10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2008
or
o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to __________

Commission File Number: 333-141453

BELVEDERE SOCAL

(Exact name of registrant as specified in its charter)

California	20-8356735
(State of incorporation)	(I.R.S. Employer Identification No.)

One Maritime Plaza, Suite 825 San Francisco, CA	94111
(Address of principal executive offices)	(Zip Code)

(415) 434 - 1236

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See 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 x

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

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

As of  November 14, 2008 there were 3,331,859 shares of common stock, no par value, outstanding.

BELVEDERE SoCAL

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	F-1
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	15
ITEM 4.	CONTROLS AND PROCEDURES	16
PART II – OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	17
ITEM 1A.	RISK FACTORS	17
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	17
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	17
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	17
ITEM 5.	OTHER INFORMATION	17
ITEM 6.	EXHIBITS	18
	SIGNATURES	19
	CERTIFICATIONS

2

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

BELVEDERE SoCAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	September 30, 2008			December 31, 2007
Cash and due from banks	$	9,871,092		$	4,401,632
Federal Funds sold		5,955,000			9,130,000
Total cash and cash equivalents		15,826,092			13,531,632
Interest-bearing deposits in other financial institutions		524,000			100,000
Investment securities available for sale, amortized cost of $9,875,715 at September 30, 2008 and $8,769,293 at December 31, 2007		9,207,715			8,786,293
Investment securities held-to-maturity, fair market value of $21,530,122 at September 30, 2008		21,112,800			-
Loans, net of allowance for loan losses of $5,622,080 at September 30, 2008 and $4,077,213 at December 31, 2007		303,374,209			210,257,162
Premises and equipment, net		5,282,896			461,760
Goodwill		23,990,432			29,459,783
Other intangible assets, net		2,717,842			2,368,172
Federal Home Loan Bank stock, at cost		1,101,500			916,300
Other real estate owned		1,217,905			-
Accrued interest and other assets		10,613,718			4,198,740
Total assets	$	394,969,109		$	270,079,842
Deposits
Noninterest bearing demand	$	97,268,173		$	73,358,729
NOW, savings and money market accounts		87,394,799			49,514,411
Time deposits under $100,000		86,742,434			45,460,646
Time deposits over $100,000		49,687,318			25,715,811
Total deposits		321,092,724			194,049,597
Federal Home Loan Bank advances		6,000,000			18,000,000
Note payable, net of fees		7,959,123			-
Junior subordinated debentures, net of issuance costs		15,425,867			-
Accrued interest and other liabilities		2,677,679			3,044,416
Total liabilities		353,155,393			215,094,013
Commitments and Contingencies (Note 3)
Shareholders’ equity:
Preferred Stock - non-cumulative, perpetual, no par value; authorized 20,000,000 shares; 900,860 and 806,666 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively		22,121,500			19,766,650
Common Stock - no par value; authorized 20,000,000 shares; 3,331,776 and 2,011,343 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively		57,990,030			35,749,587
Accumulated deficit		(37,903,814	)		(540,408	)
Accumulated other comprehensive (loss) income, net of taxes		(394,000	)		10,000
Total shareholders’ equity		41,813,716			54,985,829
Total liabilities and shareholders' equity	$	394,969,109		$	270,079,842

See notes to unaudited consolidated financial statements

F-1

BELVEDERE SoCAL AND SUBSIDIARIES

AND ITS PREDECESSOR BUSINESS PROFESSIONAL BUSINESS BANK

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three-month periods ended September 30,						Nine-month periods ended September 30,
	Belvedere  SoCal and Subsidiaries			Professional Business Bank			Belvedere  SoCal and Subsidiaries			Professional Business Bank
	2008			2007			2008			2007
Interest income:
Interest and fees on loans	$	5,395,535		$	4,105,521		$	16,211,804		$	10,878,506
Interest on investment securities		316,502			161,060			1,002,164			636,232
Other interest income		55,790			42,199			329,437			346,548
Total interest income		5,767,827			4,308,780			17,543,405			11,861,286
Interest expense:
Deposits		1,456,625			1,055,753			4,500,370			3,389,416
Junior subordinated debentures		387,466			-			1,031,800			-
Other borrowings		129,787			194,704			570,937			270,379
Total interest expense		1,973,878			1,250,457			6,103,107			3,659,795
Net interest income before provision for loan losses		3,793,949			3,058,323			11,440,298			8,201,491
Provision for loan losses		255,765			983,000			2,316,295			1,520,000
Net interest income after provision for loan losses		3,538,184			2,075,323			9,124,003			6,681,491
Non-interest income:
Service charges and fees		226,964			100,436			773,781			291,810
Loss on sales of available-for-sale investment securities		(116,431	)		-			(116,431	)		-
Other income		65,159			(17,076	)		208,440			27,997
Total non-interest income		175,692			83,360			865,790			319,807
Non-interest expense:
Salaries and employee benefits		2,161,301			1,316,074			6,782,574			4,167,056
Occupancy and equipment		369,910			176,762			1,084,985			496,718
Professional fees		743,872			298,962			1,845,512			924,943
Data processing		342,686			124,316			1,000,316			421,296
Marketing and business promotion		35,715			38,490			149,010			102,834
Office and administrative expenses		241,645			194,415			734,605			579,758
Goodwill impairment		33,301,000			-			33,301,000			-
Other expenses		623,598			175,128			1,452,607			506,798
Total non-interest expense		37,819,727			2,324,147			46,350,609			7,199,403
Loss before income taxes		(34,105,852	)		(165,464	)		(36,360,816	)		(198,105	)
Provision for income tax (benefit) expense		(353,626	)		(15,375	)		(1,352,260	)		105,362
Net loss	$	(33,752,226	)	$	(150,089	)	$	(35,008,556	)	$	(303,467	)
Net loss per share:
Basic and diluted	$	(10.38	)	$	(0.08	)	$	(11.75	)	$	(0.15	)

See notes to unaudited consolidated financial statements

F-2

BELVEDERE SoCAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)

FOR THE PERIOD FROM JANUARY 17, 2007 (INCEPTION) TO SEPTEMBER 30, 2008

	Preferred Stock				Common Stock											Accumulated Other
	Number of Shares		Amount		Number of Shares		Amount			Comprehensive Loss			Accumulated Deficit			Comprehensive (Loss) Income
Common stock issued						1,125,539	$	11,500,000
Series A non-cumulative perpetual preferred stock issued, net of issuance costs		800,000	$	19,600,000
Common stock issued for acquisition of Professional Business Bank, net of issuance costs						885,804		24,249,587
Comprehensive loss:
Net loss										$	(373,758	)	$	(373,758	)
Unrealized gain on available-for-sale securities, net of tax											10,000					$	10,000
Total comprehensive loss										$	(363,758	)
Series A preferred stock dividend declared		6,666		166,650										(166,650	)
Balance December 31, 2007		806,666		19,766,650		2,011,343		35,749,587						(540,408)			10,000
Warrants exercised						7,001		70
Stock-based compensation								240,424
Common stock issued						1,313,432		22,000,000
Cash payments for fractional shares								(51	)
Comprehensive loss:
Net loss										$	(35,008,556	)		(35,008,556	)
Change in unrealized gain (loss) on available-for-sale securities, net of tax											(404,000	)					(404,000	)
Total comprehensive loss										$	(35,412,556	)
Series A preferred stock dividends declared		94,194		2,354,850										(2,354,850	)
Balance September 30, 2008		900,860	$	22,121,500		3,331,776	$	57,990,030					$	(37,903,814	)	$	(394,000	)

See notes to unaudited consolidated financial statements

F-3

BELVEDERE SoCAL AND SUBSIDIARIES

AND ITS PREDECESSOR BUSINESS PROFESSIONAL BUSINESS BANK

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007

	Belvedere SoCal and Subsidiaries			Professional Business Bank
	2008			2007
Operating activities:
Net loss	$	(35,008,556	)	$	(303,467)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization expense		373,734			121,044
Net loss on sales of available-for-sale investment securities		116,431			-
Provision for loan losses		2,316,295			1,520,000
Stock-based compensation		240,424			162,014
Loss on sale of other real estate owned		69,716			-
Write down of other real estate owned to market value		57,000			-
Goodwill impairment		33,301,000			-
Net decrease (increase) in accrued interest and other assets		2,900,905			(855,716	)
Net (decrease) increase in accrued interest and other liabilities		(9,351,326	)		227,573
Net cash (used in) provided by operating activities		(4,984,377	)		871,448
Investing activities:
Proceeds from maturities and principal paydowns of available-for-sale investment securities		22,493,982			2,797,848
PrProceeds from sales of available-for-sale investment securities		18,343,387			-
Proceeds from issuance of junior subordinated debentures		464,000			-
Purchases of held-to-maturity investment securities		(21,105,527	)		-
Net decrease in interest-bearing deposits in other financial institutions		2,184,000			4,799,000
Increase in loans, net		(18,051,529	)		(50,403,304	)
Purchases of premises and equipment		(228,904	)		(217,935	)
Purchase of FHLB stock		(185,200	)		(710,800	)
Proceeds from sale of other real estate owned		712,184			-
Cash received in connection with the acquisition of Spectrum Bank, net of cash paid		127,811			-
Net cash provided by (used in) investing activities		4,754,204			(43,735,191	)
Financing activities:
Net (decrease) increase in deposits		(14,967,386	)		38,254,290
Net (decrease) increase in Federal Home Loan Bank advances		(12,000,000	)		2,000,000
Proceeds from note payable		7,956,000			-
Investment in Belvedere Statutory Trust I		(464,000	)		-
Proceeds from exercise of stock options		-			253,859
Proceeds from sale of stock		22,000,000			-
Cash payments for fractional shares		(51	)		-
Proceeds from exercise of warrants		70			-
Net cash provided by financing activities		2,524,633			40,508,149
Increase (decrease) in cash and cash equivalents		2,294,460			(2,355,594)
Cash and cash equivalents, beginning of period		13,531,632			9,683,852
Cash and cash equivalents, end of period	$	15,826,092		$	7,328,258
Noncash financing activities
Loans transferred to other real estate owned	$	2,056,905		$	-
Preferred stock dividends declared	$	2,354,850		$	-
Supplemental cash flow information
Interest paid	$	6,167,433		$	1,153,388
Taxes paid	$	2,400		$	268,000

See notes to unaudited consolidated financial statements 

F-4

BELVEDERE SoCAL AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

1. Nature of Business and Basis of Presentation

Belvedere SoCal ("SoCal"), a bank holding company incorporated in 2007 in the state of California, was formed by its majority shareholder, Belvedere Capital Fund II L.P. (the “Fund”), a Delaware limited partnership formed in 2002.  SoCal was formed specifically to acquire Professional Business Bank (“PBB"), which occurred on November 23, 2007, and to be the platform for acquiring other banks in southern California.  SoCal closed the acquisition of Spectrum Bank (“Spectrum”) on January 31, 2008, further expanding its market presence. Effective July 3, 2008, SoCal completed the merger of  Spectrum Bank into Professional Business Bank.  The merger was accounted for as a transfer of assets and liabilities between entities under common control and, accordingly, the assets and liabilities of Spectrum were transferred at their carrying amounts, similar to a pooling of interests.  However, the existing Spectrum branches and certain customer-related activities will continue to be conducted using the Spectrum brand.  SoCal issued an additional 1,313,432 shares of common stock to the Fund for proceeds of $22 million to fund the Spectrum acquisition. After sale of the shares, the Fund now owns approximately 73% of SoCal's common stock. Collectively, PBB and Spectrum are referred to as the "Subsidiary Bank."

Prior to November 23, 2007 SoCal had no significant operations. The consolidated balance sheet at September 30, 2008 and the results of operations for the three-month and nine-month periods ended September 30, 2008 include the operations of Spectrum subsequent to January 31, 2008. The results of operations for the three-month and nine-month periods ended September 30, 2007 are for Professional Business Bank only. Securities and Exchange Commission rules require the presentation of certain prior period comparative financial statements of the acquired business when the acquiring company succeeds to substantially all of the business and the registrant’s own operations prior to the acquisition appear insignificant relative to the business acquired.

The September 30, 2008 unaudited consolidated financial statements include the accounts of SoCal and its Subsidiary Bank.  SoCal has one other wholly-owned subsidiary, Belvedere SoCal Statutory Trust I (the “Trust”), which was formed in 2008, to issue trust preferred securities. FIN 46R does not allow the consolidation of the Trust into SoCal's consolidated financial statements. As a result, the accompanying consolidated balance sheets include the investment in the Trust of $464 thousand in other assets.

The financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation, in all material respects, of the financial position and operating results for the interim periods.   The results of operations for the nine-month period ended September 30, 2008 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2008.  The balance sheet data at December 31, 2007 was derived from the audited financial statements.

This information should be read in conjunction with the audited financial statements and notes thereto included in SoCal's Form 10-KSB for the fiscal year ended December 31, 2007.

2. Recent Accounting Pronouncements

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations (“SFAS No. 141(R)”). SFAS No. 141(R), among other things, establishes principles and requirements for how the acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired business, (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SoCal is required to adopt SFAS No. 141(R) for all business combinations for which the acquisition date is on or after January 1, 2009. Earlier adoption is prohibited. This standard will change the accounting treatment for business combinations on a prospective basis.

Effective January 1, 2008, SoCal adopted SFAS No. 157, Fair Value Measurements, which among other things, requires enhanced disclosures about financial instruments carried at fair value. SFAS No. 157 establishes a hierarchical disclosure framework associated with the level of observable pricing scenarios utilized in measuring financial instruments at fair value. The degree of judgment utilized in measuring the fair value of financial instruments generally correlates to the level of the observable pricing scenario. Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of observable pricing and a lesser degree of judgment utilized in measuring fair value. Conversely, financial instruments rarely traded or not quoted will generally have little or no observable pricing and a higher degree of judgment utilized in measuring fair value. Observable pricing scenarios are impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established and the characteristics specific to the transaction.

On October 10, 2008, the FASB issued FSP FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active,” which clarifies how companies should apply the fair value measurement methodologies of SFAS 157 to financial assets when markets they are traded in are illiquid or inactive. Under the provisions of this FSP, companies may use their own assumptions about future cash flows and appropriately risk-adjusted discount rates when relevant observable inputs are either not available or are based solely on transaction prices that reflect forced liquidations or distressed sales. This FSP is effective as of September 30, 2008. There was no impact to our financial position or results of operations from the adoption of this FSP.

F-5

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115, which permits entities to choose to measure financial instruments and certain warranty and insurance contracts at fair value.  SFAS No. 159 applies to all reporting entities, including not-for-profit organizations, and contains financial statement presentation and disclosure requirements for assets and liabilities reported at fair value. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. SoCal adopted SFAS No. 159 on January 1, 2008. SoCal chose not to elect the option to measure eligible financial assets and liabilities at fair value.

3. Commitments and Contingencies

In the normal course of business there are outstanding various commitments to extend credit which are not reflected in the financial statements, including unfunded loan commitments of approximately $36.4 million at September 30, 2008 and $62.5 million at December 31, 2007. Such loans relate primarily to real estate construction loans and revolving lines of credit and other commercial loans. However, all such unfunded commitments will not necessarily culminate in actual extensions of credit by SoCal as some of these are expected to expire without being fully drawn upon.

Standby letters of credit are conditional commitments issued to guarantee the performance or financial obligation of a client to a third party. These guarantees are issued primarily relating to purchases of inventory or as security for real estate rents by commercial clients and are typically short-term in nature. Credit risk is similar to that involved in extending loan commitments to clients and accordingly, evaluation and collateral requirements similar to those for loan commitments are used. The majority of all such commitments are collateralized. Standby letters of credit totaled $1.4 million and $769 thousand at September 30, 2008 and December 31, 2007, respectively.  SoCal provides a reserve for undisbursed commitments which totaled $130 thousand and $141 thousand at September 30, 2008 and December 31, 2007, respectively.

In connection with the acquisition of Spectrum Bank, SoCal assumed the following:  leases for two  branches, which expire in 2008 and 2011, and an administrative office, which expires in 2010.  These leases include provisions for periodic rent increases as well as payment by the lessee of certain operating expenses.

Total rent expense for the three- and nine-month periods ended September 30, 2008 was approximately $62 thousand and $168 thousand, respectively.

The approximate future minimum annual payments for these leases are as follows:

Year Ending
December 31,
2008	$	62,000
2009		58,380
2010		53,940
2011		34,960
Total	$	209,280

4. Comprehensive Loss

Comprehensive income (loss) is reported in addition to net income (loss) for all periods presented. Comprehensive (loss) is comprised of net income (loss) plus other comprehensive income (loss). Other comprehensive income (loss), net of taxes, was comprised of the unrealized gain (losses) on available-for-sale investment securities of ($404) thousand and $28 thousand for the nine-month periods ended September 30, 2008 and 2007 and ($99) thousand and $71 thousand for the three-month periods ended September 30, 2008 and 2007. Comprehensive (loss) was ($33.9) million and ($35.4) million for the three- and nine-month periods ended September 30, 2008, respectively.  Comprehensive (loss) was ($79) thousand and ($275) thousand for the three and nine-month periods ended September 30, 2007.

5. Stock-Based Compensation

SoCal has adopted SFAS No. 123(R), Shared-Based Payment.  This Statement 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 which an employee is required to provide services in exchange for the award, generally the vesting period.  Stock-based compensation expense totaled $76 thousand and $32 thousand for the quarters ended September 30, 2008 and 2007, respectively.  A tax benefit of $30 thousand and $8 thousand was recognized in connection with the stock-based compensation for the quarters ended September 30, 2008 and 2007, respectively.  Stock-based compensation expense totaled $240 thousand and $162 thousand for the nine-month periods ended September 30, 2008 and 2007, respectively.   A tax benefit of $99 thousand and $25 thousand was recognized  in connection with the stock-based compensation expense for the nine-month periods ended September 30, 2008 and 2007, respectively.    The expense for 2007 was recognized under the Professional Business Bank 2001 Incentive and Nonqualified Stock Option Plan.

F-6

SoCal has one stock-based compensation plan, the Belvedere SoCal 2007 Equity Incentive Plan (the "Plan"), which, among other things, permits the grant of stock options and stock purchase rights.  The Plan is designed primarily to attract and retain personnel and provide additional incentives to employees, directors and consultants to promote the success of SoCal's business.  The maximum aggregate number of shares that may be issued under the Plan is 1,500,000.  The amount, frequency and terms of share-based awards are subject to all applicable terms and conditions of the Plan and such other terms and conditions as prescribed by a Committee of the Board of Directors.  New shares are issued upon the exercise of options.

The Plan requires that the option or share price may not be less than the fair market value of the stock on the grant date, except for options granted in substitution for options outstanding under the Professional Business Bank Stock Option Plan, and that the stock be paid in full at the time the option is exercised.  All options vest on a date determined by the Committee, but not later than ten years from the date of grant.

Management estimates the fair value of each option award as of the date of grant using a Black-Scholes-Merton option pricing model.  Expected volatility is based on historical volatility of similar entities over a preceding period commensurate with the expected term of the option because the Company's common stock has been publicly traded for a shorter period than the expected term of the options.  The expected term represents the period that the stock-based awards are expected to be outstanding.  The risk free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.  Expected dividend yield was not considered in the option pricing formula because SoCal has not paid cash dividends historically.  In addition to these assumptions, management makes estimates regarding pre-vesting forfeitures that will impact total compensation expense recognized under the Plan.

There were two types of options granted in 2008.  The first were options granted with performance conditions that vest based on certain qualifying events, or cliff vest at the 7th anniversary of the grant date if no qualifying event occurs.  SoCal granted 175,402 and 11,640 of performance based options during the first and third quarters of 2008, respectively. The second type of options were granted with a time-based condition that cliff vest at the 5th anniversary of the grant date.  SoCal granted 175,409 and 11,641 of time-based options during the first and third quarters of 2008, respectively.  There were no stock options granted in the second quarter of 2008 or the first nine months of 2007.

The following table summarizes the assumptions utilized in the calculation of the fair value of the options granted during the stated periods:

	Three-month period ended March 31, 2008	Three-month period ended September 30, 2008
Risk-free interest rate	3.21%	3.46%
Expected life	6 years	5 years
Expected volatility	28%	30%
Expected dividend yield	N/A	N/A
Weighted average grant date fair value	$5.10	$4.92

A summary of stock option activity and related information for the nine-month period ended September 30, 2008 follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding December 31, 2007		135,041		$	15.21
Options granted		374,092			15.00
Options forfeited		(36,584	)		15.00
Options exercised		-
Outstanding at September 30, 2008		472,549			15.06	8.3 years	$	-
Options exercisable, September 30, 2008		135,041			15.21	5.3 years	$	-
Options expected to vest after September 30, 2008		336,854		$	15.00	9.5 years	$	-

F-7

All options granted in 2008 allow for early exercise into shares of restricted common stock of SoCal under identical vesting terms as the original options.  Such options are not shown as exercisable in the above table.

