FORM 10-QSB

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20429

(Mark One)

x  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006

o  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from                           to                          

Commission File No. 000-32827

COAST BANCORP

(Exact name of Registration as Specified in its Charter)

California	77-0567091
(State of incorporation or organization)	(IRS Employer Identification No.)

500 Marsh Street, San Luis Obispo, CA 93401

(Address of principal executive offices)

(805) 541-0400

(Registrant’s telephone number, including area code)

Not applicable

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

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes:    x     No:    o

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

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

Common Stock – As of October 26, 2006, there were 676,100 shares of the issuer’s common stock outstanding.

Transitional Small Business Disclosure Format (Check one)       Yes:    o    No:    x

FORWARD LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-QSB INCLUDE FORWARD-LOOKING INFORMATION WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND ARE SUBJECT TO THE “SAFE HARBOR” CREATED BY THOSE SECTIONS.  THESE FORWARD-LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS.  SUCH RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING FACTORS: COMPETITIVE PRESSURE IN THE BANKING INDUSTRY INCREASES SIGNIFICANTLY; CHANGES IN THE INTEREST RATE ENVIRONMENT REDUCE MARGINS; GENERAL ECONOMIC CONDITIONS, EITHER NATIONALLY OR REGIONALLY, ARE LESS FAVORABLE THAN EXPECTED, RESULTING IN, AMONG OTHER THINGS A DETERIORATION IN CREDIT QUALITY AND AN INCREASE IN THE PROVISION FOR POSSIBLE LOAN LOSSES; CHANGES IN THE REGULATORY ENVIRONMENT; CHANGES IN BUSINESS CONDITIONS, PARTICULARLY IN SAN LUIS OBISPO COUNTY; VOLATILITY OF RATE SENSITIVE DEPOSITS; OPERATIONAL RISKS INCLUDING DATA PROCESSING SYSTEMS FAILURES OR FRAUD; ASSET/LIABILITY MATCHING RISKS AND LIQUIDITY RISKS;  CHANGES IN THE SECURITIES MARKETS; THE ABILITY TO SATISFY THE REQUIREMENTS OF THE SARBANES-OXLEY ACT AND OTHER REGULATIONS GOVERNING INTERNAL CONTROLS; AND POTENTIAL ECOMONMIC EFFECT OF THE WAR ON TERRORISM AND THE WAR IN IRAQ AND AFGHANISTAN.

THEREFORE, THE INFORMATION CONTAINED IN THIS DOCUMENT SHOULD BE CAREFULLY CONSIDERED WHEN EVALUATING THE BUSINESS PROSPECTS OF COAST BANCORP AND COAST NATIONAL BANK.

MOREOVER, WHEREVER PHRASES ARE USED SUCH AS OR SIMILAR TO, “IN MANAGEMENT’S OPINION,”“MANAGEMENT BELIEVES,” OR “MANAGEMENT CONSIDERS”, SUCH STATEMENTS ARE AS OF, AND BASED UPON THE KNOWLEDGE OF MANAGEMENT, AT THE TIME MADE AND ARE SUBJECT TO CHANGE BY THE PASSAGE OF TIME AND/OR SUBSEQUENT EVENTS, AND ACCORDINGLY SUCH STATEMENTS ARE SUBJECT TO THE SAME RISKS AND UNCERTAINTIES NOTED ABOVE WITH RESPECT TO FORWARD-LOOKING STATEMENTS.

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INDEX

COAST BANCORP

Item 1 – Financial Statements

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COAST BANCORP & SUBSIDIARY

CONSOLIDATED BALANCE SHEETS (unaudited)

September 30, 2006 and December 31, 2005

PART I – FINANCIAL INFORMATION

	September 30,			December 31,
(in thousands)	2006			2005
ASSETS
Cash and due from banks	$	8,889		$	9,770
Federal funds sold	8,400			24,900
TOTAL CASH AND CASH EQUIVALENTS	17,289			34,670
Investment securities available for sale	6,968			7,872
Loans:
Commercial	38,706			29,491
Real estate - construction	33,375			25,213
Real estate - other	67,346			76,092
Consumer	5,376			2,866
Other	—			29
TOTAL LOANS	144,803			133,691
Net deferred loan fees	(458		)	(460		)
Allowance for credit losses	(1,301		)	(1,183		)
NET LOANS	143,044			132,048
Premises and equipment	8,112			8,314
Deferred taxes	345			329
Federal Reserve Bank and FHLB stock, at cost	946			923
Accrued interest and other assets	1,599			1,568
TOTAL ASSETS	$	178,303		$	185,724
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	38,291		$	40,583
Money market and NOW	50,720			45,092
Savings	6,871			8,856
Time deposits of $100,000 or more	49,793			58,984
Other time deposits	14,588			15,434
TOTAL DEPOSITS	160,263			168,949
Notes payable	—			45
Junior subordinated securities	5,155			5,155
Other liabilities	374			332
TOTAL LIABILITIES	165,792			174,481
Commitments and contingencies	—			—
Stockholders’ equity:
Preferred stock - 10,000,000 authorized, none outstanding	—			—
Common stock no par value; 10,000,000 shares authorized; issued and outstanding: 676,100 in 2006 and 674,100 in 2005	7,042			6,950
Retained earnings	5,491			4,373
Accumulated other comprehensive income - net unrealized losses on available-for-sale securities	(22		)	(80		)
TOTAL STOCKHOLDERS’ EQUITY	12,511			11,243
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	178,303		$	185,724

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

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COAST BANCORP & SUBSIDIARY

STATEMENTS OF OPERATIONS (unaudited)

