Options exercised	0
Options expired unexercised	(9,500)
Options expired unexercised (in Dollars per share)	$ 11.30
Options forfeited	(19,819)
Options forfeited (in Dollars per share)	$ 20.48

XML

Note 3 - Investment Securities (Detail) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012
Gain (Loss) on Sale of Securities, Net	$ 407,000	$ 934,000
Proceeds from Sale of Available-for-sale Securities, Equity	29,692,000	54,788,000
Unrealized Loss Position Less Than 12 Months [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	22	22
Public Deposits [Member]
Available-for-sale Securities Pledged as Collateral	8,670,000	8,670,000
Borrowing Facilities of Federal Home Loan Bank of San Francisco [Member]
Available-for-sale Securities Pledged as Collateral	$ 16,695,000	$ 16,695,000

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating Activities
Net income (loss)	$ 451,000	$ (1,483,000)
Adjustments to reconcile net income (loss) income to net cash provided by (used in) operating activities:
Depreciation	695,000	379,000
Accretion of discount on securities and loans, net	1,016,000	431,000
Amortization of core deposit intangible asset	303,000
Accretion of discount on assets acquired in merger	(2,186,000)
Amortization of discount on liabilities assumed in merger	84,000
Provision for loan and lease losses	675,000	300,000
Provision for losses on unfunded loan commitments	25,000	180,000
Stock-based compensation	109,000	105,000
Gain on sale or call of available-for-sale securities	(934,000)	(4,000)
Gain on sale of loans	(8,000)	(172,000)
Gains on disposition of loans held for sale	(711,000)	(255,000)
Change in the fair value of warrant liability	(68,000)	(1,207,000)
Net losses and writedowns of fixed assets or other real estate owned	458,000	71,000
Increase in company-owned life insurance	(172,000)	(68,000)
Other, net	538,000	(66,000)
Proceeds from loan sales	101,000	1,917,000
Loans originated for sale		(1,988,000)
Net cash provided by (used in) operating activities	376,000	(1,860,000)
Investing Activities
Net (increase) decrease in deposits in other banks	(1,584,000)	248,000
Purchase of available-for-sale securities	(106,091,000)	(26,652,000)
Proceeds from maturities, calls and paydowns of available-for-sale securities	33,021,000	13,180,000
Proceeds from sales of available-for-sale securities	54,788,000
Net increase in loans held for investment	(6,971,000)	(3,950,000)
Net decrease in loans held for sale	3,962,000	3,878,000
Net (increase) decrease in Federal Home Loan Bank and other stock	(2,751,000)	272,000
Purchases of premises and equipment	(431,000)	(227,000)
Additional investments in other real estate owned		(111,000)
Proceeds from sale of premises and equipment	21,000
Proceeds from sale of other real estate owned	4,780,000	2,574,000
Net cash used in investing activities	(21,256,000)	(10,788,000)
Financing Activities
Net increase in demand deposits and savings accounts	17,732,000	11,327,000
Net (decrease) increase in time deposits	(38,898,000)	6,979,000
Net Increase (decrease) in other borrowings	1,600,000	(349,000)
Additional costs of 2010 shareholder rights offering		(40,000)
Proceeds from exercise of common stock warrants	500,000
Payment of dividends on preferred stock	(478,000)	(192,000)
Net cash (used in) provided by financing activities	(19,544,000)	17,725,000
Net (decrease) increase in cash and cash equivalents	(40,424,000)	5,077,000
Cash and cash equivalents at beginning of period	61,621,000	10,817,000
Cash and cash equivalents at end of period	21,197,000	15,894,000
Non-cash changes:
Change in unrealized gains on available-for-sale securities	598,000	1,729,000
Loans reclassified to held for sale	4,583,000
Real estate acquired by foreclosure	1,462,000	1,286,000
Adjustments to net contribution from shareholder recognized in additional paid-in capital for Santa Lucia merger	1,130,000
Cancellation of warrants accounted for as liabilities	(5,116,000)
Supplemental disclosures of cash flow information:
Interest paid	1,249,000	1,086,000
Taxes paid	$ 3,000	$ 4,000

XML

Note 3 - Investment Securities (Detail) - Amortized Cost and Approximate Fair Values of Investment Securities (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Available for sale securites - amortized cost	$ 144,772	$ 126,615
Available for sale securities - unrealized gains	2,371	1,771
Available for sale securities - unrealized losses	(77)	(76)
Available for sale securities - fair value	147,066	128,310
US Government Agencies Debt Securities [Member]
Available for sale securites - amortized cost	42,686	26,098
Available for sale securities - unrealized gains	561	331
Available for sale securities - unrealized losses		(12)
Available for sale securities - fair value	43,247	26,417
Residential Mortgage Backed Securities [Member]
Available for sale securites - amortized cost	68,968	88,209
Available for sale securities - unrealized gains	1,527	1,122
Available for sale securities - unrealized losses	(16)	(38)
Available for sale securities - fair value	70,479	89,293
US States and Political Subdivisions Debt Securities [Member]
Available for sale securites - amortized cost	16,445	4,820
Available for sale securities - unrealized gains	202	239
Available for sale securities - unrealized losses	(55)	(2)
Available for sale securities - fair value	16,592	5,057
Corporate Debt Securities [Member]
Available for sale securites - amortized cost	3,026	2,059
Available for sale securities - unrealized gains	4
Available for sale securities - unrealized losses	(6)	(4)
Available for sale securities - fair value	3,024	2,055
Asset-backed Securities [Member]
Available for sale securites - amortized cost	13,647	5,429
Available for sale securities - unrealized gains	77	79
Available for sale securities - unrealized losses		(20)
Available for sale securities - fair value	$ 13,724	$ 5,488

XML

Note 5 - Credit Quality and the Allowance for Loan and Lease Losses (Detail) - Changes in the Allowance for Loan and Lease Losses (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011	Dec. 31, 2010
Allowance for Loan Losses Balance	$ 4,100	$ 3,164	$ 4,100	$ 3,164	$ 3,781	$ 3,326	$ 3,182	$ 3,198
Provision for Loans Losses Charged (Credited) to Expense	225	300	675	300
Less Loans Charged Off	22	360	144	460
Plus Recoveries on Loans Previously Charged Off	116	42	243	126
Period Start [Member] | Construction and Land Development Loans [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	366	123	366	123
Period Start [Member] | Construction and Land Development Loans [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	157	531	157	531
Period Start [Member] | Commercial Real Estate Owner Occupied [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	505	393	505	393
Period Start [Member] | Commercial Real Estate Owner Occupied [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	253	164	253	164
Period Start [Member] | Commercial Real Estate Non Owner Occupied [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	883	714	883	714
Period Start [Member] | Commercial Real Estate Non Owner Occupied [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	675	697	675	697
Period Start [Member] | Residential Real Estate Loans [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	658	516	658	516
Period Start [Member] | Residential Real Estate Loans [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	640	501	640	501
Period Start [Member] | All Other Real Estate Loans [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	6	4	6	4
Period Start [Member] | All Other Real Estate Loans [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	4	4	4	4
Period Start [Member] | Commercial and Industrial Loans [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	1,197	1,037	1,197	1,037
Period Start [Member] | Commercial and Industrial Loans [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	1,363	1,021	1,363	1,021
Period Start [Member] | Consumer and All Other Loans and Lease Financing [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	134	113	134	113
Period Start [Member] | Consumer and All Other Loans and Lease Financing [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	124	124	124	124
Period Start [Member] | Unallocated [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	32	282	32	282
Period Start [Member] | Unallocated [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	110	156	110	156
Period Start [Member] | Total [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	3,781	3,182	3,781	3,182
Period Start [Member] | Total [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	3,326	3,198	3,326	3,198
Period End [Member] | Construction and Land Development Loans [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	269	134	269	134
Period End [Member] | Construction and Land Development Loans [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	269	134	269	134
Period End [Member] | Commercial Real Estate Owner Occupied [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	618	297	618	297
Period End [Member] | Commercial Real Estate Owner Occupied [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	618	297	618	297
Period End [Member] | Commercial Real Estate Non Owner Occupied [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	956	777	956	777
Period End [Member] | Commercial Real Estate Non Owner Occupied [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	956	777	956	777
Period End [Member] | Residential Real Estate Loans [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	812	511	812	511
Period End [Member] | Residential Real Estate Loans [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	812	511	812	511
Period End [Member] | All Other Real Estate Loans [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	39	4	39	4
Period End [Member] | All Other Real Estate Loans [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	39	4	39	4
Period End [Member] | Commercial and Industrial Loans [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	1,280	1,309	1,280	1,309
Period End [Member] | Commercial and Industrial Loans [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	1,280	1,309	1,280	1,309
Period End [Member] | Consumer and All Other Loans and Lease Financing [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	111	48	111	48
Period End [Member] | Consumer and All Other Loans and Lease Financing [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	111	48	111	48
Period End [Member] | Unallocated [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	15	84	15	84
Period End [Member] | Unallocated [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	15	84	15	84
Period End [Member] | Total [Member] | Three Months Ended [Member]
Allowance for Loan Losses Balance	4,100	3,164	4,100	3,164
Period End [Member] | Total [Member] | Nine Months Ended [Member]
Allowance for Loan Losses Balance	4,100	3,164	4,100	3,164
Construction and Land Development Loans [Member] | Three Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense	(97)	11
Construction and Land Development Loans [Member] | Nine Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense			112	(397)
Commercial Real Estate Owner Occupied [Member] | Three Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense	85	(74)
Less Loans Charged Off		(22)
Plus Recoveries on Loans Previously Charged Off	28
Commercial Real Estate Owner Occupied [Member] | Nine Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense			335	144
Less Loans Charged Off				(21)
Plus Recoveries on Loans Previously Charged Off			30	10
Commercial Real Estate Non Owner Occupied [Member] | Three Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense	73	188
Less Loans Charged Off		(125)
Commercial Real Estate Non Owner Occupied [Member] | Nine Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense			281	205
Less Loans Charged Off				(125)
Residential Real Estate Loans [Member] | Three Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense	154	29
Less Loans Charged Off		(69)
Plus Recoveries on Loans Previously Charged Off		35
Residential Real Estate Loans [Member] | Nine Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense			172	114
Less Loans Charged Off				(153)
Plus Recoveries on Loans Previously Charged Off				49
All Other Real Estate Loans [Member] | Three Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense	33
All Other Real Estate Loans [Member] | Nine Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense			35
Commercial and Industrial Loans [Member] | Three Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense	70	383
Less Loans Charged Off		(115)
Plus Recoveries on Loans Previously Charged Off	13	4
Commercial and Industrial Loans [Member] | Nine Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense			(70)	350
Less Loans Charged Off			(101)	(123)
Plus Recoveries on Loans Previously Charged Off			88	61
Consumer and All Other Loans and Lease Financing [Member] | Three Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense	(76)	(39)
Less Loans Charged Off	(22)	(29)
Plus Recoveries on Loans Previously Charged Off	75	3
Consumer and All Other Loans and Lease Financing [Member] | Nine Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense			(95)	(44)
Less Loans Charged Off			(43)	(38)
Plus Recoveries on Loans Previously Charged Off			125	6
Unallocated [Member] | Three Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense	(17)	(198)
Unallocated [Member] | Nine Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense			(95)	(72)
Total [Member] | Three Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense	225	300
Less Loans Charged Off	(22)	(360)
Plus Recoveries on Loans Previously Charged Off	116	42
Total [Member] | Nine Months Ended [Member]
Provision for Loans Losses Charged (Credited) to Expense			675	300
Less Loans Charged Off			(144)	(460)
Plus Recoveries on Loans Previously Charged Off			$ 243	$ 126

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Note 9 - Business Combination (Detail) (USD $)				3 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Oct. 21, 2011 Combined Bank [Member]	Mar. 31, 2012 Fair Value Adjustment on Loans Receivable [Member]	Jun. 30, 2012 Fair Value Adjustment on Premises and Equipment [Member]	Jun. 30, 2012 Fair Value Adjustment of Other Real Estate Owned [Member]	Jun. 30, 2012 Fair Value Adjustment to Accrued Interest Receivable [Member]
Assets	$ 443,317,000	$ 463,312,000	$ 455,000,000
Deposit Liability, Current			414,000,000
Business Acquisition Excess Fair Value Allocated to Additional Paid in Capital		906,000
Business Combination, Step Acquisition, Equity Interest in Acquiree, Remeasurement Gain				$ 428,000	$ 569,000	$ 194,000	$ (61,000)

XML

Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets
Cash and due from banks	$ 21,197	$ 61,621
Certificates of deposit in other banks	5,176	3,592
Investment securities available for sale	147,066	128,310
Loans held for sale	3,490	3,720
Loans, net of unearned income	233,537	229,949
Less allowance for loan and lease losses	(4,100)	(3,326)
Net loans	229,437	226,623
Federal Home Loan Bank stock and other investments, at cost	6,699	3,926
Premises and equipment	15,977	16,282
Other real estate owned	1,463	5,220
Company owned life insurance	7,958	7,786
Core deposit intangible asset, net of accumulated amortization	2,866	3,170
Accrued interest and other assets	1,988	3,062
Total Assets	443,317	463,312
Deposits:
Noninterest-bearing demand	125,778	105,105
Money market, NOW and savings	153,332	156,273
Time certificates of deposit	110,298	149,196
Total deposits	389,408	410,574
Other borrowings	3,800
Junior subordinated debt securities	5,576	5,491
Accrued interest and other liabilities	2,667	4,271
Warrant liability		5,184
Total liabilities	401,451	425,520
Common stock - 50,000,000 shares authorized; issued and outstanding: 7,855,066 at September 30, 2012 and 7,755,066 at December 31, 2011	41,325	40,825
Additional paid-in capital	8,730	3,505
Accumulated deficit	(16,487)	(16,438)
Accumulated other comprehensive income	2,293	1,695
Total shareholders' equity	35,861	29,587
Total Liabilities and Shareholders' Equity	443,317	463,312
Bancorp-Issued Preferred Stock Series A, B, and C [Member]
Deposits:
Redeemable preferred stock	1,205	1,205
Subsidiary-Issued Preferred Stock [Member]
Deposits:
Redeemable preferred stock	$ 4,800	$ 7,000