At September 30, 2008, there was $1.5 million in unrecognized compensation costs related to the outstanding options that is expected to be recognized over a weighted average period of 5.1 years.  

6. Loss Per Share

Basic loss per share for each of the periods presented was computed by dividing net loss adjusted for stock dividends paid or declared on non-cumulative perpetual preferred stock by the weighted average number of shares outstanding during each such period.

Basic and diluted loss per share for the three-month periods ended September 30, 2008 and 2007 are computed as follows (dollars in thousands):

SoCal Three-month period ended September 30, 2008	Net Loss			Weighted Average Number of Shares Outstanding		Per Share Amount
Basic loss per share:
Net loss	$	(33,752	)
Preferred stock dividend		(814	)
Net loss available to common shareholders	$	(34,566	)		3,331,413	$	(10.38	)

Professional Business Bank Three-month period ended September 30, 2007	Net Loss			Weighted Average Number of Shares Outstanding		Per Share Amount
Net loss available to common shareholders	$	(150	)		1,998,477	$	(0.08)

Basic and diluted earnings per share for the nine-month periods ended September 30, 2008 and 2007 are computed as follows (dollars in thousands): 

SoCal Nine-month period ended September 30, 2008	Net Loss			Weighted Average Number of Shares Outstanding		Per Share Amount
Basic loss per share:
Net loss	$	(35,009	)
Preferred stock dividend		(2,355	)
Net loss available to common shareholders	$	(37,364	)		3,180,736	$	(11.75	)

F-8

Professional Business Bank Nine-month period ended September 30, 2007	Net Loss			Weighted Average Number of Shares Outstanding		Per Share Amount
Net loss available to common shareholders	$	(303	)		1,994,269	$	(0.15)

7. Allowance for Loan Losses

The following table presents the changes in the allowance for loan losses as of the dates indicated (dollars in thousands):

	Three-month period ended September 30,						Nine-month period ended September 30,
	2008			2007			2008			2007
Balance at beginning of period	$	5,385		$	2,404		$	4,077		$	1,869
Allowance acquired at acquisition of Spectrum		-			-			1,436			-
Additional provision		256			983			2,316			1,520
Charge-offs		(45	)		(6	)		(2,247	)		(8	)
Recoveries		26			-			40			-
Total	$	5,622		$	3,381		$	5,622		$	3,381

8. Acquisition of Spectrum Bank

Effective January 31, 2008, SoCal acquired all of the common stock of Spectrum, a California state-chartered bank headquartered in Irvine, California with branch offices in Huntington Beach and Montebello, California.  All the outstanding Spectrum shares were exchanged for $20.2 million in cash and $15.5 million in trust preferred securities.  The acquisition was accounted for in accordance with SFAS No. 141, Business Combinations.  Accordingly, the net assets were recorded at their estimated fair values, and the operating results were included in the financial statements from the date of acquisition.  Goodwill totaled $27.8 million (none of which is deductible for tax purposes) and a core deposit intangible of $722 thousand was recorded and is being amortized over approximately seven years.  Capitalized direct transaction costs were approximately $1 million including $740,000 paid to the Fund.  The allocation of the purchase price to the assets and liabilities acquired will be finalized no later than fourth quarter 2008, as SoCal obtains more information regarding asset valuations, liabilities assumed and revisions of preliminary estimates of fair values made at the date of purchase.  The purchase price has been allocated on a preliminary basis, using information currently available as presented below (dollars in thousands):

Assets acquired:
Cash and due from banks	$	4,283
Federal funds sold		17,080
Interest-bearing deposits in other financial institutions		2,608
Investment securities available for sale		41,475
Loans, net		79,452
Premises and equipment		4,947
Goodwill		27,832
Other intangible assets, net		722
Accrued interest and other assets		9,043
Total assets acquired		187,442
Liabilities assumed:
Total deposits		142,011
Accrued interest and other liabilities		9,196
Total liabilities assumed		151,207
Total consideration paid	$	36,235

F-9

9. Junior Subordinated Debentures

In January 2008, SoCal issued $15.5 million of junior subordinated debentures to Belvedere SoCal Statutory Trust I, a Delaware business trust that was formed for the exclusive purpose of issuing trust preferred securities. The Trust purchased debentures with: (1) the proceeds of the sale of its common trust securities to SoCal for $464 thousand, and (2) certain shares of common stock in Spectrum Bank valued at $15 million that the Trust received from certain shareholders of Spectrum Bank in exchange for the Trust’s trust preferred securities. The subordinated debentures and trust preferred securities have generally identical terms, including that they mature in 2038, are redeemable at SoCal’s option at par, and require monthly distributions/interest payments at a rate of 10%.   The trust preferred securities and corresponding junior subordinated debentures contain provisions limiting Socal’s ability to declare and pay dividends on its common stock in certain events.  SoCal has unconditionally guaranteed certain distributions on, and certain payments on liquidation and redemption of, the trust preferred securities.

Interest expense recognized by SoCal for the three- and nine-month periods ended September 30, 2008 related to the subordinated debentures was $387 thousand and $1.0 million, respectively.

10.  Note Payable

In March 2008, SoCal borrowed $8 million through a loan secured by the stock of the Subsidiary Bank.  The loan bears interest at three-month LIBOR plus 3.1% (7.15% at September 30, 2008) with quarterly interest payments through September 2009, followed by principal and interest payments through the maturity date of March 2018.  The promissory note and related loan agreements contain certain customary restrictions including a potential limitation on the ability of the Subsidiary Bank to pay dividends to SoCal for purposes other than to allow SoCal to service the loan.  The holder notified SoCal that it was in violation of the loan's debt service and minimum total capital covenants for the third quarter 2008. The holder has waived their right to declare the loan in default pursuant to the above covenant violations.

11. Investment Securities

SoCal classifies as held-to-maturity those debt securities that the Company has the positive intent and ability to hold to maturity.  All other debt and equity securities are classified as available-for-sale. Securities held-to-maturity are accounted for at cost and adjusted for amortization of premiums and accretion of discounts. Available-for-sale securities are accounted for at fair value, with the net unrealized gains and losses, net of income tax effects, presented as a separate component of shareholders’ equity. At each reporting date, held-to-maturity and available-for-sale securities are assessed to determine whether there is an other-than-temporary impairment. Such impairment, if any, is required to be recognized in current earnings rather than as a separate component of shareholders’ equity. Realized gains and losses on sales of securities are recognized in earnings at the time of sale and are determined on a specific-identification basis. Purchase premiums and discounts are recognized in interest income using the effective-yield method over the terms of the securities. For mortgage-backed securities (“MBS”), the amortization or accretion is based on estimated average lives of the securities. The lives of these securities can fluctuate based on the amount of prepayments received or losses realized on the underlying collateral of the securities.

Investment securities have been classified in the statement of condition according to management's intent.  The carrying amounts and fair values of available-for-sale and held-to-maturity investment securities were as follows at the dates indicated (dollars in thousands):

	September 30, 2008
			Gross		Gross
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Available-for-Sale Securities
U.S. Government Agencies	$	1,638			$	( 19	)	$	1,619
States and Political Subdivisions		6,250				(646	)		5,604
Mortgage-Backed Securities		1,987	$	1		(3	)		1,985
Total available-for-sale securities		9,875		1		(668	)		9,208
Held-to-Maturity Securities
Collateralized Mortgage Obligations		21,113		735		(318	)		21,530
Total held-to-maturity securities		21,113		735		(318	)		21,530
Total investment securities	$	30,988	$	736	$	(986	)	$	30,738

F-10

	December 31, 2007
			Gross		Gross
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Available-for-Sale Securities
U.S. Government Agencies	$	4,028	$	-	$	( 2	)	$	4,026
Mortgage-Backed Securities		4,741		19		-			4,760
Total investment securities	$	8,769	$	19	$	(2	)	$	8,786

As of September 30, 2008 and December 31, 2007, all investment securities were pledged to secure borrowings and for other purposes.

12.  Goodwill and Other Intangible Assets

Goodwill resulted from the purchase of PBB and Spectrum Bank. Goodwill and other intangible assets deemed to have indefinite lives generated from purchase business combinations are not subject to amortization and are instead tested for impairment no less than annually under SFAS No. 142. The current year impairment test of goodwill was performed as of August 31, 2008 and resulted in a $33.3 million write-down of goodwill which is included in the loss for the period.  See Note 15, Fair Value Measurements, for further discussion of the write-down.

13. Other Real Estate Owned

Other Real Estate Owned ("OREO") is real estate acquired through, or in lieu of, loan foreclosures that is expected to be sold and is recorded at its fair value less estimated costs to sell (fair value). The amount, if any, by which the recorded amount of the loan exceeds the fair value less estimated costs to sell are charged to the allowance for loan or lease losses at the time of foreclosure, if necessary. After foreclosure, valuations are periodically performed by management with any subsequent write-downs recorded as a valuation allowance and recognized in other operating expenses. Operating expenses of such properties, net of related income, are included in other expenses and gains and losses on their disposition are included in other income and other expenses, as applicable.

            SoCal’s investment in OREO totaled $1.2 million at September 30, 2008. SoCal had no OREO at December 31, 2007.

14. Pro forma financial information

The September 30, 2008 consolidated financial statements include the accounts of Spectrum since February 1, 2008. The following supplemental proforma information discloses selected financial information for the three- and nine-month periods ended September 30, 2008 and 2007 as though the Spectrum merger had been completed as of the beginning of the period. The proforma information for the three- and nine-month periods ended September 30, 2007 combines Professional Business Bank, as the predecessor business to SoCal, and Spectrum.  The unaudited proforma income for the three- and nine-month periods ended September 30, 2008 includes nonrecurring merger expenses incurred by Spectrum for cancellation of all outstanding options of Spectrum per the terms of the merger agreement, severance payments to Spectrum executives under change of control agreements and cash settlements of deferred compensation programs totaling $4.0 million, net of tax. Dollars are in thousands except per share data.

	Three-month periods ended September 30,					Nine-month periods ended September 30,
	2008			2007		2008			2007
Revenue (net interest income plus non-interest income)	$	3,970		$	4,787	$	12,837		$	14,071
Net (loss) income	$	(33,752	)	$	78	$	(38,817	)	$	581
Basic (loss) earnings per share	$	(10.38	)	$	0.02	$	(12.36	)	$	0.18
Diluted (loss) earnings per share	$	(10.38	)	$	0.02	$	(12.36	)	$	0.17

15.  Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which provides enhanced guidance for using fair value to measure assets and liabilities. The standard applies whenever other standards require or permit assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. SoCal adopted SFAS No. 157 as of January 1, 2008 and the adoption did not have a material impact on its consolidated financial statements or results of operations. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

●  Level 1	Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
●  Level 2	Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
●  Level 3	Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

F-11

Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:

Assets

Securities

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 inputs include securities that have quoted prices in active markets for identical assets. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, include certain collateralized mortgage and debt obligations and certain high-yield debt securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. SoCal’s current available-for-sale portfolio does not have securities that are valued using Level 3 inputs as of September 30, 2008. When measuring fair value, the valuation techniques available under the market approach, income approach and/or cost approach are used. SoCal’s evaluations are based on market data and SoCal employs combinations of these approaches for its valuation methods depending on the asset class.

Impaired Loans

SFAS No. 157 applies to loans measured for impairment using the practical expedients permitted by SFAS No. 114, Accounting by Creditors for Impairment of a Loan, including impaired loans measured at an observable market price (if available), or at the fair value of the loan’s collateral (if the loan is collateral dependent). Fair value of the loan’s collateral, when the loan is dependent on collateral, is determined by appraisals or independent valuation which is then adjusted for the cost related to liquidation of the collateral. Fair value of impaired loans that are not collateral dependent is calculated based on the present value of future cash flows. For impaired loans that are collateral dependent, either a Level 2 or Level 3 valuation methodology is used. The fair value of impared loans that are not collateral dependent is measured using a Level 3 methodology.

Other Real Estate Owned

OREO is measured at fair value less cost to sell which is a Level 2 valuation methodology based on quoted prices for similiar assets or a Level 3 valuation methodology when an income approach is used. SoCal believes that the fair value component in its valuation follows the provisions of SFAS No. 157. Fair value of OREO at September 30, 2008 was determined by independent appraised values less estimated costs to sell.

Goodwill

Initiation of the goodwill analysis during the third quarter was prompted by recent and significant deterioration in financial institution traded market values, including several acquisition transactions at heavily discounted prices, and significant weakening in local market conditions that diminish future customer business activity expectations. The reduced fair value conclusion was derived through a valuation analysis that utilized an equal weighting of valuations based on comparable transactions and discounted cash flow analysis. Given the wide range of potential values indicated by the comparable transactions analysis and limited applicability to SoCal, it was determined that the comparable transaction average value analysis should receive a 50% weight. The discounted cash flow valuation was also assigned a 50% weight. Given the discounted cash flow's reliance on subjective assumptions, the assigned fair value is deemed to be a Level 3 valuation.

F-12

Assets Measured on a Recurring Basis

Assets measured at fair value on a recurring basis are summarized below (dollars in thousands):

			Fair Value Measurements at September 30, 2008 Using
	September 30, 2008		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(in 000’s)
Assets:
Available-for-sale investment securities	$	9,208	$	—	$	9,208	$	—

Assets measured at fair value on a non-recurring basis are summarized below (dollars in thousands):

			Fair Value Measurements at September 30, 2008 Using
	September 30, 2008		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(in 000's)
Assets:
Impaired loans	$	1,916	$	—	$	1,916	$	—
OREO	$	1,218	$	—	$	1,218	$	—
Goodwill	$	23,990	$	—	$	—	$	23,990

Impaired loans consist of collateral-dependent nonaccrual loans. A valuation allowance of $195 thousand is included in the allowance for loan losses for the impaired loans.

OREO consists of four properties consisting of three residential properties and one participation interest in residential unimproved lots.  The properties were valued by independent appraisals, net of estimated selling costs. 

During the third quarter 2008, in accordance with the provisions of SFAS No. 142, following the completion of an analysis of goodwill value, goodwill with a carrying amount of $57.3 million was written down to its implied fair value of $24.0 million. This resulted in an impairment charge of $33.3 million, which was included in the loss for the period.

F-13

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Background

 SoCal acquired Professional Business Bank on November 23, 2007 and Spectrum on January 31, 2008.  Prior to November 23, 2007, SoCal had no significant operations.  Accordingly, the discussion and results of operations and financial condition for the three- and nine-month periods ended September 30, 2008 are for SoCal. The results of operations and financial condition for the three- and nine-month periods ended September 30, 2007 are for Professional Business Bank only. Securities and Exchange Commission rules require the presentation of certain prior period comparative financial statements of the acquired business when the acquiring company succeeds to substantially all of the business and the registrant’s own operations prior to the acquisition appear insignificant relative to the business acquired.

Effective July 3, 2008, SoCal completed the merger of the Subsidiary Banks.  By combining the two banks, SoCal expects to improve operational efficiency, reduce regulatory compliance costs, and consolidate vendor relationships.  The merger of Spectrum Bank into Professional Business Bank was accounted for as a transfer of assets and liabilities between entities under common control and, accordingly, the assets and liabilities of Spectrum were transferred at their carrying amounts, similar to a pooling of interests.  However, the existing Spectrum branches and certain customer-related activities will continue to be conducted using the Spectrum brand.

Forward-Looking Information

The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on SoCal. These forward looking statements involve risks and uncertainties, including the risks and uncertainties described in our annual report on Form 10-KSB in the discussion under the caption, “Business - Factors That May Affect Future Operating Results,” which was filed with the Securities and Exchange Commission on March 31, 2008. There can be no assurance that future developments affecting SoCal will be the same as those anticipated by management, and actual results may differ from those projected in the forward-looking statements. Statements regarding policies and procedures are not intended, and should not be interpreted to mean, that such policies and procedures will not be amended, modified or repealed at any time in the future.

Critical Accounting Policies

This discussion and analysis is based upon SoCal’s financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires SoCal’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosure of contingencies.

Our accounting policies are integral to understanding the results reported.  Our most complex accounting policies require management’s judgment to ascertain the valuation of assets, liabilities, commitments and contingencies.  SoCal has established detailed policies and control procedures that are intended to ensure valuation methods are well controlled and applied consistently from period to period.  In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner.  The following is a brief description of the significant 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 provision for loan losses is determined based on management’s assessment of several factors: reviews and evaluation of specific 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, the level of classified and nonperforming loans and the results of regulatory examinations.  Refer to “Provision for Loan Losses” on page 9 for a full discussion of Socal’s methodology of assessing the adequacy of the allowance for loan losses.

Loans are considered impaired if, based on current information and events, it is probable that SoCal 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.

3

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.

The Bank has an analysis of its portfolio performed on a quarterly basis utilizing a model which calculates an estimated reserve based upon loan type, collateral type, and geographic location.  The model estimates the odds of payment default, and the potential charge-off rate given default.  The model is fine tuned for Joint Policy Statement factors and actual loan performance on a loan by loan basis.  Underlying factors for geography, collateral type and overall payment history and losses given default are adjusted quarterly from call report data gathered from approximately 1,100 smaller community banks in the Western United States.

Goodwill and Other Intangibles.  Net assets of entities acquired in purchase transactions are recorded at fair value at the date of acquisition. The historical cost basis of individual assets and liabilities are adjusted to reflect their fair value. Identified intangibles are amortized on a straight-line basis over the period benefited. Goodwill is not amortized for book purposes, although it is reviewed for potential impairment on an annual basis, or if events or circumstances indicate a potential impairment. The impairment test is performed in two phases. The first step of the goodwill impairment test compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired; however, if the carrying amount of the reporting unit exceeds its fair value, an additional procedure must be performed. That additional procedure compares the implied fair value of the reporting unit’s goodwill (as defined in SFAS No. 142, Goodwill and Other Intangible Assets) with the carrying amount of that goodwill. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value.  During the third quarter of 2008, SoCal engaged a third party to provide an independent impairment analysis of goodwill in accordance with the requirements of SFAS 142. The fair value of SoCal was determined using valuation approaches typically applied in business combinations involving financial institutions: (1) comparable transactions approach, (2) discounted cash flow approach and (3) control permium approach. The process of evaluating goodwill for impairment requires assumptions and estimates including market trends and multiples of companies engaged in similar businesses. If any of those assumptions change over time, the estimated value assigned to goodwill could change significantly.

The independent analysis resulted in a non-cash charge of $33.3 million  for the write-down of goodwill.  The charge does not affect our tangible equity or our liquidity position.  Regulatory capital ratios are unaffected by the write-down of goodwill, with all ratios remaining in excess of the “well-capitalized” designation for Professional Business Bank.  As goodwill is not tax deductible at the time of acquisition, there is no corresponding tax impact for the write-down of this asset.  This charge is not expected to impact ongoing operations.

Other intangible assets subject to amortization are also evaluated for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. An impairment loss will be recognized if the carrying amount of the intangible asset is not recoverable and exceeds fair value. The carrying amount of the intangible is considered “not recoverable” if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset.

Fair Value. Effective January 1, 2008, SoCal adopted SFAS No. 157, Fair Value Measurements, which among other things, requires enhanced disclosures about financial instruments carried at fair value. SFAS No. 157 establishes a hierarchical disclosure framework associated with the level of observable pricing scenarios utilized in measuring financial instruments at fair value. The degree of judgment utilized in measuring the fair value of financial instruments generally correlates to the level of the observable pricing scenario. Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of observable pricing and a lesser degree of judgment utilized in measuring fair value. Conversely, financial instruments rarely traded or not quoted will generally have little or no observable pricing and a higher degree of judgment utilized in measuring fair value. Observable pricing scenarios are impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established and the characteristics specific to the transaction.

Overview

The following discussion reviews and analyzes the operating results of SoCal for the for the three- and nine-month periods ended September 30, 2008 and PBB for the three- and nine-month periods ended September 30, 2007 and the financial condition of SoCal at September 30, 2008 and December 31, 2007.  It should be read in conjunction with SoCal’s Annual Report to Shareholders on Form 10-K and the unaudited financial statements and the other financial data presented elsewhere in this quarterly report.

