FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Quarterly Report Under Section 13 or 15(d)

of the Securities Exchange Act of 1934

Quarter Ended June 30, 2008

Commission File Number 0-10232

FIRST REGIONAL BANCORP

(Exact name of registrant as specified in its charter)

California	95-3582843
State or other jurisdiction of	IRS Employer Identification Number
incorporation or organization

1801 Century Park East, Los Angeles, California	90067
Address of principal executive offices	Zip Code

(310) 552-1776

Registrant’s telephone number, including area code

Not applicable

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

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

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

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

APPLICABLE ONLY TO CORPORATE ISSUERS

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

Common Stock, No Par Value	11,833,616
Class	Outstanding on August 5, 2008

FIRST REGIONAL BANCORP

INDEX

			Page
Part I - Financial Information
	Item 1.	Financial Statements
		Condensed Consolidated Statements of Financial Condition (unaudited)	3
		Condensed Consolidated Statements of Operations (unaudited)	4
		Condensed Consolidated Statements of Cash Flows (unaudited) (2007 restated)	5
		Notes to Condensed Consolidated Financial Statements (unaudited)	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
	Item 4.	Controls and Procedures	29
Part II - Other Information
	Item 1.	Legal Proceedings	30
	Item 1A.	Risk Factors	30
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
	Item 4.	Submission of Matters to a Vote of Security Holders	30
	Item 6.	Exhibits	31
Signatures			32

2

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

FIRST REGIONAL BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In Thousands Except Share Data)

(Unaudited)

	June 30, 2008			December 31, 2007
Assets
Cash and cash equivalents
Cash and due from banks	$	35,084		$	46,676
Federal funds sold	17,145			0
Total cash and cash equivalents	52,229			46,676
Investment securities, available for sale, at fair value (with amortized cost of $24,626 in 2008 and $24,856 in 2007)	24,598			25,114
Interest-bearing deposits in financial institutions	2,003			7,042
Federal Home Loan Bank stock – at cost	18,532			8,487
Loans, net of allowance for losses of $44,152 in 2008 and $22,771 in 2007	2,281,604			2,020,217
Premises and equipment, net of depreciation and amortization of $5,696 in 2008 and $5,076 in 2007	5,320			5,438
Accrued interest receivable and other assets	88,102			61,341
Total Assets	$	2,472,388		$	2,174,315
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	398,251		$	418,220
Interest bearing:
Other deposits	76,968			58,173
Money market deposits	873,181			951,488
Time deposits	633,352			293,196
Total deposits	1,981,752			1,721,077
Federal funds purchased	0			20,955
Federal Home Loan Bank advances	210,000			135,000
Note payable	38			113
Accrued interest payable and other liabilities	20,783			22,034
Subordinated debentures	100,517			100,517
Total Liabilities	2,313,090			1,999,696
Commitments and contingencies (Note 6)
Shareholders’ Equity:
Common Stock – no par value; authorized 150,000,000 shares; Outstanding 11,815,000(2008) and 11,926,000 (2007)	44,651			46,096
Unearned ESOP shares; 12,000 (2008) and 36,000 (2007)	(36		)	(107		)
Total common stock-no par value; outstanding 11,803,000 (2008) and 11,890,000 (2007)	44,615			45,989
Retained earnings	114,699			128,480
Accumulated other comprehensive income (loss), net of tax	(16		)	150
Total Shareholders’ Equity	159,298			174,619
Total Liabilities and Shareholders’ Equity	$	2,472,388		$	2,174,315

The accompanying notes are an integral part of these

condensed consolidated financial statements.

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FIRST REGIONAL BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands Except Per Share Data)

(Unaudited)

	Three Months Ended June 30					Six Months Ended June 30,
	2008			2007		2008			2007
INTEREST INCOME:
Interest on loans	$	35,957		$	41,814	$	76,253		$	82,752
Interest on investment securities	317			353		676			590
Interest on deposits in financial institutions	51			69		123			128
Interest on federal funds sold	105			121		173			212
Total interest income	36,430			42,357		77,225			83,682
INTEREST EXPENSE:
Interest on deposits	9,437			12,355		20,504			23,878
Interest on subordinated debentures	1,224			1,716		2,840			3,399
Interest on FHLB advances	1,628			1,599		3,336			3,194
Interest on other borrowings	24			3		32			9
Total interest expense	12,313			15,673		26,712			30,480
Net interest income	24,117			26,684		50,513			53,202
PROVISION FOR LOAN LOSSES	44,743			300		55,533			300
Net interest income (loss) after provision for loan losses	(20,626		)	26,384		(5,020		)	52,902
OTHER OPERATING INCOME:
Customer service fees	1,931			1,609		3,855			3,104
Other – net	550			439		3,797			1,311
Total other operating income	2,481			2,048		7,652			4,415
OTHER OPERATING EXPENSES:
Salaries and related benefits	8,487			8,627		17,973			17,648
Occupancy expense	954			962		1,923			1,781
Equipment expense	471			435		904			808
Promotion expense	190			154		326			285
Professional service expense	905			980		1,755			1,762
Customer service expense	575			536		1,033			1,078
Supplies and communication expense	327			345		716			697
Other	2,948			1,380		2,769			2,679
Total other operating expenses	14,857			13,419		27,399			26,738
Income (loss) before provision (benefit) for income taxes	(33,002		)	15,013		(24,767		)	30,579
PROVISION FOR INCOME TAXES (BENEFIT)	(14,489		)	6,369		(10,989		)	12,944
NET INCOME (LOSS)	$	(18,513	)	$	8,644	$	(13,778	)	$	17,635
EARNINGS (LOSS) PER SHARE (Note 5)
Basic	$	(1.57	)	$	0.71	$	(1.17	)	$	1.44
Diluted	$	(1.57	)	$	0.66	$	(1.17	)	$	1.35

The accompanying notes are an integral part of these

condensed consolidated financial statements.

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FIRST REGIONAL BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