XML

Note 6 - Common and Preferred Stock and Earnings (Loss) per Share (Detail) (USD $)	0 Months Ended			6 Months Ended	9 Months Ended	120 Months Ended								0 Months Ended		0 Months Ended		1 Months Ended	9 Months Ended
	Jun. 15, 2010	Jun. 15, 2010	Apr. 27, 2010	Dec. 15, 2010	Sep. 30, 2012	Oct. 22, 2021	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Dec. 28, 2011	Oct. 21, 2011	Mar. 31, 2012 Conversion from Liability to Additional Paid in Capital [Member]	Sep. 30, 2012 Warrants Cancelled [Member]	Jun. 15, 2010 Warrants 2010 [Member]	Dec. 15, 2010 Public Warrants [Member] Per Shareholder [Member]	Jun. 15, 2010 Public Warrants [Member]	Dec. 15, 2010 Public Warrants [Member]	Oct. 21, 2011 Series A Preferred Stock [Member]	Sep. 30, 2012 Carpenter [Member]	Jun. 13, 2010 Carpenter [Member]
Proceeds from Issuance or Sale of Equity (in Dollars)		$ 15,000,000	$ 10,000,000		$ 500,000
Common Stock, Shares, Issued	3,000,000	3,000,000	2,000,000		7,855,066				7,755,066
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	3,000,000	3,000,000	2,000,000		171,980		100,000		660,792		2,202,641				15		748,672
Investment Warrants Expiration Date						Dec. 10, 2008								Dec. 31, 2008		Dec. 31, 2008
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item)						4.54								5.00		5.00	5.00
Stock Issued During Period, Shares, New Issues				748,672															6,028,179
Proceeds from Issuance of Common Stock (in Dollars)				3,527,000
Percentage of Series D (TARP) Preferred Stock										100.00%
Proceeds from Issuance of Preferred Stock and Preference Stock (in Dollars)																		10,000,000
Preferred Stock, Shares Issued																		10,000
Preferred Stock, Redemption Amount (in Dollars)					1,600,000		600,000		3,000,000
Preferred Stock, Liquidation Preference, Value (in Dollars)					4,800,000
Warrants Outstanding								6,487,800					153,876
Warrants and Rights Outstanding (in Dollars)												$ 4,955,000
Common Stock, Shares, Outstanding					7,855,066				7,755,066											333,334
Sale of Stock, Percentage of Ownership before Transaction	24.70%
Sale of Stock, Percentage of Ownership after Transaction					76.70%

XML

Consolidated Statements of Comprehensive Income (Unaudited) (Parentheticals) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Unrealized gains arising during the period on available-for-sale securities, tax	$ 0	$ 0	$ 0	$ 0

XML

Note 4 - Loans (Detail) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Pledged Financial Instruments, Not Separately Reported, Loans Receivable Pledged as Collateral	$ 198,553,000	$ 98,111,000
Included in Loans Held For Sale [Member]
Impaired Financing Receivable, Recorded Investment	$ 1,174,000

XML

Note 5 - Credit Quality and the Allowance for Loan and Lease Losses (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Credit Losses for Financing Receivables, Current [Table Text Block]

(in thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Balance at beginning of period	$	3,781		$	3,182		$	3,326		$	3,198
Provision for loan and lease losses charged to expense		225			300			675			300
Loans charged off		(22	)		(360	)		(144	)		(460	)
Recoveries on loans previously charged off		116			42			243			126
Balance at end of period	$	4,100		$	3,164		$	4,100		$	3,164

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	Three Months Ended September 30, 2012
Loan Portfolio Segment	Balance at Beginning of Period		Provision for Loan Losses Charged (Credited) to Expense			Less Loans Charged Off			Plus Recoveries on Loans Previously Charged Off		Balance at End of Period
Construction and land development	$	366	$	(97	)	$	-		$	-	$	269
Commercial real estate - owner-occupied		505		85			-			28		618
Commercial real estate - non-owner-occupied		883		73			-			-		956
Residential real estate		658		154			-			-		812
All other real estate loans		6		33			-			-		39
Commercial and industrial loans		1,197		70			-			13		1,280
Consumer and all other loans and lease financing		134		(76	)		(22	)		75		111
Unallocated		32		(17	)		-			-		15
Totals	$	3,781	$	225		$	(22	)	$	116	$	4,100

	Three Months Ended September 30, 2011
Loan Portfolio Segment	Balance at Beginning of Year		Provision for Loan Losses Charged (Credited) to Expense			Less Loans Charged Off			Plus Recoveries on Loans Previously Charged Off		Balance at End of Period
Construction and land development	$	123	$	11		$	-		$	-	$	134
Commercial real estate - owner-occupied		393		(74	)		(22	)		-		297
Commercial real estate - non-owner-occupied		714		188			(125	)		-		777
Residential real estate		516		29			(69	)		35		511
All other real estate loans		4		-			-			-		4
Commercial and industrial loans		1,037		383			(115	)		4		1,309
Consumer and all other loans and lease financing		113		(39	)		(29	)		3		48
Unallocated		282		(198	)		-			-		84
Totals	$	3,182	$	300		$	(360	)	$	42	$	3,164

	Nine Months Ended September 30, 2012
Loan Portfolio Segment	Balance at Beginning of Period		Provision for Loan Losses Charged (Credited) to Expense			Less Loans Charged Off			Plus Recoveries on Loans Previously Charged Off		Balance at End of Period
Construction and land development	$	157	$	112		$	-		$	-	$	269
Commercial real estate - owner-occupied		253		335			-			30		618
Commercial real estate - non-owner-occupied		675		281			-			-		956
Residential real estate		640		172			-			-		812
All other real estate loans		4		35			-			-		39
Commercial and industrial loans		1,363		(70	)		(101	)		88		1,280
Consumer and all other loans and lease financing		124		(95	)		(43	)		125		111
Unallocated		110		(95	)		-			-		15
Totals	$	3,326	$	675		$	(144	)	$	243	$	4,100

	Nine Months Ended September 30, 2011
Loan Portfolio Segment	Balance at Beginning of Year		Provision for Loan Losses Charged (Credited) to Expense			Less Loans Charged Off			Plus Recoveries on Loans Previously Charged Off		Balance at End of Period
Construction and land development	$	531	$	(397	)	$	-		$	-	$	134
Commercial real estate - owner-occupied		164		144			(21	)		10		297
Commercial real estate - non-owner-occupied		697		205			(125	)		-		777
Residential real estate		501		114			(153	)		49		511
All other real estate loans		4		-			-			-		4
Commercial and industrial loans		1,021		350			(123	)		61		1,309
Consumer and all other loans and lease financing		124		(44	)		(38	)		6		48
Unallocated		156		(72	)		-			-		84
Totals	$	3,198	$	300		$	(460	)	$	126	$	3,164

Financing Receivable Credit Quality Indicators [Table Text Block]

Loans by Asset Quality Rating (excluding loans held for sale*)	Asset Quality Ratings
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Total Loans
As of September 30, 2012:
Construction and land development	$	9,455	$	100	$	585	$	-	$	10,140
Commercial real estate - owner-occupied		62,593		-		5,831		-		68,424
Commercial real estate - non-owner-occupied		71,595		2,409		1,178		-		75,182
Residential real estate		28,621		-		2,284		185		31,090
All other real estate		7,732		-		32		-		7,764
Commercial and industrial		34,122		324		3,765		-		38,211
Consumer and all other loans and lease financing		2,726		-		-		-		2,726
Total loans, net of unearned income	$	216,844	$	2,833	$	13,675	$	185	$	233,537

As of December 31, 2011:
Construction and land development	$	13,931	$	157	$	3,359	$	-	$	17,447
Commercial real estate - owner-occupied		68,899		-		4,566		-		73,465
Commercial real estate - non-owner-occupied		49,139		5,154		5,116		-		59,409
Residential real estate		27,672		491		3,365		-		31,528
All other real estate		1,895		138		-		-		2,033
Commercial and industrial		32,154		250		6,841		88		39,333
Consumer and all other loans and lease financing		6,734		-		-		-		6,734
Total loans, net of unearned income	$	200,424	$	6,190	$	23,247	$	88	$	229,949

Past Due Financing Receivables [Table Text Block]

(in thousands)
			Commercial Real Estate										Consumer and All
	Construction and Land Development		Owner-Occupied		Non-Owner-Occupied		Residential Real Estate		All Other Real Estate		Commercial and Industrial		Other Loans and Leases		Total Loans
As of September 30, 2012:
Recorded Balance of Loans Past Due:
30-59 Days	$	-	$	59	$	-	$	158	$	-	$	427	$	174	$	818
60-89 Days		268		1,000		-		-		-		57		-		1,325
90+ Days		-		771		-		185		-		265		-		1,221
Total Past Due		268		1,830		-		343		-		749		174		3,364
Loans in Current Payment Status		9,872		66,594		75,182		30,747		7,764		37,462		2,552		230,173
Total Loans	$	10,140	$	68,424	$	75,182	$	31,090	$	7,764	$	38,211	$	2,726	$	233,537
Loans 90+ Days Past Due and Accruing1	$	-	$	-	$	-	$	-	$	-	$	120	$	7	$	127
Accruing Troubled Debt Restructurings		-		-		-		-		-		711		-		711
Loans in Non-accrual Status		317		2,267		866		851		32		1,608		-		5,941

As of December 31, 2011:
Recorded Balance of Loans Past Due:
30-59 Days	$	492	$	594	$	-	$	-	$	-	$	549	$	-	$	1,635
60-89 Days		-		-		-		423		-		220		-		643
90+ Days		1,323		1,033		21		147		-		627		-		3,151
Total Past Due		1,815		1,627		21		570		-		1,396		-		5,429
Loans in Current Payment Status		15,632		71,838		59,388		30,958		2,033		37,937		6,734		224,520
Total Loans	$	17,447	$	73,465	$	59,409	$	31,528	$	2,033	$	39,333	$	6,734	$	229,949
Loans 90+ Days Past Due and Accruing1	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Accruing Troubled Debt Restructurings		-		-		-		-		-		-		-		-
Loans in Non-accrual Status		2,031		1,429		122		1,296		-		2,107		-		6,985

Impaired Financing Receivables [Table Text Block]

(in thousands)
			Commercial Real Estate										Consumer and All
	Construction and Land Development		Owner-Occupied		Non-Owner-Occupied		Residential Real Estate		All Other Real Estate		Commercial and Industrial		Other Loans and Leases		Unallocated		Total Loans
Loans Held for Investment as of September 30, 2012:
Recorded Investment:
Impaired Loans With an Allowance Recorded	$	214	$	-	$	765	$	897	$	-	$	293	$	-			$	2,169
Impaired Loans With No Allowance Recorded		372		1,893		-		-		-		823		-				3,088
Total Loans Individually Evaluated For Impairment		586		1,893		765		897		-		1,116		-				5,257
Loans Collectively Evaluated For Impairment		7,079		49,524		62,865		25,655		7,764		35,964		2,543				191,394
Loans Acquired With Deteriorated Credit Quality		2,475		17,007		11,552		4,538		-		1,131		183				36,886
Total Loans Held for Investment	$	10,140	$	68,424	$	75,182	$	31,090	$	7,764	$	38,211	$	2,726			$	233,537
Unpaid Principal Balance:
Impaired Loans With An Allowance Recorded	$	223	$	-	$	765	$	901	$	-	$	120	$	-			$	2,009
Impaired Loans With No Allowance Recorded		378		2,025		-		-		-		817		-				3,220
Total Loans Individually Evaluated For Impairment		601		2,025		765		901		-		937		-				5,229
Loans Collectively Evaluated For Impairment		7,079		49,524		62,865		25,655		7,764		35,964		2,543				191,394
Loans Acquired With Deteriorated Credit Quality		6,288		18,749		13,251		6,498		-		2,914		187				47,887
Total Loans Held for Investment	$	13,968	$	70,298	$	76,881	$	33,054	$	7,764	$	39,815	$	2,730			$	244,510
Related Allowance for Loan and Lease Losses:
Impaired Loans With An Allowance Recorded	$	86	$	-	$	79	$	213	$	-	$	126	$	-			$	504
Impaired Loans With No Allowance Recorded		-		-		-		-		-		-		-				-
Total Loans Individually Evaluated For Impairment		86		-		79		213		-		126		-				504
Loans Collectively Evaluated For Impairment		183		618		877		599		39		1,154		111	$	15		3,596
Loans Acquired With Deteriorated Credit Quality		-		-		-		-		-		-		-				-
Total Loans Held for Investment	$	269	$	618	$	956	$	812	$	39	$	1,280	$	111	$	15	$	4,100
For the Nine Months Ended September 30, 2012:
Average Recorded Investment in Impaired Loans:
Impaired Loans With An Allowance Recorded	$	103	$	145	$	191	$	318	$	-	$	366	$	-			$	1,123
Impaired Loans With No Allowance Recorded		229		1,447		-		-		-		558		-				2,234
Total Loans Individually Evaluated For Impairment	$	332	$	1,592	$	191	$	318	$	-	$	924	$	-			$	3,357
Interest Income Recognized on Impaired Loans:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	-	$	-			$	-
Impaired Loans With No Allowance Recorded		13		-		-		38		-		6		-				57
Total Loans Individually Evaluated For Impairment	$	13	$	-	$	-	$	38	$	-	$	6	$	-			$	57