SoCal recorded a net loss of $35.0 million, ($11.75) basic and diluted loss per share, for the nine-month period ended September 30, 2008 as compared to PBB’s $303 thousand loss, ($0.15) basic and diluted loss per share, for the nine-month period ended September 30, 2007. The increased loss was primarily due to the $33.3 million non-cash write-down of goodwill discussed above along with a $5.9 million increase in other non-interest expenses and a $796 thousand increase in provision for loan losses, partially offset by a $3.2 million increase in net interest income, a $546 thousand increase in non-interest income and a $1.5 million decrease in income tax expense.

SoCal recorded a net loss of $33.8 million, ($10.38) basic and diluted loss per share, for the three-month period ended September 30, 2008 as compared to PBB’s $150 thousand loss, ($0.08) basic and diluted loss per share, for the three-month period ended September 30, 2007.  The increased loss was primarily due to the $33.3 million non-cash write-down of goodwill along with a $2.2 million increase in other non-interest expenses, partially offset by a $735 thousand increase in net interest income, a $727 thousand decrease to the provision for loan losses, a $92 thousand increase in non-interest income, and an increase in income tax benefit of $338 thousand.

Total assets increased from $270.1 million at December 31, 2007 to $395.0 million at September 30, 2008, an increase of $124.9 million, or 46.2%  Net loans grew from $210.3 million at December 31, 2007 to $303.4 million at September 30, 2008, an increase of $93.1 million, or 44.3%, which includes approximately 13% of organic loan growth. Deposits grew from $194.0 million at December 31, 2007 to $321.1 million at September 30, 2008, an increase of $127.0 million, or 65.5%.  The primary reason for the increase in assets, loans and deposits relates to the acquisition of Spectrum, which contributed $187.4 million in assets, $80.9 million in loans and $142.0 million in deposits at the acquisition date.

Total assets decreased from $458.9 million at June 30, 2008 to $395.0 million at September 30, 2008, a decrease of $63.9 million, or 13.9%. The primary reasons for the decrease in total assets are the $33.3 million write-down of goodwill during the third quarter of 2008 along with a reduction in Fed Funds Sold of $28.1 million. Total deposits decreased from $342.7 million at June 30, 2008 to $321.1 million at September 30, 2008, a decrease of $21.6 million, or 6.3%. Customer deposit decreases of $45.6 million, primarily time deposits, were partially offset by a $24.0 million increase in brokered deposits.

4

Set forth below are certain key financial performance ratios for the periods indicated:

	For the nine-month period ended September 30,
	2008	2007
Return on Average Assets (1)	(10.93%)	(0.21%)
Return on Average Equity (1)	(62.39%)	(2.01%)
(1) Annualized

Net Interest Income

SoCal’s interest income was $5.8 million and $17.5 million for the three- and nine-month periods ended September 30, 2008 as compared to PBB’s $4.3 million and $11.9 million for the three- and nine-month periods ended September 30, 2007.  SoCal’s interest expense was $2.0 million and $6.1 million for the three- and nine-month periods ended September 30, 2008 as compared to PBB’s $1.3 million and $3.7 million for the three- and nine-month periods ended September 30, 2007. SoCal’s net interest income was $3.8 million and $11.4 million for the three- and nine-month periods ended September 30, 2008 as compared to PBB’s $3.1 million and $8.2 million for the three- and nine-month periods ended September 30, 2007.  The increase in interest income was primarily due to the $146.9 million and $165.2 million increase in SoCal’s average interest-earning assets for the three- and nine-month periods ended September 30, 2008 as compared to PBB’s interest-earning assets for the same periods in 2007.  The increase in interest expense was due to a $148.3 million and $133.6 million increase in SoCal’s average interest-bearing liabilities.  The decrease in net interest margin from 5.84% for the nine-month period ended September 30, 2007 to 4.39% for the nine-month period ended September 30, 2008 is primarily due to declines in market interest rates, additional interest costs incurred on holding company debt and Spectrum’s lower net interest margin as compared to that of PBB, which decreased the overall net interest margin on the combined banks.

 The increase in SoCal’s average interest-earning assets and average interest-bearing liabilities as compared to PBB’s average interest-earning assets and average interest-bearing liabilities for the same period in the prior year is primarily the result of the acquisition of Spectrum.  Average loans increased $136.8 million, or 84.5%, to $298.8 million at September 30, 2008 compared to $161.9 million at September 30, 2007.   Average interest-bearing deposits increased $104.3 million, or 94.1%, to $215.3 million at September 30, 2008 compared to $111.0 million at September 30, 2007.  

The weighted average yield on interest-earning assets decreased as a result of a decline in market interest rates. The prime rate decreased seven times, totaling a reduction of 325 basis points, from September 2007 through September 2008.  Variable rate loans, with rates primarily indexed to the prime rate, comprise approximately 73% of the loan portfolio.  The decline in the prime rate impacted the loan portfolio immediately and to a greater extent than its impact on the interest-bearing liabilities generally due to a lag in deposit repricing as compared to loans.

The following table presents the weighted average yield on each specified category of interest-earning assets, the weighted average rate paid on each specified category of interest-bearing liabilities, and the resulting interest rate spread and net interest margin for the periods indicated.  Loan fees, which are not material, are included in interest earned on loans (dollars in thousands).

5

	Three-month period ended September 30,
	Belvedere SoCal							Professional Business Bank
	2008							2007
						Average							Average
				Interest		Yield or					Interest		Yield or
	Average			Earned		Rate		Average			Earned		Rate
	Balance			or Paid		Paid		Balance			or Paid		Paid
Assets
Interest-Earning Assets:
Investment Securities-Taxable	$	17,771		$	233		5.22%	$	13,454		$	172		5.07%
Investment Securities-Nontaxable		7,970			84		6.35%		-			-		-
Interest-Bearing Deposits in Other
Financial Institutions		554			6		4.31%		100			1		3.97%
Federal Funds Sold		10,139			49		1.92%		2,296			30		5.18%
Loans		307,827			5,396		6.97%		181,542			4,106		8.97%
Total Interest-Earning Assets		344,261			5,768		6.67%		197,392			4,309		8.66%
Noninterest-Earning Assets:
Cash and Due from Banks		8,501							4,158
Premises and Equipment		5,158							488
Goodwill		56,686							-
Other Intangible Assets, Net		2,763							-
Accrued Interest and Other Assets		13,325							4,070
Allowance for Loan Losses		(5,793	)						(2,614	)
Total Assets	$	424,901						$	203,494
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Money Market, Savings and NOW	$	88,770			310		1.39%	$	74,449			608		3.24%
Time Deposits under $100,000		71,336			545		3.04%		18,378			250		5.40%
Time Deposits of $100,000 or More		59,381			602		4.03%		15,166			198		5.18%
Short-Term Borrowings		2,147			4		0.74%		15,088			195		5.13%
Note Payable		7,979			387		6.28%		-			-		-
Subordinated Debentures		15,445			126		9.97%		-			-		-
Total Interest-Bearing Liabilities		245,058			1,974		3.20%		123,081			1,251		4.08%
Noninterest-Bearing Liabilities:
Demand Deposits		100,306							58,803
Other Liabilities		3,982							1,415
Shareholders' Equity		75,555							20,195
Total Liabilities and Shareholders' Equity	$	424,901						$	203,494
Net Interest Income				$	3,794						$	3,058
Net Yield on Interest-Earning
Assets (Net Interest Margin)							4.38%							6.15%

Yields are computed on a tax equivalent basis resulting in an adjustment of $43 thousand to interest earned on municipal bonds for the three-month period ended September 30, 2008.  There were no municipal bonds held during the three-month period ended September 30, 2007.

6

	Nine-month period ended September 30,
	Belvedere SoCal 2008							Professional Business Bank 2007
						Average							Average
				Interest		Yield or					Interest		Yield or
	Average			Earned		Rate		Average			Earned		Rate
	Balance			or Paid		Paid		Balance			or Paid		Paid
Assets
Interest-Earning Assets:
Investment Securities-Taxable	$	23,210		$	767		4.41%	$	14,146		$	528		4.99%
Investment Securities-Nontaxable		7,663			235		6.21%		-			-		-
Interest-Bearing Deposits in Other Financial Institutions		1,067			38		4.76%		2,668			107		5.36%
Federal Funds Sold		17,141			291		2.27%		8,874			347		5.23%
Loans		298,777			16,212		7.25%		161,941			10,879		8.98%
Total Interest-Earning Assets		347,858			17,543		6.74%		187,629			11,861		8.45%
Noninterest-Earning Assets:
Cash and Due from Banks		8,490							5,128
Premises and Equipment		4,690							453
Goodwill		53,874							-
Other Intangibles Assets, Net		2,818							-
Accrued Interest and Other Assets		15,923							3,488
Allowance for Loan Losses		(5,874	)						(2,269	)
Total Assets	$	427,779						$	194,429

Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Money Market, Savings and NOW	$	82,145		856	1.39%	$	78,596		2,106	3.58%
Time Deposits under $100,000		71,928		2,003	3.72%		20,262		823	5.43%
Time Deposits of $100,000 or  More		61,250		1,641	3.58%		12,101		461	5.09%
Short-Term Borrowings		14,686		308	2.80%		7,218		270	5.00%
Note Payable		7,124		263	4.93%		-		-	-
Subordinated Debentures		13,771		1,032	10.01%		-		-	-
Total Interest-Bearing Liabilities		250,904		6,103	3.25%		118,177		3,660	4.14%
Noninterest-Bearing Liabilities:
Demand Deposits		97,487					54,939
Other Liabilities		4,437					1,154
Shareholders' Equity		74,951					20,159
Total Liabilities and Shareholders' Equity	$	427,779				$	194,429
Net Interest Income			$	11,440				$	8,201
Net Yield on Interest-Earning
Assets (Net Interest Margin)					4.39%					5.84%

Yields are computed on a tax equivalent basis resulting in an adjustment of $121 thousand to interest earned on municipal bonds for the nine-month period ended September 30, 2008. There were no municipal bonds held during the nine-month period ended September 30, 2007.

7

Rate and Volume Analysis

The following tables show the increase or decrease in interest income, interest expense and net interest income resulting from the changes in rates and volumes for the periods indicated (dollars in thousands):

	Three Months Ended September 30, 2008
	versus
	Three Months Ended September30, 2007
	Increase (Decrease) Due
	To Change in
	Volume			Rate			Total
Interest-Earning Assets:
Investment Securities-Taxable	$	56		$	5		$	61
Investment Securities-Nontaxable		84			-			84
Certificates of Deposit		4			1			5
Federal Funds Sold		23			(4	)		19
Loans		1,898			(608	)		1,290
Total Interest Income		2,065			(606	)		1,459
Interest-Bearing Liabilities:
Money Market, Savings and NOW		615			(913	)		(298	)
Time Deposits under $100,000		319			(24	)		295
Time Deposits of $100,000 or More		437			(33	)		404
Short-Term Borrowings		(96	)		( 95	)		(191	)
Subordinated Debentures		387			-			387
Note Payable		126			-			126
Total Interest Expense		1,788			(1,065	)		723
Net Interest Income	$	277		$	459		$	736
	Nine Months Ended September 30, 2008
	versus
	Nine Months Ended September 30, 2007
	Increase (Decrease) Due
	To Change in
	Volume			Rate			Total
Interest-Earning Assets:
Investment Securities-Taxable	$	305		$	(66	)	$	239
Investment Securities-Nontaxable		235			-			235
Certificates of Deposit		(58	)		(11	)		(69	)
Federal Funds Sold		209			(265	)		(56	)
Loans		7,753			(2,420	)		5,333
Total Interest Income		8,444			(2,762	)		5,682
Interest-Bearing Liabilities:
Money Market, Savings and NOW		91			(1,341	)		(1,250	)
Time Deposits under $100,000		1,511			(331	)		1,180
Time Deposits of $100,000 or More		1,355			(175	)		1,180
Short-Term Borrowings		194			(156	)		38
Subordinated Debentures		1,032			-			1,032
Note Payable		263			-			263
Total Interest Expense		4,446			(2,003	)		2,443
Net Interest Income	$	3,998		$	(759	)	$	3,239

8

 Provision for Loan Losses

SoCal made provisions for loan losses of $256 thousand and $2.3 million for the three- and nine-month periods ended September 30, 2008 and Professional Business Bank made provisions of $983 thousand and $1.5 million for the three- and nine-month periods ended September 30, 2007, respectively.  The increase year over year reflects SoCal’s assessment of the overall adequacy of the allowance for loan losses considering the $1.8 million charge-off of one real estate construction loan along with an increase in nonperforming loans.  

During the second quarter, additional provision was recorded to replenish the allowance for loan losses after a $1.8 million charge-off on one real estate construction participation loan.  The loan was classified as impaired at March 31, 2008 with a $510 thousand specific reserve pending an updated appraisal from the lead bank.  The appraisal received during the second quarter indicated additional reserves were required.  Management recorded a charge-off of the $1.8 million impairment based on the appraised value, reducing the loan balance to $520 thousand.  The loan remained on nonaccrual status until being transferred to OREO during the third quarter.

Management believes that the allowance for loan losses is adequate. Quarterly detailed reviews are performed by management to identify the risks inherent in the loan portfolio, assess the overall quality of the loan portfolio and to determine the adequacy of the allowance for loan losses and the related provision for loan losses to be charged to expense. These systematic reviews follow the methodology set forth by the FDIC in its 2006 policy statement on the allowance for loan losses.

Management has adopted a methodology designed by a third-party to prepare the quarterly provision for loan loss calculations.  The methodology estimates the expected loss rates based on a two-factor approach.  The first factor is based on the actual payment default rate in the loan portfolio.  For loan types that have not generated an actual payment default rate, a rate is applied based on industry experience for such loans by type and geographic location.  The second factor is based on the rate of loss as determined by dividing the expected net charge-off of defaulted loans, with defaulted loans being defined as loans that have 30 days or greater payment delinquency plus nonaccrual and gross loans charged-off, by total loans in each group.   This rate reflects industry experience as determined by state and loan type.  Taken together, the two factors produce the expected loss rate.

The calculation is applied to outstanding loan balances, including participation loans, and expected contingent funding of commitments to fund as of the measurement date. Expected losses on loans identified as specifically impaired are excluded from the above measurements, as the provision for such loans is based on the present value of expected future cash flows discounted at the historical effective interest rate stipulated in the loan agreement, or based on the fair value of collateral for collateral-dependent loans and is included as a separate component in calculating the required provision for loan losses.

SoCal has also elected to take external, subjective (so-called qualitative) factors into consideration when assessing the adequacy of the allowance for loan losses. These qualitative factors take into account and weight by risk, among other things, the growth and nature of the loan portfolio, concentration of credits, lending policies, economic trends, competition and legal and regulatory requirements. The total qualitative reserve requirement is determined by applying the risk weights of the qualitative factors to the total amount of loans outstanding and is included as the third component in the calculation.

The credit quality of our loans will be influenced by underlying trends in the economic cycle, particularly in Southern California, and other factors, which are beyond management’s control. Accordingly, no assurance can be given that we will not sustain loan losses that in any particular period will be sizable in relation to the allowance. Additionally, subsequent evaluation of the loan portfolio by us and by our regulators, in light of factors then prevailing, may require increases in the allowance through charges to the provision for loan losses.

Non-Interest Income

Non-interest income consists primarily of service charges on deposit accounts. Non-interest income for SoCal was $176 thousand and $866 thousand for the three- and nine-month periods ended September 30, 2008.  Non-interest income for Professional Business Bank was $83 thousand and $320 thousand for the three- and nine-month periods ended September 30, 2007. Virtually all of the increase is attributable to the acquisition of Spectrum’s deposit base.  During the three-month period ended September 30, 2008, losses on sales of available-for-sale investment securities totaling $116 thousand were included in non-interest income.  There were no sales of investment securities during the first nine months of 2007.

9

Non-Interest Expense

	Three-month period ended September 30,							Nine-month period ended September 30,
	Belvedere SoCal 2008		Professional Business Bank 2007		Percent Change			Belvedere SoCal 2008		Professional Business Bank 2007		Percent Change
Salaries and employee benefits	$	2,161,301	$	1,316,074		64.2%		$	6,782,574	$	4,167,056		62.8%
Occupancy and equipment		369,910		176,762		109.3%			1,084,985		496,718		118.4%
Professional fees		743,872		298,962		148.8%			1,845,512		924,943		99.5%
Data processing		342,686		124,316		175.7%			1,000,316		421,296		137.4%
Marketing and business promotion		35,715		38,490		(7.2%	)		149,010		102,834		44.9%
Office and administrative expenses		241,645		194,415		24.3%			734,605		579,758		26.7%
Write-down of goodwill		33,301,000		-		100.0%			33,301,000		-		100.0%
Other expenses		623,598		175,128		256.1%			1,452,607		506,798		186.6%
Total	$	37,819,727	$	2,324,147		1527.8%		$	46,350,609	$	7,199,403		543.8%

Salary and employee benefits increased $845 thousand, or 64.2%, and $2.6 million, or 62.8%, for the three-and nine-month periods ended September 30, 2008 compared to the same periods in 2007.  Virtually all of the increase related to the addition of 33 full-time and two part-time Spectrum employees.   The remainder of the increase was the result of increased stock-based compensation costs, salary adjustments and other employee benefits.

Occupancy and equipment expenses increased $193 thousand, or 109.3%, and $588 thousand, or 118.4%, for the three- and nine-month periods ended September 30, 2008. The increase was primarily due to the acquisition of Spectrum, which added two branch offices and one administrative office to the existing branches of Professional Business Bank.

Professional fees increased $445 thousand, or 148.8%, and $921 thousand, or 99.5%, for the three- and nine-month periods ended September 30, 2008 due to professional fees incurred by Spectrum, Sarbanes-Oxley Act of 2002 implementation costs and legal, accounting and audit fees incurred by the holding company.

Data processing expenses increased $218 thousand, or 175.7%, and $579 thousand, or 137.4%, for the three- and nine-month periods ended September 30, 2008 due to system conversion costs and the increased transaction volume subsequent to the acquisition of Spectrum.

Marketing and business promotion expenses decreased $3 thousand, or 7.2% as a result of consolidating advertising for Professional Business Bank and Spectrum.  Marketing and business promotion costs increased $14 thousand, or 14.2%, for the nine-month periods ended September 30, 2008 compared to the same period in 2007 due to costs incurred by the holding company related to the processing and publication of public filings and marketing costs incurred by Spectrum.

Office and administrative expenses increased $47 thousand, or 24.3%, and $155 thousand, or 26.7%, for the three- and nine-month periods ended September 30, 2008 due to administrative costs incurred by the combined banks.

As discussed previously, an independent analysis performed during the third quarter of 2008 resulted in a $33.3 million write-down of goodwill. See Notes to Consolidated Financial Statements, Notes 12 and 15, for a more detailed discussion.

Other expenses increased $448 thousand, or 256.1%, and $946 thousand, or 186.6%, for the three- and nine-month periods ended September 30, 2008 due to amortization of  core deposit intangibles and expenses incurred by the holding company and Spectrum.

Income Tax (Benefit) Expense

The income tax benefit for the three- and nine-month periods ended September 30, 2008, respectively, totaled $354 thousand, an effective rate of 43.9%, and $1.4 million, an effective tax rate of 44.2%.  The income tax benefit for the three-month period ended September 30, 2007 totaled $15 thousand, an effective rate of 9.3%.  The income tax provision for the nine-month period ended September 30, 2007 totaled $105 thousand, an effective rate of 53.2%.  The fluctuating effective rates (compared to a statutory rate of 41.2%) for the three- and nine-month periods ended September 30, 2007 were due to nondeductible merger-related costs and stock compensation costs incurred by PBB during these periods partially offset by interest income exclusions for certain loans in designated enterprise zones of California.   No valuation allowance for deferred taxes is considered necessary based on the earnings history of the combined banks.

10

The income tax rates used in determining the income tax provision or benefit were 34.000% for federal income tax purposes and 7.115% for state income taxes, net of federal income tax benefit.  Generally, the current tax expense is the result of applying the current tax rate to taxable income.  The deferred portion is intended to account for the fact that (losses) income on which taxes are recognized differs from financial statement pre-tax (loss) income because some items of income and expense are recognized in different years for income tax purposes than in the financial statements.  These recognition anomalies cause “temporary differences”; eventually, all taxes are paid and benefits realized.