	Six Months Ended June 30,
				2007
	2008			as Restated (See Note 9)
OPERATING ACTIVITIES
Net Income (loss)	$	(13,778	)	$	17,635
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for loan losses	55,533			300
Depreciation and amortization	669			513
Amortization of investment securities premiums and discounts – net	17			46
Stock compensation costs	237			288
Federal Home Loan Bank stock dividends	(275		)	(325		)
Realized gain on sale of VISA stock investments	(2,758		)	0
Net gains on sale/disposal of premises and equipment	(3		)	(92		)
Loss on sale of investment security	0			29
(Increase) decrease in accrued interest receivable and other assets	(23,557		)	427
(Decrease) increase in accrued interest payable and other liabilities	(1,131		)	2,916
Tax benefit from stock options exercised	(25		)	(263		)
Increase in taxes payable	25			263
Net cash provided by operating activities	14,954			21,737
INVESTING ACTIVITIES
Net decrease (increase) in interest-bearing deposits in financial institutions	5,039			(2,008		)
Purchases of investment securities	(1,238		)	(6,230		)
Proceeds from sale and maturities of investment securities	4,209			3,578
Purchases of Federal Home Loan Bank stock	(9,817		)	0
Redemption of Federal Home Loan Bank stock	47			3,384
Net increase in loans	(316,920		)	(80,287		)
Purchase of CRA investments included in other assets	(3,204		)	(1,111		)
Proceeds from sale of premises and equipment	8			130
Purchases of premises and equipment	(556		)	(1,725		)
Net cash used in investing activities	(322,432		)	(84,269		)
FINANCING ACTIVITIES
Net (decrease) increase in non-interest bearing deposits and and other interest bearing deposits	(79,481		)	18,615
Net increase (decrease) in time deposits	340,156			(6,634		)
Decrease in note payable	(75		)	(75		)
Increase (decrease) in Federal Home Loan Bank advances	75,000			(50,000		)
Decrease in federal funds purchased	(20,955		)	0
Stock options exercised	12			210
Tax benefit from stock options exercised	25			263
Common stock repurchased and retired	(1,978		)	0
Common stock issued	327			667
Net cash provided by (used by) financing activities	313,031			(36,954		)
Increase (decrease) in cash and cash equivalents	5,553			(99,486		)
Cash and cash equivalents, beginning of period	46,676			175,994
Cash and cash equivalents, end of period	$	52,229		$	76,508
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	26,140		$	30,564
Income taxes paid	$	13,500		$	9,300

The accompanying notes are an integral part of these

condensed consolidated financial statements.

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FIRST REGIONAL BANCORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(Unaudited)

NOTE 1:Basis of Presentation

First Regional Bancorp, a bank holding company (the “Company”), and one of its wholly-owned subsidiaries, First Regional Bank, a California state-chartered bank (the “Bank”), primarily serve Southern California through their branches. The Company’s primary source of revenue is providing loans to customers, which are predominantly small and midsize businesses.

In the opinion of the Company, the interim condensed consolidated financial statements contain all adjustments of a normal recurring nature necessary to present fairly the financial position and the results of operations for the interim periods. Interim results may not be indicative of annual operations.

While the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these financial statements be read in conjunction with the financial statements and the notes included in the Company’s 2007 annual report on Form 10-K.

NOTE 2: Recent Accounting Pronouncements

EITF 06-4 – In September 2006, the EITF issued EITF 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements, which requires employers to recognize an obligation associated with endorsement split-dollar life insurance arrangements that extend into the employee’s postretirement period. EITF 06-4 is effective for financial statements issued for fiscal years beginning after December 31, 2007. The adoption of this guidance has not had a material impact to the Company’s condensed consolidated financial statements.

SFAS No. 157 – In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157), which provides a definition of fair value, establishes a framework for measuring fair value, and requires expanded disclosures about fair value measurements. The standard applies when GAAP requires or allows assets or liabilities to be measured at fair value, and therefore, does not expand the use of fair value in any new circumstance. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an arm’s length transaction between market participants in the markets where we conduct business. SFAS 157 clarifies that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices available in active markets and the lowest priority to data lacking transparency. The level of the reliability of inputs utilized for fair value calculations drives the extent of disclosure requirements of the valuation methodologies used under the standard. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those years. The provisions of SFAS 157 should be applied prospectively, except for certain financial instruments for which the standard should be applied retrospectively. The adoption of this guidance has not had a material impact to the Company’s condensed consolidated financial condition and results of operations.

SFAS No. 159 – 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. SFAS No. 159 would allow the Company a one-time irrevocable election to measure certain financial assets and liabilities on the balance sheet at fair value and report the unrealized gains and losses on the elected items in earnings at each subsequent reporting date. This Statement requires companies to provide additional information that will help investors and other users of financial statements to more easily understand the effect of the company’s choice to use fair value on its earnings. SFAS No. 159 is effective for

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fiscal years beginning after November 15, 2007. The Company has elected not to measure any new financial instruments at fair value, as permitted in SFAS No. 159, but to continue recording its financial instruments in accordance with current practice.

SFAS No. 141(R) – In December 2007, the FASB issued SFAS No. 141(R), Business Combinations SFAS 141(R), which replaces FASB Statement No. 141, Business Combinations. SFAS 141(R) establishes principles and requirements for how an acquiring company (1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree, (2) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and (3) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) is effective for business combinations occurring on or after the beginning of the fiscal year beginning on or after December 15, 2008 and applies to all transactions or other events in which the Company obtains control in one or more businesses. Management will assess the adoption of SFAS 141(R) on future business transactions as they occur.

SFAS No. 160 –In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements – an Amendment of ARB No. 51. This Statement requires that non-controlling or minority interests in subsidiaries be presented in the consolidated statement of financial position within equity, but separate from the parents’ equity, and that the amount of the consolidated net income attributable to the parent and to the non-controlling interest be clearly identified and presented on the face of the consolidated statement of income. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. Management does not expect this guidance to have a material effect on the Company’s financial condition and results of operations.

NOTE 3: Allowance for Loan Losses

An analysis of the activity in the allowance for loan losses for the six months ended June 30, 2008 and 2007 is as follows (in thousands):

	2008			2007
Balance – beginning of year	$	22,771		$	20,624
Provision for loan losses	55,533			300
Loans charged off	(34,244		)	(50		)
Change in allowance for unfunded loan commitments and lines of credit	74			155
Recoveries on loans previously charged off	18			94
Balance – end of period	$	44,152		$	21,123

Management believes the allowance for loan losses as of June 30, 2008, is adequate to absorb losses inherent in the loan portfolio. Management’s estimates of the allowance are subject to potential adjustment by the Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Institutions upon examination of the Bank by such authorities.

At June 30, 2008 and December 31, 2007, the recorded investment in impaired loans was $94,062,000 (net of charge-offs of $33,990,000) and $2,012,000, with specific reserves of $19,482,000 and $20,000, respectively.

The average recorded investment in impaired loans during the second quarter ended June 30, 2008 and 2007 was $68,702,000, and $13,000, respectively. No interest income on impaired loans was recognized for cash payments received in the first six months of 2008 or 2007. Forgone interest on impaired loans is not material to the results of operations of the Company.

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NOTE 4: Fair Value Disclosures

SFAS No. 157 was implemented by the Company effective January 1, 2008. SFAS No. 157 establishes a hierarchy that prioritizes the use of fair value inputs used in valuation methodologies into the following three levels:

Level 1:  Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2:  Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be derived from or corroborated by observable market data by correlation or other means.

Level 3:  Significant unobservable inputs that reflect the reporting entity’s ownassumptions about the assumptions that market participants would use in pricing an asset or liability.

The following is a description of the Company’s valuation methodologies used to measure and disclose the fair values of its financial assets and liabilities on a recurring or nonrecurring basis:

Investment securities available for sale:  Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based on quoted prices, when available, or the prices of other securities with similar characteristics. Level 1 securities include both U.S. Treasury and actively traded U.S. government sponsored enterprise debt securities, and Level 2 securities are comprised of U.S. government sponsored enterprise debt securities.