(in thousands)			Commercial Real Estate										Consumer and All
	Construction and Land Development		Owner-Occupied		Non-Owner-Occupied		Residential Real Estate		All Other Real Estate		Commercial and Industrial		Other Loans and Leases		Unallocated		Total Loans
Loans Held for Investment as of December 31, 2011:
Recorded Investment:
Impaired Loans With an Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	396	$	-			$	396
Impaired Loans With No Allowance Recorded		-		1,028		-		-		-		423		-				1,451
Total Loans Individually Evaluated For Impairment		-		1,028		-		-		-		819		-				1,847
Loans Collectively Evaluated For Impairment		11,617		57,980		42,406		27,103		2,033		34,519		6,547				182,205
Loans Acquired With Deteriorated Credit Quality		5,830		14,457		17,003		4,425		-		3,995		187				45,897
Total Loans Held for Investment	$	17,447	$	73,465	$	59,409	$	31,528	$	2,033	$	39,333	$	6,734			$	229,949
Unpaid Principal Balance:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	443	$	-			$	443
Impaired Loans With No Allowance Recorded		-		1,045		-		-		-		518		-				1,563
Total Loans Individually Evaluated For Impairment		-		1,045		-		-		-		961		-				2,006
Loans Collectively Evaluated For Impairment		11,617		57,980		42,406		27,103		2,033		34,519		6,547				182,205
Loans Acquired With Deteriorated Credit Quality		9,981		16,350		18,954		5,129		-		6,132		191				56,737
Total Loans Held for Investment	$	21,598	$	75,375	$	61,360	$	32,232	$	2,033	$	41,612	$	6,738			$	240,948
Related Allowance for Loan and Lease Losses:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	81	$	-			$	81
Impaired Loans With No Allowance Recorded		-		-		-		-		-		-		-				-
Total Loans Individually Evaluated For Impairment		-		-		-		-		-		81		-				81
Loans Collectively Evaluated For Impairment		157		253		675		640		4		1,282		124	$	110		3,245
Loans Acquired With Deteriorated Credit Quality		-		-		-		-		-		-		-				-
Total Loans Held for Investment	$	157	$	253	$	675	$	640	$	4	$	1,363	$	124	$	110	$	3,326
For the Year Ended December 31, 2011:
Average Recorded Investment in Impaired Loans:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	224	$	-			$	224
Impaired Loans With No Allowance Recorded		-		1,011		-		-		-		341		-				1,352
Total Loans Individually Evaluated For Impairment	$	-	$	1,011	$	-	$	-	$	-	$	565	$	-			$	1,576
Interest Income Recognized on Impaired Loans:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	-	$	-			$	-
Impaired Loans With No Allowance Recorded		-		-		-		-		-		-		-				-
Total Loans Individually Evaluated For Impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-			$	-

Accretable Discount for Loans Purchased [Table Text Block]

	Nine Months Ended
(in thousands)	September 30,
	2012
Balance at beginning of period	$	3,289
Measurement period adustments to Santa Lucia Bank fair values		(428	)
Accretion to interest income		(844	)
Loans reclassified to held for sale		(355	)
Loans charged off		-
Transfers from non-accretable discount to accretable		125
Balance at end of period	$	1,787

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Note 4 - Loans (Detail) - Loans by Type (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financing receivable carrying amount (in Dollars)	$ 237,027	$ 233,669
Financing receivable percentage of loan portfolio	100.00%	100.00%
Construction and Land Development Loans [Member]
Financing receivable carrying amount (in Dollars)	11,695	18,022
Financing receivable percentage of loan portfolio	4.90%	7.60%
Commercial Real Estate Owner Occupied [Member]
Financing receivable carrying amount (in Dollars)	69,410	70,153
Financing receivable percentage of loan portfolio	29.30%	30.00%
Commercial Real Estate Non Owner Occupied [Member]
Financing receivable carrying amount (in Dollars)	75,020	64,382
Financing receivable percentage of loan portfolio	31.70%	27.60%
Residential Real Estate Loans [Member]
Financing receivable carrying amount (in Dollars)	32,120	32,609
Financing receivable percentage of loan portfolio	13.60%	14.00%
All Other Real Estate Loans [Member]
Financing receivable carrying amount (in Dollars)	7,764	2,321
Financing receivable percentage of loan portfolio	3.30%	1.00%
Commercial and Industrial Loans [Member]
Financing receivable carrying amount (in Dollars)	32,826	30,176
Financing receivable percentage of loan portfolio	13.80%	12.90%
Agricultural Loans [Member]
Financing receivable carrying amount (in Dollars)	3,369	9,272
Financing receivable percentage of loan portfolio	1.40%	4.00%
Municipal Loans [Member]
Financing receivable carrying amount (in Dollars)	2,352	2,393
Financing receivable percentage of loan portfolio	1.00%	1.00%
Finance Leases Financing Receivable [Member]
Financing receivable carrying amount (in Dollars)	1,277	2,323
Financing receivable percentage of loan portfolio	0.50%	1.00%
Consumer Other Financing Receivable [Member]
Financing receivable carrying amount (in Dollars)	$ 1,194	$ 2,018
Financing receivable percentage of loan portfolio	0.50%	0.90%

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Note 8 - Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

	As of December 31, 2011
	Warrants Granted in
	2011			June 2010			April 2010
Outstanding common stock warrants subject to fair value accounting		1,541,849			3,000,000			2,000,000
Warrant exercise price	$	4.54		$	5.00		$	5.00
Market price of common stock	$	3.35		$	3.35		$	3.35
Average risk-free interest rate		1.89	%		0.36	%		0.36	%
Average expected volatility		33.57	%		44.01	%		45.07	%
Average expected life (in years)		9.81			3.46			3.32
Expected dividend yield		0.00	%		0.00	%		0.00	%

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	Fair Value Measurements Using
September 30, 2012	Level 1		Level 2		Level 3		Total
Available for sale securities:
U.S. Government agencies	$	-	$	43,247	$	-	$	43,247
Residential mortgage-backed securities		-		70,479		-		70,479
Municipal securities		-		16,592		-		16,592
Corporate debt securities		-		3,024		-		3,024
Asset-backed securities		-		13,724		-		13,724
Total available-for-sale securities		-		147,066		-		147,066
Loans held for sale		-		-		3,490		3,490
Warrant liability		-		-		-		-
Total net assets measured at fair value on a recurring basis	$	-	$	147,066	$	3,490	$	150,556

December 31, 2011
Available for sale securities:
U.S. Government agencies	$	-	$	26,417	$	-		$	26,417
Residential mortgage-backed securities		-		89,293		-			89,293
Municipal securities		-		5,057		-			5,057
Corporate debt securities		-		2,055		-			2,055
Asset-backed securities		-		5,488		-			5,488
Total available-for-sale securities		-		128,310		-			128,310
Loans held for sale		-		-		3,720			3,720
Warrant liability		-		-		(5,184	)		(5,184	)
Total net assets measured at fair value on a recurring basis	$	-	$	128,310	$	(1,464	)	$	126,846

Fair Value Measurements, Nonrecurring [Table Text Block]

(in thousands)	Fair Value Measurements Using								Current Period Gains
September 30, 2012	Level 1		Level 2		Level 3		Total		(Losses)
Financial assets measured at fair value on a non-recurring basis:
Impaired loans, net of specific reserves--
Construction and land development	$	-	$	-	$	500	$	500	$	(86	)
Commercial real estate - owner-occupied		-		-		1,893		1,893		-
Commercial real estate - non-owner-occupied		-		-		686		686		(79	)
Residential real estate		-		-		684		684		(213	)
All other real estate		-		-		-		-		-
Commercial and industrial		-		-		990		990		(60	)
Consumer and all other loans and lease financing		-		-		-		-		-
Total impaired loans, net of charge-offs and specific reserves	$	-	$	-	$	4,753	$	4,753	$	(438	)
Non-financial assets measured at fair value on a non-recurring basis:
Other real estate owned	$	-	$	-	$	1,463	$	1,463	$	(458	)

	Fair Value Measurements Using								Full Year Gains
December 31, 2011	Level 1		Level 2		Level 3		Total		(Losses)
Financial assets measured at fair value on a non-recurring basis:
Impaired loans, net of specific reserves--
Commercial and industrial	$	-	$	-	$	521	$	521	$	(145	)
Residential real estate	$	-	$	-	$	-		-	$	(87	)
Commercial real estate - non-owner-occupied		-		-		-		-		(116	)
Construction and land development		-		-		-		-		(21	)
Total impaired loans, net of charge-offs and specific reserves	$	-	$	-	$	521	$	521	$	(369	)
Non-financial assets measured at fair value on a non-recurring basis:
Other real estate owned	$	-	$	-	$	5,220	$	5,220	$	(113	)

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

(in thousands)	Level 3 Securities Available for Sale, Loans Held for Sale and Warrant Liability
	Nine Months Ended September 30
	2012			2011
Balance at beginning of year	$	(1,464	)	$	10,086
Net increase (decrease) in SBA loans held for sale		(115	)		232
Loans held for sale transfered into Level 3		4,283			-
Settlements - principal reductions in loans held for sale		(1,857	)		(4,252	)
Loan participations sold to related party		(1,952	)		-
Loans held for sale transferred to other real estate owned		(589	)		(1,069	)
Loans held for sale valuation reserve		-			(75	)
Cancellation of warrants accounted for as liabilities		5,116			-
Changes in fair value of warrant liability		68			1,207
Balance at end of period	$	3,490		$	6,129

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block]

(in thousands)	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and due from banks	$	21,197	$	21,197	$	61,621	$	61,621
Interest-bearing deposits in other banks		5,176		5,176		3,592		3,592
Investment securities		147,066		147,066		128,310		128,310
Loans held for sale		3,490		3,490		3,720		3,720
Loans, net of allowance for loan and lease losses		229,437		225,338		226,623		224,721
Federal Home Loan Bank and other stocks		6,699		6,699		3,926		3,926
Accrued interest receivable		1,353		1,353		1,450		1,450
Financial Liabilities:
Deposits		389,408		389,641		410,574		411,323
Other borrowings		3,800		3,800		-		-
Junior subordinated debt securities		5,576		4,188		5,491		4,527
Accrued interest payable		140		140		330		330
Warrant liability		-		-		5,184		5,184

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Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (USD $)	Scenario, Previously Reported [Member] Common Stock [Member]	Scenario, Previously Reported [Member] Additional Paid-in Capital [Member]	Scenario, Previously Reported [Member] Retained Earnings [Member]	Scenario, Previously Reported [Member] Accumulated Other Comprehensive Income (Loss) [Member]	Scenario, Previously Reported [Member]	Scenario, Actual [Member] Common Stock [Member]	Scenario, Actual [Member] Additional Paid-in Capital [Member]	Scenario, Actual [Member] Retained Earnings [Member]	Scenario, Actual [Member] Accumulated Other Comprehensive Income (Loss) [Member]	Scenario, Actual [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at January 1, 2012, as adjusted at Dec. 31, 2010
Balance at December 31, 2011, as previously reported	$ 40,825,000	$ 2,375,000	$ (16,438,000)	$ 1,695,000	$ 28,457,000
Balance at December 31, 2011, as previously reported (in Shares)	7,755,066
Adjustment to net contribution from shareholder recognized in additional paid-in capital for Santa Lucia merger		1,130,000			1,130,000
Balance at September 30, 2012 at Dec. 31, 2011	40,825,000	2,375,000	(16,438,000)	1,695,000	28,457,000	40,825,000	3,505,000	(16,438,000)	1,695,000	29,587,000					29,587,000
Balance at September 30, 2012 (in Shares) at Dec. 31, 2011	7,755,066					7,755,066
Balance at December 31, 2011, as previously reported											41,325,000	8,730,000	(16,487,000)	2,293,000	35,861,000
Balance at December 31, 2011, as previously reported (in Shares)											7,855,066
Adjustment to net contribution from shareholder recognized in additional paid-in capital for Santa Lucia merger															1,130,000
Exercise of common stock warrants						500,000				500,000
Exercise of common stock warrants (in Shares)						100,000
Dividends declared on subsidiary-issued preferred stock								(500,000)		(500,000)					500,000
Stock-based compensation							109,000			109,000					109,000
Cancellation of warrants accounted for as liabilities							5,116,000			5,116,000
Net income								451,000		451,000					451,000
Other comprehensive income									598,000	598,000					1,049,000
Balance at September 30, 2012 at Sep. 30, 2012											41,325,000	8,730,000	(16,487,000)	2,293,000	35,861,000
Balance at September 30, 2012 (in Shares) at Sep. 30, 2012											7,855,066
Balance at January 1, 2012, as adjusted at Jun. 30, 2012
Balance at December 31, 2011, as previously reported											41,325,000	8,730,000	(16,487,000)	2,293,000	35,861,000
Balance at December 31, 2011, as previously reported (in Shares)											7,855,066
Dividends declared on subsidiary-issued preferred stock															151,000
Stock-based compensation															36,000
Net income															760,000
Other comprehensive income															918,000
Balance at September 30, 2012 at Sep. 30, 2012											$ 41,325,000	$ 8,730,000	$ (16,487,000)	$ 2,293,000	$ 35,861,000
Balance at September 30, 2012 (in Shares) at Sep. 30, 2012											7,855,066

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Liquidation value (in Dollars)	$ 4,800,000
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	7,855,066	7,755,066
Common stock, shares outstanding	7,855,066	7,755,066
Bancorp-Issued Preferred Stock Series A, B, and C [Member]
Liquidation value (in Dollars)	1,205,000	1,205,000
Subsidiary-Issued Preferred Stock [Member]
Liquidation value (in Dollars)	$ 4,800,000	7,000,000

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Note 9 - Business Combination

9 Months Ended

Sep. 30, 2012

Business Combination Disclosure [Text Block]

Note 9 — Business Combination

On October 21, 2011, Santa Lucia Bank, Atascadero, California (“SL Bank”), was merged with and into the Bank (the "Bank Merger") under an Agreement and Plan of Merger by and among Bancorp, the Bank, Carpenter Fund Manager GP, LLC (“Carpenter”), as General Partner of Carpenter Community BancFund L.P. and Carpenter Community BancFund-A., L.P. (the “Funds”), Santa Lucia Bancorp (“SL Bancorp”), the parent holding company of SL Bank and SL Bank.  For Bancorp and the Bank, this transaction is accounted for based on transactions between entities under common control, as our largest shareholder acquired SL Bancorp immediately prior to the Bank Merger and contributed Santa Lucia Bank to the Company.