For the Periods ended September 30, 2006 and 2005

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
(In thousands, except for per share numbers)	2006		2005			2006		2005
Interest income:
Interest and fees on loans	$	3,453	$	2,682		$	9,569	$	7,300
Interest on investment securities	57		77			165		238
Interest on federal funds sold	136		145			582		296
Other interest income	17		13			47		40
TOTAL INTEREST INCOME	3,663		2,917			10,363		7,874
Interest expense:
Interest on money market and NOW accounts	382		181			992		427
Interest on savings deposits	35		22			93		55
Interest on time deposits	715		598			2,084		1,355
Interest on junior subordinated debt securities	125		99			351		277
TOTAL INTEREST EXPENSE	1,257		900			3,520		2,114
Net interest income	2,406		2,017			6,843		5,760
Provision for credit losses	56		20			116		20
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	2,350		1,997			6,727		5,740
Noninterest income:
Service charges on deposit accounts and other	114		50			280		175
Gain on sale of loans and net servicing fees	104		(9		)	250		98
Gain on sale of premises and equipment	15		5			15		47
Gain on sale of securities	—		—			—		5
TOTAL NONINTEREST INCOME	233		46			545		325
Noninterest expense:
Salaries and benefits	985		835			2,860		2,502
Net occupancy expense (net of rental income)	104		126			367		363
Equipment expense	77		81			246		243
Other expense	634		519			1,927		1,489
TOTAL NONINTEREST EXPENSE	1,800		1,561			5,400		4,597
INCOME BEFORE TAXES	783		482			1,872		1,468
Income taxes	318		234			754		692
NET INCOME	$	465	$	248		$	1,118	$	776
Per share data:
Earnings per share - Basic	$	0.69	$	0.37		$	1.65	$	1.16
Earnings per share - Diluted	$	0.66	$	0.35		$	1.59	$	1.09

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

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COAST BANCORP & SUBSIDIARY

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)

										Accumulated
	Common Stock									Other
	Number of			Comprehensive			Retained			Comprehensive
(In thousands, except number of Shares)	Shares	Amount		Income			Earnings			Income			Total
Balance at January 1, 2005	652,700	$	6,641				$	3,393		$	(61	)	$	9,973
Exercise of stock options, including the realization of tax benefits of $22,417	21,400	309											309
Cash dividends							(118		)				(118		)
Comprehensive Income
Net income				$	1,098		1,098						1,098
Unrealized losses on available-for-sale securities, net of taxes of $13,024				(19		)				(19		)	(19		)
Total comprehensive income				$	1,079
Balance at December 31, 2005	674,100	$	6,950				$	4,373		$	(80	)	$	11,243
Exercise of stock options, including the realization of tax benefits of $7,716	2,000	36											36
Stock based compensation expense		56											56
Comprehensive Income
Net income				1118			1,118						1,118
Unrealized gain (losses) on available-for-sale securities, net of taxes of $40,188				58						58			58
Total comprehensive income				$	1,176
Balance at September 30, 2006	676,100	$	7,042				$	5,491		$	(22	)	$	12,511

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

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COAST BANCORP & SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

For the Nine Months ended September 30, 2006 and 2005

	For the Nine Months Ended
	September 30,
(In thousands)	2006			2005
Operating activities:
Net income	$	1,118		$	776
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	355			373
Provision for credit losses	116			20
Stock based compensation	56			—
Gain on sale of loans	(312		)	—
Other items - net	(64		)	280
Net cash provided by operating activities	1,269			1,449
Investing activities:
Net increase in loans	(14,546		)	(10,114		)
Proceeds from loans sold	3,749			—
Proceeds of Federal Reserve Bank and Federal Home Loan Bank stock	(23		)	(33		)
Proceeds from the sale and maturity of available-for-sale securities	1,000			2,000
Purchase of premises and equipment	(135		)	86
Net cash used by investing activities	(9,955		)	(8,061		)
Financing activities:
Increase (decrease) in deposits	(8,686		)	18,115
Principle payments on notes payable	(45		)	(56		)
Proceeds from exercise of options, including tax benefits	36			287
Net cash provided (used) by financing actvities	(8,695		)	18,346
Increase (decrease) in cash and cash equivalents	(17,381		)	11,734
Cash and cash equivalents at beginning of period	34,670			20,690
Cash and cash equivalents at end of period	$	17,289		$	32,424

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

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Item 1. Financial Statements- Continued

Note 1Basis of Presentation

The accompanying financial information has been prepared in accordance with the Securities and Exchange Commission rules and regulations for quarterly reporting and therefore does not necessarily include all information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles.  This information should be read in conjunction with the Company’s Annual Report for the year ended December 31, 2005 filed on Form 10-KSB.

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 information for the three month and nine month period ended September 30, 2006 and 2005, reflect all adjustments, consisting only of normal recurring accruals and provisions, necessary for a fair presentation thereof.

Some matters discussed in this Form 10-QSB 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”.

Note 2                    Earnings Per Share

Effective December 31, 1997, the Bank adopted SFAS No. 128, “Earnings per Share”, which has subsequently been adopted by the Company.  Accordingly, basic earnings per share are computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during each period.  The computation of diluted earnings per share also considers the number of shares issuable upon the assumed exercise of outstanding common stock options.  All earnings per common share amounts presented have been restated in accordance with the provisions of this statement.

	For the Three Months Ended		For the Nine Months Ended
	September 30,		September 30,
	2006	2005	2006	2005
	Shares	Shares	Shares	Shares
Used in Basic EPS	676,100	671,790	675,597	668,179
Dilutive Effect of Outstanding Stock Options	27,219	44,354	25,913	44,354
Used in Earnings Per Share - Diluted	703,319	716,144	701,510	712,533

Note 3Stock-Based Compensation

In December 2004, Financial Accounting Standards Board (“FASB”) revised SFAS 123 and issued under its new name, “Share-Based Payment”.  This statement eliminates the previously allowable alternative to use Opinion 25’s intrinsic value method of accounting.  Instead, this Statement generally requires entities to recognize the cost of employee services received in exchange for awards of stock options, or other equity instruments, based on the grant-date fair value of those awards.  This cost is recognized over the period during which an employee is required to provide service in exchange for the award, generally the vesting period.