Regulatory Capital

At September 30, 2008, Tier 1 capital of PBB, which is comprised of shareholders’ equity as modified by certain regulatory adjustments, was $34.8 million.

Under regulatory capital guidelines, capital adequacy is measured as a percentage of risk-adjusted assets in which risk percentages are applied to assets and certain off-balance-sheet items, such as unused loan commitments and standby letters of credit. The guidelines require that a portion of total capital be core, or Tier 1, capital consisting of common shareholders’ equity and non-cumulative perpetual preferred stock, less goodwill and certain deductions. Tier 2 capital consists of other elements, primarily some types of non-perpetual preferred stock, subordinated debt and mandatory convertible debt, plus the allowance for loan losses, subject to certain limitations. Under current regulatory guidelines, SoCal’s $15 million in trust preferred securities outstanding currently qualify as Tier 1 capital up to 25% of core capital. The guidelines also evaluate the leverage ratio, which is Tier 1 capital divided by average tangible assets.  Beginning with the quarter ended March 31, 2009, amendments to the risk-based capital guidelines will become effective and the amount of trust preferred securities that may be included in Tier 1 capital may not exceed 25% of the sum of all core capital elements, including restricted core capital elements, net of goodwill less any associated deferred tax liability.

The following table sets forth the minimum regulatory requirements to qualify as being well-capitalized or adequately capitalized and the capital ratios for SoCal and PBB as of the date indicated (dollars in thousands):

September 30, 2008:	Actual				For Capital Adequacy Purposes			To Be Well Capitalized
	Amount		Ratio		Amount		Ratio	Amount		Ratio
SoCal
Total Capital (to risk-weighted assets)	$	33,446		9.65%	$	27,727	8%		N/A		N/A
Tier 1 Capital (to risk-weighted assets)		29,084		8.39%		13,864	4%		N/A		N/A
Tier 1 Capital (to average assets)		29,084		7.46%		15,593	4%		N/A		N/A
Professional Business Bank
Total Capital (to risk-weighted assets)		39,171		11.27%		27,808	8%	$	34,760	10%
Tier 1 Capital (to risk-weighted assets)		34,809		10.01%		13,904	4%		20,856	6%
Tier 1 Capital (to average assets)		34,809		8.91%		15,633	4%		19,542	5%

The United States Treasury Department recently announced a Capital Purchase Program under the Troubled Asset Relief Program, the $700 billion relief program for financial institutions passed by Congress. Under the Capital Purchase Program, the Treasury department is offering to purchase senior preferred stock in qualifying financial institutions with an initial cumulative dividend rate of 5%, increasing to 9% after five years. Financial institutions participating in the program are required to issue warrants to purchase their common stock equal to 30% of the value of the preferred stock purchased by the Treasury Department.

SoCal has applied for $10.4 million of TARP Capital Purchase Program funding. Management reserves the right to modify or withdraw the application following release of program rules applicable to SoCal. Application approval is at the discretion of the Treasury Department, with consideration given to a concurrent recommendation from SoCal's primary federal regulator. Given that program rules for nonexchange traded applicants have not yet been issued, it is uncertain when SoCal's application will be processed and if approved, when funding may occur.

Deposits

Deposits grew from $194.0 million at December 31, 2007 to $321.1 million at September 30, 2008, an increase of $127.1 million, or 65.5%.  The increase primarily related to the acquisition of Spectrum, which contributed $142.0 million in deposits.

Total demand deposits represented 30.3% of total deposits at September 30, 2008 compared to 37.8% at December 31, 2007.  Total interest-bearing checking, money market and savings accounts as a group totaled 27.0% of total deposits at September 30, 2008 compared to 25.5% at December 31, 2007.  Total certificates of deposit represented 42.5% of total deposits at September 30, 2008 compared to 36.7% at December 31, 2007.

At September 30, 2008 and December 31, 2007, the deposit portfolio consisted of $60.1 million and $20.0 million in brokered deposits, respectively, which are defined to include not only deposits received through deposit brokers, but also deposits bearing interest in excess of 75 basis points over market rates.  Movement in brokered deposit balances reflect loan portfolio growth and shifts in other funding sources.

11

The following table sets forth the scheduled maturities of time deposits in denominations of $100,000 or greater at September 30, 2008 (dollars in thousands):

Three Months or less	$	15,502
Over Three Months to One Year		24,790
Over One Year to Three Years		5,199
Over Three Years		4,196
Total	$	49,687

Liquidity and Borrowings

Liquidity management for banks requires that funds always be available to pay anticipated deposit withdrawals and maturing financial obligations promptly and fully in accordance with their terms. The balance of the funds required is generally provided by payments on loans, the acquisition of additional deposit liabilities and liquidation of assets.

Liquidity may be enhanced, if necessary, through short-term borrowings. As of September 30, 2008, SoCal had short-term borrowing facilities available totaling approximately $127.0 million. This consisted of $22.5 million in unsecured federal funds lines of credit with correspondent banks and approximately $104.5 million in a secured line of credit with the Federal Home Loan Bank.

SoCal has from time to time borrowed funds on a short-term basis from the Federal Home Loan Bank and other financial institutions.  Outstanding borrowings totaled $6.0 million and $18.0 million at September 30, 2008 and December 31, 2007, respectively.  The interest rate was 1.33% and 3.80% on these outstanding borrowings at September 30, 2008 and December 31, 2007, respectively.  The average amounts outstanding totaled $17.5 million and $7.8 million and the weighted average interest rates were 2.10% and 4.90% for the nine-month period ended September 30, 2008 and the year ended December 31, 2007, respectively.  The maximum outstanding at any month-end during the nine-month period ended September 30, 2008 and the year ended December 31, 2007 was $39.0 million and $18.0 million, respectively.

In March 2008, SoCal borrowed $8.0 million through a loan secured by the stock of the Subsidiary Bank.  The loan bears interest at three-month LIBOR plus 3.1% (7.15% at September 30, 2008) with quarterly interest payments through September 2009, followed by principal and interest payments through the maturity date of March 2018.  The promissory note and related loan agreements contain certain customary restrictions, including a potential limitation on the ability of the Subsidiary Bank to pay dividends to SoCal for purposes other than to allow SoCal to service the loan.  

The holder notified SoCal that it was in violation of the loan's debt service and minimum total capital covenants for the third quarter 2008. The holder waived their right to declare the loan in default pursuant to the above covenant violations.

In January 2008, SoCal issued $15.5 in junior subordinated debentures to Belvedere SoCal Statutory Trust I, a Delaware business trust that was formed for the exclusive purpose of issuing trust preferred securities. The Trust purchased debentures with: (1) the proceeds of the sale of its common trust securities to SoCal for $464 thousand, and (2) certain shares of common stock in Spectrum Bank valued at $15 million that the Trust received from certain shareholders of Spectrum Bank in exchange for the Trust’s trust preferred securities. The junior subordinated debentures and trust preferred securities have generally identical terms, including that they mature in January 2038 are redeemable at SoCal’s option at par and require monthly interest payments at a rate of 10%. SoCal has unconditionally guaranteed certain distributions on, and certain payments on liquidation and redemption of, the trust preferred securities.  The trust preferred securities and corresponding junior subordinated deferrable interest debentures contain provisions limiting our ability to declare and pay dividends on SoCal’s common stock in certain events.

Loan Portfolio

SoCal’s lending strategy is to attract small to mid-sized business borrowers by offering a variety of commercial and real estate loan products and a full range of other banking services coupled with highly personalized service. We offer commercial loans, lines of credit, certain consumer and installment loans, commercial and residential construction loans, as well as specialized products such as SBA and CalCAP loans.

12

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

	September 30, 2008					December 31, 2007
	Amount			Percent of		Amount			Percent of
	Outstanding			Total		Outstanding			Total
Loans
Commercial	$	80,252			25.9%	$	56,791			26.5%
Real Estate - Construction		41,930			13.6%		37,566			17.5%
Real Estate - Other		179,607			58.1%		113,123			52.7%
Consumer		7,563			2.4%		7,127			3.3%
Total Loans		309,352			100.0%		214,607			100.0%
Net Deferred Loan Fees		(356	)				(273	)
Allowance for Loan Losses		(5,622	)				(4,077	)
Net Loans	$	303,374				$	210,257
Commitments
Letters of Credit	$	1,398				$	769
Undisbursed Loans and
Commitments to Grant Loans		36,390					62,459
Total Commitments	$	37,788				$	63,228

The following table sets forth participation loans purchased by loan type at the dates indicated:

	September 30, 2008					December 31, 2007
	Amount in Thousands		Percent of Total			Amount in Thousands		Percent of Total
Commercial	$	1,125		3.8	%	$	339		1.1	%
Real Estate - Other		17,634		59.1	%		21,717		72.6	%
Real Estate - Construction		11,078		37.1	%		7,857		26.3	%
Total	$	29,837		100.0	%	$	29,913		100.0	%

At September 30, 2008 one borrowing relationship totaling $3.5 million, of which $3.4 million is outstanding, was graded Substandard.  Of the total outstanding balance, approximately $1.0 million was past due at September 30, 2008, of which $0.5 million is collateralized by deposits at PBB.  The borrowers have filed suit against PBB and an advisory director alleging conspiracy to disparage the borrower.  PBB denies the allegations and believes that the suit is unwarranted.  PBB has currently declared the loans in default. While the loans are supported by various guarantors, PBB is currently unsure of what action, if any, will be required to collect from the guarantors.  While management believes that the amount included in the allowance for loan losses at September 30, 2008 is adequate to cover any potential losses related to this relationship, there is no assurance that an additional provision will not be required in the future. 

Nonperforming Assets

Nonaccrual loans are those loans for which SoCal has discontinued accrual of interest because reasonable doubt exists as to the full and timely collection of either principal or interest.  Loans past due 90 days generally will continue to accrue interest when the loan is both well secured and in the process of collection.  Other real estate owned consists of real properties that secured loans on which we have taken title in partial or complete satisfaction of the loan.

When a loan is placed on nonaccrual status, all interest previously accrued but uncollected is reversed against current period operating results.  Income on such loans is then recognized only to the extent that cash is received and, where the ultimate collection of the carrying amount of the loan is probable, after giving consideration to the borrower’s current financial condition, historical repayment performance and other factors.  Accrual of interest is resumed only when (i) principal and interest are brought fully current, and (ii) such loan is either considered, in management’s judgment, to be fully collectible or otherwise well secured and in the process of collection.

The following table sets forth information about non-performing assets at the dates indicated (dollars in thousands):

	September 30, 2008		December 31, 2007
Loans 90 Days Past Due and Still Accruing Interest	$	291	$	-
Nonaccrual Loans		1,916		920
Total Nonperforming Loans		2,207		920
Other Real Estate Owned		1,218		-
Total Nonperforming Assets	$	3,425	$	920
Nonperforming Loans as a Percentage of Total Loans		0.71%		0.43%
Allowance for Loan Losses as a Percentage of Nonperforming Loans		254.73%		443.15%
Nonperforming Assets as a Percentage of Total Assets		0.87%		0.34%

13

The increase in nonperforming assets resulted primarily from placing several SBA loans, one real estate construction participation loan and one commercial loan on nonaccrual, as well as taking three properties in settlement of SBA loan obligations.  The current economic slowdown has negatively affected the ability of borrowers to meet their payment obligations under the terms of the loans.  Management continues to actively evaluate the entire loan portfolio as part of their internal credit review process.

The increase in nonperforming assets resulted primarily from placing several SBA loans, one real estate construction participation loan and one commercial loan on nonaccrual, as well as taking three properties in settlement of SBA loan obligations.  The current economic slowdown has negatively affected the ability of borrowers to meet their payment obligations under the terms of the loans.  Management continues to actively evaluate the entire loan portfolio as part of their internal credit review process.

Provision and Changes in Allowance for Loan Losses

The following table summarizes the allocation of the allowance for loan losses by loan type as of the indicated date and the percent of loans in each category to total loans (dollars in thousands):

	September 30, 2008				December 31, 2007
	Amount		Loan Percent		Amount		Loan Percent
Commercial	$	2,731		25.9%	$	1,286		26.5%
Real Estate - Construction		1,190		13.6%		1,163		17.5%
Real Estate - Other		1,480		58.1%		1,468		52.7%
Consumer		221		2.4%		152		3.3%
Unallocated		-		n/a		8		n/a
Total	$	5,622		100.0%	$	4,077		100.0%

The following table presents an analysis of changes in the allowance for loan losses during the periods indicated (dollars in thousands):

	Three-month period ended September 30,						Nine-month period ended September 30,
	Belvedere SoCal			Professional Business Bank			Belvedere SoCal			Professional Business Bank
	2008			2007			2008			2007
Balance at beginning of period	$	5,385		$	2,404		$	4,077		$	1,869
Allowance acquired at acquisition of Spectrum								1,436
Charge-offs:
Commercial		(19	)		-			(127	)		-
Real Estate - Construction		-			-			(1,934	)		-
Real Estate - Other		-			-			-			-
Consumer		(26	)		(6	)		(186	)		(8	)
Total charge-offs		(45	)		(6	)		(2,247	)		(8	)
Recoveries:
Commercial		26			-			26			-
Real Estate - Construction		-			-			-			-
Real Estate - Other		-			-			-			-
Consumer		-			-			14			-
Total recoveries		26			-			40			-
Additional provision		256			983			2,316			1,520
Balance at end of period	$	5,622		$	3,381		$	5,622		$	3,381

At September 30, 2008 and December 31, 2007, the allowance for loan losses was 1.82% and 1.90%, respectively, of total loans. 

14

Investment Portfolio

The following table summarizes the types, amounts, yields and maturities of investment securities held as of the dates indicated (dollars in thousands):

	September 30, 2008							December 31, 2007
					Weighted							Weighted
	Amortized		Market		Average			Amortized		Market		Average
	Cost		Value		Yield			Cost		Value		Yield
Available-for-Sale Securities
U.S. Government Agencies
Within One Year	$	-	$	-				$	2,004	$	2,002		4.24	%
One to Five Years		1,638		1,618		6.20	%		2,024		2,024		5.42	%
		1,638		1,618		6.20	%		4,028		4,026		4.40	%
States and Political Subdivisions
Over Ten Years		6,250		5,604		4.47	%		-		-
		6,250		5,604		4.47	%		-		-
Mortgage-Backed Securities
Within One Year		1,453		1,454		3.81	%		-		-
One to Five Years		-		-					1,230		1,231		4.16	%
After Five Years to Ten Years		185		185		5.00	%		558		559		4.98	%
Over Ten Years		349		346		5.71	%		2,953		2,970		4.78	%
		1,987		1,985		4.26	%		4,741		4,760		4.84	%
Subtotal available-for-sale securities		9,875		9,207		4.73	%		8,769		8,786		4.56	%
Held-to-Maturity Securities
Collateralized Mortgage Obligations
Over Ten Years		21,113		21,530		5.31	%		-		-
		21,113		21,530					-		-
Total investment securities	$	30,988	$	30,737		5.09	%	$	8,769	$	8,786		4.56	%

During September 2008 SoCal purchased $21.1 million of seasoned private label collateralized mortgage obligation (CMO) securities secured by prime and Alt A residential mortgages originated from 2003 to 2007,94% of which were originated prior to 2006. CMO purchase prices ranged from 75.8% to 93.3% of their par value and credit loss protection provided by subordinated tranches ranged from 4.02% to 12.10% of par. All purchased CMOs carry current AAA credit ratings.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss in a financial instrument arising from adverse changes in market prices, interest rates, foreign currency exchange rates, commodity prices and equity prices. SoCal's market risk arises primarily from interest rate risk inherent in its lending, investment and deposit taking activities. Management uses various asset/liability strategies to manage the re-pricing characteristics of SoCal's earning assets and funding liabilities to ensure that exposure to interest rate fluctuations is within its guidelines of acceptable risk-taking. Economic hedging strategies, including the terms and pricing of loans, investments, deposits and borrowings, are used to reduce mismatches in interest rate re-pricing opportunities of portfolio assets and their funding sources.

Interest rate risk is addressed by the Asset Liability Management Committee (“ALCO”) which is comprised of executive officers of SoCal. The ALCO monitors interest rate risk by analyzing the potential impact on the net value of equity and net interest income from potential changes in interest rates, and considers the impact of alternative strategies or changes in balance sheet structure. The ALCO manages SoCal's balance sheet in part to maintain, within acceptable ranges, the potential impact on net value of equity and net interest income despite fluctuations in market interest rates.

15

Exposure to interest rate risk is reviewed on at least a quarterly basis by the ALCO and the Board of Directors. Interest rate risk exposure is measured using interest rate sensitivity analysis to determine the change in net portfolio value in the event of hypothetical changes in interest rates. If potential changes to the net value of equity and net interest income resulting from hypothetical interest rate changes are not within the limits established by the Board of Directors, management may adjust the asset and liability mix to bring interest rate risk within approved limits.

At September 30, 2008, SoCal's interest rate risk position was within the Board's established risk limits and moderately asset-sensitive.

Item 4.  Controls and Procedures

Evaluation of Controls and Procedures

With the participation of management, including our Chief Executive Officer and Principal Accounting Officer, the effectiveness of SoCal's disclosure controls and procedures (as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) were evaluated as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, SoCal's Chief Executive Officer and Principal Accounting Officer have concluded that:

(a)           information required to be disclosed by SoCal in this Quarterly Report on Form 10-Q and the other reports which SoCal files or submits under the Exchange Act would be accumulated and communicated to SoCal's management, including its Chief Executive Officer and Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure;

(b)           information required to be disclosed by SoCal in this Quarterly Report on Form 10-Q and the other reports which SoCal files or submits under the Exchange Act would be recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and

(c)           SoCal's disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that material information relating to SoCal and its consolidated subsidiary is made known to them, particularly during the period for which periodic reports, including this Quarterly Report on Form 10-Q, are being prepared.

Changes in Internal Control over Financial Reporting

There were no changes during the period covered by this Quarterly Report on Form 10-Q in SoCal's internal control over financial reporting (as defined in Rule 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

16

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

There have been no material changes in legal proceedings as described in the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2007.

Item 1A.  Risk Factors

Economic conditions continue to be disruptive, particularly in the financial sector.  The cost and availability of funds may be adversely affected by relatively illiquid credit markets, and the demand for our products and services may decline as our borrowers and customers realize the impact of an economic slowdown.  The severity and duration of these adverse conditions is unknown and may exacerbate our exposure to credit risk and adversely affect the ability of borrowers to perform under the terms of their lending arrangements with us. Accordingly, continued turbulence in the U.S. and international markets and economy may adversely affect our liquidity, financial condition, results of operations and profitability.

There can be no assurance that the actions of the U.S. government, Federal Reserve and other governmental and regulatory bodies for the purpose of stabilizing the financial markets, or market response to those actions, will achieve the intended effect. Our business may not benefit from these actions and further government or market developments could adversely impact us.

We may be required to pay significantly higher FDIC premiums because market developments have significantly depleted the insurance fund of the FDIC and reduced the ratio of reserves to insured deposits.

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

None.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Submission of Matters to a Vote of Security Holders

None.

Item 5.  Other Information

On November 11, 2008, it was announced that Alan Lane, the executive chairman of SoCal and its subsidiary, Professional Business Bank, will resign his duties as executive chairman of both entities effective December 5, 2008.  Mr. Lane will remain as chairman of Professional Business Bank in a non-executive capacity at least through the end of 2008.

17

Item 6.  Exhibits

10.1	First Amendment to Management Agreement
10.2	Baribault Employment Agreement
10.3	Warrant Agreement
31.1	Rule 15d-14(a) Certification by Chief Executive Officer
31.2	Rule 15d-14(a) Certification by Principal Accounting Officer
32.1	Section 1350 Certifications

______________________

18

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

BELVEDERE SOCAL
By:	/s/    WILLIAM BARIBAULT
	William Baribault President and Chief Executive Officer (Principal Executive Officer)
Dated: November 19, 2008
BELVEDERE SOCAL
By:	/s/    DANELLE THOMSEN
	Danelle Thomsen Manager of Financial Reporting (Principal Accounting Officer)
Dated: November 19, 2008

19

EX-10.1

Exhibit 10.1

FIRST AMENDMENT TO

MANAGEMENT AGREEMENT

THIS FIRST AMENDMENT TO MANAGEMENT AGREEMENT (the "First Amendment") is entered into as of January 29, 2008, among Belvedere SoCal, a corporation organized under the laws of California ("SoCal") located in San Francisco, California, Professional Business Bank, a California banking corporation ("Bank"), located in Pasadena, California, Belvedere Capital Fund II L.P., a Delaware limited partnership ("Fund"), and Belvedere Capital Partners II LLC, the General Partner of Fund and a Delaware limited liability company (the "Partnership").