The Bank Merger was undertaken to increase the Company’s market share in its primary market—San Luis Obispo County and northern Santa Barbara County.  The combined bank had $455 million in assets and $414 million in deposits immediately following the Bank Merger and continues to operate under the Mission Community Bank name, with full-service branch offices in San Luis Obispo and Santa Barbara counties in the cities of San Luis Obispo, Paso Robles, Atascadero, Arroyo Grande and Santa Maria.  With the acquisition, the Company has initiated a strategic plan intended to build the premier California Central Coast banking franchise.  This initiative is designed to capitalize on the distinctive characteristics of the Central Coast banking markets in San Luis Obispo, Santa Barbara and Ventura counties.

SL Bank’s results of operations have been included in the Company’s results beginning October 22, 2011.  The excess of the fair value of net assets of $906,000 arising from the acquisition was recognized in additional paid-in capital in the fourth quarter of 2011.  The fair values of assets acquired and liabilities assumed are subject to adjustment during the first twelve months after the acquisition date if additional information becomes available to indicate a more accurate or appropriate value for an asset or liability.  Assets that were particularly susceptible to adjustment included certain loans, other real estate owned and certain premises and equipment.  During the first quarter of 2012, management recorded a $428,000 increase in loans, based on the estimated fair value of certain loans.  In the second quarter of 2012, management recorded a $569,000 increase in the fair value of premises and equipment and a $194,000 increase in the fair value of other real estate owned, based on real estate appraisals.  Also in the second quarter of 2012, a $61,000 decrease to accrued interest receivable on investments was recorded.  These measurement period adjustments have been presented on a retrospective basis, consistent with applicable accounting guidance.  As of September 30, 2012, the Company does not expect any more measurement period adjustments.  The following table summarizes the adjusted estimated fair value of assets acquired and liabilities assumed recognized as of the acquisition date (in thousands):

Recognized amounts of identifiable assets acquired and liabilities assumed:
Financial assets--
Cash and cash equivalents	$	53,998
Investment securities		21,487
Loans		122,374
Federal Home Loan Bank and other stocks		1,574
Company-owned life insurance		4,690
Other financial assets		1,024
Total financial assets		205,147
Premises and equipment		13,591
Other real estate owned		2,742
Identifiable intangible assets		3,237
Other assets		289
Total assets	$	225,006
Financial liabilities:
Deposits		(220,102	)
Junior subordinated debt securities		(2,380	)
Other financial liabilities		(162	)
Total financial liabilities		(222,644	)
Other liabilities		(325	)
Total liabilities	$	(222,969	)
Identifiable net assets acquired / net contribution from shareholder	$	2,037

The following table presents pro forma information as if the acquisition had occurred on January 1, 2011.  The pro forma information includes adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the transaction, depreciation expense on property acquired, and interest expense on deposits acquired.  The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
(in thousands)	2011			2011
Interest income	$	5,564		$	16,919
Non-interest income		790			2,787
Net (loss)		(577	)		(756	)
Basic and diluted loss per share	$	(0.12	)	$	(0.21	)

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Document And Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 02, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	Mission Community Bancorp
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		7,855,066
Amendment Flag	false
Entity Central Index Key	0001129920
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

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Note 10 - Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

Description of New Accounting Pronouncements Not yet Adopted [Text Block]

Note 10 — Recent Accounting Pronouncements

Fair Value Measurement

In May 2011, FASB issued Accounting Standards Update (“ASU”) ASU 2011-04, Fair Value Measurement (Topic 820) – Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRS.  ASU 2011-04 amends Topic 820, Fair Value Measurements and Disclosures, to converge the fair value measurement guidance under U.S. generally accepted accounting principles and International Financial Reporting Standards.  ASU 2011-04 clarifies the application of existing fair value measurement requirements, changes certain principles in Topic 820 and requires additional fair value disclosures.  ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011.  Adoption of ASU 2011-04 in the quarter ended March 31, 2012, did not have a significant on the Company’s consolidated financial statements.

Comprehensive Income

In June 2011, FASB issued ASU 2011-05, Comprehensive Income (Topic 220) – Presentation of Comprehensive Income.  ASU 2011-05 amends Topic 220, Comprehensive Income, to require that all nonowner changes in shareholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements.  Additionally, ASU 2011-05 requires entities to present, on the face of the financial statements, reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement or statements where the components of net income and the components of other comprehensive income are presented.  The option to present components of other comprehensive income as part of the statement of changes in shareholders’ equity was eliminated.  ASU 2011-05 is effective for interim and annual periods beginning after December 15, 2011.  Additionally, in December 2011, FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Reclassification of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05.  ASU 2011-12 defers the effective date for the changes in ASU 2011-05 that specifically refer to the presentation of the effects of reclassification adjustments out of accumulated other comprehensive income on the components of net income and other comprehensive income on the face of the financial statements for all periods presented.  ASU 2011-12 reinstates the requirements of the presentation of reclassifications out of accumulated other comprehensive income that were in place before the issuance of ASU 2011-05.  The Company will continue to disclose the effects of reclassifications in the footnotes to the financial statements.  The effective date for ASU 2011-12 is the same as for ASU 2011-05.  Neither ASU 2011-05 nor ASU 2011-12 had a significant impact on the consolidated financial statements.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Interest Income
Interest and fees on loans	$ 3,739	$ 1,785	$ 12,389	$ 5,271
Interest on investment securities	696	470	2,035	1,350
Other interest income	17	6	85	22
Total interest income	4,452	2,261	14,509	6,643
Interest Expense
Interest on money market, NOW and savings deposits	71	86	212	305
Interest on time certificates of deposit	149	217	601	693
Other interest expense	82	25	246	80
Total interest expense	302	328	1,059	1,078
Net interest income	4,150	1,933	13,450	5,565
Provision for loan and lease losses	225	300	675	300
Net interest income after provision for loan and lease losses	3,925	1,633	12,775	5,265
Non-interest income
Service charges on deposit accounts	236	114	691	312
Gain on sale of SBA-guaranteed loans		31	8	172
Net gains(losses) on disposition of other loans held for sale	685	209	711	255
Loan servicing fees, net of amortization	37	38	119	97
Gain on sale or call of available-for-sale securities	407	4	934	4
Gain(loss) or writedown of other real estate owned and premises and equipment	(170)	(94)	(458)	(71)
Change in fair value of warrant liability	(11)	248	68	1,207
Other income and fees	128	138	341	260
Total non-interest income	1,312	688	2,414	2,236
Non-interest expense
Salaries and employee benefits	2,237	1,601	7,090	4,364
Occupancy expenses	431	341	1,353	993
Furniture and equipment	162	120	597	346
Data processing	464	276	1,805	739
Professional fees	265	369	1,000	902
Marketing and business development	96	47	312	140
Office supplies and expenses	145	66	537	192
Insurance and regulatory assessments	162	86	485	312
Loan and lease expenses	56	42	246	202
Other real estate expenses	89	15	238	113
Provision for unfunded loan commitments	25	180	25	180
Amortization of core deposit intangible asset	101		303
Other expenses	244	178	744	495
Total non-interest expense	4,477	3,321	14,735	8,978
Income (loss) before income taxes	760	(1,000)	454	(1,477)
Income tax expense		1	3	6
Net income (loss)	760	(1,001)	451	(1,483)
Less dividends on preferred stock	151	64	500	192
Net income (loss) attributable to common stock	$ 609	$ (1,065)	$ (49)	$ (1,675)
Per Common Share Data:
Net income (loss) - basic (in Dollars per share)	$ 0.08	$ (0.15)	$ (0.01)	$ (0.24)
Net income (loss) - diluted (in Dollars per share)	$ 0.08	$ (0.15)	$ (0.01)	$ (0.24)
Average common shares outstanding - basic (in Shares)	7,855,066	7,094,274	7,792,292	7,094,274
Average common shares outstanding - diluted (in Shares)	7,855,066	7,094,274	7,792,292	7,094,274

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Note 4 - Loans

9 Months Ended

Sep. 30, 2012

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 4 — Loans

The Company’s loan portfolio consists primarily of loans to borrowers within the Central Coast area of California.  Although the Company seeks to avoid concentrations of loans to a single industry or based upon a single class of collateral, real estate and real estate associated businesses are among the principal industries in the Company’s market area and, as a result, the loan and collateral portfolios are concentrated in those industries and in that geographic area.

The following table shows the composition of the Company’s loans by type:

Loan Composition
(Dollars in thousands)
	September 30, 2012					December 31, 2011
Type of Loan	Amount		Percentage			Amount		Percentage
Construction and land development	$	11,695		4.9	%	$	18,022		7.6	%
Commercial real estate - owner-occupied		69,410		29.3	%		70,153		30.0	%
Commercial real estate - non-owner-occupied		75,020		31.7	%		64,382		27.6	%
Residential real estate		32,120		13.6	%		32,609		14.0	%
All other real estate loans		7,764		3.3	%		2,321		1.0	%
Commercial and industrial loans		32,826		13.8	%		30,176		12.9	%
Agricultural loans		3,369		1.4	%		9,272		4.0	%
Municipal loans		2,352		1.0	%		2,393		1.0	%
Leases, net of unearned income		1,277		0.5	%		2,323		1.0	%
Consumer loans		1,194		0.5	%		2,018		0.9	%
Total loans	$	237,027		100.0	%	$	233,669		100.0	%

The table above includes loans held for sale as follows:

Loans Held for Sale*
(Dollars in thousands)
	September 30, 2012					December 31, 2011
Type of Loan	Amount		% of Total Loans			Amount		% of Total Loans
Commercial	$	278		0.1	%	$	115		0.1	%
Real estate		1,656		0.7	%		3,030		1.3	%
Construction and land development		1,556		0.7	%		575		0.2	%
Total loans held for sale	$	3,490		1.5	%	$	3,720		1.6	%

* Consists of all loans held at Mission Asset Management, Inc. and SBA-guaranteed loans held for sale at Mission Community Bank

Loans and leases, other than those held for sale, are carried at the principal amount outstanding, net of any deferred loan origination fee income and deferred direct loan origination costs, and net of any unearned interest on discounted loans.  A separate allowance for loan and lease losses is provided for loans held for investment.  Loans held for sale, including $1,174,000 of impaired loans, are carried at the lower of cost or fair value, with no allowance for loan losses.

As of September 30, 2012, and December 31, 2011, loans totaling $198,553,000 and $98,111,000, respectively, were pledged to secure borrowings and potential borrowing facilities from the Federal Home Loan Bank of San Francisco.

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Note 3 - Investment Securities

9 Months Ended

Sep. 30, 2012

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 3 — Investment Securities

Investment securities have been classified in the consolidated balance sheets as available for sale according to management’s intent.  The amortized cost of securities and their approximate fair values as of the balance sheet dates were as follows:

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2012:
U.S. Government agencies	$	42,686	$	561	$	-		$	43,247
Residential mortgage-backed securities		68,968		1,527		(16	)		70,479
Municipal securities		16,445		202		(55	)		16,592
Corporate debt securities		3,026		4		(6	)		3,024
Asset-backed securities		13,647		77		-			13,724
	$	144,772	$	2,371	$	(77	)	$	147,066

December 31, 2011:
U.S. Government agencies	$	26,098	$	331	$	(12	)	$	26,417
Residential mortgage-backed securities		88,209		1,122		(38	)		89,293
Municipal securities		4,820		239		(2	)		5,057
Corporate debt securities		2,059		-		(4	)		2,055
Asset-backed securities		5,429		79		(20	)		5,488
	$	126,615	$	1,771	$	(76	)	$	128,310

The scheduled maturities of investment securities at September 30, 2012, were as follows.  Actual maturities may differ from contractual maturities because some investment securities may allow the right to call or prepay the obligation with or without call or prepayment penalties.

(in thousands)	Available-for-Sale Securities
	Amortized Cost		Fair Value
Within one year	$	6,939	$	6,963
Due in one year to five years		32,979		33,034
Due in five years to ten years		39,207		39,877
Due in greater than ten years		65,647		67,192
	$	144,772	$	147,066

Investment securities in a temporary unrealized loss position as of each balance sheet date are shown in the following table, based on the length of time they have been continuously in an unrealized loss position:

(in thousands)	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2012:
Residential mortgage-backed securities	$	9,601	$	16	$	-	$	-	$	9,601	$	16
Municipal securities		4,986		55		-		-		4,986		55
Corporate debt securities		1,994		6		-		-		1,994		6
	$	16,581	$	77	$	-	$	-	$	16,581	$	77

December 31, 2011:
U.S. Government agencies	$	2,082	$	12	$	-	$	-	$	2,082	$	12
Residential mortgage-backed securities		9,731		38		-		-		9,731		38
Municipal securities		240		2		-		-		240		2
Corporate debt securities		1,055		4		-		-		1,055		4
Asset-backed securities		1,585		20		-		-		1,585		20
	$	14,693	$	76	$	-	$	-	$	14,693	$	76

As of September 30, 2012, the Company held 22 securities that had been in an unrealized loss position for less than 12 months.  No securities have been in an unrealized loss position for 12 months or longer as of September 30, 2012.  The unrealized losses relate principally to changes in market interest rate conditions.  All of the securities continue to pay as scheduled.  When analyzing the issuer’s financial condition, management considers the length of time and extent to which the market value has been less than cost; the historical and implied volatility of the security; the financial condition of the issuer of the security; and the Bank’s intent and ability to hold the security to recovery.  As of September 30, 2012, management does not have the intent to sell these securities nor does it believe it is more likely than not that it will be required to sell these securities before maturity or the recovery of amortized cost basis.  Based on the Bank’s evaluation of the above and other relevant factors, the Bank does not believe the securities that are in an unrealized loss position as of September 30, 2012, are other than temporarily impaired.