The Company adopted this Statement in 2006 for all new stock option awards as well as any existing awards that are modified, repurchased or cancelled.  In addition, the unvested portion of previously awarded options have also been recognized as an expense during the first nine months of 2006.  During the first nine months of 2006, $56,024 was expensed by the Company for stock option related compensation.

Prior to January 1, 2006, the Company accounted for stock-based compensation under the FASB’s SFAS No. 123, “Accounting for Stock-Based Compensation,” which allowed companies to use an intrinsic value method prescribed in Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations.

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SFAS No. 123 (R) requires that cash flows resulting from the realization of tax deductions in excess of the compensation cost recognized (excess tax benefits) are to be classified as financing cash flows.  Before the adoption of SFAS No. 123 (R), the Company presented all tax benefits realized from the exercise of stock options as operating cash flows in the Statement of Cash Flows.  The $7,716 excess tax benefit classified as a financing cash inflow for September 30, 2006 would have been classified as an operating cash inflow if we had not adopted SFAS 123 (R).

Had previously recognized compensation cost (prior to 2006) for the Company’s stock option plan been determined based on the fair value at the grant dates for awards under those plans consistent with the method of SFAS 123R, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below:

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2006		2005			2006		2005
Net Income:
As Reported	$	465	$	248		$	1,118	$	776
Stock-Based Compensation using the Intrinsic Value Method	—		—			—		—
Stock-Based Compensation that would have been reported using the Fair Value Method of SFAS 123	—		(10		)	—		(30		)
Pro Forma Net Income	$	465	$	238		$	1,118	$	746
Basic Earnings Per Share:
As Reported	$	0.69	$	0.37		$	1.65	$	1.16
Proforma	$	0.69	$	0.35		$	1.65	$	1.12
Diluted Earnings Per Share:
As Reported	$	0.66	$	0.35		$	1.59	$	1.09
Pro Forma	$	0.66	$	0.34		$	1.59	$	1.06

Note 4 Current Accounting Pronouncements

As discussed in the preceding note, SFAS No.123 (R) became effective January 1, 2006 and has been fully implemented by the Company.

In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140.”  The statement amends SFAS No. 140 by  (1) requiring the separate accounting for servicing assets and servicing liablilties, which arise from the sale of financial assets; (2) requiring all separately recognized serving assets and servicing liabilities to be initially measured at fair value, if practicable; and (3) permitting an entity to choose between an amortization method or a fair value method for subsequent measurement for each class of separately recognized servicing assets and servicing liabilities.  The Company must adopt the statement no later than January 1, 2007.  Management does not expect that the adoption of this new standard will have a material impact on the Company’s financial position, results of operations or cash flows.

In June 2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes.”  This interpretation applies to all tax positions accounted for in accordance with SFAS No. 109, “Accounting for Income Taxes.”  FIN 48 clarifies the application of SFAS No. 109 by defining the criteria that an individual tax position must meet in order for the position to be recognized within the financial statements and provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition for tax positions.  The Company must adopt the interpretation by January 1, 2007.  Management does not expect that the adoption of this new interpretation will have a material impact on the Company’s financial position, results of operations or cash flows.

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

The unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and contain statements relating to future results of the Company that are considered to be “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements relate to, among other things, credit loss reserve adequacy and simulations of changes in interest rates and litigation results.  Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties, including, but not limited to, changes in political and economic conditions, interest rate fluctuations, competitive product and pricing pressures within the Company’s markets, equity and fixed income market fluctuations, personal and corporate customers’ bankruptcies, inflation, technological change, changes in law, changes in fiscal, monetary, regulatory and tax policies, monetary fluctuations, political and global changes arising from the terrorist attacks of September 11, 2001 as well as the war in Iraq and its aftermath, success in gaining regulatory approvals when required as well as other risks and uncertainties detailed elsewhere in this quarterly report or from time to time in the filings of the Company with the Securities Exchange Commission.  Such forward-looking statements speak only as of the date on which such statements are made, and the corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

The accompanying financial information should be read in conjunction with Coast Bancorp’s Annual Report on Form 10-KSB for the year ended December 31, 2005.

Description of Business

Coast Bancorp

Coast Bancorp, headquartered in San Luis Obispo, California, is a California corporation incorporated in 2001.  Coast Bancorp became the bank holding company of Coast National Bank on May 31, 2001 through a corporate reorganization.  In the reorganization, Coast National Bank became the wholly-owned subsidiary of Coast Bancorp and the shareholders of the Bank became shareholders of Coast Bancorp.  Coast Bancorp is operated through a two-tiered corporate structure.  At the holding company level the affairs of Coast Bancorp are overseen by a Board of Directors elected by the shareholders of Coast Bancorp at the annual meeting of shareholders.  The business of the Bank is overseen by a Board of Directors elected by Coast Bancorp, the sole owner of the Bank.  As of the date of this Form 10-QSB the respective members of the Board of Directors of the Bank and the Board of Directors of Coast Bancorp are identical.  Coast Bancorp is subject to the regulations of, and examination by, the Board of Governors of the Federal Reserve System.  At present, Coast Bancorp does not engage in any material business activities other than the ownership of the Bank.  Financial information presented in this Form 10-QSB for September 30, 2006 and comparative information for December 31, 2005 and September 30, 2005 is inclusive of the consolidated Company.