Impaired Loans – In accordance with SFAS No. 114, Accounting by Creditors for Impairment of a Loan, an Amendment of FASB Statements No. 5 and 15, the Company’s impaired loans are generally measured using the fair value of the underlying collateral, which is determined based on the most recent appraisal information received, less costs to sell. Appraised values may be adjusted based on factors such as the Company’s historical knowledge and changes in market conditions from the time of valuation.  As of June 30, 2008, collateral dependent impaired loans totaled $18,453,000, net of the specific reserves.  Collateral dependent impaired loans fall within Level 3 of the fair value hierarchy since they were measured at fair value based on appraisals of the underlying collateral.

The balances of financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2008 were as follows (in $1,000s):

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Securities available for sale	$	24,598	$	1,242	$	23,356

The balances of financial assets and liabilities measured at fair value on a non-recurring basis as of June 30, 2008 were as follows (in $1,000s):

	Total		Significant Observable Inputs (Level 3)		Total Gains (Losses)
Impaired loans (1)	$	18,453	$	18,453	$	(25,003	)

(1)Represents carrying value and related write-downs for which adjustments are based upon the appraised value of the collateral, less costs to sell.

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The following is a summary of changes in fair value of the Company’s financial assets that have been classified as Level 3 for the three and six months ended June 30, 2008 (in thousands):

	Impaired Loans
Balance – December 31, 2007	$	0
Transfers in	38,170
Balance – March 31, 2008	38,170
Transfers out	(3,294		)
Transfers in	3,618
Unrealized loss	(20,041		)
Balance – June 30, 2008	$	18,453

Certain non-financial assets and non-financial liabilities measured at fair value on a non-recurring basis include long-lived assets and foreclosed assets. SFAS No. 157 is applicable to these fair value measurements beginning January 1, 2009.

NOTE 5: Earnings per Share and Stock Based Compensation

Basic earnings per share are computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during each period. The computation of diluted earnings per share also considers the number of shares issuable upon the assumed exercise of outstanding common stock options. In accordance with SFAF No. 128, Earnings Per Share, due to the net loss recorded during the three and six months ended June 30, 2008, incremental shares resulting from the assumed conversion, exercise or contingent issuance of securities is not included as their effect on earnings or loss per share would be antidilutive. A reconciliation of the numerator and the denominator used in the computation of basic and diluted earnings (loss) per share is:

	Three Months Ended June 30, 2008
	Income (Numerator)			Weighted Average Shares (Denominator)	Per Share Amount
Basic EPS
Income available to common shareholders	$	(18,513,000	)	11,797,000	$	(1.57	)
Effect of Dilutive Securities
Incremental shares from assumed exercise of outstanding options				0	0.00
Diluted EPS
Income available to common shareholders	$	(18,513,000	)	11,797,000	$	(1.57	)

	Three Months Ended June 30, 2007
	Income (Numerator)		Weighted Average Shares (Denominator)	Per Share Amount
Basic EPS
Income available to common shareholders	$	8,644,000	12,243,000	$	0.71
Effect of Dilutive Securities
Incremental shares from assumed exercise of outstanding options			820,000	(0.05		)
Diluted EPS
Income available to common shareholders	$	8,644,000	13,063,000	$	0.66

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	Six Months Ended June 30, 2008
	Income (Numerator)			Weighted Average Shares (Denominator)	Per Share Amount
Basic EPS
Income available to common shareholders	$	(13,778,000	)	11,806,000	$	(1.17	)
Effect of Dilutive Securities
Incremental shares from assumed exercise of outstanding options				0	0.00
Diluted EPS
Income available to common shareholders	$	(13,778,000	)	11,806,000	$	(1.17	)

	Six Months Ended June 30, 2007
	Income (Numerator)		Weighted Average Shares (Denominator)	Per Share Amount
Basic EPS
Income available to common shareholders	$	17,635,000	12,228,000	$	1.44
Effect of Dilutive Securities
Incremental shares from assumed exercise of outstanding options			845,000	(0.09		)
Diluted EPS
Income available to common shareholders	$	17,635,000	13,073,000	$	1.35

As discussed above, anti-dilutive shares from stock options are excluded from the computation of loss per share. The anti-dilutive stock options totaled 1,098,000 and 1,126,000 for the three and six months ended June 30, 2008, respectively. There were no anti-dilutive shares from stock options for the three and six months ended June 30, 2007, respectively.

Stock Compensation Plans

In May 2005, the Company’s Board of Directors adopted a non-qualified employee stock option plan that expires in 2015 and authorizes the issuance of up to 600,000 shares of its common stock upon the exercise of options granted. The plan is intended to allow the Company the ability to grant stock options to persons who had not previously been awarded option grants commensurate with their positions, primarily persons hired since the exhaustion of options available for grant under the Company’s previous stock option plans. The Company’s Board of Directors believes that the Plan will assist the Company in attracting and retaining high quality officers and staff, and will provide grantees under the Plan with added incentive for high levels of performance and to assist in the effort to increase the Company’s earnings. As of June 30, 2008, none of the grants have been made to directors or executive officers of the Company or to directors of the Bank. During both August 2007 and February 2008, the Company granted options to buy up to 45,000 shares of the Company’s common stock to certain officers of the Company and its subsidiaries. All such granted options will vest over seven years and expire in 2017 and 2018, respectively.

In 1999, the Company adopted a nonqualified employee stock option plan that authorizes the issuance of up to 1,800,000 shares of its common stock and expires in 2009.

Under all plans, options may be granted at a price not less than the fair market value of the stock at the date of the grant.

A summary of the award activity under the stock option plans as of June 30, 2008 and changes during the six month period is presented below:

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	Shares (in thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (In thousands)
Outstanding – January 1, 2008	1,854		$	6.34
Granted	45		16.70
Exercised	(4	)	2.92
Cancelled	(7	)	25.00
Outstanding – June 30, 2008	1,888		$	6.52	4.73 years	$	(1,714	)
Vested or expected to vest at June 30,2008	1,508		$	6.01	4.63 years	$	8,460
Exercisable at June 30, 2008	1,468		$	4.79	4.31 years	$	1,199

The total intrinsic value of options exercised during the three and six month periods ended June 30, 2008 was $0 and $61,000, respectively. The total intrinsic value of options exercised during the three and six month periods ended June 30, 2007 was $20,000 and $627,000, respectively. The total fair value of shares vested during the three and six month periods ended both June 30, 2008 and 2007 was $230,000 and $279,000, respectively.

As of June 30, 2008, there was $1,832,000 of total unrecognized compensation cost related to non-vested share-based compensation awards granted under the stock option plans. That cost is expected to be recognized over a weighted-average period of 2.63 years. The Company received $12,000 and $210,000 cash from the exercise of stock options during the six month periods ended June 30, 2008 and 2007, respectively.