No securities were sold in the first nine months of 2011.  Gains totaling $407,000 were recognized in the third quarter of 2012 on sales of $29,692,000 of securities. For the first nine months of 2012 gains of $934,000 were recognized on sales of $54,788,000 of available-for-sale securities.

As of September 30, 2012, investment securities carried at $8,670,000 were pledged to secure public deposits, as required by law.  Investment securities carried at $16,695,000 as of September 30, 2012, were pledged to secure borrowing facilities from the Federal Home Loan Bank of San Francisco.

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Note 6 - Common and Preferred Stock and Earnings (Loss) per Share (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

	Shares			Weighted Average Exercise Price
Outstanding January 1, 2011		5,748,672			5.00
Warrants granted in 2011		2,202,641		$	4.54
Warrants exercised in 2011		(660,792	)		4.54
Outstanding December 31, 2011		7,290,521		$	4.90
Warrants granted in 2012		6,659,780		$	5.00
Warrants cancelled in 2012		(6,541,849	)		4.89
Warrants exercised in 2012		(100,000	)		5.00
Outstanding September 30, 2012		7,308,452		$	5.00

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

(in thousands, except per share data)	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2012		2011			2012			2011
Net income (loss)	$	760	$	(1,001	)	$	451		$	(1,483	)
Less dividends on preferred stock:
Non-convertible subsidiary-issued preferred stock		151		-			500			-
TARP preferred stock (Series D)		-		64			-			192
Net income allocated to all classes of preferred stock		151		64			500			192
Net income (loss) attributable to common stock	$	609	$	(1,065	)	$	(49	)	$	(1,675	)
Average common shares outstanding		7,855,066		7,094,274			7,792,292			7,094,274
Dilutive effect of outstanding stock options		-		-			-			-
Average common shares used for diluted EPS		7,855,066		7,094,274			7,792,292			7,094,274
Basic earnings (loss) per common share	$	0.08	$	(0.15	)	$	(0.01	)	$	(0.24	)
Diluted earnings (loss) per common share	$	0.08	$	(0.15	)	$	(0.01	)	$	(0.24	)

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Note 2 - Stock Based Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2012

Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value [Table Text Block]

Date of grant	1/25/2011			4/4/2011			7/26/2011
Number of options granted		20,000			20,000			20,000
Exercise price	$	5.00		$	5.00		$	5.00
Market price of common stock	$	3.65		$	3.61		$	3.55
Expected stock price volatility		37.4	%		37.3	%		36.2	%
Expected option life (years)		6			6			6
Risk-free interest rate		2.32	%		2.53	%		2.07	%
Weighted average fair value of all options granted during the period:
3 months ended 9/30/11							$	1.03
9 months ended 9/30/11							$	1.06

Schedule of Unrecognized Compensation Cost, Nonvested Awards [Table Text Block]

October 1 through December 31, 2012	$	35
2013		85
2014		29
2015		29
2016		19
Total unrecognized compensation cost	$	197

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of In-the-Money Options
Outstanding at beginning of period		297,219		$	7.84
Options granted		-
Options exercised		-
Options expired unexercised		(9,500	)		11.30
Options forfeited		(19,819	)		20.48
Outstanding at end of period		267,900		$	6.78		7.9	$	-
Options exercisable at end of period		122,338		$	8.76		7.2	$	-
Options Vested or Expected to Vest		267,900		$	6.78		7.9	$	-

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Note 7 - Income Taxes

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Text Block]

Note 7 —Income taxes

Due to a limitation on the Company’s ability to recognize deferred tax assets, no federal income tax expense or benefit was recognized for the nine-month periods ended September 30, 2012 and 2011.

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Note 5 - Credit Quality and the Allowance for Loan and Lease Losses

9 Months Ended

Sep. 30, 2012

Allowance for Credit Losses [Text Block]

Note 5 — Credit Quality and the Allowance for Loan and Lease Losses

An allowance for loan and lease losses is provided for loans held for investment (i.e., not held for sale).  Loans held for sale are carried on the consolidated balance sheets at the lower of cost or fair value, therefore no related allowance for loan losses is provided.

Following is a summary of the changes in the allowance for loan and lease losses for the three-month and nine-month periods ended September 30:

(in thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Balance at beginning of period	$	3,781		$	3,182		$	3,326		$	3,198
Provision for loan and lease losses charged to expense		225			300			675			300
Loans charged off		(22	)		(360	)		(144	)		(460	)
Recoveries on loans previously charged off		116			42			243			126
Balance at end of period	$	4,100		$	3,164		$	4,100		$	3,164

Changes in the allowance for loan and lease losses for the three-month and nine-month periods ended September 30, 2012 and 2011, are shown below disaggregated by portfolio segment:

	Three Months Ended September 30, 2012
Loan Portfolio Segment	Balance at Beginning of Period		Provision for Loan Losses Charged (Credited) to Expense			Less Loans Charged Off			Plus Recoveries on Loans Previously Charged Off		Balance at End of Period
Construction and land development	$	366	$	(97	)	$	-		$	-	$	269
Commercial real estate - owner-occupied		505		85			-			28		618
Commercial real estate - non-owner-occupied		883		73			-			-		956
Residential real estate		658		154			-			-		812
All other real estate loans		6		33			-			-		39
Commercial and industrial loans		1,197		70			-			13		1,280
Consumer and all other loans and lease financing		134		(76	)		(22	)		75		111
Unallocated		32		(17	)		-			-		15
Totals	$	3,781	$	225		$	(22	)	$	116	$	4,100

	Three Months Ended September 30, 2011
Loan Portfolio Segment	Balance at Beginning of Year		Provision for Loan Losses Charged (Credited) to Expense			Less Loans Charged Off			Plus Recoveries on Loans Previously Charged Off		Balance at End of Period
Construction and land development	$	123	$	11		$	-		$	-	$	134
Commercial real estate - owner-occupied		393		(74	)		(22	)		-		297
Commercial real estate - non-owner-occupied		714		188			(125	)		-		777
Residential real estate		516		29			(69	)		35		511
All other real estate loans		4		-			-			-		4
Commercial and industrial loans		1,037		383			(115	)		4		1,309
Consumer and all other loans and lease financing		113		(39	)		(29	)		3		48
Unallocated		282		(198	)		-			-		84
Totals	$	3,182	$	300		$	(360	)	$	42	$	3,164

	Nine Months Ended September 30, 2012
Loan Portfolio Segment	Balance at Beginning of Period		Provision for Loan Losses Charged (Credited) to Expense			Less Loans Charged Off			Plus Recoveries on Loans Previously Charged Off		Balance at End of Period
Construction and land development	$	157	$	112		$	-		$	-	$	269
Commercial real estate - owner-occupied		253		335			-			30		618
Commercial real estate - non-owner-occupied		675		281			-			-		956
Residential real estate		640		172			-			-		812
All other real estate loans		4		35			-			-		39
Commercial and industrial loans		1,363		(70	)		(101	)		88		1,280
Consumer and all other loans and lease financing		124		(95	)		(43	)		125		111
Unallocated		110		(95	)		-			-		15
Totals	$	3,326	$	675		$	(144	)	$	243	$	4,100

	Nine Months Ended September 30, 2011
Loan Portfolio Segment	Balance at Beginning of Year		Provision for Loan Losses Charged (Credited) to Expense			Less Loans Charged Off			Plus Recoveries on Loans Previously Charged Off		Balance at End of Period
Construction and land development	$	531	$	(397	)	$	-		$	-	$	134
Commercial real estate - owner-occupied		164		144			(21	)		10		297
Commercial real estate - non-owner-occupied		697		205			(125	)		-		777
Residential real estate		501		114			(153	)		49		511
All other real estate loans		4		-			-			-		4
Commercial and industrial loans		1,021		350			(123	)		61		1,309
Consumer and all other loans and lease financing		124		(44	)		(38	)		6		48
Unallocated		156		(72	)		-			-		84
Totals	$	3,198	$	300		$	(460	)	$	126	$	3,164

The Company assigns asset quality (i.e., risk) ratings to all loans except pools of homogeneous loans and those asset quality ratings are continuously reviewed and updated by management at least quarterly or as conditions dictate.  These asset quality ratings are also subject to semi-annual examination by independent specialists engaged by the Company, and also by its regulators.  During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which borrowers operate and the fair values of collateral securing these loans.  These credit quality indicators are used to assign an asset quality rating to each individual loan.  The asset quality ratings can be grouped into five major categories, defined as follows:

  Pass –  A pass loan meets all of the Company’s underwriting criteria and provides adequate protection for the Bank through the paying capacity of the borrower and/or the value and marketability of the collateral.

Special Mention –  A special mention loan has potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Company’s credit position at some future date.  Special Mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

  Substandard –  A substandard loan is not adequately protected by the current sound worth and paying capacity of the borrower or the value of the collateral pledged, if any.  Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.  Substandard loans have a high probability of payment default, or they have other well defined weaknesses, and are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization.

  Doubtful –  Loans classified doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

  Loss –  Loans classified as loss are considered uncollectible and are of such little value that their continuance as bankable assets is not warranted.  Loans classified as loss are charged off immediately.

The following table shows the Company’s loan portfolio (excluding loans held for sale) allocated by management’s internal asset quality ratings as of the dates indicated:

Loans by Asset Quality Rating (excluding loans held for sale*)	Asset Quality Ratings
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Total Loans
As of September 30, 2012:
Construction and land development	$	9,455	$	100	$	585	$	-	$	10,140
Commercial real estate - owner-occupied		62,593		-		5,831		-		68,424
Commercial real estate - non-owner-occupied		71,595		2,409		1,178		-		75,182
Residential real estate		28,621		-		2,284		185		31,090
All other real estate		7,732		-		32		-		7,764
Commercial and industrial		34,122		324		3,765		-		38,211
Consumer and all other loans and lease financing		2,726		-		-		-		2,726
Total loans, net of unearned income	$	216,844	$	2,833	$	13,675	$	185	$	233,537

As of December 31, 2011:
Construction and land development	$	13,931	$	157	$	3,359	$	-	$	17,447
Commercial real estate - owner-occupied		68,899		-		4,566		-		73,465
Commercial real estate - non-owner-occupied		49,139		5,154		5,116		-		59,409
Residential real estate		27,672		491		3,365		-		31,528
All other real estate		1,895		138		-		-		2,033
Commercial and industrial		32,154		250		6,841		88		39,333
Consumer and all other loans and lease financing		6,734		-		-		-		6,734
Total loans, net of unearned income	$	200,424	$	6,190	$	23,247	$	88	$	229,949

* Loans held for sale consists of all loans held at Mission Asset Management, Inc. and SBA-guaranteed loans held for sale at Mission Community Bank

The following table shows an aging analysis of the loan portfolio (excluding loans held for sale) as of the dates indicated.  Also shown are loans on non-accrual, those that are past due and still accruing interest and troubled debt restructurings:

(in thousands)
			Commercial Real Estate										Consumer and All
	Construction and Land Development		Owner-Occupied		Non-Owner-Occupied		Residential Real Estate		All Other Real Estate		Commercial and Industrial		Other Loans and Leases		Total Loans
As of September 30, 2012:
Recorded Balance of Loans Past Due:
30-59 Days	$	-	$	59	$	-	$	158	$	-	$	427	$	174	$	818
60-89 Days		268		1,000		-		-		-		57		-		1,325
90+ Days		-		771		-		185		-		265		-		1,221
Total Past Due		268		1,830		-		343		-		749		174		3,364
Loans in Current Payment Status		9,872		66,594		75,182		30,747		7,764		37,462		2,552		230,173
Total Loans	$	10,140	$	68,424	$	75,182	$	31,090	$	7,764	$	38,211	$	2,726	$	233,537
Loans 90+ Days Past Due and Accruing1	$	-	$	-	$	-	$	-	$	-	$	120	$	7	$	127
Accruing Troubled Debt Restructurings		-		-		-		-		-		711		-		711
Loans in Non-accrual Status		317		2,267		866		851		32		1,608		-		5,941

As of December 31, 2011:
Recorded Balance of Loans Past Due:
30-59 Days	$	492	$	594	$	-	$	-	$	-	$	549	$	-	$	1,635
60-89 Days		-		-		-		423		-		220		-		643
90+ Days		1,323		1,033		21		147		-		627		-		3,151
Total Past Due		1,815		1,627		21		570		-		1,396		-		5,429
Loans in Current Payment Status		15,632		71,838		59,388		30,958		2,033		37,937		6,734		224,520
Total Loans	$	17,447	$	73,465	$	59,409	$	31,528	$	2,033	$	39,333	$	6,734	$	229,949
Loans 90+ Days Past Due and Accruing1	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Accruing Troubled Debt Restructurings		-		-		-		-		-		-		-		-
Loans in Non-accrual Status		2,031		1,429		122		1,296		-		2,107		-		6,985

1 Includes pooled loans acquired with deteriorated credit quality.  Management evaluates estimated cash flows subsequent to acquisition.  If cash flows have not decreased, the pooled acquired loans remain in performing status.