WHEREAS, SoCal, Bank, Fund and Partnership entered into a Management Agreement dated as of November 2, 2007 (the "Agreement");

WHEREAS, SoCal has entered into an Agreement to Merge and Plan of Reorganization dated as of July 13, 2007 and subsequently amended on September 4, 2007 and January 29, 2008 pursuant to which SoCal will acquire Spectrum Bank, Irvine, California (as so amended the "Spectrum Acquisition Agreement"); -

WHEREAS, the Parties wish to make a change and an amendment to the Agreement which they believe to be in their respective best interest to reflect the Spectrum Acquisition Agreement;

NOW, THEREFORE, in consideration of the premises and mutual promises of the Parties, the Parties hereto agree as follows:

1.  At the effective time of the Spectrum Bank transaction as provided for in the Spectrum Acquisition Agreement, Section 2.1 is hereby amended to read as follows:

"2.1            Services of the Partnership.The Partnership shall provide its

monitoring abilities and its management expertise and experience to SoCal and its subsidiary banks. Such services may include, but not be limited to, regular monitoring of the business of SoCal and its subsidiary banks, evaluating and formulating corporate strategy and aiding in implementation, augmenting management talent through the Partnership's personnel or contacts, assisting in the evaluation of new geographic or customer markets to expand business and new customer products, identifying and negotiating group purchase discounts, optimizing the capital structure of SoCal and its subsidiary banks through its contacts in the capital markets, assisting in the training of personnel, and consulting on data processing, compensation planning and branch and site expansion and selection."

2. At the effective time of the Spectrum Bank transaction as provided for in the Spectrum Acquisition Agreement, Sections 3.1, 3.2, 3.3 and 3.4 are hereby amended to read as follows:

"3.1  Management Fee. In connection with the services to be provided under Section 2.1, SoCal shall pay a yearly fee to the Partnership equal to 5% of the combined pre-tax income of all SoCal's subsidiary banks; provided, however, in no event shall such yearly fee be less than $200,000 nor more than $750,000. Fees will be paid on a quarterly basis as soon as reasonably practicable after the end of each fiscal quarter based upon the financial statements of the subsidiary banks relating to such quarter. Pre-tax net income shall be determined in accordance with generally accepted accounting principals.

3.2  Deferral. If as a result of any regulatory or financial disability, any of the fees provided for in Section 3.1 cannot be timely paid, SoCal will pay them as soon as such regulatory or financial disability is removed. Until so paid, the amount owed to the Partnership shall bear interest at the Wall Street Journal published prime rate as changed from time to time. Interest payments shall be made to the Partnership monthly unless the regulatory or financial disability prevents such payments. In such event, accrued and unpaid interest shall be paid at the time when the amount of the fee is actually paid.

3.3  Expenses. SoCal shall reimburse the Partnership, upon its demand, for all of its reasonable out-of-pocket expenses incurred in connection with its provision of services hereunder. The Partnership shall provide an itemized statement of its expenses and shall make appropriate allocations of such expenses between SoCal and its subsidiary banks based upon the relative benefits that each has received as a result of such services. Any expenses reimbursed pursuant to this Section must be in compliance with Section 23B of the Federal Reserve Act.

3.4  Indemnification. SoCal agrees to indemnify the Partnership and Fund and its affiliates (each an "Indemnified Party") to the fullest extent permitted by law, from and against any and all losses, penalties, judgments, suits, costs, claims, liabilities, damages and expenses (including, without limitation, reasonable attorneys' fees and disbursements) (collectively "Losses"), incurred by, imposed upon or asserted against any of the Indemnified Parties as a result of, relating to or arising out of any litigation, claims, suits or proceedings to which such Indemnified Party is made a party (other than as a plaintiff) or any penalties, costs, claims, liabilities damages or expenses suffered by such Indemnified Party, in each case arising from or relating to the operations or acquisition of SoCal or its subsidiary banks (and any successor or any of their subsidiaries), except for any such Losses arising on account of such Indemnified Party's gross negligence or willful misconduct, and if and to the extent that the foregoing undertaking may be unenforceable for any reason, SoCal hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Losses which is permissible under applicable law. Each such Indemnified Party shall be reimbursed for all indemnified Losses as they are incurred; provided, that if a final and non-appealable judicial determination shall be made that such Indemnified Party is not entitled to be indemnified for Losses, such Indemnified Party shall repay to SoCal, the amount of such Losses for which SoCal shall have reimbursed such Indemnified Party. Notwithstanding anything to the contrary contained herein, no Indemnified Party shall be entitled to any indemnity hereunder for any Loss that relates solely to the decrease in the value of the SoCal common stock. No indemnification shall be permitted hereunder that would be prohibited pursuant to the provisions of Part 359 of the Federal Deposit Insurance Corporation's regulations."

3.            Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the Agreement.

4.            This First Amendment may be entered into in one or more counterparts, all of which shall be considered one and the same instrument, and it shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that all Parties need not sign the same counterpart.

5.            Except as herein amended, the Agreement shall remain in full force and effect.

6.            This First Amendment shall be governed by and construed in accordance with the laws of the State of California.

WITNESS, the signature of Belvedere SoCal as of the 29th day of January, 2008, set by its Chairman and its Secretary, pursuant to a resolution of its)s and of directors,

acting by at least a majority:

			/s/ Alison Davis
By:	Alan Lane	By:	Alison Davis
	Chairman		Secretary

WITNESS, the signature of Belvedere Capital Fund II L.P. as of the 29th day of January, 2008, set by the Managing Member of its General Partner pursuant to its authority:

WITNESS, the signature of Belvedere Capital Partners II LLC, as of the 29th day of January, .48, set by Managing Member pursuant to its authority:

	/s/ Alison Davis
By:	Alison Davis
	Managing Member

WITNESS, the signature of Professional Business Bank, as of the 29th day of January, 2008, set by its Chairman and its Secretary, pursuant to a resolution of its board of directors, acting by at least a majority:

			/s/ Alison Davis
By:	Alan Lane	By:	Alison Davis
	Chairman		Secretary

	/s/ Alison Davis
By:	Alison Davis
	Managing Member

WITNESS, the signature of Belvedere SoCal as of the 29th day of January, 2008, set by its Chairman and its Secretary, pursuant to a resolution of its board of directors, acting by at least a majority:

	/s/ Alan Lane
By:	Alan Lane	By:	Alison Davis
	Chairman		Secretary

WITNESS, the signature of Belvedere Capital Fund II L.P. as of the 29th day of January, 2008, set by the Managing Member of its General Partner pursuant to its authority:

By:
	Managing Member

WITNESS, the signature of Belvedere Capital Partners II LLC, as of the 29th day of January, 2008, set by its Managing Member pursuant to its authority:

By:
	Managing Member

WITNESS, the signature of Professional Business Bank, as of the 29th day of January, 2008, set by its Chairman and its Secretary, pursuant to a resolution of its board of directors, acting by at least a majority:

	/s/ Alan Lane
By:	Alan Lane	By:	Alison Davis
	Chairman		Secretary

EX-10.2

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS AGREEMENT is dated as of August 14, 2008 (the "Execution Date"), between Belvedere SoCal ("SoCal"), Professional Business Bank ("PBB"), and William Baribault ("Executive") for the purposes set forth in this agreement (the "Agreement").

WHEREAS, SoCal is a California corporation and bank holding company registered under the Bank Holding Company Act of 1956, as amended, subject to the supervision and regulation of the Board of Governors of the Federal Reserve System ("FRB");

WHEREAS, SoCal is the parent holding company of PBB, a California chartered banking corporation and wholly-owned subsidiary of SoCal, subject to the supervision and regulation of the California Department of Financial Institutions ("DF1") and Federal Deposit Insurance Corporation ("FDIC");

WHEREAS, it is the intention of the parties to enter into an employment agreement for the purposes of securing Executive's services as the President and Chief Executive Officer of SoCal and PBB (together, the "Company").

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, SoCal, PBB and Executive agree as follows:

1.  TERM. Subject to the provisions for earlier termination hereinafter provided, Executive's employment hereunder shall be for a term that commenced on February 28, 2008 (the "Effective Date") and ending on the fifth anniversary of the Effective Date (the "Term"). Executive acknowledges that all amounts that have become due and payable under this Agreement prior to the Execution Date have been paid or provided to Executive by the Company.

2.  POSITION, DUTIES AND RESPONSIBILITIES. During the Term, the Company will employ Executive, and Executive agrees to be employed as the President and Chief Executive Officer of SoCal and the President and Chief Executive Officer of P138. In such employment capacity, Executive will have such duties and responsibilities as are noimally associated with such position and will report to SoCal's Executive Chairman of the Board (currently Alan J. Lane) or his designee. During the Term, and except as set forth on Schedule 1, Executive shall devote his entire business time, attention and energies to the business and affairs of the Company, to the performance of Executive's duties under this Agreement and to the promotion of the Company's interests. Notwithstanding the foregoing, subject to Section 11 below, nothing in this Agreement shall be construed to limit Executive's ability to provide services to or participate in non-profit, charitable or civic organizations or to manage personal investments, including personal investment vehicles, to the extent that such activities do not materially interfere with Executive's performance of his duties hereunder. Executive acknowledges that Executive's services as President and Chief Executive Officer of the Company shall constitute Executive's principal business activity. During the Term, the geographic location where Executive's primary office will be located will be in the Company's principal offices located at 199 South Los Robles Avenue, Suite 130, Pasadena, CA 91101, but Executive may also work from any location Executive chooses. Notwithstanding the foregoing, the Company may from time to time require Executive to travel temporarily to other locations on the Company's business. At the Company's request, Executive will serve the Company and/or its subsidiaries and affiliates in other capacities in addition to the foregoing. In the event that Executive serves in any one or more of such additional capacities, Executive's compensation will not be increased beyond that specified in this Agreement. In addition, in the event Executive's service in one or more of such additional capacities is terminated, Executive's compensation, as specified in this Agreement, will not be diminished or reduced in any manner as a result of such termination for so long as Executive otherwise remains employed under the terms of this Agreement.

1

3.            BASE COMPENSATION. During the Term, the Company will pay Executive a base salary of $300,000 per year, less payroll deductions and all required withholdings, payable in accordance with the Company's normal payroll practices and prorated for any partial pay period of employment. Executive's base salary shall be subject, in the sole discretion of the Board of Directors of SoCal (the "Board"), to (i) increase only based on the Board's annual review and (ii) increase pursuant to the Company's policies as in effect from time to time, and, pursuant to the growth of the Company (such base salary, as may be increased pursuant to this Section 3, the "Base Compensation").

4.            ANNUAL BONUS. In addition to the Base Compensation, during the Term, Executive will be eligible to participate in the Company's incentive bonus plan applicable to senior executives of the Company. The amount of Executive's annual bonus will be based on the attainment of performance criteria established and evaluated by the Company in accordance with the terms of such bonus plan as in effect from time to time, provided that, subject to the teuus of such bonus plan, Executive's target annual bonus shall be one hundred percent (100%) of Base Compensation per year, pro-rated in accordance with Sections 4(a) or 4(b) below, as applicable, for any partial year of service in which an annual bonus is earned. Each annual bonus shall, to the extent payable in accordance with the terms of the incentive bonus plan, be paid no later than. March 15th of the year following the year in which such annual bonus is earned. Each annual bonus shall be paid in cash or, at the election of Executive made at least thirty (30) days prior to the payment date (or such other date as may be determined by the Board), in whole or in part in a number of fully vested shares of SoCal common stock equal to the dollar amount of the bonus payable divided by the Fair Market Value (as defined in the SoCal 2007 Equity Incentive Plan (the "Plan")) of a share of SoCal common stock on the date preceding the date on which the bonus is paid. In the event that Executive elects to receive an annual bonus in shares, SoCal shall issue such shares to Executive under the Plan and such shares shall be subject to the terms and conditions of the Plan (including, without limitation, the limits set forth in Section 3 and Section 6(c) of the Plan) and an award agreement in a form prescribed by the Company.

The term "annual" as used in this Agreement shall be deemed to be with reference to each calendar year during the Term. Further, to the extent that this Agreement is in effect for less than any full calendar year, and unless otherwise expressly provided herein, the following calculations shall apply:

a.  For the first year of the Term (calendar year 2008), any benefit amount calculated on an annual basis for such year shall be determined by multiplying the full amount which Executive was eligible to be paid for such year by a fraction, the numerator of which is the number of days in the calendar year remaining after the Effective Date and the denominator of which equals 365; and

2

b.  With respect to calendar year 2013 (if Executive remains employed by the Company under this Agreement through the fifth anniversary of the Effective Date), any benefit amount calculated on an annual basis for such year shall be determined by multiplying the full amount which Executive was eligible to be paid for such year by a fraction, the numerator of which is the number of days in the calendar year up until the effective date of Executive's termination and the denominator of which equals 365.

5.            STOCK OPTIONS.

a.  Initial Option. The Company, on February 27, 2008 (the "Initial Grant Date"), granted to Executive a nonqualified stock option to purchase 99,774 shares of SoCal common stock, which number is equal to 3.00% of the total number of shares of SoCal common stock outstanding as of the Initial Grant Date (the "Initial Option"), in the following proportions: 50% Performance-Vested Options, 17% Time-Vested Options, and 33% Modified Time-Vested Options, each substantially in the applicable form stock option agreement attached hereto as Exhibits A, B and C (together, the "Option Agreements").

b.  Subsequent Acquisition Make-Whole Option. In addition, provided that Executive is then employed by the Company, in the event that (i) the Company consummates an acquisition transaction in which the holders of SoCal common stock immediately prior to such transaction continue, immediately after such transaction, to control more than 50% of the total outstanding shares of SoCal common stock (or equity securities of the surviving entity if SoCal is not the surviving entity (any such equity securities, "New Equity")), and (ii) the total number of shares of SoCal common stock (or New Equity) outstanding immediately after the consummation of such acquisition transaction exceeds the total number of shares of SoCal common stock outstanding immediately prior to the consummation of such transaction, as determined in the sole and absolute discretion of the Company (any such excess, the "Transaction Share Increase"), then SoCal (or the surviving entity) shall, on the thirtieth calendar day (or, if not a trading day, the next succeeding trading day) following the consummation of such acquisition, grant to Executive a nonqualified option to purchase a number of shares of SoCal common stock (or New Equity) equal to 3.00% of the Transaction Share Increase (the "Subsequent Acquisition Make-Whole Option" and, together with the Initial Option, the "Options").

c.  Option Terms. Each Option has been or shall be granted at an exercise price per share equal to the Fair Market Value of a share of SoCal common stock on the applicable date of grant. The terms and conditions of the Options, including without limitation any applicable vesting and forfeiture conditions, have been or shall be set forth in appropriate Option Agreements. The Options shall, subject to the provisions of this Section 5, be governed in all respects by the terms of the Plan and the applicable Option Agreement.

3

6.            BENEFITS AND VACATION. During the Teini, (i) Executive and his dependents shall be reimbursed by the Company throughout the term for all medical and dental insurance premiums incurred by him for him and his Spouse consistent with any plans, practices, policies and programs maintained or sponsored by the Company from time to time which are applicable to other senior executives of the Company, (ii) Executive shall be eligible to participate in all incentive, savings and retirement plans, practices, policies and programs maintained or sponsored by the Company from time to time which are applicable to other senior executives of the Company, including without limitation, a Company 401(k) plan, subject to the terms and conditions thereof, and (iii) Executive shall be eligible for standard benefits, such as paid time off and holidays, to the extent applicable generally to other senior executives of the Company, provided that, during the Term, Executive shall be entitled to no less than twenty (20) vacation days per year (i.e., four weeks of vacation), pro-rated for any partial year of service, in all cases, subject to the terms and conditions of the applicable Company plans or policies. In addition, without limiting the generality of the foregoing, the Company shall make available to Executive any life and long-term disability insurance policies which it may provide for other senior executives of the Company on the same terms and conditions as are made available to such other senior executives or, at Executive's election, an amount equal to the premiums payable by the Company for such policies as an expense reimbursement.

7.            EXPENSES. During the Term, Executive shall be entitled to receive prompt reimbursement of all reasonable business expenses incurred by Executive in accordance with Company expense reimbursement policy applicable to its senior executives, as in effect from time to time (plus such additional expense amounts as Executive, in his reasonable discretion and subject to Company approval, deems necessary and appropriate to carry out his duties as Chief Executive Officer and President of each of the Companies) including expenses of up to $1,300 per month, pro-rated for any partial month of service, associated with the purchase or lease, operation and maintenance, of an automobile. To the extent that any such expenses are deemed to constitute compensation to Executive, including without limitation any auto reimbursement expenses or insurance reimbursements pursuant to Section 6 above, such expenses shall be reimbursed by December 31 of the year following the year in which the expense was incurred. The amount of any such expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year and Executive's right to reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

8.            TERMINATION OF EMPLOYMENT.

a.  Termination Without Cause. The Company may terminate Executive's employment without Cause (as defined below) at any time during the Term upon thirty (30) days' written notice provided to Executive in accordance with Section 10 below, or in the Company's sole discretion, payment of Executive's Base Salary for such period in lieu of notice. If Executive's termination of employment is without Cause and is also a "separation from service" (within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the "Code"), and Treasury Regulation Section 1.409A-1(h)) ("Separation from Service"), the Company shall promptly or, in the case of obligations described in clause (iv) below, as such obligations become due, pay or provide to Executive, (i) Executive's earned but unpaid Base Compensation accrued through the date of such Separation from Service (the "Termination Date"), (ii) accrued but unpaid vacation time through the Termination Date, (iii) reimbursement of any business expenses incurred by Executive prior to the Termination Date that are reimbursable under Section 7 above, (iv) any vested benefits and other amounts due to Executive under any plan, program or policy of the Company, and (v) any payment in lieu of notice of termination under this Section 8(a) (together, the "Accrued Obligations"). In addition, subject to Section 8(f) below and Executive's execution and non-revocation of a binding release in accordance with Section 8(g) below, in the event Executive experiences a Separation from Service due to a termination by the Company without Cause, the Company shall pay or provide to Executive (the "Severance"):

4

(1)  a lump-sum cash payment equal to the sum of (A) Executive's Base Compensation at the rate in effect as of the Termination Date, plus (B) a pro rata portion of Executive's target annual bonus for the calendar year in which the Termination Date occurs, deteimined by multiplying the target annual bonus by a fraction, the numerator of which equals the lesser of (i) the number of days elapsed in the calendar year of termination through the Termination Date and (ii) the number of days elapsed from the Effective Date through the Termination Date and the denominator of which equals 365, provided, however, that if a termination described in this Section 8(a) occurs within twenty-four months after the consummation of an Acquisition (as defined below), then the payment pursuant to this Section 8(a)(1) shall instead equal 200% of the sum of (A) Executive's Base Compensation at the rate in effect as of the Termination Date (disregarding any purported reduction of such Base Compensation), plus (B) the annual bonus amount paid to Executive during the twelve (12) months immediately preceding the Termination Date, or if an annual bonus was not paid to Executive during such period, Executive's target annual bonus for the calendar year in which the Termination Date occurs,and

(2)  at the Company's expense, continuation of group healthcare coverage for Executive and his legal dependents until the earlier of twelve months from the Termination Date or such time as Executive becomes eligible to receive medical benefits under another group health plan, provided that Executive properly elects continuation healthcare coverage under Section 4980B of the Code and the regulations thereunder; following such continuation period, any further continuation of such coverage under applicable law shall be at Executive's sole expense.

Subject to Sections 8(1) and 8(g) below, the Severance amounts described in Section 8(a)(1) above shall be paid to Executive no later than 15 calendar days following the Termination Date, which payment schedule is intended to satisfy the short-deferral exemption under Treasury Regulation Section 1.409A-1(b)(4). For the avoidance of doubt, in no event shall the Severance, if payable, be subject to offset in respect of any claims by the Company.