For the three and six month periods ended June 30, 2008, stock based compensation expense reduced income before taxes by $121,000 and $237,000 and reduced net income by $70,000 and $137,000. This additional expense reduced both basic and diluted earnings per share by $0.01 for the three months ended June 30, 2008, and reduced both basic and diluted earnings per share by $0.01 for the six months ended June 30, 2008. Cash provided by operating activities decreased by $25,000 and cash provided by financing activities increased by an identical amount for the first six months of 2008 related to excess tax benefits from the exercise of stock options.

For the three and six month periods ended June 30, 2007, stock based compensation expense reduced income before taxes by $144,000 and $288,000 and reduced net income by $84,000 and $167,000. This additional expense reduced both basic and diluted earnings per share by $0.01 for the three months ended June 30, 2007, and reduced both basic and diluted earnings per share by $0.01 for the six months ended June 30, 2007. Cash provided by operating activities decreased by $263,000 and cash provided by financing activities increased by an identical amount for the first six months of 2007 related to excess tax benefits from the exercise of stock options.

NOTE 6: Commitments and Contingencies

As of June 30, 2008, the Bank had a total of $14,505,000 in standby letters of credit outstanding. No losses are anticipated as a result of these transactions.

NOTE 7: Comprehensive Income

The Company’s comprehensive income includes all items which comprise net income plus the unrealized holding (losses) gains on available-for-sale securities. For the three and six month periods ended June 30, 2008 and 2007, the Company’s comprehensive income (loss), net of taxes, was as follows:

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	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
	(Dollars in Thousands)
Net income (loss)	$	(18,513	)	$	8,644		$	(13,778	)	$	17,635
Other comprehensive income (loss)	(242		)	(449		)	(166		)	(223		)
Total comprehensive income (loss)	$	(18,755	)	$	8,195		$	(13,944	)	$	17,412

NOTE 8: Operating Segment Reports

Management has evaluated the Company’s overall operation and determined that its business consists of certain reportable business segments as of June 30, 2008 and 2007:  core banking operations, the administrative services in relation to TAS (as defined below), and trust services. The following describes these three business segments:

Core Bank Operations - The principal business activities of this segment are attracting funds from the general public and originating commercial and real estate loans for small and midsize businesses in Southern California. This segment’s primary sources of revenue are interest income from loans and investment securities and fees earned in connection with loans and deposits. This segment’s principal expenses consist of interest paid on deposits, personnel, and other general and administrative expenses. Core banking services also include the Bank’s merchant services operations, which provide credit card deposits and clearing services to retailers and other credit card accepting businesses and which generates fee income.

Trust Administrative Services - The principal business activity of the Bank’s division, Trust Administration Services (referred to as “Administrative Services” or “TAS”) is providing administrative services for self-directed retirement plans. The primary source of revenue for this segment is fee income from self-directed accounts. The segment’s principal expenses consist of personnel, rent, data processing and other general and administrative expenses.

Trust Services - The principal business activity of this segment is providing trust services for living trusts, investment agency accounts, IRA rollovers, and all forms of court-related matters. The primary source of revenue for this segment is fee income. The segment’s principal expenses consist of personnel, data processing, professional service expenses, and other general and administrative expenses.

Total assets of TAS at June 30, 2008 and December 31, 2007 were $1,556,000 and $1,110,000, respectively and total assets of Trust Services at June 30, 2008 and December 31, 2007 were $83,000 and $96,000, respectively. The remaining assets reflected on the condensed consolidated balance Sheets of the Company are associated with core banking operations.

A table showing the net income (loss) for the core banking operations, administrative services, and trust services for the three and six-month periods ended June 30, 2008 and 2007(in thousands).

	Three Month Period Ended June 30, 2008
	Core Banking Operations			Administrative Services			Trust Services		Combined Operations
Net interest income	$	24,117							$	24,117
Provision for loan losses	44,743								44,743
Other operating income	1,238			$	670		$	573	2,481
Other operating expenses	13,684			887			286		14,857
Provision (benefit) for income taxes	(14,518		)	(91		)	120		(14,489		)
Net income (loss)	$	(18,554	)	$	(126	)	$	167	$	(18,513	)

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	Three Month Period Ended June 30, 2007
	Core Banking Operations		Administrative Services			Trust Services		Combined Operations
Net interest income	$	26,684						$	26,684
Provision for loan losses	300							300
Other operating income	1,026		$	495		$	527	2,048
Other operating expenses	12,387		756			276		13,419
Provision (benefit) for income taxes	6,374		(110		)	105		6,369
Net income (loss)	$	8,649	$	(151	)	$	146	$	8,644

	Six Month Period Ended June 30, 2008
	Core Banking Operations			Administrative Services			Trust Services		Combined Operations
Net interest income	$	50,513							$	50,513
Provision for loan losses	55,533								55,533
Other operating income	5,203			$	1,277		$	1,172	7,652
Other operating expenses	25,191			1,622			586		27,399
Provision (benefit) for income taxes	(11,090		)	(145		)	246		(10,989		)
Net income (loss)	$	(13,918	)	$	(200	)	$	340	$	(13,778	)

	Six Month Period Ended June 30, 2007
	Core Banking Operations		Administrative Services			Trust Services		Combined Operations
Net interest income	$	53,202						$	53,202
Provision for loan losses	300							300
Other operating income	2,318		$	1,058		$	1,039	4,415
Other operating expenses	24,731		1,426			581		26,738
Provision (benefit) for income taxes	12,907		(155		)	192		12,944
Net income (loss)	$	17,582	$	(213	)	$	266	$	17,635

In addition, the operations of the administrative services positively affect the results of core banking operations by providing a source of low-cost deposits.

NOTE 9: Restatement

Subsequent to the issuance of the Company’s condensed financial statements for the six months ended June 30, 2007, the Company identified a classification error in the condensed consolidated statement of cash flows for the six months ended June 30, 2007 where the Company classified the purchase of CRA investments as an operating activity rather than an investing activity. The following summarizes the effects of the restatement on the condensed consolidated statement of cash flows for the six months ended June 30, 2007:

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	Six Months Ended June 30, 2007
Statement of Cash Flows	As Restated			Previously Reported
Decrease (increase) in accrued interest receivables and other assets	$	427		$	(684	)
Net cash provided by operating activities	21,737			20,626
Purchases of CRA investments included in other assets	(1,111		)	—
Net cash used in investing activities	(84,269		)	(83,158		)
Decrease in cash and cash equivalents	$	(99,486	)	$	(99,486	)

As noted in the table above, this restatement does not change the overall decrease in cash and cash equivalents for the six months ended June 30, 2007.

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

SUMMARY

First Regional Bancorp did not conduct any significant business activities independent of First Regional Bank.  The following discussion and analysis relates primarily to the Bank.