The Company considers a loan to be impaired when it is probable that the Company will be unable to collect all amounts due (principal and interest) according to the contractual terms of the loan agreement.  Loans for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are generally considered to be troubled debt restructurings (“TDR’s”). TDR’s typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms.  Both non-accrual loans and TDR’s are generally considered to be impaired.

Concessions granted in TDR’s typically are intended to reduce the borrower’s cash requirements, such as an extension of the payment terms or a change in the interest rate charged.  TDR’s with extended payment terms are accounted for as impaired until adequate performance is established.  A reduction in the interest rate for a borrower experiencing financial difficulties would result in a change to TDR status if the restructured loan yield is below the yield for a new loan with comparable risk. TDR’s with below-market rates are considered impaired until fully collected.   TDR’s may be reported as non-accrual, rather than TDR, if they are not performing under the restructured terms or if adequate payment performance under the restructured terms has yet to be established.

Ten troubled debt restructurings totaling $1,853,000 were effected in the first nine months of 2012 and one for $7,000 in the first nine months of 2011.  One troubled debt restructuring for $711,000 was in accruing status and less than 90 days past due as of September 30, 2012; none were accruing as of December 31, 2011.  The Bank has no commitments to lend additional funds under loans classified as troubled debt restructurings as of September 30, 2012.

Following are summaries of the investment in loans (by impairment method, excluding loans held for sale) as of the dates indicated, including the related allowance for loan losses and cash-basis income recognized:

(in thousands)
			Commercial Real Estate										Consumer and All
	Construction and Land Development		Owner-Occupied		Non-Owner-Occupied		Residential Real Estate		All Other Real Estate		Commercial and Industrial		Other Loans and Leases		Unallocated		Total Loans
Loans Held for Investment as of September 30, 2012:
Recorded Investment:
Impaired Loans With an Allowance Recorded	$	214	$	-	$	765	$	897	$	-	$	293	$	-			$	2,169
Impaired Loans With No Allowance Recorded		372		1,893		-		-		-		823		-				3,088
Total Loans Individually Evaluated For Impairment		586		1,893		765		897		-		1,116		-				5,257
Loans Collectively Evaluated For Impairment		7,079		49,524		62,865		25,655		7,764		35,964		2,543				191,394
Loans Acquired With Deteriorated Credit Quality		2,475		17,007		11,552		4,538		-		1,131		183				36,886
Total Loans Held for Investment	$	10,140	$	68,424	$	75,182	$	31,090	$	7,764	$	38,211	$	2,726			$	233,537
Unpaid Principal Balance:
Impaired Loans With An Allowance Recorded	$	223	$	-	$	765	$	901	$	-	$	120	$	-			$	2,009
Impaired Loans With No Allowance Recorded		378		2,025		-		-		-		817		-				3,220
Total Loans Individually Evaluated For Impairment		601		2,025		765		901		-		937		-				5,229
Loans Collectively Evaluated For Impairment		7,079		49,524		62,865		25,655		7,764		35,964		2,543				191,394
Loans Acquired With Deteriorated Credit Quality		6,288		18,749		13,251		6,498		-		2,914		187				47,887
Total Loans Held for Investment	$	13,968	$	70,298	$	76,881	$	33,054	$	7,764	$	39,815	$	2,730			$	244,510
Related Allowance for Loan and Lease Losses:
Impaired Loans With An Allowance Recorded	$	86	$	-	$	79	$	213	$	-	$	126	$	-			$	504
Impaired Loans With No Allowance Recorded		-		-		-		-		-		-		-				-
Total Loans Individually Evaluated For Impairment		86		-		79		213		-		126		-				504
Loans Collectively Evaluated For Impairment		183		618		877		599		39		1,154		111	$	15		3,596
Loans Acquired With Deteriorated Credit Quality		-		-		-		-		-		-		-				-
Total Loans Held for Investment	$	269	$	618	$	956	$	812	$	39	$	1,280	$	111	$	15	$	4,100
For the Nine Months Ended September 30, 2012:
Average Recorded Investment in Impaired Loans:
Impaired Loans With An Allowance Recorded	$	103	$	145	$	191	$	318	$	-	$	366	$	-			$	1,123
Impaired Loans With No Allowance Recorded		229		1,447		-		-		-		558		-				2,234
Total Loans Individually Evaluated For Impairment	$	332	$	1,592	$	191	$	318	$	-	$	924	$	-			$	3,357
Interest Income Recognized on Impaired Loans:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	-	$	-			$	-
Impaired Loans With No Allowance Recorded		13		-		-		38		-		6		-				57
Total Loans Individually Evaluated For Impairment	$	13	$	-	$	-	$	38	$	-	$	6	$	-			$	57

(in thousands)			Commercial Real Estate										Consumer and All
	Construction and Land Development		Owner-Occupied		Non-Owner-Occupied		Residential Real Estate		All Other Real Estate		Commercial and Industrial		Other Loans and Leases		Unallocated		Total Loans
Loans Held for Investment as of December 31, 2011:
Recorded Investment:
Impaired Loans With an Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	396	$	-			$	396
Impaired Loans With No Allowance Recorded		-		1,028		-		-		-		423		-				1,451
Total Loans Individually Evaluated For Impairment		-		1,028		-		-		-		819		-				1,847
Loans Collectively Evaluated For Impairment		11,617		57,980		42,406		27,103		2,033		34,519		6,547				182,205
Loans Acquired With Deteriorated Credit Quality		5,830		14,457		17,003		4,425		-		3,995		187				45,897
Total Loans Held for Investment	$	17,447	$	73,465	$	59,409	$	31,528	$	2,033	$	39,333	$	6,734			$	229,949
Unpaid Principal Balance:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	443	$	-			$	443
Impaired Loans With No Allowance Recorded		-		1,045		-		-		-		518		-				1,563
Total Loans Individually Evaluated For Impairment		-		1,045		-		-		-		961		-				2,006
Loans Collectively Evaluated For Impairment		11,617		57,980		42,406		27,103		2,033		34,519		6,547				182,205
Loans Acquired With Deteriorated Credit Quality		9,981		16,350		18,954		5,129		-		6,132		191				56,737
Total Loans Held for Investment	$	21,598	$	75,375	$	61,360	$	32,232	$	2,033	$	41,612	$	6,738			$	240,948
Related Allowance for Loan and Lease Losses:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	81	$	-			$	81
Impaired Loans With No Allowance Recorded		-		-		-		-		-		-		-				-
Total Loans Individually Evaluated For Impairment		-		-		-		-		-		81		-				81
Loans Collectively Evaluated For Impairment		157		253		675		640		4		1,282		124	$	110		3,245
Loans Acquired With Deteriorated Credit Quality		-		-		-		-		-		-		-				-
Total Loans Held for Investment	$	157	$	253	$	675	$	640	$	4	$	1,363	$	124	$	110	$	3,326
For the Year Ended December 31, 2011:
Average Recorded Investment in Impaired Loans:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	224	$	-			$	224
Impaired Loans With No Allowance Recorded		-		1,011		-		-		-		341		-				1,352
Total Loans Individually Evaluated For Impairment	$	-	$	1,011	$	-	$	-	$	-	$	565	$	-			$	1,576
Interest Income Recognized on Impaired Loans:
Impaired Loans With An Allowance Recorded	$	-	$	-	$	-	$	-	$	-	$	-	$	-			$	-
Impaired Loans With No Allowance Recorded		-		-		-		-		-		-		-				-
Total Loans Individually Evaluated For Impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-			$	-

The amount of the allowance for loan losses provided for impaired loans represents the aggregate amount by which the recorded investment in each impaired loan exceeds its fair value.  Fair value for this purpose is determined by computing either the present value of expected future cash flows discounted at the loan’s effective interest rate or, if repayment is expected solely from the collateral, the fair value of the underlying collateral less estimated costs to sell, based on current appraisals.  In some cases, impaired loans are partially charged off, such that there is no excess of the recorded investment over the fair value of the loan, as determined above.

Changes in the accretable discount for loans purchased with credit quality deterioration follows:

	Nine Months Ended
(in thousands)	September 30,
	2012
Balance at beginning of period	$	3,289
Measurement period adustments to Santa Lucia Bank fair values		(428	)
Accretion to interest income		(844	)
Loans reclassified to held for sale		(355	)
Loans charged off		-
Transfers from non-accretable discount to accretable		125
Balance at end of period	$	1,787

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Note 6 - Common and Preferred Stock and Earnings (Loss) per Share

9 Months Ended

Sep. 30, 2012

Stockholders' Equity Note Disclosure [Text Block]

Note 6 —Common and Preferred Stock and Earnings (Loss) per Share

Common Stock

On April 27, 2010, there was an initial closing (the “Initial Closing”) under the Securities Purchase Agreement dated December 22, 2009, as amended (the “Securities Purchase Agreement”), by and between the Company and Carpenter Fund Manager GP, LLC (the “Manager”) on behalf of and as General Partner of Carpenter Community BancFund, L.P., Carpenter Community BancFund-A, L.P. and Carpenter Community BancFund—CA, L.P.  (the “Investors”).   At the Initial Closing the Investors purchased, for an aggregate purchase price of $10 million, 2,000,000 shares of the common stock of the Company paired with warrants to purchase 2,000,000 shares of the common stock.  On June 15, 2010, the Investors purchased, for an aggregate purchase price of $15 million, 3,000,000 additional shares of common stock and warrants to purchase 3,000,000 shares of common stock in the second closing under the Securities Purchase Agreement (the “Second Closing”).  The warrants issued in the Initial Closing and in the Second Closing (collectively referred to herein as the “2010 Warrants”) were issued for a term of five years from issuance at an exercise price of $5.00 per share and contained customary anti-dilution provisions.

The Company used a substantial majority of the proceeds from the First and Second Closings to enable a newly-formed wholly-owned subsidiary of the Company, Mission Asset Management, Inc., to purchase from the Bank certain non-performing loans and other real estate owned assets.

The Securities Purchase Agreement further provided that the Company would conduct a rights offering to its existing shareholders, pursuant to which each shareholder was offered the right to purchase 15 additional shares of common stock, paired with a warrant (the “Public Warrants”), for each share held, at a price of $5.00 per unit of common stock and warrant (five-year term and $5.00 exercise price).  The rights offering closed on December 15, 2010, with 748,672 shares and Public Warrants to purchase an additional 748,672 shares of common stock being issued. Net proceeds from the rights offering totaled $3,527,000.  Effective October 1, 2012, the expiration date of the Public Warrants was extended by the Company from December 17, 2015 to March 21, 2017.  No other terms or conditions of the Public Warrant were modified and no consideration was received for such extension of expiration date.

Bancorp-Issued Preferred Stock

As a result of a change in control in 2010, the Company is likely to lose its status as a Community Development Financial Institution (“CDFI”), which may trigger redemption provisions of some or all of the Company’s Series A and C preferred stock.  Therefore, those series of preferred stock are carried at their redemption values in the consolidated balance sheets and are classified as mezzanine financing rather than equity.

On December 28, 2011, after receiving the required regulatory approvals, the Company redeemed 100% of the Series D (TARP) preferred stock.

Mission Asset Management, Inc. Preferred Stock and Company Warrants

 On October 21, 2011, for an aggregate purchase price of $10 million, Mission Asset Management, Inc. issued 10,000 shares of its newly authorized Series A Non-Cumulative Perpetual Preferred Stock (“MAM Preferred Stock”) and the Company issued warrants to purchase an aggregate of 2,202,641 shares of the Company’s common stock (the “2011 Warrants”).  The 2011 Warrants were issued for a term of 10 years from issuance at an exercise price of $4.54 per share.  In December 2011, 660,792 of the 2011 Warrants were exercised and $3,000,000 of the MAM Preferred Stock was liquidated.  In June 2012 an additional 100,000 of the 2011 Warrants were exercised and $600,000 of the MAM Preferred Stock was liquidated, and in September 2012 another $1,600,000 was liquidated.  These preferred shares include redemption provisions that are outside the control of the Company.  Accordingly, these preferred shares are presented as mezzanine financing at their redemption value of $4,800,000 as of September 30, 2012.

In addition to customary anti-dilution provisions, the 2010 Warrants and the 2011 Warrants referred to above contain certain anti-dilution features that have caused these warrants to be reflected as derivative liabilities pursuant to ASC 815—at their fair values—in the consolidated balance sheets rather than as components of equity.  Subsequent changes in their fair values are recognized as gains or losses through non-interest income, which impacts net loss and loss per share in the consolidated statement of operations.  In March 2012 all 2010 Warrants and substantially all of the 2011 Warrants (i.e., those issued to the Investors) were cancelled and replaced with 6,487,800 warrants having approximately the equivalent aggregate fair value as the cancelled warrants but without the anti-dilution features that call for derivative accounting treatment.  Accordingly, $4,955,000 (the fair value of the cancelled warrants immediately prior to cancellation) was transferred from warrant liability to additional paid-in capital in March 2012.  In September 2012 the remaining 153,876 of the 2011 Warrants were cancelled and replaced with 171,980 warrants having identical terms as those issued in March 2012 and aggregate fair value equivalent to the cancelled warrants.