Coast National Bank

Coast National Bank (the “Bank”) was chartered June 16, 1997 (charter #23222) by The Office of the Comptroller of the Currency as a national bank.  The Bank commenced operations on that date with two offices, 16 employees and $6,250,000 in capital.  The original branch offices were located at 486 Marsh Street, San Luis Obispo and 1199 Grand Avenue, Arroyo Grande, California.  Since that time, an additional branch office was opened in June 1998 at 948 Morro Bay Boulevard in Morro Bay, California and another branch office was opened in July 1999 at 1193 Los Osos Valley Road in Los Osos, California.  In July 2002, a loan production office was opened at 930 South Broadway Street in Santa Maria, California and in July 2004 moved to 301 S. Miller Street, Ste. 110 in Santa Maria, California. In December 2005, the office was relocated to 411 Betteravia Rd., Ste 201, Santa Maria, California.  In October 2004 a loan production office was opened in Santa Barbara, California at 15 West Carrillo Street, Ste. 252.  The original lease on this facility expired and the office was closed in September 2005.  The Bank applied for and received approval from the Comptroller of the Currency for another branch office at 2138 Spring Street, Paso Robles, California which opened in March 2005.  The Bank also purchased a lot at 2045 Spring Street, Paso Robles, California with the intention of relocating the Paso Robles branch.  However, the lot was not adequate for the relocation of the branch and on October 26, 2006, the Bank purchased a new lot at 2110 Spring St, Paso Robles, California.  The Bank intends to relocate the Paso Robles branch to this larger lot, sometime in the future. In June 2005, the Bank opened a new loan production office at 7429 N. First St., Ste. 104, Fresno, California.  In July of 2006, the Fresno office was relocated to 466 W. Fallbrook Ave., #109, Fresno, California.

When the Bank opened for business in June 1997, it purchased the real estate and building that housed the Arroyo Grande branch office.  On October 14, 1999, the Bank purchased an adjacent lot next to the San Luis Obispo main office on Marsh Street.  A few months later on February 1, 2000, the Bank also purchased the contiguous property and building that was home to the San Luis Obispo main office at 486 Marsh Street.  Construction of a new head office building on the adjacent lot began on October 11, 2001 and was completed on November 25, 2002.  The new main office, located at 500 Marsh Street is approximately 10,700 square feet with the San Luis Obispo branch operation occupying the ground floor and the administrative offices occupying the second floor.  Half of the original main office at 486 Marsh Street now houses the Bank’s Small Business Lending Center and the Bank’s Note Department while the other half is leased to various businesses.

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On March 29, 2002, the Bank purchased a vacant site on Morro Bay Boulevard in Morro Bay that is approximately one block from the existing branch.  The purpose for this acquisition was the eventual construction and relocation of the Morro Bay branch to a larger facility with a drive-through lane.  In October 2003 construction began on the new Morro Bay facility which was completed and occupied in August 2004. The branch consists of approximately 2700 square feet with two drive through lanes.

As of September 30, 2006, the Bank had a total of 73 employees.  A number of these employees are part-time however. Part-time employees are converted to full-time equivalent employees on the percentage of their weekly hours worked compared to 40 hours.  On a full-time equivalent basis, employees represent 68 positions.  The Bank values its employees.  They are actively engaged individually and as a team in contributing to the Bank’s realization of its vision and mission.

Critical Accounting Policies

Our accounting policies are integral to understanding the results reported.  In preparing its consolidated financial statements, the Company is required to make judgments and estimates that may have a significant impact upon its financial results.  Certain accounting policies require the Company to make significant estimates and assumptions, which have a material impact on the carrying value of certain assets and liabilities, and are considered critical accounting policies.  The estimates and assumptions used are based on the historical experiences and other factors, which are believed to be reasonable under the circumstances.  Actual results could differ significantly from these estimates and assumptions, which could have a material impact on the carrying value of assets and liabilities at the balance sheet dates and results of operations for the reporting periods.  For example, the Company’s determination of the adequacy of its allowance for credit losses is particularly susceptible to management’s judgment and estimates.  The following is a brief description of our current accounting policies involving significant management valuation judgments.

Allowance for Loan Losses

The allowance for loan losses represents management’s best estimate of losses inherent in the existing loan portfolio.  The allowance for loan losses is increased by the provision for loan losses charged to expense and reduced by loans charged off, net of recoveries.  The allowance for loan losses is determined based on management’s assessment of several factors: reviews and evaluation of individual loans, changes in the nature and volume of the loan portfolio, current economic conditions and the related impact on specific borrowers and industry groups, historical loan loss experiences and the levels of classified and nonperforming loans.

Loans are considered impaired if, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  The measurement of impaired loans is generally based on the present value of expected future cash flows discounted at the historical effective interest rate stipulated in the loan agreement, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral.  In measuring the fair value of the collateral, management uses assumptions and methodologies consistent with those that would be utilized by unrelated third parties.

Changes in the financial condition of individual borrowers, in economic conditions, in historical loss experience and in the condition of the various markets in which collateral may be sold may all affect the required level of the allowance for loan losses and the associated provision for loan losses.

Available-for-Sale Securities

The fair value of most securities classified as available for sale are based on quoted market prices.  If quoted market prices are not available, fair values are extrapolated from the quoted prices of similar instruments.

Income Taxes

Deferred income taxes are computed using the asset and liability method, which recognizes a liability or asset representing the tax effects, based on current tax law, of future deductible or taxable amounts attributable to events that have been recognized in the consolidated financial statements.  A valuation allowance is established to reduce the deferred tax asset to the level at which it is “more likely than not” that the tax asset or benefits will be realized.  Realization of tax benefits of deductible temporary differences and operating loss carry forwards depends on having sufficient taxable income of an appropriate character within the carry forward periods.