For a more complete understanding of the Company and its operations reference should be made to the financial statements included in this report and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.  Certain statements in this report on Form 10-Q constitute “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements, other than statements of historical fact, included herein may constitute forward-looking statements.  Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.  Important factors that could cause actual results to differ materially from management’s expectations include fluctuations in interest rates, inflation, government regulations, and economic conditions and competition in the geographic and business areas in which First Regional Bancorp conducts its operations.  For additional information concerning these factors, see “Item 1.  Business” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

The Company has established various accounting policies which govern the application of accounting principles generally accepted in the United States of America in the preparation of the Company’s financial statements.  Certain accounting policies involve significant judgments and assumptions by management which have a material impact on the carrying value of assets and liabilities; management considers such accounting policies to be critical accounting policies.  The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances.  Because of the nature of the judgments and assumptions made by management, actual results could differ from these judgments and estimates that could have a material impact on the carrying values of assets and liabilities and the results of operations of the Company.  The Company believes the allowance for loan losses is a critical accounting policy that requires the most significant judgments and estimates used in the preparation of its condensed consolidated financial statements.  In estimating the allowance for loan losses, management utilizes historical experience as well as other factors including the effect of changes in the local real estate market on collateral values, the effect on the loan portfolio of current economic indicators and their probable impact on borrowers and increases or decreases in nonperforming and impaired loans.  Changes in these factors may cause management’s estimate of the allowance to increase or decrease and result in adjustments to the Company’s provision for loan losses.

As of June 30, 2008 total assets were $2,472,388,000 compared to $2,174,315,000 at December 31, 2007, an increase of $298,073,000 or 13.7% and the June 30, 2008 asset level represents a $414,090,000 (20.1%) increase over the $2,058,298,000 that existed on the same date in 2007.  Total deposits increased by $260,675,000 or 15.2%, from $1,721,077,000 at the end of 2007 to $1,981,752,000 at June 30, 2008.  While overall deposits increased, the deposit growth was centered in time deposits, a $340,156,000 (116%) increase and other deposits, a $18,795,000 (32%) increase, while non-interest bearing deposits and money market deposits experienced a slight decrease.  There were several changes in the composition of the Bank’s assets during the first six months of 2008.  The Bank’s loan portfolio grew significantly by $261,387,000 during the six month period, bringing the Bank’s total loans, net of allowance for losses and deferred loan fees, to $2,281,604,000 at June 30, 2008 from the December 31, 2007 total of $2,020,217,000.  The combined effect of the increase in loans and the growth in deposits was a slight decrease in the level of total liquid assets (cash and due from banks, Federal funds sold and investment securities).  Investment securities and interest-bearing deposits in financial institutions decreased by $5,555,000, while cash and cash equivalents (cash and due from banks and Federal funds sold), increased by $5,553,000 in order to accommodate the changes that took place in the rest of the balance sheet.

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The Company had a net loss of $18,513,000 in the three months ended June 30, 2008, compared to earnings of $8,644,000 in the second quarter of 2007.  The results for the six months ended June 30, 2008 was a net loss of $13,778,000 compared to net income of $17,635,000 for the corresponding period of 2007, a decrease of 178%.

NET INTEREST INCOME

Net interest income is the excess of interest income earned on interest-earning assets over interest expense incurred on interest-bearing liabilities.  Interest income and interest expense are determined by the average volume of interest-bearing assets or liabilities, and the average rate of interest earned or paid on those assets or liabilities.  As was the case during 2007, in the first six months of 2008 the Company’s continued growth efforts resulted in an increase in interest earning assets, including loans.  The Bank’s core loan portfolio increased during the first six months of 2008.

Total interest income decreased by $5,927,000 (14%) for the second quarter of 2008 compared to the same period in 2007, and decreased by $6,457,000 (7.7%) for the six month period ended June 30, 2008 compared to the same period in 2007 although total average earning assets were higher (19%) in 2008 than in 2007. The majority of the decrease in interest income arises from a substantial decrease of $5,857,000 (14.0%) in interest on loans from $41,814,000 for the three months ended June 30, 2007 compared to $35,957,000 for the same period in 2008.  Although interest income decreased primarily due to the Federal Reserve’s series of interest rate decreases, it was mitigated by an increase in the loan portfolio of $396,316,000 (21%) from June 30, 2007 to June 30, 2008.  For the three months ended June 30, 2008 interest expense on deposits decreased by $2,918,000 (24%) to $9,437,000 from the 2007 level of $12,355,000 and for the six months ended June 30, 2008 interest expense on deposits decreased by $3,374,000 (14%) to $20,504,000 from the 2007 level of $23,878,000 primarily due to the Federal Reserve’s series of interest rate decreases but partially offset by an increase in total deposits of $342,012,000 (21%) from June 30, 2007 to June 30, 2008.  The increases in deposits were primarily in time deposits, while other deposits also showed increases and non-interest bearing demand deposit and money market accounts decreased.  For the three months ended June 30, 2008 interest expense on subordinated debentures decreased by $492,000 (29%), to $1,224,000 from the 2007 level of $1,716,000 due to a decrease in interest rates during the period. For the six months ended June 30, 2008 interest expense on subordinated debentures decreased by $559,000 (16%), to $2,840,000 from the 2007 level of $3,399,000 due to the increase of $7,732,000 in subordinated debentures on September 25, 2007, and also due to a decrease in interest rates during the period.  For the three months ended June 30, 2008 interest expense on FHLB advances increased by $29,000 (1.8%), to $1,628,000 from the 2007 level of $1,599,000 due to a combination of an increase of $70,000,000 in FHLB advances at June 30, 2008 compared to June 30, 2007 and a decrease in interest rates during the period.  For the six months ended June 30, 2008 interest expense on FHLB advances increased by $142,000 (4.5%), to $3,336,000 from the 2007 level of $3,194,000 due to the increase in FHLB advances compared to the prior year and which is partially offset due to a decrease in interest rates during the period.  The net result was a decrease in net interest income of $2,567,000 (9.6%), from $26,684,000 in the second quarter of 2007 to $24,117,000 for the second quarter of 2008 and a decrease in net interest income of $2,689,000 (5%), from $53,202,000 for the six months ended June 30, 2007 to $50,513,000 for the first six months of 2008.