Activity in the Company’s outstanding warrants follows:

	Shares			Weighted Average Exercise Price
Outstanding January 1, 2011		5,748,672			5.00
Warrants granted in 2011		2,202,641		$	4.54
Warrants exercised in 2011		(660,792	)		4.54
Outstanding December 31, 2011		7,290,521		$	4.90
Warrants granted in 2012		6,659,780		$	5.00
Warrants cancelled in 2012		(6,541,849	)		4.89
Warrants exercised in 2012		(100,000	)		5.00
Outstanding September 30, 2012		7,308,452		$	5.00

Prior to the Initial Closing, the Manager was the largest shareholder of the Company, beneficially owning 333,334 shares of the common stock of the Company or 24.7% of the issued and outstanding shares.  As of September 30, 2012, following the Second Closing, the rights offering, the 2011 warrants exercise, and the 2012 warrants exercise, the Manager is the beneficial owner of 6,028,179 shares of the common stock of the Company (not including warrants), or 76.7% of the issued and outstanding shares.

Earnings (Loss) per Share

The following table shows the calculation of earnings (loss) per common share and the allocation of the Company’s net loss among common stock and the various classes of preferred stock:

(in thousands, except per share data)	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2012		2011			2012			2011
Net income (loss)	$	760	$	(1,001	)	$	451		$	(1,483	)
Less dividends on preferred stock:
Non-convertible subsidiary-issued preferred stock		151		-			500			-
TARP preferred stock (Series D)		-		64			-			192
Net income allocated to all classes of preferred stock		151		64			500			192
Net income (loss) attributable to common stock	$	609	$	(1,065	)	$	(49	)	$	(1,675	)
Average common shares outstanding		7,855,066		7,094,274			7,792,292			7,094,274
Dilutive effect of outstanding stock options		-		-			-			-
Average common shares used for diluted EPS		7,855,066		7,094,274			7,792,292			7,094,274
Basic earnings (loss) per common share	$	0.08	$	(0.15	)	$	(0.01	)	$	(0.24	)
Diluted earnings (loss) per common share	$	0.08	$	(0.15	)	$	(0.01	)	$	(0.24	)

No dilutive effect of outstanding stock options (and therefore no change to earnings (loss) per common share) has been presented for the three months ended September 30, 2011, or for either of the nine-month periods presented, because the result would be anti-dilutive.

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Note 8 - Fair Value Measurement

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Text Block]

Note 8 — Fair Value Measurement

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of September 30, 2012 and December 31, 2011, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

· 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.  Valuation techniques include management’s judgment, which may be a significant factor.

For some assets or liabilities, the inputs used to measure fair value may fall into more than one level of the fair value hierarchy.  In such cases, the asset or liability is identified based on the lowest level input that is significant to the fair value measurement.  The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the asset or liability.

No warrants were subject to fair value accounting as of September 30, 2012.  The following assumptions were used in the Black-Scholes simulation model to determine the fair value of the warrant liability for the 2011 and 2010 warrants as of December 31, 2011:

	As of December 31, 2011
	Warrants Granted in
	2011			June 2010			April 2010
Outstanding common stock warrants subject to fair value accounting		1,541,849			3,000,000			2,000,000
Warrant exercise price	$	4.54		$	5.00		$	5.00
Market price of common stock	$	3.35		$	3.35		$	3.35
Average risk-free interest rate		1.89	%		0.36	%		0.36	%
Average expected volatility		33.57	%		44.01	%		45.07	%
Average expected life (in years)		9.81			3.46			3.32
Expected dividend yield		0.00	%		0.00	%		0.00	%

Assets and liabilities measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements Using
September 30, 2012	Level 1		Level 2		Level 3		Total
Available for sale securities:
U.S. Government agencies	$	-	$	43,247	$	-	$	43,247
Residential mortgage-backed securities		-		70,479		-		70,479
Municipal securities		-		16,592		-		16,592
Corporate debt securities		-		3,024		-		3,024
Asset-backed securities		-		13,724		-		13,724
Total available-for-sale securities		-		147,066		-		147,066
Loans held for sale		-		-		3,490		3,490
Warrant liability		-		-		-		-
Total net assets measured at fair value on a recurring basis	$	-	$	147,066	$	3,490	$	150,556

December 31, 2011
Available for sale securities:
U.S. Government agencies	$	-	$	26,417	$	-		$	26,417
Residential mortgage-backed securities		-		89,293		-			89,293
Municipal securities		-		5,057		-			5,057
Corporate debt securities		-		2,055		-			2,055
Asset-backed securities		-		5,488		-			5,488
Total available-for-sale securities		-		128,310		-			128,310
Loans held for sale		-		-		3,720			3,720
Warrant liability		-		-		(5,184	)		(5,184	)
Total net assets measured at fair value on a recurring basis	$	-	$	128,310	$	(1,464	)	$	126,846

The fair value of securities available for sale equals quoted market prices, if available.  If quoted market prices are not available, fair value is determined using quoted market prices for similar securities.  There were no changes in the valuation techniques used during 2012 or 2011 and there were no transfers into or out of Levels 1, 2 or 3 of the fair value hierarchy during the nine months ended September 30, 2012.

Loans held for sale that are measured at fair value on a recurring basis consist of all loans held by the company’s MAM subsidiary.  Those loans are carried at the lower of cost or fair value and, accordingly, have been subject to recurring fair value adjustments.  Fair value for those loans is determined by assessing the probability of borrower default using historical payment performance and available cash flows to the borrower, then projecting the amount and timing of cash flows to MAM, including collateral liquidation if repayment weaknesses exist.

Management monitors the availability of observable market data to assess the appropriate classifications of financial instruments within the fair value hierarchy.  Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another.  In such instances, the transfer is reported at the beginning of the reporting period.

Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings.

Assets and liabilities measured at fair value on a non-recurring basis are summarized below:

(in thousands)	Fair Value Measurements Using								Current Period Gains
September 30, 2012	Level 1		Level 2		Level 3		Total		(Losses)
Financial assets measured at fair value on a non-recurring basis:
Impaired loans, net of specific reserves--
Construction and land development	$	-	$	-	$	500	$	500	$	(86	)
Commercial real estate - owner-occupied		-		-		1,893		1,893		-
Commercial real estate - non-owner-occupied		-		-		686		686		(79	)
Residential real estate		-		-		684		684		(213	)
All other real estate		-		-		-		-		-
Commercial and industrial		-		-		990		990		(60	)
Consumer and all other loans and lease financing		-		-		-		-		-
Total impaired loans, net of charge-offs and specific reserves	$	-	$	-	$	4,753	$	4,753	$	(438	)
Non-financial assets measured at fair value on a non-recurring basis:
Other real estate owned	$	-	$	-	$	1,463	$	1,463	$	(458	)

	Fair Value Measurements Using								Full Year Gains
December 31, 2011	Level 1		Level 2		Level 3		Total		(Losses)
Financial assets measured at fair value on a non-recurring basis:
Impaired loans, net of specific reserves--
Commercial and industrial	$	-	$	-	$	521	$	521	$	(145	)
Residential real estate	$	-	$	-	$	-		-	$	(87	)
Commercial real estate - non-owner-occupied		-		-		-		-		(116	)
Construction and land development		-		-		-		-		(21	)
Total impaired loans, net of charge-offs and specific reserves	$	-	$	-	$	521	$	521	$	(369	)
Non-financial assets measured at fair value on a non-recurring basis:
Other real estate owned	$	-	$	-	$	5,220	$	5,220	$	(113	)

The following methods were used to estimate the fair value of each class of assets above.  The fair value of impaired loans is based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral less estimated costs to sell if repayment is expected solely from the collateral.  Collateral values are estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria.  Collateral-dependent impaired loans are categorized as Level 3 due to ongoing real estate conditions resulting in inactive market data which, in turn, required the use of unobservable inputs and assumptions in fair value measurements.  Impaired loans were measured and reported at fair value through specific valuation allocations of the allowance for loan and lease losses and/or partial charge-offs of the impaired loans.

The fair value of other real estate owned is based on the values obtained through property appraisals, which can include observable and unobservable inputs.  Other real estate owned fair values are categorized as Level 3 due to ongoing real estate conditions resulting in inactive market data which required the use of unobservable inputs and assumptions in fair value measurements.

The following table presents a reconciliation of net assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the first nine months of 2012 and 2011:

(in thousands)	Level 3 Securities Available for Sale, Loans Held for Sale and Warrant Liability
	Nine Months Ended September 30
	2012			2011
Balance at beginning of year	$	(1,464	)	$	10,086
Net increase (decrease) in SBA loans held for sale		(115	)		232
Loans held for sale transfered into Level 3		4,283			-
Settlements - principal reductions in loans held for sale		(1,857	)		(4,252	)
Loan participations sold to related party		(1,952	)		-
Loans held for sale transferred to other real estate owned		(589	)		(1,069	)
Loans held for sale valuation reserve		-			(75	)
Cancellation of warrants accounted for as liabilities		5,116			-
Changes in fair value of warrant liability		68			1,207
Balance at end of period	$	3,490		$	6,129

“Settlements” in the above table relate to actual cash payments received from borrowers on loans held for sale and do not represent refinancings or write-downs to fair value.  The following methods and assumptions were used to estimate the fair value of significant financial instruments that are not carried at fair value in the consolidated balance sheet:

Financial Assets.  The carrying amounts of cash and short-term investments are considered to approximate fair value.  Short-term investments include federal funds sold and interest bearing deposits with other banks.  For investment securities, fair values are based on quoted market prices, where available.  If quoted market prices are not available, fair values are estimated using other observable data, which may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other factors.  The fair value of loans (including loans held for sale) are estimated using a combination of techniques, including discounting estimated future cash flows and quoted market prices of similar instruments, where available, and are considered to be within Level 2.  Impaired loans are within Level 3 of the fair value hierarchy.  The carrying value of accrued interest receivable approximates fair value.  The carrying amount of FHLB and FRB stock approximate their fair value.

Financial Liabilities.  The carrying amounts of deposit liabilities payable on demand and short-term borrowed funds are considered to approximate fair value.  For fixed maturity (i.e., time) deposits, which are within Level 2 of the fair value hierarchy, fair value is estimated by discounting estimated future contractual cash flows using currently offered rates for deposits of similar remaining maturities.  The fair value of junior subordinated debt securities (Level 2) is based on rates currently available to the Bank for debt with similar terms and remaining maturities.

Off-Balance Sheet Financial Instruments.  The fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements.  The fair value of these financial instruments is not material.

The estimated fair value of financial instruments is summarized as follows:

(in thousands)	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and due from banks	$	21,197	$	21,197	$	61,621	$	61,621
Interest-bearing deposits in other banks		5,176		5,176		3,592		3,592
Investment securities		147,066		147,066		128,310		128,310
Loans held for sale		3,490		3,490		3,720		3,720
Loans, net of allowance for loan and lease losses		229,437		225,338		226,623		224,721
Federal Home Loan Bank and other stocks		6,699		6,699		3,926		3,926
Accrued interest receivable		1,353		1,353		1,450		1,450
Financial Liabilities:
Deposits		389,408		389,641		410,574		411,323
Other borrowings		3,800		3,800		-		-
Junior subordinated debt securities		5,576		4,188		5,491		4,527
Accrued interest payable		140		140		330		330
Warrant liability		-		-		5,184		5,184

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Note 3 - Investment Securities (Detail) - Investment Securities in a Temporary Unrealized Loss Position (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Available for sale securities unrealized loss position less than 12 months fair value	$ 16,581	$ 14,693
Available for sale securities unrealized loss position less than 12 months unrealized losses	77	76
Available for sale securities unrealized loss position 12 months or longer fair value	0	0
Available for sale securities unrealized loss position12 months or longer unrealized losses	0	0
Available for sale securities unrealized loss position fair value	16,581	14,693
Available for sale securities unrealized loss position unrealized losses	77	76
Residential Mortgage Backed Securities [Member]
Available for sale securities unrealized loss position less than 12 months fair value	9,601	9,731
Available for sale securities unrealized loss position less than 12 months unrealized losses	16	38
Available for sale securities unrealized loss position 12 months or longer fair value	0	0
Available for sale securities unrealized loss position12 months or longer unrealized losses	0	0
Available for sale securities unrealized loss position fair value	9,601	9,731
Available for sale securities unrealized loss position unrealized losses	16	38
US States and Political Subdivisions Debt Securities [Member]
Available for sale securities unrealized loss position less than 12 months fair value	4,986	240
Available for sale securities unrealized loss position less than 12 months unrealized losses	55	2
Available for sale securities unrealized loss position 12 months or longer fair value	0	0
Available for sale securities unrealized loss position12 months or longer unrealized losses	0	0
Available for sale securities unrealized loss position fair value	4,986	240
Available for sale securities unrealized loss position unrealized losses	55	2
Corporate Debt Securities [Member]
Available for sale securities unrealized loss position less than 12 months fair value	1,994	1,055
Available for sale securities unrealized loss position less than 12 months unrealized losses	6	4
Available for sale securities unrealized loss position 12 months or longer fair value	0	0
Available for sale securities unrealized loss position12 months or longer unrealized losses	0	0
Available for sale securities unrealized loss position fair value	1,994	1,055
Available for sale securities unrealized loss position unrealized losses	6	4
US Government Agencies Debt Securities [Member]
Available for sale securities unrealized loss position less than 12 months fair value		2,082
Available for sale securities unrealized loss position less than 12 months unrealized losses		12
Available for sale securities unrealized loss position 12 months or longer fair value		0
Available for sale securities unrealized loss position12 months or longer unrealized losses		0
Available for sale securities unrealized loss position fair value		2,082
Available for sale securities unrealized loss position unrealized losses		12
Asset-backed Securities [Member]
Available for sale securities unrealized loss position less than 12 months fair value		1,585
Available for sale securities unrealized loss position less than 12 months unrealized losses		20
Available for sale securities unrealized loss position 12 months or longer fair value		0
Available for sale securities unrealized loss position12 months or longer unrealized losses		0
Available for sale securities unrealized loss position fair value		1,585
Available for sale securities unrealized loss position unrealized losses		$ 20