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Overview

Earnings Summary

For the three months ended September 30, 2006 the Company reported consolidated net income of $465,000 or $0.66 diluted earnings per share compared to net income of $248,000 and $0.35 diluted earnings per share for the same period during 2005, a 87.5% increase.  For the nine months ended September 30, 2006 the Bancorp reported consolidated net income of $1,118,000 or $1.59 diluted earnings per share compared to consolidated net income of $776,000 or $1.09 diluted earnings per share for the same period in 2005, a 44.1% increase.  The increase in net income was primarily due to an increase in loans and loan income as well as increases in service charges and gains resulting from the sale of the guaranteed portion of government guaranteed loans.

Balance Sheet Summary

As of September 30, 2006, total consolidated assets of Coast Bancorp were $178.3 million in comparison to total assets of $185.7 million as of December 31, 2005. This represents a decrease of $7.4 million, or 4.0%.  Compared to total consolidated assets of $179.2 million at September 30, 2005, assets have decreased by $903,000, or 0.5%, over the last twelve months.  The decreased quantity of time deposits was somewhat offset by the increased quantity of money market and Now accounts.  The Company has been strategically reducing the amount of time deposits over $100,000 as a percentage of total deposits while remaining competitive with customers that have existing relationships with the Company.

The Bank has continued to grow its loan portfolio.  Gross loans as of September 30, 2006 were $144.8 million in comparison to total loans of $133.7 million as of December 31, 2005.  This represents an increase of $11.1 million, or 8.3%.  Compared to total loans of $126.4 million at September 30, 2005, the Company has increased loans by $18.4 million, or 14.6%, over the last twelve months. The loan portfolio has grown as a result of continued strong loan demand in the Bank’s market area and the Bank has drawn on Fed funds to fund this growth.

Total deposits as of September 30, 2006 were $160.3 million in comparison to total deposits of $169.0 million as of December 31, 2005.  This represents a decrease of $8.7 million, or 5.1%. Compared to total deposits of $162.6 million at September 30, 2005, deposits have decreased by $2.3 million, or 1.4%, over the last twelve months.  These decreases are due to the Company’s strategic realignment of its deposit portfolio.

Earnings Analysis

Net Interest Income

A significant component of the Bank’s earnings is from net interest income.  Net interest income is the amount by which the interest and amortization of fees generated from loans and other earning assets exceed the cost of funding those assets, usually deposit account interest expense.  Net interest income depends on the difference between gross interest and fees earned on the loans and investment portfolios and the interest rates paid on deposits and borrowings (“the interest rate spread”).   Net interest income after the provision for credit losses was $2,350,000 for the quarter ended September 30, 2006, compared to $1,997,000 for the quarter ended September 30, 2005, representing an increase of 17.7%.  Net interest income after the provision for credit losses was $6,727,000 for the nine months ended September 30, 2006, compared to $5,740,000 for the nine months ended September 30, 2005, representing an increase of 17.2%.  These increases were primarily the result of rising interest rates and loan growth generated by the Banks’ branches. The percentage change in the average interest rate paid on deposits increased faster than the percentage change in the average interest rates earned on loans for both the three and nine months ended September 30, 2006 as compared to the three and nine months ended September 30, 2005.  However, this was offset by both an increase in net interest margin and a larger increase in loans as compared to deposits for the same time periods.

12

The following tables present, for the three months and nine months ended September 30, 2006 and 2005, the distribution of average assets, liabilities and shareholders’ equity.  In addition, the total amounts of interest income from average interest-earning assets and the resultant yields, and the dollar amounts of interest expense and average interest-bearing liabilities, expressed both in dollars and in rates are also presented.  Non-accrual loans are included in the calculation of the average balances of loans, and interest not accrued is excluded (dollar amounts in thousands).

	Distribution of Assets, Liabilities and Stockholders’ Equity
	For the Three Months Ended
	September 30, 2006							September 30, 2005
				Interest		Average					Interest		Average
	Average			Earned		Yield or		Average			Earned		Yield or
	Balance			or Paid		Rate Paid		Balance			or Paid		Rate Paid
Assets
Interest-Earning Assets:
Investment Securities	$	6,907		$	57	3.27	%	$	12,013		$	77	2.54	%
Federal Funds Sold	10,367			136		5.20	%	16,450			145		3.50	%
Other Earning Assets	943			17		7.15	%	912			13		5.66	%
Loans	144,283			3,453		9.49	%	128,431			2,682		8.29	%
Total Interest-Earning Assets	162,500			3,663		8.94	%	157,806			2,917		7.33	%
Cash and Due from Bank	7,288							9,839
Premises and Equipment	8,139							8,386
Other Real Estate Owned	—							—
Accrued Interest and Other Assets	1,875							1,739
Allowance For Loan Losses	(1,264		)					(1,168		)
Total Assets	$	178,538						$	176,602
Liabilities and Shareholders’ Equity
Interest-Bearing Liabilities:
Money Market and NOW:	$	47,541		$	382	3.19	%	$	38,895		$	181	1.85	%
Savings	7,133			35		1.95	%	8,648			22		1.01	%
Time Deposits under $100,000	14,058			143		4.04	%	14,404			101		2.78	%
Time Deposits of $100,000 or More	51,709			572		4.39	%	57,831			497		3.41	%
Trust Preferred Securities	5,155			125		9.62	%	5,155			99		7.62	%
Total Interest-Bearing Liabilities	125,596			1,257		3.97	%	124,933			900		2.86	%
Non-Interest Bearing Liabilities
Demand Deposits	40,152							40,219
Other Liabilities	539							478
Stockholders’ Equity	12,251							10,872
Total Liabilities and Stockholders’ Equity	$	178,538						$	176,502
Net Interest Income				$	2,406						$	2,017
Net Yield on Interest-Earning Assets						5.87	%						5.07	%