Interest Rates and Interest Differential

The following table sets forth the average daily balances outstanding for major categories of interest earning assets and interest bearing liabilities and the average interest rates earned and paid thereon:

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	For the Three Month Period Ended June 30,
	2008						2007
	Average Balance		Interest Income (2)		Average Yield/ Rate %		Average Balance		Interest Income (2)		Average Yield/ Rate %
					(Dollars in Thousands)
Interest Earning Assets:
Loans (1)	$	2,293,118	$	35,957	6.3	%	$	1,868,461	$	$41,814	9.0	%
Interest bearing deposits in financial institutions	5,203		51		3.9	%	5,733			69	4.8	%
Investment securities	24,699		317		5.2	%	25,180		353		5.6	%
Federal funds sold	21,240		105		2.0	%	9,387		121		5.2	%
Total Interest Earning Assets	$	2,344,260	$	36,430	6.3	%	$	1,908,761	$	42,357	8.9	%

	For the Three Month Period Ended June 30,
	2008						2007
	Average Balance		Interest Expense		Average Yield/ Rate %		Average Balance		Interest Expense		Average Yield/ Rate %
	(Dollars in Thousands)
Interest Bearing Liabilities:
Other deposits	$	72,865	$	287	1.6	%	$	56,928	$	315	2.2	%
Money market accounts	888,391		4,684		2.1	%	929,216		9,210		4.0	%
Time Deposits	469,121		4,466		3.8	%	225,675		2,830		5.0	%
Subordinated debentures	100,517		1,224		4.9	%	92,785		1,716		7.4	%
FHLB advances	289,385		1,628		2.3	%	121,575		1,599		5.3	%
Other borrowings	3,520		24		2.7	%	145		3		8.3	%
Total Interest Bearing Liabilities	$	1,823,799	$	12,313	2.7	%	$	1,426,324	$	15,673	4.4	%

(1)This figure reflects total loans, including non-accrual loans, and is not net of the allowance for losses, which had an average balance in the second quarter of $41,154,000 in 2008 and $21,544,000 in 2007 and is not net of deferred loan fees, which had an average balance in the second quarter of $7,001,000 in 2008 and $7,805,000 in 2007.

(2)Includes loan fees in the second quarter of $2,245,000 in 2008 and $2,625,000 in 2007.

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	For the Six Month Period Ended June 30,
	2008						2007
	Average Balance		Interest Income (2)		Average Yield/ Rate %		Average Balance		Interest Income (2)		Average Yield/ Rate %
	(Dollars in Thousands)
Interest Earning Assets:
Loans (1)	$	2,211,408	$	76,253	6.9	%	$	1,849,854	$	82,752	9.0	%
Interest bearing deposits in financial institutions	6,120		123		4.0	%	5,371			128	4.8	%
Investment securities	24,756		676		5.5	%	24,368		590		4.9	%
Federal funds sold	15,033		173		2.3	%	8,075		212		5.3	%
Total Interest Earning Assets	$	2,257,317	$	77,225	6.9	%	$	1,887,668	$	83,682	8.9	%

	For the Six Month Period Ended June 30,
	2008						2007
	Average Balance		Interest Expense		Average Yield/ Rate %		Average Balance		Interest Expense		Average Yield/ Rate %
					(Dollars in Thousands)
Interest Bearing Liabilities:
Other deposits	$	66,694	$	553	1.7	%	$	56,272	$	640	2.3	%
Money market accounts	925,032		11,967		2.6	%	901,434		17,525		3.9	%
Time Deposits	385,592		7,984		4.2	%	228,459		5,713		5.0	%
Subordinated debentures	100,517		2,840		5.7	%	92,785		3,399		7.4	%
FHLB advances	255,582		3,336		2.6	%	120,085		3,194		5.4	%
Other borrowings	2,126		32		3.0	%	283		9		6.4	%
Total Interest Bearing Liabilities	$	1,735,543	$	26,712	3.1	%	$	1,399,318	$	30,480	4.4	%

(1)This figure reflects total loans, including non-accrual loans, and is not net of the allowance for losses, which had an average balance in the first six months of $33,174,000 in 2008 and $21,529,000 in 2007 and is not net of deferred loan fees, which had an average balance in the first six months of $7,199,000 in 2008 and $7,684,000 in 2007.

(2)Includes loan fees in the first six months of $4,518,000 in 2008 and $5,293,000 in 2007.

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The following table shows the net interest earnings and the net yield on average interest earning assets:

	For the Three Month Period Ended June 30,						For the Six Month Period Ended June 30,
	2008			2007			2008			2007
	(Dollars in Thousands)
Total interest income (l)	$	36,430		$	42,357		$	77,225		$	83,682
Total interest expense	12,313			15,673			26,712			30,480
Net interest earnings	$	24,117		$	26,684		$	50,513		$	53,202
Average interest earnings assets	$	2,344,260		$	1,908,761		$	2,257,317		$	1,887,668
Average interest bearing liabilities	$	1,823,799		$	1,426,324		$	1,735,543		$	1,399,318
Net yield on average interest earning assets	4.1		%	5.6		%	4.5		%	5.7		%

(1)Includes loan fees in the second quarter of $2,245,000 in 2008 and $2,625,000 in 2007 and first six months of $4,518,000 in 2008 and $5,293,000 in 2007.

The following table sets forth changes in interest income and interest expense.  The net change as shown in the column “Net” is segmented into the change attributable to variations in volume and the change attributable to variations in interest rates.  Non-performing loans are included in average loans.

	Net Increase (Decrease) For the Three Month Periods Ended June 30,									Net Increase (Decrease) For the Six Month Periods Ended June 30,
	2008 over 2007									2008 over 2007
	Volume			Rate			Net			Volume			Rate			Net
Interest income (1)
Loans (2)	$	18,983		$	(24,840	)	$	(5,857	)	$	35,407		$	(41,906	)	$	(6,499	)
Interest bearing deposits in financial institutions	(3		)	(15		)	(18		)	36			(41		)	(5		)
Federal funds sold	(31		)	15			(16		)	(112		)	73			(39		)
Investment securities	(7		)	(29		)	(36		)	10			76			86
Total interest earning assets	$	18,942		$	(24,869	)	$	(5,927	)	$	35,341		$	(41,798	)	$	(6,457	)

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	Net Increase (Decrease) For the Three Month Periods Ended June 30,									Net Increase (Decrease) For the Six Month Periods Ended June 30,
	2008 over 2007									2008 over 2007
	Volume			Rate			Net			Volume		Rate			Net
Interest Expense (1)
Other deposits	$	1,251		$	(1,279	)	$	(28	)	$	184	$	(271	)	$	(87	)
Money Market	(389		)	(4,137		)	(4,526		)	469		(6,027		)	(5,558		)
Subordinated Debentures	160			(652		)	(492		)	316		(875		)	(559		)
Time Deposits	2,101			(465		)	1,636			3,042		(771		)	2,271
FHLB Advances	49			(20		)	29			259		(117		)	142
Other Borrowings	22			(1		)	21			25		(2		)	23
Total interest bearing liabilities	$	3,194		$	(6,554	)	$	(3,360	)	$	4,295	$	(8,063	)	$	(3,768	)

(1)	The change in interest due to both rate and volume has been allocated to the change due to volume and the change due to rate in proportion to the relationship of the absolute dollar amounts of the change in each.
(2)	Includes loan fees in the second quarter of $2,245,000 in 2008 and $2,625,000 in 2007 and first six months of $4,518,000 in 2008 and $5,293,000 in 2007.

PROVISION FOR LOAN LOSSES

The allowance for loan losses is intended to reflect the known and unknown risks, which are inherent in a loan portfolio at the time of reporting.  The adequacy of the allowance for loan losses is continually evaluated in light of many factors, including loan loss experience and current economic conditions.  The allowance for loan losses is increased by provisions for loan losses, and is decreased by net charge-offs.  Management believes the allowance for loan losses is adequate in relation to both existing and potential risks in the loan portfolio.