5

b.  Resignation. Executive may terminate his employment at any time upon thirty (30) days' written notice provided to Company in accordance with Section 10 below, provided, that the Company may, in its sole discretion, waive such notice period without payment in lieu thereof, and Executive shall be entitled to receive the Accrued Obligations promptly or, in the case of benefits described in Section 8(a)(iv) above, as such obligations become due.

c.   Death; Disability. If Executive dies during the Term or his employment is terminated due to his total and permanent disability (within the meaning of Section 22(e)(3) of the Code) ("Disability"), Executive or his estate, as applicable, shall be entitled to receive the Accrued Obligations promptly or, in the case of benefits described in Section 8(a)(iv) above, as such obligations become due.

d.   Resignation for Good Reason. As used herein, "Good Reason" shall mean the occurrence of any of the following, without Executive's express written consent: (i) a material reduction of Executive's duties or responsibilities; (ii) a material reduction by Company of Executive's Base Compensation as in effect immediately prior to such reduction; (iii) the relocation of Executive's principal work location to a facility or a location that constitutes a material change in the geographic location at which Executive provides services (within the meaning of Section 409A, as defined below); or (iv) a material breach by the Company of Sections 3, 4, 5, 6 or 7 of this Agreement; provided, that no resignation for Good Reason shall be effective unless and until

(A)  Executive has first provided the Company with written notice specifically identifying the acts or omissions constituting the grounds for "Good Reason" within thirty (30) days after Executive has or should reasonably be expected to have had knowledge of the occurrence thereof, (B) the Company has not cured such acts or omissions within thirty (30) days of its actual receipt of such notice, and (C) the effective date of Executive's termination for Good Reason occurs no later than ninety (90) days after the initial existence of the facts or circumstances constituting Good Reason.

If Executive's termination of employment is for "Good Reason" and is also a Separation from Service, then Company shall have the same obligations as are set forth in Section 8.a. above under the circumstance when a termination without Cause is also a Separation from Service.

6

e.  Cause. The Company may terminate Executive's employment for Cause by providing notice to Executive in accordance with Section 10 below. If the Company terminates Executive's employment for Cause, Executive shall be entitled to receive the Accrued Obligations promptly or, in the case of benefits described in Section 8(a)(iv) above, as such obligations become due.

f. Potential Six-Month Delay. Notwithstanding anything to the contrary in this Agreement, compensation and benefits that become payable in connection with a termination of employment (if any), including without limitation any Severance payments, shall be paid to Executive during the 6-month period following his Separation from Service only to the extent that the Company reasonably determines that paying such amounts at the time or times indicated in this Agreement will not cause Executive to incur additional taxes under Code Section 409A (together with Department of Treasury regulations issued thereunder, "Section 409A"). If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such 6-month period (or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes, including as a result of Executive's death), the Company shall pay to Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such 6-month period.

g.  Release. Executive's right to receive the Severance payments and benefits set forth in this Section 8 is conditioned on and subject to the execution and non-revocation by Executive and the Company of a mutual, general release of claims in a foiin reasonably acceptable to both parties, provided, however, that the Release shall not apply to (i) claims by Executive against the Company in his capacity as an optionholder or shareholder of the Company, or (ii) claims by the Company against Executive for acts of fraud, embezzlement, breach of fiduciary duty or other criminal acts.

h.  Termination of Offices and Directorships. Upon termination of Executive's employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any affiliate, and shall take all actions reasonably requested by the Company to effectuate the foregoing, provided, however, that if Executive's employment terminates other than due to his voluntary resignation, a termination by the Company for Cause or due to his death or Disability, this Section 8(h) shall not apply to Executive's service as a member of the Board, which service shall be governed by the terms and conditions applicable to such service prior to the Effective Date, and the Company shall consider in good faith the continuation of Executive's service on the Board. To the extent permissible under applicable law, including without limitation, applicable fiduciary duties, if Executive's service on the Board is terminated in connection with his termination of employment, other than due to a termination by the Company for Cause or Executive's death or Disability, the Company shall, contemporaneously with such termination, cause Executive to serve (or to continue to serve) on the Company's Advisory Board in accordance with the SoCal Interim Bank Advisory Board Charter, as in effect from time to time.

i.  Definitions. For purposes of this Agreement:

(1)  "Acquisition" means (i) any consolidation or merger of the Company with or into any other corporation or other entity or person in which the stockholders of the Company prior to such consolidation or merger own, directly or indirectly, less than fifty percent (50%) of the continuing or surviving entity's voting power immediately after such consolidation or merger, excluding any consolidation or merger effected exclusively to change the domicile of the Company; or (ii) a sale or other disposition of all or substantially all of the stock or assets of the Company.

7

(2)  "Cause" shall mean (A) Executive willfully fails to perform the duties which Executive is required to perform hereunder, (B) Executive willfully engages in illegal activity which materially adversely affects the Company's reputation in the community or which evidences Executive's lack of fitness or ability to perform his duties as reasonably determined by the Board in good faith, (C) Executive willfully engages in the falsification of reports or makes material, intentional misrepresentations or omissions of information supplied to PBB, SoCal or to regulatory agencies, (D) Executive willfully commits any act which would cause termination of coverage under PBB's Bankers' Blanket Bond, (E) Executive willfully breaches a fiduciary duty, exhibits dishonesty or deliberately or repeatedly disregards material policies or procedures of the Company, (F) Executive willfully breaches this Agreement in any material respect, (G) Executive willfully engages in conduct or acts of moral turpitude that are materially injurious to the Company or any of its subsidiaries and affiliates, (H) Executive is suspended or temporarily or permanently removed or prohibited from participating in the conduct of the business of the Company by the FDIC, DFI, FRB or any other banking authority, or (I) PBB is in default under the provisions of 12 U.S.C. Section 1813(x)(1). Notwithstanding the foregoing, Executive's employment with the Company shall not be deemed to have been terminated for Cause unless the Company provides written notice to Executive in accordance with Section 10 below of its intention to terminate his employment for Cause, setting forth the specific facts or circumstances constituting Cause and, in the case of facts or circumstances that are capable of  cur; Executive has either failed to cure, or has failed to take reasonable steps toward curing, such facts or circumstances within fifteen days of such notice (or, in the case that reasonable steps have been taken within fifteen days of such notice, has failed to cure within forty-five days of such notice). In addition, notwithstanding any other provision of this Agreement, the Company shall have no right to terminate Executive's employment for "Cause" to the extent that the facts and/or circumstances relating to such termination arise, in whole or in part, from the operation of the Company, or any conduct by, or related to, the Company, or any parent, subsidiary or other affiliate of the Company, in any case, occurring prior to the Effective Date.

9.            INTERNAL REVENUE CODE SECTION 280G.

a.  Gross-Up Payment. Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment (as defined below) would be subject to the Excise Tax (as defined below), then Executive shall be entitled to receive an additional payment (the "Excise Tax Gross-Up Payment") in an amount equal to 50% of the Excise Tax. For purposes of determining the amount of any Excise Tax Gross-Up Payment, Executive shall be considered to pay federal income tax at Executive's actual marginal rate of federal income taxation in the calendar year in which the Excise Tax Gross-Up Payment is to be made and state and local income taxes at Executive's actual marginal rate of taxation in the state and locality of Executive's residence on the date on which the Excise Tax Gross-Up Payment is calculated for purposes of this Section 9, net of Executive's actual reduction in federal income taxes which could be obtained from deduction of such state and local taxes, and taking into consideration the phase-out of Executive's itemized deductions under federal income tax law.

8

b.  Detelininations. Subject to the provisions of Section 9(c) below, all determinations required to be made under this Section 9, including whether and when an Excise Tax Gross-Up Payment is required, the amount of such Excise Tax Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by such nationally recognized accounting firm as may be selected by the Company (the "Accounting Firm"); provided, that the Accounting Firm's deteimination shall be made based upon "substantial authority" within the meaning of Section 6662 of the Code. The Accounting Film shall provide detailed supporting calculations both to the Company and Executive within fifteen business days of the receipt of notice from Executive that there has been a Payment or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Excise Tax Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to Executive within fifteen days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and Executive, unless the Company obtains an opinion of outside legal counsel, based upon at least "substantial authority" within the meaning of Section 6662 of the Code, reaching a different determination, in which event such legal opinion shall be binding upon the Company and Executive. Notwithstanding anything herein to the contrary, in no event shall any Excise Tax Gross-Up Payment to be paid by the Company under this Section 9 be made later than the end of Executive's taxable year next following Executive's taxable year in which Executive remits the related taxes. Any costs and expenses incurred by the Company on behalf of Executive under this Section 9 due to any tax contest, audit or litigation will be paid by the Company promptly, and in no event later than the end of Executive's taxable year following Executive's taxable year in which the taxes that are the subject of the tax contest, audit or litigation are remitted to the taxing authority, or where as a result of such tax contest, audit or litigation no taxes are remitted, the end of Executive's taxable year following Executive's taxable year in which the audit is completed or there is a final and non-appealable settlement or other resolution of the contest or litigation.

c.  Notification; Contest. Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require payment by the Company of the Excise Tax Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 15 business days after Executive is informed in writing of such claim. Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that the Company desires to contest such claim, Executive shall:

9

(i)  give the Company any information reasonably requested by the Company relating to such claim,

(ii)  take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii)  cooperate with the Company in good faith in order effectively to contest such claim, and

(iv)  permit the Company to participate in any proceedings relating to such claim;

provided, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount.

d.  Refund. If, after the receipt by Executive of an Excise Tax Gross-Up Payment,

Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Excise Tax Gross-Up Payment relates, Executive shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto).

e.  Excise Tax Withholding. Notwithstanding any other provision of this Section 9, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of Executive, all or any portion of any Excise Tax Gross-Up Payment, and Executive hereby consents to such withholding.

f.  Deduction Loss. For the avoidance of doubt, the the Company (and its successor) shall be solely responsible for any loss of deductibility arising in connection with Code Section 280G with respect to any Payments.

g.  Definitions. The following terms shall have the following meanings for purposes of this Section 9:

(i) "Excise Tax" shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

10

(ii)  "Parachute Value" of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a "parachute payment" under Section 280G(b)(2) of the Code, as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

(iii)  "Payment" shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise, but shall exclude any Excise Tax Gross-Up Payment.

(iv)  "Safe Harbor Amount" shall mean 2.99 times Executive's "base amount," within the meaning of Section 280G(b)(3) of the Code.

10.           NOTICE. Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and delivered personally or sent by fax, email (followed by confirmation in writing) or registered or certified mail, postage prepaid, addressed as follows (or if it is sent through any other method agreed upon by the parties):

If to the Company:

Belvedere SoCal

199 South. Los Robles Ave. Suite 110

Pasadena, CA 91101

Attention: Alan Lane

Facsimile: (626) 395-7000

E-mail: alane@probizbank.com

If to Executive: to Executive's most current home address on file with the Company's Human Resources Department, or to such other address as any party hereto may designate by notice to the other in accordance with this Section 10, and shall be deemed to have been given upon receipt.

11.           COVENANTS. a.Noncompetition, Nonsolicitation and Nondisclosure by Executive.

(1)  Executive hereby agrees that he shall not, during the Term, directly or indirectly, whether as an employee, employer, consultant, agent, principal, stockholder, officer, director, or in any other individual or representative capacity, engage or participate in any competitive banking or financial services business.

(2)  Executive hereby agrees that he shall not, during the Term and for the nine (9)-month period immediately following termination of Executive's employment hereunder (the "Restricted Period"), solicit, encourage or assist, directly, indirectly or in any manner whatsoever, any employees of the Company or its affiliates or subsidiaries (including any former employees who voluntarily teiininated employment with the Company within a twelve (12)- month period prior to Executive's termination of employment with the Company) to resign or to apply for or accept employment with any other competitive banking or financial services business within the counties in California in which the Company has located its offices. In addition, Executive hereby agrees that he shall not, at any time, use any Proprietary Information (as defined below) to solicit, encourage or assist, directly, indirectly or in any manner whatsoever, any customer, person or entity that has a business relationship with the Company or, during the twelve (12)-month period prior to Executive's termination of employment with the Company, was engaged in a business relationship with the Company, to terminate such business relationship and engage in a business relationship with any other competitive banking or financial services business within the counties in California in which the Company has located its offices.

11

b.  Disclosure of Information. Executive shall not, at any time, without the prior written consent of the Board or except as required by law to comply with legal process including, without limitation, by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process, disclose to anyone any financial information, trade or business secrets, customer lists, computer software or other information concerning the business or operations of the Company or its affiliates or subsidiaries (the "Proprietary Information"); provided, that Proprietary Information shall not include information (i) in or which enters the public domain (other than by breach of Executive's obligations hereunder), (ii) acquired by Executive other than in connection with his employment, or (iii) that is disclosed to Executive by a third party who Executive reasonably believes is not obligated to the Company to keep such information confidential. Executive further recognizes and acknowledges that any financial information concerning any customers of the Company or its affiliates or subsidiaries is strictly confidential and is a valuable, special and unique asset of the Company's business which also constitutes Proprietary Information. Executive shall not, at any time, without such consent or except as required by law, disclose to anyone said financial information or any part thereof, for any reason or purpose whatsoever. In the event Executive is required by law to disclose such information described in this Section 11(b), Executive will provide the Company with prompt notice of such request so that it may consider seeking a protective order. If, in the absence of a protective order or the receipt of a waiver hereunder, Executive is nonetheless, in the opinion of counsel, compelled to disclose any of such information to any tribunal or any other party, then Executive may disclose (on an "as needed" basis only) such information to such tribunal or other party without liability hereunder. Notwithstanding the foregoing, Executive may disclose such information concerning the business or operations of the Company and its affiliates and subsidiaries as reasonably necessary in the proper performance of Executive's duties and responsibilities hereunder or as may be required by the FRB, DFI, FDIC or other regulatory agency having jurisdiction over the operations of the Company in connection with an examination of the Company or other proceeding conducted by such regulatory agency.

12

c.  Non-Disparagement. During the Term and for a period of twelve (12) months following termination of this Agreement and Executive's employment hereunder, (i) Executive agrees that he shall not publicly or privately disparage, defame or criticize the Company, its shareholders, its affiliates, subsidiaries, officers or directors, and (ii) the Company, and each of them, agrees that (i) none of its officers or directors shall publicly or privately disparage, defame or criticize Executive, and (ii) it will take reasonable steps, as determined in the sole discretion of the Company, to discourage its employees from publicly or privately disparaging, defaming or criticizing Executive.

d.  Written, Printed or Electronic Material. All written, printed and electronic material, notebooks and records including, without limitation, computer disks used by Executive in performing duties for the Company, other than Executive's personal address lists, telephone lists, notes and diaries, are and shall remain the sole property of the Company. Upon termination of Executive's employment or earlier request by the Company, Executive shall promptly return all such materials (including all copies, extracts and summaries thereof) to the Company.

e.  Breach of Covenants. Each party acknowledges that a breach by such party of any of the covenants or restrictions contained in this Section 11 will cause irreparable damage to other party, the exact amount of which will be difficult to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, each party agrees that if such party breaches or attempts to breach any such covenants or restrictions, the other party shall be entitled to temporary or permanent injunctive relief with respect to any such breach or attempted breach (in addition to any other remedies, at law or in equity, as may be available to such other party), without posting bond or other security.

12.            INDEMNIFICATION. The Company and Executive acknowledge that they have entered into that certain Indemnification Agreement dated February 27, 2008 ("Indemnification Agreement") which shall govern all matters relating to indemnification of Executive by the Company.

13.            REPRESENTATIONS. Executive hereby represents and warrants to the Company that (a) Executive is entering into this Agreement voluntarily and that the performance of his obligations hereunder will not violate any agreement between Executive and any other person, firm, organization or other entity, and (b) Executive is not bound by the terms of any agreement with any previous employer or other party to refrain from competing, directly or indirectly, with the business of such previous employer or other party that would be violated by his entering into this Agreement and/or providing services to the Company pursuant to the teams of this Agreement.

14.            CODE SECTION 409A. To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A. Notwithstanding any provision of this Agreement to the contrary, if at any time Executive and the Company mutually determine that any payments or benefits payable hereunder may be subject to Section 409A, the parties shall work together to adopt such amendments to this Agreement or take any other actions that the parties determine are necessary or appropriate to (i) exempt such payments and benefits from Section 409A and/or preserve the intended tax treatment of such payments or benefits, or (ii) comply with the requirements of Section 409A and thereby avoid the application of penalty taxes under Section 409A.

13

15.            WITHHOLDING. The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

16.            ENTIRE AGREEMENT. As of the Effective Date, this Agreement, together with any Option Agreement(s) and the Indemnification Agreement, constitutes the final, complete and exclusive agreement between Executive and the Company with respect to the subject matter hereof and replaces and supersedes any and all other agreements, offers or promises, whether oral or written, made to Executive by the Company or any representative thereof. Executive agrees that any such agreement, offer or promise is hereby terminated and will be of no further force or effect, and that upon his execution of this Agreement, Executive will have no right or interest in or with respect to any such agreement, offer or promise.

17.            AMENDMENT. The terms of this Agreement may not be amended or modified other than by a written instrument executed by the parties hereto or their respective successors.

18.            ACKNOWLEDGEMENT. Executive hereby acknowledges (a) that Executive has consulted with or has had the opportunity to consult with independent counsel of his own choice concerning this Agreement, and has been advised to do so by the Company, and (b) that Executive has read and understands this Agreement, is fully aware of its legal effect, and has entered into it freely based on his own judgment.

19.            GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to conflicts of laws principles thereof.

20.            NO WAIVER. Failure by either party hereto to insist upon strict compliance with any provision of this Agreement or to assert any right such party may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

21.            ASSIGNMENT. This Agreement is binding on and for the benefit of the parties hereto and their respective successors, heirs, executors, administrators and other legal representatives. Neither this Agreement nor any right or obligation hereunder may be assigned by Executive.

22.            SEVERABILITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

14

23.            CONSTRUCTION. The parties hereto acknowledge and agree that each party has reviewed and negotiated the terms and provisions of this Agreement and has had the opportunity to contribute to its revision. Accordingly, the rule of construction to the effect that ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement. Rather, the telins of this Agreement shall be construed fairly as to all parties hereto and not in favor or against any party by the rule of construction abovementioned.

24.            COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

25.            CAPTIONS. The captions of this Agreement are not part of the provisions hereof, rather they are included for convenience only and shall have no force or effect.

[SIGNATURE PAGE FOLLOWS]

15

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

EXECUTIVE:
/s/ William H. Baribault
WILLIAM H. BARIBAULT
SOCAL:
BELVEDERE SOCAL
By:	/s/ Alan J. Lane
Name:	Alan J. Lane
Title:	Executive Chairman
PROFESSIONAL BUSINESS BANK
By:	/s/ Alan J. Lane
Name:	Alan J. Lane
Title:	Executive Chairman

16

SCHEDULE 1

LIST OF EXECUTIVE'S

OTHER PERMITTED ACTIVITIES

Boards of Directors positions, including advisory boards:

Henry Company, Director

M Chemical, Director

MC Gill, Director

Flintridge Preparatory School, Director

Kidspace Museum, Director

Verdugo Hills Hospital Foundation, Vice Chair Staub Metals, Advisor

Enterprises with ownership:

Oakwood Enterprises, Chair Paul Mar Inc, Chair

Eagle Associates, Partner

21 Fund, Partner

Henry Company (stock options)

Exhibit A

[TIME-VEST OPTION AGREEMENT]

Exhibit B

[PERFORMANCE-VEST OPTION AGREEMENT]

Exhibit C

[MODIFIED TIME-VEST OPTION AGREEMENT]

EX-10.3

Exhibit 10.3

WARRANT AGREEMENT

THIS WARRANT AGREEMENT (this “Agreement”) is made and entered into by Belvedere SoCal, a California corporation (the “Company”), and Computershare, Inc. a Delaware corporation and its fully owned subsidiary Computershare Trust Company, N.A. a federally chartered trust company, having its principal office at 250 Royall Street, Canton, MA 02021 (Collectively (“Warrant Agent”), or individually “Computershare” and the “Trust Company”, respectively), agree as of this 23rd day of November , 2007, with regard to the following:

A.           The Company proposes to issue warrants (each individually, a “Warrant” and, collectively, the “Warrants”) as documented by certificates (the “Warrant Certificates”) initially evidencing the right to purchase up to an aggregate of 44,729 shares of common stock, no par value, of the Company (the “Common Stock”) pursuant to an Agreement to Merge and Plan of Reorganization, dated as of February 1, 2007 and amended on April 23 and August 7, 2007.