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	Distribution of Assets, Liabilities and Stockholders’ Equity
	For the Nine Months Ended
	September 30, 2006							September 30, 2005
				Interest		Average					Interest		Average
	Average			Earned		Yield or		Average			Earned		Yield or
	Balance			or Paid		Rate Paid		Balance			or Paid		Rate Paid
Assets
Interest-Earning Assets:
Investment Securities	$	7,482		$	165	2.95	%	$	12,547		$	238	2.54	%
Federal Funds Sold	16,256			582		4.79	%	13,264			296		2.98	%
Other Earning Assets	933			47		6.74	%	900			40		5.94	%
Loans	139,186			9,569		9.19	%	124,283			7,300		7.85	%
Total Interest-Earning Assets	163,857			10,363		8.46	%	150,994			7,874		6.97	%
Cash and Due from Bank	7,791							9,589
Premises and Equipment	8,200							8,472
Other Real Estate Owned	—							—
Accrued Interest and Other Assets	1,687							1,788
Allowance For Loan Losses	(1,227		)					(1,168		)
Total Assets	$	180,308						$	169,675
Liabilities and Shareholders’ Equity
Interest-Bearing Liabilities:
Money Market and NOW:	$	45,756		$	992	2.90	%	$	37,743		$	427	1.51	%
Savings	7,711			93		1.61	%	8,638			55		0.85	%
Time Deposits under $100,000	14,928			414		3.71	%	14,217			238		2.24	%
Time Deposits of $100,000 or More	54,293			1,669		4.11	%	52,372			1,117		2.85	%
Trust Preferred Securities	5,155			351		9.10	%	5,155			277		7.18	%
Total Interest-Bearing Liabilities	127,843			3,520		3.68	%	118,125			2,114		2.39	%
Non-Interest Bearing Liabilities
Demand Deposits	40,107							40,582
Other Liabilities	481							423
Stockholders’ Equity	11,877							10,494
Total Liabilities and Stockholders’ Equity	$	180,308						$	169,624
Net Interest Income				$	6,843						$	5,760
Net Yield on Interest-Earning Assets						5.58	%						5.10	%

Net interest income is affected by changes in the amount and mix of our interest-earning assets and interest-bearing liabilities, referred to as a “volume change”.  It is also affected by changes in the yields we earn on interest-earning assets and rates we pay on interest-bearing deposits and other borrowed funds, referred to as a “rate change”.

14

The following table sets forth changes in interest income and interest expense for each major category of interest-earning asset and interest-bearing deposit accounts, and the amount of change attributable to volume and rate changes for the three and nine months ended September 30, 2006 and 2005.  Changes not solely attributable to rate or volume have been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the changes in each (dollar amounts in thousands).

	Three Months Ended September 30, 2006								Nine Months Ended September 30, 2006
	compared to the								compared to the
	Three Months Ended September 30, 2005								Nine Months Ended September 30, 2005
	Increase (Decrease) in interest income and								Increase (Decrease) in interest income and
	expense due to change in:								expense due to change in:
	Volume			Rate		Total			Volume			Rate		Total
Interest-Earning Assets:
Investment Securities	$	(101	)	$	81	$	(20	)	$	(126	)	$	53	$	(73	)
Federal Funds Sold	(102		)	93		(9		)	78			208		286
Other Earning Assets	0			4		4			2			5		7
Loans	199			572		771			937			1,332		2,269
Total Interest Income	(4		)	750		746			890			1,599		2,489
Interest-Bearing Liabilities:
Transaction Accounts	48			153		201			107			458		565
Savings	(23		)	36		13			(10		)	48		38
Time Deposits	(17		)	59		42			12			164		176
Time Deposits $100,000 or more	(285		)	360		75			43			510		552
Trust Preferred	—			26		26			—			74		74
Total Interest Expense	(277		)	634		357			152			1,254		1,406
Net Interest Income	$	273		$	116	$	389		$	738		$	345	$	1,083

The following table sets forth the components of net interest income, average earning assets and net interest margin (in thousands):

	Three Months Ended						Nine Months Ended						Year Ended
	September 30,						September 30,						December 31,
	2006			2005			2006			2005			2005
Interest Income	$	3,663		$	2,917		$	10,363		$	7,874		$	10,903
Interest Expense	1,257			900			3,520			2,114			3,171
Net Interest Income	$	2,406		$	2,017		$	6,843		$	5,760		$	7,732
Average Earning Assets	$	162,500		$	157,806		$	150,994		$	150,994		$	154,573
Net Interest Margin	5.87		%	5.07		%	5.58		%	5.10		%	5.00		%

Interest expense was $1,257,000 for the quarter ended September 30, 2006 compared to $900,000 for the quarter ended September 30, 2005, representing an increase of 39.7%.  Interest expense was $3,520,000 for the nine months ended September 30, 2006, compared to $2,114,000 for the nine months ended September 30, 2005, an increase of 66.5%.  These increases reflect higher interest rates paid to all interest bearing accounts which is offset by decreased volume.

The net interest margin is the ratio of net interest income to average earning assets. This ratio is useful in allowing the Company to monitor the spread between interest income and interest expense between reporting periods irrespective of the growth of the Company’s assets.  The net interest margin increased 80 basis points to 5.87% for the quarter ended September 30, 2006 as compared to 5.07% for the quarter ended September 30, 2005.  The net interest margin, 5.58% for the nine months ending September 30, 2006 was 48 basis points higher than the comparable figure, 5.10%, for the nine month period ending September 30, 2005.  These increases are primarily due to the continued growth of quality loans and the Bank’s ability to respond to the changes in interest rates.

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Non-interest Income

Non-interest income represents deposit account service charges and other types of fee income including gain on sale of fixed assets and mortgage referral fees.  Non-interest income for the three months ended September 30, 2006 totaled $233,000 compared to $46,000 for the same period in 2005, a 406.5% increase.    Non-interest income for the nine months ended September 30, 2006 totaled $545,000 compared to $325,000 for the same period in 2005 representing a 67.7% increase.  The increases in non-interest income for 2006 were principally due to increases in service charges on deposit accounts, servicing fees and realized gains on the sale of the guaranteed portion of government-guaranteed loans.