In determining the adequacy of the allowance for loan losses, management considers such factors as historical loan loss experience, known problem loans, evaluations made by bank regulatory authorities, assessment of economic conditions and other appropriate data to identify the risks in the loan portfolio.

The first major element includes a detailed analysis of the loan portfolio in two phases. The first phase is conducted in accordance with SFAS No. 114, “Accounting by Creditors for the Impairment of a Loan,” as amended by SFAS No. 118, “Accounting by Creditors for Impairment of a Loan – Income Recognition and Disclosures.”  Individual loans are reviewed to identify loans for impairment.  A loan is impaired when principal and interest are not expected to be collected in accordance with the original contractual terms of the loan.  Impairment is measured as either the expected future cash flows discounted at each loan’s effective interest rate, the fair value of the loan’s collateral if the loan is collateral dependent, or an observable market price of the loan (if one exists).  Upon measuring the impairment, the Bank will insure an appropriate level of allowance is present or established.

Central to the first phase and the Bank’s credit risk management is its loan risk rating system.  The originating credit officer assigns borrowers an initial risk rating, which is based primarily on a thorough analysis of each borrower’s financial capacity in conjunction with industry and economic trends.  Approvals are made based upon the amount of inherent credit risk specific to the transaction and are reviewed for appropriateness

20

by senior line and credit administration personnel.  Credits are monitored by line and credit administration personnel for deterioration in a borrower’s financial condition, which would impact the ability of the borrower to perform under the contract.  Risk ratings are adjusted as necessary.

Based on the risk rating system, specific allowances are established in cases where management has identified significant conditions or circumstances related to a credit that management believes indicates the probability that a loss has been incurred.  Management performs a detailed analysis of these loans, including, but not limited to, cash flows, appraisals of the collateral, conditions of the marketplace for liquidating the collateral and assessment of the guarantors.  Management then determines the inherent loss potential and allocates a portion of the allowance for losses as a specific allowance for each of these credits.

The second phase is conducted by evaluating or segmenting the remainder of the loan portfolio into groups or pools of loans with similar characteristics in accordance with SFAS No. 5, “Accounting for Contingencies”.  In this second phase, groups or pools of homogeneous loans are reviewed to determine a portfolio allowance.  Additionally, groups of non-homogeneous loans, such as construction loans, are also reviewed to determine a portfolio allowance.  The risk assessment process in this case emphasizes trends in the different portfolios for delinquency, loss, and other-behavioral characteristics of the subject portfolios.

The second major element in the Company’s methodology for assessing the appropriateness of the allowance consists of management’s considerations of all known relevant internal and external factors that may affect a loan’s collectibility.  This includes management’s estimates of the amounts necessary for concentrations, economic uncertainties, the volatility of the market value of collateral, and other relevant factors.  The relationship of the two major elements of the allowance to the total allowance may fluctuate from period to period.

Reflecting the Company’s ongoing analysis of the risks presented by its loan portfolio and concerns with the economic climate and its potential impact, the allowance for losses was $44,152,000 and $22,771,000 (or 1.89% and 1.11% of gross outstanding loans) at June 30, 2008 and December 31, 2007, respectively.  There was a $44,743,000 total provision for loan losses including $43,468,000 related to impaired loans, during the three month period ended June 30, 2008, compared to $300,000 for the same period of 2007. There was a $55,533,000 total provision for loan losses including $52,503,000 related to impaired loans, during the six month period ended June 30, 2008, compared to $300,000 for the same period of 2007.  For both the three and six months ended June 30, 2008 and 2007, the Company generated net loan charge-offs of $34,244,000 and $50,000, respectively. The Company had loan recoveries of $18,000 and $15,000 during the three months ended June 30, 2008 and 2007, respectively.

Loans are determined to be impaired when it is determined probable that the bank will be unable to collect all the contractual interest and principal payments as scheduled in the loan agreement.  Impaired loans include both non-performing and performing assets.

Per banking industry convention, non-performing assets consist of loans past due 90 or more days and still accruing interest, loans on non-accrual status, and other real estate owned (“OREO”).  As of June 30, 2008 First Regional had no loans past due 90 or more days which were still accruing interest, and no OREO.  First Regional’s non-performing assets as of June 30, 2008 which consist entirely of loans on non-accrual status, were as follows:

Asset Type	Number of loans	Amount
Land loans	5	$	27,545,000
Construction loans	5	37,306,000
Unsecured loan	1	2,000,000
Gross non-performing assets		66,851,000
Less charge-offs		33,990,000
Total non-performing assets		$	32,861,000

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Performing assets that are considered impaired due to concerns with the economic climate consist of the following:

Asset Type	Number of loans	Amount
Apartment loans
– First Trust Deed	1	$	16,267,000
– Second Trust Deeds	6	10,368,000
Land development	1	6,734,000
Unsecured	3	27,832,000
Total performing assets		$	61,201,000

Thus, at June 30, 2008 the Company has identified non-performing and performing loans totaling $94,062,000 which it concluded were impaired under SFAS No. 114.  These loans are principally secured by real estate.  The Company’s policy is generally to discontinue the accrual of interest income on non-performing impaired loans, and to recognize income on such loans only after the loan principal has been repaid in full.  The Company has established a loss reserve for each of the performing and nonperforming impaired loans which at June 30, 2008 totaled $19,482,000 for the loans as a group.

For the quarter ended June 30, 2008, the Company has identified loans having an aggregate average balance of $68,702,000 which it concluded were impaired under SFAS No. 114. By comparison, for the quarter ended June 30, 2007, the Company had identified loans having an aggregate average balance of $13,000 which it concluded were impaired under SFAS No. 114.

OTHER OPERATING INCOME

Other operating income increased to $2,481,000 in the second quarter of 2008 from $2,048,000 in the three months ended June 30, 2007.  For the first six months of 2008 other operating income also increased to $7,652,000 from $4,415,000 for the first six months of 2008.  During the first quarter of 2008, the Company realized a gain of $2,758,000 on the redemption of restricted stock of Visa Inc., which results in the majority of the increase in other operating income over the first six months of 2007.  The Bank’s Trust Administration Services division, which provides administrative and custodial services to self-directed retirement plans, had revenue which increased to $670,000 for the second quarter of 2008 and $1,277,000 for the six months ended June 30, 2008 in contrast with $495,000 in the second quarter of 2007 and $1,058,000 in the first six months of 2007.  The Bank’s Trust Department, that provides trust services for living trusts, investment agency accounts, IRA rollovers, and all forms of court-related matters, had revenue of $573,000 and $1,172,000 in the three and six months ended June 30, 2008 and revenue of $527,000 and $1,039,000 during three and six months ended June 30, 2007.  The Bank’s merchant services operation, which provides credit card deposit and clearing services to retailers and other credit card accepting businesses, had revenue that totaled $403,000 for the second quarter of 2008 and $800,000 for the six months ended June 30, 2008 in contrast with $333,000 for the second quarter of 2007 and $467,000 for the six months ended June 30, 2007.  During the first six months of 2008 gains of $3,000 and no losses on sales of premises and equipment were realized.  In contrast, during the first six months of 2007 gains of $108,000 and losses of $16,000 on sales of premises and equipment were realized.  During the first six months of 2008, the Company realized a gain of $2,758,000 on the redemption of restricted stock of Visa Inc.  No losses on securities sales were realized in the first six months of 2008.  In comparison, no gains and $29,000 losses on securities sales were realized in the first six months of 2007.