B.           The Company desires that Warrant Agent act on behalf of the Company in connection with the issuance, transfer, exchange, exercise and replacement of the Warrants and Warrant Certificates, and in this Agreement wishes to set forth, among other things, the form and provisions of the Warrants and Warrant Certificates and the terms and conditions on which they may be issued, transferred, exchanged, exercised and replaced.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.           Issuance, Execution and Delivery of Warrants

1.1           Issuance of Warrants.  The Company shall issue the Warrants, as evidenced by Warrant Certificates each in substantially the form of Exhibit 1 hereto.  Each Warrant Certificate shall evidence the right, subject to the provisions of this Agreement and of the Warrant Certificate, to purchase that number of Warrant Shares (as defined below) as set forth on the face of the Warrant Certificate, but not less than one whole Warrant Share.  For the purposes of this Agreement and the Warrant Certificates, “Warrant Shares” means the number of shares of Common Stock deliverable upon exercise of a Warrant, as adjusted from time to time pursuant to the provisions of Section 3 hereof.  Although originally issued as part of a unit consisting of shares of the Company’s common stock and Warrants, each Warrant is detachable, and may be transferred separately, from such units and shares of the Company’s common stock.

1.2           Execution and Delivery of Warrants.  Each Warrant Certificate shall bear the facsimile signature of the Chief Executive Officer and Corporate Secretary of the Company, and shall be countersigned by Warrant Agent.  Except for the countersignature of Warrant Agent, the Company may adopt and use as the facsimile signature of any such officer the facsimile signature of any person who on the date of this Agreement or at any time thereafter shall have been such officer, whether or not he or she is such officer at the time of issue of any Warrant Certificate.  The Warrant Certificates shall be issued in registered form only.  For purposes of this Agreement and the Warrant Certificates, the term “Registered Holder” shall mean the Person (as defined below) in whose name or names a particular Warrant Certificate shall be registered on the books of the Company kept for that purpose in accordance with the terms of this Agreement.  For purposes of this Agreement and the Warrant Certificates the term “Person” shall mean an individual, partnership, corporation, trust, joint stock company, association, joint venture, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

1

2.           Exercise Price, Duration and Transfer and Exercise of Warrants

2.1           Exercise Price.  Each Warrant Certificate shall, when properly countersigned by Warrant Agent, entitle the Registered Holder thereof, subject to the provisions of this Agreement and the Warrant Certificate, to purchase from the Company the number of Warrant Shares stated on the Warrant Certificate, as such Warrant Shares are constituted on the date the Warrants evidenced thereby are exercised, at the price of $0.01 per Warrant Share (the “Exercise Price”) payable in full at the time such Warrants are exercised.  The Exercise Price shall be adjusted from time to time based on adjustment of the number of shares that may be purchased upon the exercise of all Warrants issued pursuant to this Agreement in accordance with Section 3 hereof.

2.2           Duration.  Warrants may be exercised only from the date of issuance (the “Exercise Date”) through on or before November 23, 2007 (the “Expiration Date”), unless extended.  The Company shall advise Warrant Agent of the date of issuance of the Warrants and shall confirm with Warrant Agent the Exercise Date and the Expiration Date of the Warrants upon issuance.  Each Warrant not exercised prior to the Expiration Date shall become void, and all rights of the Registered Holder thereunder and under this Agreement and the Warrant Certificate shall cease after the close of business on the relevant Expiration Date.

2.3           Transfer and Exercise.

2.3.1                      The Company shall keep, at the office of Warrant Agent at 350 Indiana Street, Golden, CO, 80401, a register, in which, subject to such reasonable regulations as it may prescribe, the Company shall register the Warrants at the time of issuance thereof and shall transfer Warrants so registered as provided in this Agreement.  Upon surrender for transfer of any Warrant at such office, the Company shall execute and Warrant Agent shall countersign and deliver to the name of the transferees a new Warrant Certificate(s) evidencing Warrants to purchase a like number of Warrant Shares.  All Warrant Certificates presented for transfer or exchange shall (if required by the Company) be Duly Endorsed (as defined below) or be accompanied by a written instrument of transfer in form satisfactory to the Company and Warrant Agent duly executed by the Registered Holder or his or her attorney duly authorized.  For purposes of this Agreement and the Warrant Certificates, the term “Duly Endorsed” shall mean duly endorsed in blank by the Person or Persons in whose name a Warrant Certificate is registered or accompanied by a duly executed assignment separate from the certificate with the signatures thereon guaranteed by an eligible guarantor institution (banks, stock brokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934.

2

2.3.2                      A Registered Holder is entitled to exercise his or her Warrants, in whole or in part, so long as the number of Warrant Shares purchased upon exercise is at least 100 or, if the total number of Warrant Shares subject to exercise under the relevant Warrant Certificate is less than 100, such lesser number.  Such exercise may occur at any time or from time to time, commencing on the Exercise Date and terminating at 5:00 p.m. Pacific time on the Expiration Date or, if such day is not a Business Day (as defined below), then until 5:00 p.m. Pacific time on the next succeeding Business Day, by presentation and surrender of the Registered Holder’s Warrant Certificates to the Company at the office of Warrant Agent at 350 Indiana Street, Golden, CO, 80401 with the Exercise Subscription Form set forth on the Warrant Certificate, duly executed and accompanied by proper payment of the Exercise Price for the number of Warrant Shares specified in such form, all subject to the terms and conditions of this Agreement and the Warrant Certificate.  At the option of the Registered Holder, the Exercise Price may be paid by certified or official Company check or Company cashier’s check payable to the order of the Company, or by any combination thereof.  For purposes of this Agreement and the Warrant Certificates, the term “Business Day” shall mean any day except a Saturday, Sunday or other day on which commercial banks in San Francisco County, California are authorized by law to close.

2.3.3                      Upon surrender of any Warrants in accordance with the provisions of this Agreement and the Warrant Certificate, the Company shall transfer to the Registered Holder thereof appropriate evidence of ownership of any shares of Common Stock to which the Registered Holder is entitled, registered or otherwise placed in the name of, or payable to the order of, the Registered Holder, and the Company shall deliver such evidence of ownership to such Registered Holder.

2.3.4                      If a Registered Holder exercises fewer than all of the Warrants evidenced by a Warrant Certificate, such Warrant Certificate shall be surrendered to Warrant Agent and a new Warrant Certificate of the same tenor evidencing such Registered Holder’s remaining Warrants shall be issued.  Warrant Agent shall register such new Warrant Certificate in the name of such Registered Holder and shall deliver the new Warrant Certificate to such Registered Holder.

2.3.5                      The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed in respect of, the issue or delivery of any shares of Common Stock issuable upon the exercise of any Warrant.  The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of a certificate for shares of Common Stock in any name other than that of a Registered Holder of the Warrant at issue, and in such case the Company shall not be required to issue or deliver any such stock certificate until such tax or other charge has been paid or it has been established to the Company’s reasonable satisfaction that such tax or other charge is not due.

2.3.6                      Each Person in whose name any such certificate for shares of Common Stock is issued shall for all purposes be deemed have become the holder of record of Common Stock represented thereby on the date on which the Warrant was surrendered and payment of the purchase price and any applicable taxes was made irrespective of the date of issue or delivery of such certificate except that if the date of such surrender and payment is a date when the stock transfer books of the Company for the Common Stock are closed, such Person shall be deemed to have become the holder of such shares on the next succeeding date on which such stock transfer books are open.  The Company will not close such stock transfer books at any one time for a period longer than 20 days.

3

3.           Adjustments in Warrant Shares; Fractional Shares

3.1           Anti-Dilution Provisions. The number of Warrant Shares which may be purchased upon the exercise of a Warrant shall be subject to change or adjustment as follows:

3.1.1                      Stock Dividends – Subdivisions, Combinations.  In case the Company shall (i) pay a dividend on the Common Stock in shares of Common Stock (or securities convertible into, exchangeable for or otherwise entitling the registered holder to receive Common Stock), (ii) subdivide the outstanding Common Stock into a greater number of shares of Common Stock or (iii) combine the outstanding Common Stock into a smaller number of shares of Common Stock, the number of shares of Warrant Shares purchasable upon exercise of any Warrant immediately prior to the record date fixing shareholders to be affected by such event shall be adjusted so that the Registered Holder shall thereafter be entitled to receive that kind and number of Warrant shares or other securities of the Company that the Registered Holder would have owned or have been entitled to receive after the happening of any of the events described above, had the Warrant been exercised immediately prior to the happening of such event or any record date with respect thereto.  An adjustment made pursuant to this Section 3.1.1 shall become effective (x) immediately after the record date in the case of a dividend and (y) immediately after the effective date in the case of a subdivision or combination.  If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter and before the distribution to shareholders thereof legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment in the number of Warrant Shares issuable upon exercise of a Warrant then in effect shall be required by reason of the taking of such record.  No adjustment shall be made under this Section 3.1.1 unless such adjustment would require an increase or decrease of at least one percent in the number of shares of Common Stock or other securities of the Company that the Registered Holder would have owned or have been entitled to receive had the Warrant been exercised, provided however, that any adjustments which by reason of this sentence are not required to be made shall be carried forward and taken into account in any subsequent adjustment, and all calculations shall be made to the nearest one-hundredth of a share.

3.1.2                      Reorganization or Reclassification.

3.1.2.1                        In case of any capital reorganization or any reclassification of the capital stock of the Company (whether pursuant to a merger or consolidation, sale of substantially all of the assets or otherwise, but excepting (i) the formation of a holding company owning all of the outstanding Common Stock of the Company following such formation and (ii) a change in the Company’s jurisdiction of organization), the successor or purchasing corporation shall have the right to assume the Warrants, and in such event would execute an agreement with the Company providing that after such transaction each Warrant would thereafter be exercisable for the number of shares of stock or other securities or property receivable upon such capital reorganization or reclassification of capital stock, as the case may be, by a holder of the number of shares of Common Stock into which the Warrant was exercisable immediately prior to such capital reorganization or reclassification of capital stock; and, in any case, appropriate adjustment shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the Registered Holder of any Warrant to the end that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the exercise of the Warrant.  Such agreement shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 3.  The provisions of this Section 3.1.2.1 shall similarly apply to successive consolidation, mergers, sales or conveyances.

4

3.1.2.2                       In the event that such successor corporation does not execute such an agreement with the Company as provided in Section 3.1.2.1, then as to outstanding Warrants, whether or not then otherwise exercisable, each Registered Holder shall be entitled to exercise outstanding Warrants upon the payment of the Exercise Price during a period of at least 30 days (or until the Expiration Date, if earlier), which period terminates at least five days prior to consummation of the transaction.  If Section 3.1.2.1 is not applicable and Warrants are not exercised in accordance with this Section 3.1.2.2 before consummation of the transaction then all Warrants not so exercised will be cancelled and become null and void.

3.1.3                      Notice.  In the event that the Company shall propose at any time to effect any transaction of the type described in Subsections 3.1.1 or 3.1.2 or take any similar extraordinary corporate action affecting the Company’s capital stock (including but not limited to the transfer of substantially all of our assets) during the time that Warrants are exercisable or as a result of which the Warrants may become exercisable, then, in connection with each such event, the Company shall send notice thereof to all Registered Holders at least 20 days prior to the earlier of (i) the date on which such event is to become effective, (ii) the record date for the shareholders affected by such event, or (iii) the first date on which the Company intends to effect any such transaction, in each case specifying in reasonable detail what the transaction or event consists of and, if applicable, the aggregate amount or value of any cash or property proposed to be distributed, paid, purchased or received by the Company in connection therewith.

3.1.4                      Adjustment of Exercise Price.  The Exercise Price per share of Common Stock purchasable upon exercise of any Warrant shall be subject to adjustment from time to time as follows:  upon each adjustment of the number of shares of Common Stock purchasable pursuant to Section 3.1, the Exercise Price shall be reduced or increased, as the case may be, to a price determined by dividing the aggregate Exercise Price of all Warrant Shares in effect prior to such adjustment by the total maximum number of Warrant Shares purchasable upon the exercise of all Warrants immediately after such adjustment.

3.2           Voluntary Adjustments by the Company.  The Company may at its option, at any time during the term of the Warrants, reduce the then current Exercise Price to any amount deemed appropriate by the Company’s board of directors, approve additional exercise periods or extend the Expiration Date to any time deemed appropriate by the Company’s board of directors.  In case of any such adjustment, the terms of this Agreement shall apply from the date of such adjustment according to the terms of such adjustment.

5

3.3           Fractional Shares.  No fractional shares of Common Stock shall be issued upon the exercise of any Warrant.  If any fraction of a share of Common Stock would be issuable upon the exercise of a Warrant, the Company shall round down the number of shares of Common Stock to be issued upon exercise of such Warrant to the nearest lower whole number of shares of Common Stock. The Company will repay a Warrant holder in cash for any fraction of a share of Common Stock that would otherwise be issuable.

4.           Other Provisions Relating to the Rights of Registered Holders of Warrants

4.1           Rights of Registered Holders.  Prior to the exercise of any Warrant, a Registered Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company including, without limitation, the right to vote, to receive dividends or other distributions or to receive any notice of meetings of shareholders or any notice of any proceedings of the Company, except as may be specifically provided for herein.  The Company upon request of a Registered Holder shall provide such Registered Holder with a copy of the Company’s most recent annual report, including audited financial statements.

4.2           Assignment or Transfer.  A Warrant is transferable by the Registered Holder thereof by surrendering for transfer at the office of Warrant Agent, maintained for that purpose at 350 Indiana Street, Golden, CO, 80401 , the Warrant Certificate evidencing the Warrant and the Assignment Form, Duly Endorsed, set forth on the Warrant Certificate.  Thereupon, one or more new Warrant Certificates evidencing the transferred Warrants of authorized denominations will be issued to the designated transferee or transferees, and, if necessary, a new Warrant Certificate evidencing Warrants not transferred will be issued to the original Registered Holder.

4.3           Loss of Warrant Certificates.  Upon receipt by the Company of evidence satisfactory to it (in the exercise of its reasonable discretion) of the loss, theft, destruction or mutilation of any Warrant Certificate, upon the posting by the Registered Holder of a bond acceptable to Warrant Agent, and (in the case of loss, theft or destruction) upon receipt by the Company of reasonably satisfactory indemnification, and (in the case of mutilation) the surrender and cancellation of the mutilated Warrant Certificate, the Company shall execute and deliver, or shall instruct Warrant Agent to deliver, a new Warrant Certificate of like tenor and date.  The provisions of this Section 4.3 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of mutilated, lost, stolen or destroyed Warrant Certificates.

4.4           Reservation of Shares.  The Company agrees that at all times there shall be reserved for issuance and delivery upon exercise of any Warrant such number of its authorized but unissued shares of Common Stock or other securities of the Company from time to time issuable upon exercise of the Warrants as will be sufficient to permit the exercise in full of all the Warrants.  All such shares shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid, free and clear of all liens, security interests and charges.

4.5           Securities Laws.  The exercise of Warrants is prohibited unless the issuance of the Common Stock has been registered or qualified under laws of the state(s) where the shares are to be issued and delivered and federal law unless there are exemptions available from such requirements.  Unless waived by the Company, the date of exercise shall be deemed to be the date that all conditions imposed under this Section 4.5, as well as all other conditions to exercise hereunder, have been satisfied.  The Company will use its best efforts to register the issuance of the Common Stock under state and/or federal law, if required, before the Exercise Date.  If the issuance of the Common Stock is not so registered by the Exercise Date, the exercise period shall be automatically extended until the Common Stock is registered.

6

5.           Concerning Warrant Agent and Other Matters

5.1           Payment of Taxes.  The Company will from time to time promptly pay to Warrant Agent, or make provision satisfactory to Warrant Agent for the payment of, all taxes and charges that may be imposed by the United States or any State upon the Company or Warrant Agent upon the issuance or delivery of shares of Common Stock upon the exercise of any Warrant, but the Company shall not be obligated to pay any transfer taxes in respect of the Warrant or such shares.

5.2           Resignation, Consolidation or Merger of Warrant Agent, and Successor Warrant Agent.

5.2.1                      Warrant Agent may resign its duties and be discharged from all further duties and liabilities hereunder after giving 30 days’ notice in writing to the Company, except that such shorter notice may be given as the Company shall, in writing, accept as sufficient.  If the office of Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a new warrant agent.  If the Company shall fail to make such appointment within a period of 30 days after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Warrant Agent or by a Registered Holder, then a Registered Holder may apply to any court of competent jurisdiction in the State of California, County of San Francisco, for the appointment of a new warrant agent.  Any new warrant agent appointed hereunder shall execute, acknowledge and deliver to the former warrant agent last in office and to the Company an instrument accepting such appointment hereunder and thereupon such new warrant agent without any further act or deed shall become vested with all the rights, powers, duties and responsibilities of Warrant Agent hereunder with like effect as if it had been named as warrant agent; but if for any reason it becomes necessary or expedient to have the former warrant agent execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the expense of the Company and shall be legally and validly executed and delivered by the former warrant agent.  Not later than the effective date of any such appointment, the Company shall file notice thereof with the former warrant agent and each transfer agent for the Common Stock, and shall forthwith mail notice thereof to the Registered Holders at their addresses as they appear on the registry books.  Failure to file or mail such notice, or any defect therein, shall not affect the legality or validity of the appointment of the successor warrant agent.

5.2.2                      Any Person into which Warrant Agent or any new warrant agent may be merged or converted or with which it may be consolidated or any Person resulting from any merger, conversion or consolidation to which Warrant Agent, or any new warrant agent shall be a party, shall be the successor warrant agent under this Agreement without any further act, provided that such company would be eligible for appointment as a successor warrant agent under the provisions of Section 5.2.1.

7

5.2.3                      After the first year of this Agreement, the Company may terminate and replace Warrant Agent upon 90 days written notice to Warrant Agent, except that such shorter notice may be given as Warrant Agent shall, in writing, accept as sufficient.

5.3           Fees and Expenses of Warrant Agent. The Company agrees that it will (i) pay Warrant Agent reasonable remuneration for its services as warrant agent hereunder and will reimburse Warrant Agent upon demand for all expenditures that it may reasonably incur in the execution of its duties hereunder; and (ii) perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by Warrant Agent for the carrying out or performing by Warrant Agent of the provisions of this Agreement.

5.4           Additional Provisions.

5.4.1                      Warrant Agent may consult with its legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to Warrant Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.

5.4.2                      Whenever in the performance of its duties under this Agreement, Warrant Agent shall deem it necessary or desirable that any matter be proved or established by the Company prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate or instrument signed by the Chief Executive Officer or President or an Executive Vice President or Senior Vice President of the Company and delivered to Warrant Agent; and such certificate or instrument shall be full warrant to Warrant Agent for any action taken or suffered in good faith by Warrant Agent under the provisions of this Agreement in reliance upon such certificate or instrument; but in its discretion Warrant Agent may in lieu thereof accept other evidence of such matter or may require such further or additional evidence as it may deem reasonable.

5.4.3                      Warrant Agent shall be liable hereunder only for its own gross negligence or willful misconduct.

5.4.4                      Warrant Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Warrant Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.

5.5           Acceptance of Agency. Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions set forth herein.

5.6           Modification of Agreement.  Notwithstanding the provisions of Section 6.2, Warrant Agent may, without the consent or concurrence of any Registered Holder by supplemental agreement or otherwise, concur with the Company in making any changes or corrections in this Agreement that they shall have been advised by counsel are required to cure any ambiguity or to correct any defective or inconsistent provision or clerical omission or mistake or manifest error herein contained.

8

5.7           Successors.  All the covenants and provisions of this Agreement by or for the benefit of the Company shall bind and inure to the benefit of its successors and assigns.

5.8           Persons Having Rights Under this Agreement.

5.8.1                      Nothing in this Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any Person other than the Company, Warrant Agent and the Registered Holders any right, remedy or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise or agreement hereof and all covenants, conditions, stipulations, promises and agreements contained in this Agreement shall be for the sole and exclusive benefit of the Company and Warrant Agent and their successors and of the Registered Holders.

5.8.2                      The Company, Warrant Agent and any transfer agent and registrar for the Common Stock may deem and treat the Person in whose name any Warrant Certificate shall be registered upon the books of the Company as the absolute owner of such Warrant Certificate (notwithstanding any notation of ownership or other writing thereon made by anyone other than the Company or Warrant Agent) for all purposes; and neither the Company nor Warrant Agent or any transfer agent or registrar of the Common Stock shall be affected by a notice to the contrary.

