8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

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

Date of Report (Date of earliest event reported): February 27, 2006

DISCOVERY BANCORP

Incorporated Under the Laws of the State of California

333-122090	20-1814766
Commission File Number	I.R.S. Employer Identification Number

338 Via Vera Cruz
San Marcos, California 92078
(760) 736-8900

Not Applicable

(Former name or former address, if changed since last report)

     Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

2

TABLE OF CONTENTS

Exhibit 99

Item 2.02 Results of Operations and Financial Condition.

     (a) Discovery Bancorp issued a press release on February 27, 2006 announcing its financial results for the quarter ended December 31, 2005. The press release is furnished as Exhibit 99 and is hereby incorporated by reference in its entirety. Discovery Bancorp does not intend for this Item 2.02 or Exhibit 99 to be incorporated by reference into filings under the Securities Exchange Act of 1934.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

     99                     Fourth Quarter Earnings Press Release of Discovery Bancorp, dated February 27, 2006

SIGNATURES

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

	DISCOVERY BANCORP
Date: March 1, 2006
	By:	/s/ Martin McNabb
		Martin McNabb
		Chief Financial Officer

EX-99

	Exhibit 99
February 27, 2005	For Further Information
	Kenn Ulrich, APR
	619-397-5471

Discovery Bancorp 4^th Quarter Earnings Rise by 138 Percent

     (San Marcos, CA) Net profits for Discovery Bancorp (OTCBB:DVBC) were $330,044, or $0.18 per share, for the fourth quarter of 2005, a gain of 138 percent over earnings of $138,689 or $0.13 per share, for the same period in 2004. Results for 2005 reflect the performances of both Discovery Bank and Celtic Capital Corp., a commercial finance company acquired in September 2005 and now operating as a wholly owned subsidiary of Discovery Bancorp.

     Discovery Bancorp’s earnings for 2005 totaled $552,681, or $0.42 per share, compared to $618,640, or $0.60 per share for Discovery Bank and Discovery Bancorp combined in 2004. The 2005 earnings included one-time expenses of $340,000 related to the Celtic Capital acquisition and $296,000 for costs attributable to the holding company reorganization. A tax benefit of $85,800 is included in 2004 earnings, a year that marked final utilization of the bank’s net operating loss allowance.

     “We had a very active and very good year in 2005,” said James P. Kelley, president and chief executive officer of Discovery Bancorp. “Pre-tax income was up by 62 percent, showing solid performance in daily operations. At the same time, we completed the acquisition of Celtic Capital Corp., raised more than $12 million in a stock offering, and received shareholder approval to form a bank holding company. We kept our eye on the ball and at the same time looked far down the playing field to remain competitive.”

     Total assets, loans and deposits for the company grew to record levels by Dec. 31, 2005. Assets rose to $164.6 million at Dec. 31, 2005, or 66 percent higher than $99.2 million at Dec. 31, 2004. Net loans at year-end 2005, including the newly acquired portfolio of Celtic Capital’s commercial loans, increased 68 percent to $134.3 million, from $80.0 million 12 months earlier. Total deposits reached $112.6 million at Dec. 30, 2005, or 41 percent above $79.7 million a year earlier.

     Steady growth in loan demand and the addition of Celtic Capital’s portfolio boosted the company’s interest income to a two-fold increase from the prior year. Interest income rose to $10.1 million for all of 2005, compared to $5.0 million for Discovery Bank for 2004. Net interest income advanced at a near-similar pace, to $6.9 million for 2005 from $3.8 million in 2004.

     Increases in loan originations and inclusion of Celtic Capital’s loans also led to a higher loan loss provision. For 2005, the loan loss provision totaled $786,361, compared to $237,798 for 2004, due to the above mentioned loan increase in loans outstandings. Net interest income after accounting for the loan loss provision increased 71 percent for the year, to $6.1 million for 2005 versus $3.6 million for 2004.

     The holding company’s taxes for 2005 were $401,863, an upward reversal of nearly one-half million dollars from the tax benefit offset in 2004 of $85,800.

     Stockholder’s equity as of Dec. 31, 2005, stood at $22.8 million, reflecting growth in the company’s core operations and the addition of $11.1 million in net proceeds from the mid-year stock offering. The company had 1,871,883 shares outstanding as of Dec. 31, 2005, compared to 1,037,298 at the end of 2004.

     Discovery Bancorp is a bank holding company serving the financial needs of small to medium-sized businesses, professionals and individuals through two principal subsidiaries – Discovery Bank and Celtic Capital Corp. Its headquarters are in San Marcos, Calif., a northern suburb of San Diego.

Discovery Bancorp Financial Highlights (Unaudited)

	As of		As of
	Dec. 2005		Dec. 2004
ASSETS
Cash & Cash Equivalents		14,854,337		6,583,876
Investments		6,007,994		5,397,357
Loans, Net		134,325,780		80,036,566
Other Assets		9,518,997		7,188,189
TOTAL ASSETS		164,707,108		99,205,988
LIABILITIES
Total Deposits		112,585,086		79,672,126
Borrowings Under Line of Credit		16,085,861		0
FHLB Advances		12,000,000		9,000,000
Other Liabilities		1,194,123		234,370
STOCKHOLDERS’ EQUITY		22,842,038		10,299,492
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY		164,707,108		99,205,988

	Year Ended		4th Quarter		Year Ended			4th Quarter
	Dec. 2005		Dec. 2005		Dec. 2004			Dec. 2004
STATEMENT OF OPERATIONS
Interest Income		10,098,438		3,722,358		5,004,569			1,454,943
Interest Expense		3,184,802		1,124,808		1,180,334			367,894
NET INTEREST INCOME		6,913,636		2,597,550		3,824,235			1,087,049
PROVISION FOR LOAN LOSSES		786,361		153,539		237,798			29,100
Net Interest Profit After Provision for Loan Losses		6,127,275		2,444,011		3,586,437			1,057,949
Non-Interest Income		1,031,993		329,661		152,379			45,983
Non-Interest Expense		6,204,724		2,203,714		3,205,976			840,218
PRE TAX INCOME		954,544		569,958		532,840			263,714
Income Tax Provision (Benefit)		401,863		239,914		(85,800	)		125,025
NET INCOME (LOSS)		552,681		330,044		618,640			138,689
Basic Earnings Per Share		0.42		0.18		0.60			0.13

Forward-Looking Statements – Statements in this release that are not historical facts are forward-looking statements based on management’s current expectations and beliefs on future developments and their potential effects on the bank. There is no assurance that future developments affecting the bank will be those anticipated by management. Forward-looking statements involve risks and uncertainties, and actual results may differ from those projected in the forward-looking statements due to credit, market, operational, liquidity, interest rate and other risks.

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