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Note 8 - Fair Value Measurement (Detail) - Fair Value of Assets on a Recurring Basis Using SIgnificant Unobservable Inputs (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Balance at beginning of year	$ (1,464)	$ 10,086
Balance at end of period	3,490	6,129
Settlements - principal reductions in loans held for sale	(1,857)	(4,252)
Loan participations sold to related party	(1,952)
Loans held for sale transferred to other real estate owned	(589)	(1,069)
Cancellation of warrants accounted for as liabilities	5,116
Changes in fair value of warrant liability	68	1,207
Change in SBA Loans Held For Sale [Member]
Transfers into Level 3	(115)	232
Loans Held For Sale [Member]
Transfers into Level 3	4,283
Loans held for sale valuation reserve		$ (75)

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Note 4 - Loans (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Loan Composition
(Dollars in thousands)
	September 30, 2012					December 31, 2011
Type of Loan	Amount		Percentage			Amount		Percentage
Construction and land development	$	11,695		4.9	%	$	18,022		7.6	%
Commercial real estate - owner-occupied		69,410		29.3	%		70,153		30.0	%
Commercial real estate - non-owner-occupied		75,020		31.7	%		64,382		27.6	%
Residential real estate		32,120		13.6	%		32,609		14.0	%
All other real estate loans		7,764		3.3	%		2,321		1.0	%
Commercial and industrial loans		32,826		13.8	%		30,176		12.9	%
Agricultural loans		3,369		1.4	%		9,272		4.0	%
Municipal loans		2,352		1.0	%		2,393		1.0	%
Leases, net of unearned income		1,277		0.5	%		2,323		1.0	%
Consumer loans		1,194		0.5	%		2,018		0.9	%
Total loans	$	237,027		100.0	%	$	233,669		100.0	%

Schedule of Loans Held For Sale [Table Text Block]

Loans Held for Sale*
(Dollars in thousands)
	September 30, 2012					December 31, 2011
Type of Loan	Amount		% of Total Loans			Amount		% of Total Loans
Commercial	$	278		0.1	%	$	115		0.1	%
Real estate		1,656		0.7	%		3,030		1.3	%
Construction and land development		1,556		0.7	%		575		0.2	%
Total loans held for sale	$	3,490		1.5	%	$	3,720		1.6	%

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Note 1 - Basis of Presentation and Management Representations (Detail)	Sep. 30, 2012
Number of Branches	5

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Note 8 - Fair Value Measurement (Detail) - Assets and Liabilities Measured at Fair Value on a Recurring Basis (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Available for sale securities:
Available-for-sale securities	$ 147,066	$ 128,310
Loans held for sale	3,490	3,720
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available-for-sale securities	43,247	26,417
US Government Agencies Debt Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Available for sale securities:
Available-for-sale securities	43,247	26,417
Mortgage-backed Securities, Issued by Private Enterprises [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available-for-sale securities	70,479	89,293
Mortgage-backed Securities, Issued by Private Enterprises [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Available for sale securities:
Available-for-sale securities	70,479	89,293
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available-for-sale securities	16,592	5,057
US States and Political Subdivisions Debt Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Available for sale securities:
Available-for-sale securities	16,592	5,057
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available-for-sale securities	3,024	2,055
Corporate Debt Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Available for sale securities:
Available-for-sale securities	3,024	2,055
Asset-backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available-for-sale securities	13,724	5,488
Asset-backed Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Available for sale securities:
Available-for-sale securities	13,724	5,488
Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available-for-sale securities	147,066	128,310
Total assets measured at fair value on a recurring basis	147,066	128,310
Fair Value, Inputs, Level 3 [Member]
Available for sale securities:
Loans held for sale	3,490	3,720
Warrant liability		(5,184)
Total assets measured at fair value on a recurring basis	3,490	(1,464)
Estimate of Fair Value, Fair Value Disclosure [Member]
Available for sale securities:
Available-for-sale securities	147,066	128,310
Loans held for sale	3,490	3,720
Warrant liability		(5,184)
Total assets measured at fair value on a recurring basis	$ 150,556	$ 126,846

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Note 5 - Credit Quality and the Allowance for Loan and Lease Losses (Detail) - Company’s Loan Portfolio Allocated by Management's Internal Risk Ratings (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable	$ 233,537	$ 229,949
Pass [Member] | Construction and Land Development Loans [Member]
Financing Receivable	9,455	13,931
Pass [Member] | Commercial Real Estate Owner Occupied [Member]
Financing Receivable	62,593	68,899
Pass [Member] | Commercial Real Estate Non Owner Occupied [Member]
Financing Receivable	71,595	49,139
Pass [Member] | Residential Real Estate Loans [Member]
Financing Receivable	28,621	27,672
Pass [Member] | All Other Real Estate Loans [Member]
Financing Receivable	7,732	1,895
Pass [Member] | Commercial and Industrial Loans [Member]
Financing Receivable	34,122	32,154
Pass [Member] | Consumer and All Other Loans and Lease Financing [Member]
Financing Receivable	2,726	6,734
Pass [Member]
Financing Receivable	216,844	200,424
Special Mention [Member] | Construction and Land Development Loans [Member]
Financing Receivable	100	157
Special Mention [Member] | Commercial Real Estate Non Owner Occupied [Member]
Financing Receivable	2,409	5,154
Special Mention [Member] | Residential Real Estate Loans [Member]
Financing Receivable		491
Special Mention [Member] | All Other Real Estate Loans [Member]
Financing Receivable		138
Special Mention [Member] | Commercial and Industrial Loans [Member]
Financing Receivable	324	250
Special Mention [Member]
Financing Receivable	2,833	6,190
Substandard [Member] | Construction and Land Development Loans [Member]
Financing Receivable	585	3,359
Substandard [Member] | Commercial Real Estate Owner Occupied [Member]
Financing Receivable	5,831	4,566
Substandard [Member] | Commercial Real Estate Non Owner Occupied [Member]
Financing Receivable	1,178	5,116
Substandard [Member] | Residential Real Estate Loans [Member]
Financing Receivable	2,284	3,365
Substandard [Member] | All Other Real Estate Loans [Member]
Financing Receivable	32
Substandard [Member] | Commercial and Industrial Loans [Member]
Financing Receivable	3,765	6,841
Substandard [Member]
Financing Receivable	13,675	23,247
Doubtful [Member] | Residential Real Estate Loans [Member]
Financing Receivable	185
Doubtful [Member] | Commercial and Industrial Loans [Member]
Financing Receivable		88
Doubtful [Member]
Financing Receivable	185	88
Construction and Land Development Loans [Member]
Financing Receivable	10,140	17,447
Commercial Real Estate Owner Occupied [Member]
Financing Receivable	68,424	73,465
Commercial Real Estate Non Owner Occupied [Member]
Financing Receivable	75,182	59,409
Residential Real Estate Loans [Member]
Financing Receivable	31,090	31,528
All Other Real Estate Loans [Member]
Financing Receivable	7,764	2,033
Commercial and Industrial Loans [Member]
Financing Receivable	38,211	39,333
Consumer and All Other Loans and Lease Financing [Member]
Financing Receivable	$ 2,726	$ 6,734

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net income (loss)	$ 760	$ (1,001)	$ 451	$ (1,483)
Other comprehensive income:
Unrealized gains arising during the period on available-for-sale securities, net of taxes of $-0-	565	809	1,532	1,734
Less reclassification adjustment for securities gains included in net income	(407)	(4)	(934)	(4)
Other comprehensive income	158	805	598	1,730
Comprehensive income (loss)	$ 918	$ (196)	$ 1,049	$ 247

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Note 2 - Stock Based Compensation Plans

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 2 – Stock Based Compensation Plans

The Company has three stock compensation plans—the 1998 Stock Option Plan, the 2008 Stock Incentive Plan and the 2011 Equity Incentive Plan (the “2011 Plan”)—which are more fully described in Note J to the consolidated financial statements in the Company’s Annual Report on Form 10-K.

The 2011 Plan provides for the issuance of both “incentive” and “nonqualified” stock options, restricted stock awards, stock appreciation rights and stock awards.  Awards under the 2011 Plan may be made to salaried officers and employees of the Company and its affiliates, to non-employee directors of the Company and its affiliates, and to consultants providing services to the Company and its affiliates.  Awards under the 2011 Plan may be granted on such terms and conditions as are established by the Board of Directors or an authorized Committee of the Board of Directors in its discretion.  Awards may be granted as performance-based compensation under section 162(m) of the Internal Revenue Code.

The Company determines the fair value of options granted on the date of grant using a Black-Scholes-Merton option pricing model, which uses assumptions based on expected option life, expected stock volatility and the risk-free interest rate. The expected volatility assumptions used by the Company are based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected life of the Company’s stock options. The Company bases its expected life assumption on its historical experience and on the terms and conditions of the stock options it grants to employees. The risk-free rate is based on the U.S. Treasury yield curve for the periods within the contractual life of the options in effect at the time of the grant. The Company also makes assumptions regarding estimated forfeitures that will impact the total compensation expenses recognized.

No options were granted in the nine months ended September 30, 2012.  The fair values of options granted in the nine months ended September 30, 2011, were estimated on the date of grant using the following assumptions:

Date of grant	1/25/2011			4/4/2011			7/26/2011
Number of options granted		20,000			20,000			20,000
Exercise price	$	5.00		$	5.00		$	5.00
Market price of common stock	$	3.65		$	3.61		$	3.55
Expected stock price volatility		37.4	%		37.3	%		36.2	%
Expected option life (years)		6			6			6
Risk-free interest rate		2.32	%		2.53	%		2.07	%
Weighted average fair value of all options granted during the period:
3 months ended 9/30/11							$	1.03
9 months ended 9/30/11							$	1.06

During the three-month periods ended September 30, 2012 and 2011, the Company recognized pre-tax stock-based compensation expense of $36,000 and $36,000, respectively.  For the nine-month periods ended September 30, 2012 and 2011, stock-based compensation expense was recognized totaling $109,000 and $105,000, respectively.As of September 30, 2012, the Company has unvested options outstanding with unrecognized compensation expense totaling $197,000, which is scheduled to be recognized as follows (in thousands):

October 1 through December 31, 2012	$	35
2013		85
2014		29
2015		29
2016		19
Total unrecognized compensation cost	$	197

No options outstanding were “in the money” as of September 30, 2012.

The following table summarizes information about stock option activity for the nine months ended September 30, 2012:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of In-the-Money Options
Outstanding at beginning of period		297,219		$	7.84
Options granted		-
Options exercised		-
Options expired unexercised		(9,500	)		11.30
Options forfeited		(19,819	)		20.48
Outstanding at end of period		267,900		$	6.78		7.9	$	-
Options exercisable at end of period		122,338		$	8.76		7.2	$	-
Options Vested or Expected to Vest		267,900		$	6.78		7.9	$	-

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Note 2 - Stock Based Compensation Plans (Detail) (USD $)	3 Months Ended			9 Months Ended		12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation	$ 35,000	$ 36,000	$ 36,000	$ 109,000	$ 105,000	$ 19,000	$ 29,000	$ 29,000	$ 85,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized		$ 197,000		$ 197,000

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Note 5 - Credit Quality and the Allowance for Loan and Lease Losses (Detail) (USD $)	Sep. 30, 2012	Sep. 30, 2011
Financing Receivable, Modifications, Number of Contracts	10	1
Financing Receivable, Modifications, Recorded Investment (in Dollars)		$ 7,000
Modified in Current Reporting Period [Member]
Financing Receivable, Modifications, Recorded Investment (in Dollars)	1,853,000
Accruing Status Less Than 90 Days Past Due [Member]
Financing Receivable, Modifications, Number of Contracts	1
Financing Receivable, Modifications, Recorded Investment (in Dollars)	711,000

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Note 3 - Investment Securities (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2012:
U.S. Government agencies	$	42,686	$	561	$	-		$	43,247
Residential mortgage-backed securities		68,968		1,527		(16	)		70,479
Municipal securities		16,445		202		(55	)		16,592
Corporate debt securities		3,026		4		(6	)		3,024
Asset-backed securities		13,647		77		-			13,724
	$	144,772	$	2,371	$	(77	)	$	147,066

December 31, 2011:
U.S. Government agencies	$	26,098	$	331	$	(12	)	$	26,417
Residential mortgage-backed securities		88,209		1,122		(38	)		89,293
Municipal securities		4,820		239		(2	)		5,057
Corporate debt securities		2,059		-		(4	)		2,055
Asset-backed securities		5,429		79		(20	)		5,488
	$	126,615	$	1,771	$	(76	)	$	128,310

Investments Classified by Contractual Maturity Date [Table Text Block]

(in thousands)	Available-for-Sale Securities
	Amortized Cost		Fair Value
Within one year	$	6,939	$	6,963
Due in one year to five years		32,979		33,034
Due in five years to ten years		39,207		39,877
Due in greater than ten years		65,647		67,192
	$	144,772	$	147,066

Schedule of Unrealized Loss on Investments [Table Text Block]

(in thousands)	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2012:
Residential mortgage-backed securities	$	9,601	$	16	$	-	$	-	$	9,601	$	16
Municipal securities		4,986		55		-		-		4,986		55
Corporate debt securities		1,994		6		-		-		1,994		6
	$	16,581	$	77	$	-	$	-	$	16,581	$	77

December 31, 2011:
U.S. Government agencies	$	2,082	$	12	$	-	$	-	$	2,082	$	12
Residential mortgage-backed securities		9,731		38		-		-		9,731		38
Municipal securities		240		2		-		-		240		2
Corporate debt securities		1,055		4		-		-		1,055		4
Asset-backed securities		1,585		20		-		-		1,585		20
	$	14,693	$	76	$	-	$	-	$	14,693	$	76