6.           Indemnification.

6.1           The Company shall indemnify and hold Warrant Agent harmless against all losses, claims, damages, liabilities, costs and expenses (including reasonable fees and disbursements of legal counsel) which Warrant Agent may incur or become subject to arising from or out of any claim or liability resulting from actions taken as Warrant Agent pursuant to this Agreement; provided, however, that indemnity does not extend to, and Warrant Agent will not be indemnified or held harmless with respect to, such losses, claims, damages, liabilities, costs and expenses incurred or suffered by Warrant Agent as a result, or arising out, of Warrant Agent’s gross negligence, misconduct, bad faith or breach of this Agreement.  In connection therewith (i) in no case will the Company be liable with respect to any claim against Warrant Agent unless Warrant Agent notifies the Company in writing of the assertion of a claim against Warrant Agent or of any action commenced against Warrant Agent, promptly after Warrant Agent has notice of any such assertion of a claim or has been served with the summons or other first legal process giving information as to the nature and basis of the claim; (ii) the Company will be entitled to participate at its own expense in the defense of any suit brought to enforce any such claim and, if the Company so elects, it will assume the defense of any such suit, in which event the Company will not thereafter be liable for the fees and expenses of any additional counsel that Warrant Agent may retain so long as the Company retains counsel reasonably satisfactory to Warrant Agent, in the exercise of Warrant Agent’s reasonable judgment, to defend such suit; and (iii) Warrant Agent agrees not to settle any litigation in connection with any claim or liability with respect to which it may seek indemnification from the Company without the prior written consent of the Company.  No indemnification shall be permitted hereunder that would be prohibited pursuant to the provisions of Part 359 of the Federal Deposit Insurance Corporation’s regulations.

9

6.2           Warrant Agent will be protected and will incur no liability for or with respect to any action taken, suffered or omitted by it without gross negligence and in good faith in connection with its administration of this Agreement in reliance upon any instrument of assignment or transfer, power of attorney, endorsement, affidavit letter, notice, direction, consent, certificate, statement or other paper or document reasonably believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged by the proper person or persons.

6.3           Notwithstanding anything to the contrary herein, in no event will either party be liable to the other for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the party has been advised of the likelihood of such loss or damage and regardless of the form of action.

7.           General Provisions.

7.1           Notices.  Unless otherwise specifically permitted by this Agreement, all notices or other communications required or permitted under this Agreement between Warrant Agent and the Company shall be in writing, and shall be personally delivered or sent by registered or certified mail, postage prepaid, return receipt requested, or sent by facsimile, provided that the facsimile cover sheet contains a notation of the date and time of transmission, and shall be deemed received:  (i) if personally delivered, upon the date of delivery to the address of the person to receive such notice, (ii) if mailed in accordance with the provisions of this Section 7.1, two (2) Business Days after the date placed in the United States mail, (iii) if mailed other than in accordance with the provisions of this Section 7.1 or mailed from outside the United States, upon the date of delivery to the address of the person to receive such notice or (iv) if given by facsimile, when sent with confirmation of receipt.  Notices shall be given at the following addresses:

If to the Company: Belvedere SoCal One Maritime Plaza, Suite 825 San Francisco, CA  94111 Attention:  Jae Lim Facsimile:  (415) 434-9918	With a copy to: Reitner, Stuart & Moore 1319 Marsh Street San Luis Obispo, Ca 93401 Attention:  John Stuart, Esq. Facsimile:  (805) 545-8599
If to Warrant Agent: Computershare, Inc. 350 Indiana Street, Suite 800 Golden, CO  080401 Attention:  Corporate Actions Facsimile: 303-262-0609

10

7.2           Complete Agreement; Modifications.  This Agreement, together with its exhibits, (i) constitute the parties’ entire agreement, including all terms, conditions, definitions, warranties, representations and covenants, with respect to the subject matter hereof, (ii) merge all prior discussions and negotiations between the parties as to the subject matter hereof, and (iii) supersede and replace all terms, conditions, definitions, warranties, representations, covenants, agreements, promises and understandings, whether oral or written, with respect to the subject matter hereof.  Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by a majority in interest of all Registered Holders and the Company, or in the case of a waiver, by the party against whom the waiver is to be effective.  No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies by law.  Any amendment, alteration or modification requiring the signature of more than one party may be signed in counterparts.

7.3           Further Actions.  Each party agrees to perform any further acts and execute and deliver any further documents reasonably necessary to carry out the provisions of this Agreement.

7.4           Assignment.  No party may assign its rights under this Agreement without the prior written consent of the other parties hereto.

7.5           Successors and Assigns.  Except as explicitly provided herein to the contrary, this Agreement shall be binding upon and inure to the benefit of the parties, their respective successors and permitted assigns.

7.6           Severability.  If any portion of this Agreement shall be held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law if enforcement would not frustrate the overall intent of the parties (as such intent is manifested by all provisions of this Agreement, including such invalid, void or otherwise unenforceable portion).

7.7           Extension Not a Waiver.  No delay or omission in the exercise of any power, remedy or right herein provided or otherwise available to any party shall impair or affect the right of such party thereafter to exercise the same.  Any extension of time or other indulgence granted to a party hereunder shall not otherwise alter or affect any power, remedy or right of any other party, or the obligations of the party to whom such extension or indulgence is granted, except as specifically waived.

7.8           Time of Essence.  Time is of the essence of each and every term, condition, obligation and provision hereof.

7.9           No Third Party Beneficiaries.  Subject to Section 5.8, this Agreement and each and every provision hereof is for the exclusive benefit of the parties hereto and not for the benefit of any third party.

7.10          Attorneys’ Fees.  Should any litigation (including any proceedings in a bankruptcy court) or arbitration be commenced between the parties hereto or their representatives concerning any provision of this Agreement or the rights and duties of any person or entity hereunder, the party or parties prevailing in such litigation or arbitration shall be entitled, in addition to such other relief as may be granted, to the attorneys’ fees and court or arbitration costs incurred by reason of such litigation or arbitration, including attorneys’ and experts’ fees incurred in preparation for or investigation of any matter relating to such litigation or arbitration.

11

7.11         Headings.  The headings in this Agreement are inserted only as a matter of convenience, and in no way define, limit or extend or interpret the scope of this Agreement or of any particular provision hereof.

7.12         References.  A reference to a particular section of this Agreement shall be deemed to include references to all subordinate sections, if any.

7.13         Counterparts.  This Agreement may be signed in multiple counterparts with the same force and effect as if all original signatures appeared on one copy; and in the event this Agreement is signed in counterparts, each counterpart shall be deemed an original and all of the counterparts shall be deemed to be one agreement.

7.14         Applicable Law.  This Agreement shall be construed in accordance with, and governed by, the laws of the State of California.  Any action on this Agreement may only be brought in a court of competent jurisdiction in the County of San Francisco, State of California and the parties consent to such exclusive jurisdiction.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

Belvedere SoCal		Computershare Trust Company, N.A. and Computershare, Inc., on behalf of both entities
By:	/s/  Alison Davis	By:	/s/ Kellie Gwinn
Its:	Chief Executive Officer	Its:	Vice President

12 

EXHIBIT 1

No. W.____                      Definitive Warrant Certificate to Purchase Warrant Shares as herein described.

BELVEDERE SOCAL

COMMON STOCK PURCHASE WARRANT

Exercisable only between November 23, 2007 and November 23, 2017

Void After November 23, 2017

Capitalized terms used but not defined herein have the meaning assigned to them in the Warrant Agreement dated as of November 20, 2007 between Belvedere SoCal (the “Company”) and Computershare, Inc.  (the “Warrant Agreement”).

This certifies that ___________________________________________ (the “Registered Holder”), will be entitled to purchase, at any time on or after November 23, 2007 and on or before November 23, 2017, Warrant Shares, with each Warrant Share consisting of one share of fully paid Common Stock, no par value, of the Company, as such Common Stock is constituted at the date of this Warrant Certificate (but the shares included in a Warrant Share may be adjusted from time to time as stated below), at the price of $0.01 per Warrant Share, by surrendering this Warrant Certificate, with the purchase form on the back hereof duly executed, at the office of Warrant Agent, in 350 Indiana Street, Golden, CO, 80401, and by paying in full, as provided in the Warrant Agreement, the Exercise Price for the Warrant Shares as to which this Warrant Certificate is exercised, and upon compliance with and subject to the conditions set forth herein and in the Warrant Agreement.  No such purchase may consist of a number of Warrant Shares less than 100; provided, however, that if the total number of Warrant Shares set forth on this Warrant Certificate is less than 100, then such purchase must be for such total number.  Each Warrant is detachable, and may be transferred separately, from any shares of the Company’s common stock owned by the Registered Holder.

The Warrants evidenced by this Warrant Certificate may not be exercised unless Warrant Agent has countersigned this Warrant Certificate.  Upon any exercise of fewer than all of the Warrants evidenced by this Warrant Certificate, there shall be issued to the Registered Holder a new Warrant Certificate evidencing the Warrants not exercised.  Upon certain events provided for in the Warrant Agreement (which provisions are set forth on the back of this Warrant Certificate) the shares of Common Stock included in a Warrant Share and the Exercise Price may be adjusted as therein provided.  The term “Warrant Share” refers to such shares as so adjusted from time to time.  No fractional shares will be issued upon the exercise of rights to purchase hereunder.  If any fraction of a share of Common Stock would be issuable upon the exercise of any of the Warrants evidenced hereby, the Company shall round the number of shares of Common Stock to be issued on such exercise to the nearest lower whole number of shares of Common Stock.

This Warrant Certificate is issued under and in accordance with the Warrant Agreement and is subject to the terms and provisions contained therein.  The Registered Holder of this Warrant Certificate consents to all of such terms and provisions by acceptance of this Warrant Certificate.  Copies of the Warrant Agreement are on file at the above-mentioned office of Warrant Agent.

This Warrant Certificate is transferable by the Registered Holder upon surrender of this Warrant Certificate for transfer at the office of Warrant Agent maintained for that purpose in Glendale, California, Duly Endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and Warrant Agent, duly executed by the Registered Holder or such Registered Holder’s attorney duly authorized in writing.  Upon such surrender and compliance (if applicable), one or more new Warrant Certificates of authorized denominations will be issued to the designated transferee or transferee.  The Company and Warrant Agent and all transfer agents and registrars for the Common Stock may deem and treat the Registered Holder as the absolute owner of this Warrant Certificate for all purposes, and neither the Company, Warrant Agent nor any such transfer agent or registrar shall be affected by any notice to the contrary.

This Warrant Certificate shall not entitle the Registered Holder to any of the rights of a shareholder of the Company including, without limitation, the right to vote, to receive dividends and other distributions, to exercise any preemptive right, or to receive any notice of, or to attend, meetings of shareholders or any other proceedings of the Company.  This Warrant Certificate shall be void and all rights represented hereby shall cease unless exercised on or before November 23, 2017 and otherwise in accordance with the terms of the Warrant Agreement.

Dated as of  November 23, 2007	Belvedere SoCal
	By:
		Alison Davis, President
	By:
		Alison Davis, Secretary

Countersigned: Computershare Inc. Warrant Agent
By:
	Authorized Signature

FORM OF WARRANT CERTIFICATE

[REVERSE SIDE OF WARRANT CERTIFICATE]

The text of Section 3 of the Warrant Agreement is set forth below.

3.           Adjustments in Warrant Shares; Fractional Shares

3.1           Anti-Dilution Provisions. The number of Warrant Shares which may be purchased upon the exercise of a Warrant shall be subject to change or adjustment as follows:

3.1.1           Stock Dividends – Subdivisions, Combinations.  In case the Company shall (i) pay a dividend on the Common Stock in shares of Common Stock (or securities convertible into, exchangeable for or otherwise entitling the registered holder to receive Common Stock), (ii) subdivide the outstanding Common Stock into a greater number of shares of Common Stock or (iii) combine the outstanding Common Stock into a smaller number of shares of Common Stock, the number of shares of Warrant Shares purchasable upon exercise of any Warrant immediately prior to the record date fixing shareholders to be affected by such event shall be adjusted so that the Registered Holder shall thereafter be entitled to receive that kind and number of Warrant shares or other securities of the Company that the Registered Holder would have owned or have been entitled to receive after the happening of any of the events described above, had the Warrant been exercised immediately prior to the happening of such event or any record date with respect thereto.  An adjustment made pursuant to this Section 3.1.1 shall become effective (x) immediately after the record date in the case of a dividend and (y) immediately after the effective date in the case of a subdivision or combination.  If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter and before the distribution to shareholders thereof legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment in the number of Warrant Shares issuable upon exercise of a Warrant then in effect shall be required by reason of the taking of such record.  No adjustment shall be made under this Section 3.1.1 unless such adjustment would require an increase or decrease of at least one percent in the number of shares of Common Stock or other securities of the Company that the Registered Holder would have owned or have been entitled to receive had the Warrant been exercised, provided however, that any adjustments which by reason of this sentence are not required to be made shall be carried forward and taken into account in any subsequent adjustment, and all calculations shall be made to the nearest one-hundredth of a share.

3.1.2           Reorganization or Reclassification.

3.1.2.1           In case of any capital reorganization or any reclassification of the capital stock of the Company (whether pursuant to a merger or consolidation, sale of substantially all of the assets or otherwise, but excepting (i) the formation of a holding company owning all of the outstanding Common Stock of the Company following such formation and (ii) a change in the Company’s jurisdiction of organization), the successor or purchasing corporation shall have the right to assume the Warrants, and in such event would execute an agreement with the Company providing that after such transaction each Warrant would thereafter be exercisable for the number of shares of stock or other securities or property receivable upon such capital reorganization or reclassification of capital stock, as the case may be, by a holder of the number of shares of Common Stock into which the Warrant was exercisable immediately prior to such capital reorganization or reclassification of capital stock; and, in any case, appropriate adjustment shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the Registered Holder of any Warrant to the end that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the exercise of the Warrant.  Such agreement shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 3.  The provisions of this Section 3.1.2.1 shall similarly apply to successive consolidation, mergers, sales or conveyances.

3.1.2.2           In the event that such successor corporation does not execute such an agreement with the Company as provided in Section 3.1.2.1, then as to outstanding Warrants, whether or not then otherwise exercisable, each Registered Holder shall be entitled to exercise outstanding Warrants upon the payment of the Exercise Price during a period of at least 30 days (or until the Expiration Date, if earlier), which period terminates at least five days prior to consummation of the transaction.  If Section 3.1.2.1 is not applicable and Warrants are not exercised in accordance with this Section 3.1.2.2 before consummation of the transaction then all Warrants not so exercised will be cancelled and become null and void.

3.1.3           Notice.  In the event that the Company shall propose at any time to effect any transaction of the type described in Subsections 3.1.1 or 3.1.2 or take any similar extraordinary corporate action affecting the Company’s capital stock (including but not limited to the transfer of substantially all of our assets) during the time that Warrants are exercisable or as a result of which the Warrants may become exercisable, then, in connection with each such event, the Company shall send notice thereof to all Registered Holders at least 20 days prior to the earlier of (i) the date on which such event is to become effective, (ii) the record date for the shareholders affected by such event, or (iii) the first date on which the Company intends to effect any such transaction, in each case specifying in reasonable detail what the transaction or event consists of and, if applicable, the aggregate amount or value of any cash or property proposed to be distributed, paid, purchased or received by the Company in connection therewith.

3.1.4           Adjustment of Exercise Price.  The Exercise Price per share of Common Stock purchasable upon exercise of any Warrant shall be subject to adjustment from time to time as follows:  upon each adjustment of the number of shares of Common Stock purchasable pursuant to Section 3.1, the Exercise Price shall be reduced or increased, as the case may be, to a price determined by dividing the aggregate Exercise Price of all Warrant Shares in effect prior to such adjustment by the total maximum number of Warrant Shares purchasable upon the exercise of all Warrants immediately after such adjustment.

3.2           Voluntary Adjustments by the Company.  The Company may at its option, at any time during the term of the Warrants, reduce the then current Exercise Price to any amount deemed appropriate by the Company’s board of directors, approve additional exercise periods or extend the Expiration Date to any time deemed appropriate by the Company’s board of directors.  In case of any such adjustment, the terms of this Agreement shall apply from the date of such adjustment according to the terms of such adjustment.

3.3           Fractional Shares.  No fractional shares of Common Stock shall be issued upon the exercise of any Warrant.  If any fraction of a share of Common Stock would be issuable upon the exercise of a Warrant, the Company shall round down the number of shares of Common Stock to be issued upon exercise of such Warrant to the nearest lower whole number of shares of Common Stock. The Company will repay a Warrant holder in cash for any fraction of a share of Common Stock that would otherwise be issuable.

REVERSE SIDE OF WARRANT CERTIFICATE

EXERCISE SUBSCRIPTION FORM

To Be Executed by the Registered Holder

Desiring to Exercise the Warrants of

Belvedere SoCal

Capitalized terms used but not defined herein shall have the meaning assigned to them in the within Warrant Certificate and in the Warrant Agreement between Belvedere SoCal (the “Company”) and Computershare, Inc, and its subsidiary, Computershare Trust Company, N.A. dated as of November 23, 2007.

The undersigned Registered Holder hereby exercises _________ Warrants evidencing the right to purchase shares of the Common Stock covered by the within Warrant Certificate, according to the conditions thereof.

The undersigned Registered Holder herewith makes payment in full of the Exercise Price on such shares of $___________________ by certified or official bank check or bank cashier’s check payable to the order of the Company, or by any combination thereof.

Check the box below if the Registered Holder is exercising fewer than all of the Warrants evidenced by the within Warrant Certificate:

 o The Undersigned Registered Holder has hereby exercised fewer than all the Warrants evidenced by the within Warrant Certificate and, therefore, requests that a new Warrant Certificate evidencing the remaining Warrants evidenced by the within Warrant Certificate be issued in the name of and delivered to the Registered Holder.

NOTE:  EXERCISE MAY BE MADE FOR A MINIMUM OF THE LESSER OF 100 SHARES OR THE FULL NUMBER OF SHARES AS TO WHICH EXERCISE MAY BE MADE UNDER THIS WARRANT CERTIFICATE.

Dated:	Registered Holder Signature
	Name:
	Title (if any)
	Address:

EXERCISE FORM

ASSIGNMENT FORM

To Be Executed by the Registered Holder Desiring to Effect a Transfer of the Warrants of

Belvedere SoCal

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations.

TEN COM TEN ENT JT TEN  – – – as tenants in common as tenants by the entireties as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT  –     __________Custodian __________ (Cust)                               (Minor) under the Uniform Gifts to Minors Act ______________________                       (State)

Additional abbreviations may also be used, though not in the above list.

FOR VALUE RECEIVED, in accordance with the Warrant Agreement between Belvedere SoCal and Computershare, Inc, and its subsidiary, Computershare Trust Company, N.A. dated as of November 23, 2007., and the Securities Act of 1933, as amended, if applicable, the undersigned hereby sells, assigns and transfers unto the person named below the right to purchase ____________ Warrant Shares evidenced by the within Warrant Certificate, and does hereby irrevocably constitute and appoint__________________________, as attorney to transfer the said right on the books of the Company with full power of substitution.

Transferee Name    

Address    

Dated:	_______________	Registered Holder Signature
		Name:
		Title (if any)
		Address:

NOTICE:  The signature to this assignment must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatsoever.

Signature(s) Guaranteed

By: __________________________________________

Pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) must guarantee the signature(s).

ASSIGNMENT FORM

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, William Baribault, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2008 of Belvedere SoCal;

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

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

4. The registrant’s other certifying officer 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 registrant and we have:

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

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

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

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

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

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

Dated: November 19, 2008

/s/    WILLIAM BARIBAULT        

William Baribault

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL ACCOUNTING OFFICER

I, Danelle Thomsen, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2008 of Belvedere SoCal;

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

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

4. The registrant’s other certifying officer 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 registrant and we have:

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

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

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

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

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

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

Dated: November 19, 2008

/s/  DANELLE THOMSEN

Danelle Thomsen

Manager of Financial Reporting

(Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to the requirement set forth in 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Corporate Fraud Accountability Act of 2002, William Baribault and Danelle Thomsen each hereby certify as follows:

1. They are the duly appointed Chief Executive Officer and Principal Accounting Officer, respectively, of Belvedere SoCal, a California Corporation (the “Company”).

2. Based on their knowledge, the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, and to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 and the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, the undersigned have set their hands hereto as of this 19th day of November, 2008.

/s/    WILLIAM BARIBAULT        

William Baribault

President and Chief Executive Officer

(Principal Executive Officer)

/s/    DANELLE THOMSEN        

Danelle Thomsen

Manager of Financial Reporting

(Principal Accounting Officer)