Non-interest Expense

Non-interest expense represents salaries, occupancy expenses, professional expenses, outside services and other miscellaneous expenses necessary to conduct business.  Non-interest expense for the three months ended September 30, 2006 totaled $1.8 million compared to $1.6 million for the same period in 2005 for an increase of 15.3%.  Non-interest expense for the nine months ended September 30, 2006 totaled $5.4 million compared to $4.6 million for the same period in 2005 for an increase of 17.5%.  These increases are primarily due to an overall rise in salary and benefit expenses and an increase in promotional expenses.   The number of fulltime equivalent employees necessary to provide superior customer service was 68 in September 2006 as compared to 61 in September, 2005.  The continuing growth of the Bank’s governmental guaranteed lending department specializing in Small Business Administration lending programs, and the overall expansion of the Bank’s customer base also contributed to the increase.

Income Taxes

The Company recorded a $318,000 tax provision during the three months ended September 30, 2006 compared to $234,000 during the same period in 2005.  The Company recorded a $754,000 tax provision for the nine months ended September 30, 2006 compared to $692,000 during the same period in 2005. The increase in the tax provisions is a result of the increasing income for the three months and nine months ended September 30, 2006.

Balance Sheet Analysis

Investment Portfolio

The following table summarizes the amounts and distribution of our investment securities held as of the dates indicated, and the weighted average yields as of September 30, 2006 and December 31, 2005 (dollar amounts in thousands):

	September 30, 2006						December 31, 2005
					Weighted
	Book		Market		Average		Book		Market
	Value		Value		Yield		Value		Value
Available-for-Sale Securities
U.S. Treasuries	—		—		—		—		—
U.S. Government and Agency Securities:
Within One Year	7,004		6,968		2.94	%	4,992		4,920
One to Five Years	—		—		0.00	%	3,015		2,952
Five to Ten Years	—		—		0.00	%	—		—
After Ten Years	—		—		0.00	%	—		—
Total U.S. Treasury and Government Agency Securities	7,004		6,968		2.94	%	8,007		7,872
Mutual Funds	—		—				—		—
Mortgage Backed Securities	—		—				—		—
Total Available-for-Sale Securities	$	7,004	$	6,968	2.94	%	$	8,007	$	7,872

Securities may be pledged to meet security requirements imposed as a condition to receipt of deposit of public funds and for other purposes.  At September 30, 2006, the fair market value of securities pledged to secure public deposits and other purposes were $999,380 or 14.3% of available for sale securities.

16

Loan Portfolio

The following table sets forth the components of total net loans outstanding in each category at the date indicated (dollar amounts in thousands):

	September 30, 2006			December 31, 2005
Loans
Commercial loans	$	38,706		$	29,491
Real Estate - Construction	33,375			25,213
Real Estate - Other	67,346			76,092
Consumer loans	5,376			2,866
Other	—			29
Total loans	144,803			133,691
Net Deferred Loan Costs (Fees)	(458		)	(460		)
Allowance for Loan Losses	(1,301		)	(1,183		)
Net Loans	$	143,044		$             132,048
Commitments
Standby Letters of Credit	$	2,715		$                 2,589
Undisbursed Loans and Commitments to Grant Loans	65,038			57,356
Total Commitments	$	67,753		$               59,945

Asset Quality

As of September 30, 2006, the Company had three government guaranteed loans on non-accrual for a total of $321,792.  The non-guaranteed portion of these non-accrual loans is $116,023.  As of September 30, 2006, there are no loans past due 90 days or more and still accruing.  As of September 30, 2005, the Company had no loans on non-accrual and no loans past due 90 days or more and still accruing.   As of December 31, 2005 the company had one loan on non-accrual of $15,186 and no loans 90 days past due and still accruing.

As of September 30, 2006 and 2005 the Company has had no OREO or restructured loans.

Provision for Loan Losses

Management of the Bank and Coast Bancorp believes that the allowance for loan losses is adequate.  The Bank has established a monitoring system for loans in order to identify impaired loans and potential problem loans and to permit periodic evaluation of impairment and adequacy of the allowance for loan losses in a timely manner.  The monitoring system and allowance for loan losses methodology have evolved over a period of years, and loan classifications have been incorporated into the determination of the allowance for loan losses.  This monitoring system and allowance methodology includes a loan-by-loan analysis for all classified loans as well as loss factors for the balance of the unclassified portfolio.  Classified loans are reviewed individually to estimate the amount of probable losses that needs to be included in the allowance.  These reviews include analysis of financial information as well as evaluation of collateral securing the credit.  Loss factors on the unclassified portion of the portfolio are based on such factors as historical loss experience, current portfolio delinquency and trends, and other inherent risk factors such as economic conditions, concentrations in the portfolio, risk levels of particular loan categories, internal loan review and management oversight.

The Bank made a $116,000 contribution to the allowance for loan losses for the nine months ended September 30, 2006 compared to $20,000 for the same period in 2005 to accommodate the increase in the Bank’s loan portfolio.  Management believes that the allowance, which equals 0.90% of gross loans at September 30, 2006, is adequate to cover future losses.  The allowance for loan losses at December 31, 2005 was 0.88% of gross loans.

17

The following table summarizes, for the periods indicated, changes in the allowance for loan losses arising from loans charged-off, recoveries on loans previously charged-off, and additions to the allowance which have been charged to operating expenses and certain ratios relating to the allowance for loan losses (dollar amounts in thousands):

	Three Months Ended						Nine Months Ended
	September 30, 2006						September 30, 2006
	2006			2005			2006			2005
Outstanding Net Loans
Average for the Year	$	145,084		$	129,263		$	140,002		$	123,115
Allowance for Loan Losses:
Balance, beginning of period	$	1,244		$	1,168		$	1,183		$	1,168
Actual Charge-Offs:
Commercial	1			—			1			—
Consumer	—			—			—			—
Real Estate	—			—			—			—
Total Charge-Offs	1			—			1			—
Less Recoveries:
Commercial	—			—			—			—
Consumer	2			—			3			—
Real Estate	—			—			—			—
Total Recoveries	2			—			3			—
Net Loans Recovered (Charged-Off)	1			—			2			—
Provision for Loan Losses	56			20			116			20
Balance, end of period	$	1,301		$	1,188		$	1,301		$	1,188
Ratios:
Net Loans Charged-Off to Average Loans	0.00		%	0.00		%	0.00		%	0.00		%
Allowance for Loan Losses to Total Loans	0.90		%	0.92		%	0.93		%	0.96		%
Net Loans Recovered (Charged-Off) to Beginning Allowance for Loan Losses	0.08		%	0.00		%	0.17		%	0.00		%
Net Loans Recovered (Charged-Off) to Provision for Loan Losses	1.79		%	0.00		%	1.72		%	0.00		%
Allowance for Loan Losses to Non-performing Loans	1121.55		%	n/a			n/a			n/a

Funding

Deposits are our primary source of funds.  At September 30, 2006, we had a deposit mix of 44.5% in time and savings deposits, 31.6% in money market and NOW deposits, and 23.9% in non-interest-bearing demand deposits.  Our net interest income is enhanced by our percentage of non-interest-bearing deposits.

Return on Equity and Assets

The following table sets forth several key operating ratios for the nine months ended September 30, 2006 and 2005:

	Nine Months Ended
	September 30,
	2006		2005
Return on Average Assets	0.84	%	0.61	%
Return on Average Equity	12.59	%	9.89	%
Dividend Payout Ratio	0.00	%	0.00	%
Average Stockholder’s Equity to Average Total Assets	6.66	%	6.19	%

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Capital Resources

Stockholders equity at September 30, 2006 was $12.5 million, compared to $11.2 million at December 31, 2005, an 11.3% increase.  Stockholders equity increased primarily from net income of $1,118,000.

The Company is required to meet certain minimum risk-based capital guidelines and leverage ratios set by the bank regulatory authorities. The risk-based capital standards establish capital requirements that are more sensitive to risk differences between various assets, consider off balance sheet activities in assessing capital adequacy, and minimize the disincentives to holding liquid, low risk assets.  The leverage ratio consists of tangible Tier 1 capital divided by average total assets.

Both Coast Bancorp and Coast National Bank maintain capital ratios above the Federal regulatory guidelines for “well-capitalized” bank holding companies.  The ratios for the Bank and Bancorp are as follows:

							Coast			Coast
	Regulatory Standard						National Bank			National Bank
	Adequately			Well			As of			As of
	Capitalized			Capitalized			September 30, 2006			December 31, 2005
Total risk-based capital ratio		8.00	%		10.00	%		11.95	%		11.52	%
Tier 1 risk-based capital ratio		4.00	%		6.00	%		11.09	%		10.70	%
Tier 1 leverage capital ratio		4.00	%		5.00	%		9.76	%		8.75	%

							Coast			Coast
	Regulatory Standard						Bancorp			Bancorp
	Adequately			Well			As of			As of
	Capitalized			Capitalized			September 30, 2006			December 31, 2005
Total risk-based capital ratio		8.00	%		10.00	%		12.70	%		11.73	%
Tier 1 risk-based capital ratio		4.00	%		6.00	%		11.24	%		10.04	%
Tier 1 leverage capital ratio		4.00	%		5.00	%		9.35	%		8.61	%

Liquidity

The objective of the Company’s asset/liability strategy is to manage liquidity and interest rate risk.  Ultimately, management seeks to monitor the safety and soundness of the Bank and its capital base, while maintaining adequate net interest margins and spreads to provide an appropriate return to the stockholders.  The bank manages liquidity by maintaining a majority of its investment portfolio in federal funds sold and other liquid investments.  The ratio of net loans to deposits, a key liquidity ratio, at September 30, 2006 was 89.3%, as compared to 78.2% at December 31, 2005, which are within acceptable liquidity levels for the Company.

Management is not aware of any future capital expenditures or other significant demands on commitments which would severely impair liquidity.

Item 3.  Controls and Procedures

Based on their evaluation as of September 30, 2006, the Bancorp’s Chief Executive Officer and Chief Financial Officer have concluded that the Bancorp’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Bancorp files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  There have been no significant changes in the Bancorp’s internal controls or in other factors that could significantly affect those controls subsequent to the date of their evaluation.

19

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

Not applicable.

ITEM 2 – CHANGES IN SECURITIES

Not applicable.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5 – OTHER INFORMATION

Not applicable.

ITEM 6 – EXHIBITS

EXHIBITS

Exhibit 10.1 -          Fresno SBA Lease Agreement

Exhibit 10.2 -          Paso Robles Property Purchase Agreement

Exhibit 31 -             RULE 13a-14(a) CERTIFICATIONS

31.1Certification of Chief Executive Officer

31.2Certification of Chief Financial Officer

Exhibit 32 -             SECTION 1350 CERTIFICATIONS

32.1Certification of Chief Executive Officer

32.2Certification of Chief Financial Officer

20

Signatures

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

		COAST BANCORP
Date:	November 13, 2006	/s/ Jack C. Wauchope
		Jack C. Wauchope
		Chairman of the Board
		President/Chief Executive Officer
		(Principal Executive Officer)
Date:	November 13, 2006	/s/ Karan C. Pohl
		Karan C. Pohl, CPA
		Senior Vice President
		Chief Financial Officer
		(Principal Financial Officer)

21