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OTHER OPERATING EXPENSES

Overall operating expenses increased in the first six months of 2008 compared to the same period of 2007.  Operating expenses rose to a total of $14,857,000 for the second quarter of 2008 from $13,419,000 for the three months ended June 30, 2007.  For the six months ended June 30, 2008 operating expenses totaled $27,399,000, an increase from $26,738,000 for the corresponding period in 2007.

Included in other operating expenses during the first quarter of 2008 is a reversal of a litigation accrual of $2,232,000 further described below.  While the total expense figures increased primarily due to the increases in overall bank growth, most components continue to be moderated by the effects of an ongoing program of expense control.

Salary and related benefits decreased by $140,000 (1.6%), declining from a total of $8,627,000 for the second quarter of 2007 to $8,487,000 for the same period in 2008, but for the six months ended June 30, 2008 increased to $17,973,000 from $17,648,000 for the six month period in 2007.  The six month period increase in this expense category principally reflects increases in staffing in the main and regional offices as part of the Company’s growth initiative and also reflects employee salary adjustments.  Occupancy expense rose to $1,923,000 for the six months ended June 30, 2008 from $1,781,000 in the same period of 2007. The increase reflects the rent paid on additional space at the various facilities which house the Bank’s headquarters and many of the regional offices.  The total of all other operating expenses rose in 2008 compared to the prior year, increasing from $7,309,000 for the first six months of 2007 to $7,503,000 for the same period of 2008 and increased from $3,830,000 in 2007 to $5,416,000 for the three month period of 2008.

During the fourth quarter of 2007, the Company recorded a charge of $2,232,000 for its share of contingent liabilities relating to settlement of lawsuits by Visa Inc.  This charge was reversed in the first quarter of 2008 after the successful completion of the Visa Inc. IPO, where a portion of the proceeds from the IPO funded an escrow account expected to be used for litigation settlement/claims, reducing all other operating expenses.

The combined effects of the above-described factors resulted in a loss before taxes of $33,002,000 for the three months ended June 30, 2008 compared to income of $15,013,000 for the second quarter of 2007.  For the six months ended June 30, 2008 the loss before taxes is $24,767,000 compared to income of $30,579,000 for the first six months of the prior year. In the second quarter, the Company’s provision for taxes decreased from $6,369,000 in 2007 to a tax benefit of $14,489,000 in 2008.  For the six months ended June 30, 2008 the tax benefit provisions were $10,989,000 (benefit) compared to $12,944,000 provision in 2007.  The effective tax rate for the six-month periods ended June 30, 2008 and 2007 are 44.4% and 42.3%, respectively.  This brought net loss for the second quarter of 2008 to $18,513,000 compared to net income of $8,644,000 for the same period in 2007.  For the six months ended June 30, net loss in 2008 was $13,778,000, while 2007 net income through June 30 was $17,635,000.

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INVESTMENT SECURITIES

The amortized cost and estimated fair values of securities available for sale as of June 30, 2008 and December 31, 2007 were as follows (dollars in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2008
U.S. Treasury Securities	$	249	$	—	$	—		$	249
U.S. Government sponsored Enterprise debt securities	24,377		158		(186		)	24,349
	$	24,626	$	158	$	(186	)	$	24,598
December 31, 2007
U.S. Treasury Securities	$	249	$	—	$	—		$	249
U.S. Government sponsored Enterprise debt securities	24,607		290		(32		)	24,865
	$	24,856	$	290	$	(32	)	$	25,114

LOAN PORTFOLIO AND PROVISION FOR LOAN LOSSES

The loan portfolio consisted of the following at June 30, 2008 and December 31, 2007:

	June 30, 2008			December 31, 2007
	(Dollars in Thousands)
Commercial loans	$	276,778		$	255,077
Real estate construction loans	692,682			591,334
Real estate loans	1,359,446			1,199,070
Government guaranteed loans	1,676			2,661
Other loans	1,972			2,412
Total loans	2,332,554			2,050,554
Less – Allowances for loan losses	(44,152		)	(22,771		)
– Deferred loan fees	(6,798		)	(7,566		)
Net loans	$	2,281,604		$	2,020,217

Government guaranteed loans represent loans for which the repayment of principal and interest is guaranteed by the U.S. government. The loans bear contractual interest at various rates tied to national prime lending rates.

The Bank’s lending is concentrated in real estate and businesses in Southern California.  From time to time, this area has experienced adverse economic conditions. Future declines in the local economy or in real estate values may result in increased losses that cannot  reasonably be predicted at this date.  No industry constitutes a concentration in the Bank’s portfolio, except the real estate construction industry.

The Bank offers a full range of lending services including commercial, real estate, and real estate construction loans.  The Bank has developed a substantial portfolio of short- and medium-term “mini-perm” first trust deed loans for income properties as well as specializing in construction lending for moderate-size commercial and residential projects.  The Bank also offers commercial loans for commercial and industrial borrowers,

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which includes equipment financing as well as short-term loans.  Typically, the Bank’s loans are floating rate and have no prepayment penalties.

Interest-only loans allow interest-only payments for a fixed period of time.  The loans generally mature at the end of the interest-only period and require a balloon payment.  At June 30, 2008 and December 31, 2007, the Company had $1,081,121,000 and $976,808,000 of short-and medium-term “mini-perm” first trust deed loans for income properties with interest-only payments that have a balloon payment at loan maturity.  The Bank does not offer residential mortgage products, negative amortization loans, “option-ARMs”, or sub-prime loan products.

Certain customers of the Bank control various separate legal entities representing, in the aggregate, significant borrowing concentration, including as much as $134,075,000 as of June 30, 2008.  While each individual loan is separately and independently underwritten, and while the majority of such loans are secured by commercial real property and are performing, these borrowing concentrations nevertheless present certain risks.

LIQUIDITY, SOURCES OF FUNDS, AND CAPITAL RESOURCES

The Company’s financial position remains liquid.  Total liquid assets (cash and due from banks, investment securities, federal funds sold and interest bearing deposits in financial institutions) stood at 4.0% of total deposits at June 30, 2008.  This level represents a decrease from the 4.6% liquidity level, which existed on December 31, 2007. In addition, at June 30, 2008 some $16,676,000 of the Bank’s total assets consisted of government guaranteed assets, which represent a significant source of liquidity due to the active secondary markets which exist for these assets. The ratio of net loans and government guaranteed assets to deposits was 115.9% and 118.1% as of June 30, 2008 and December 31, 2007, respectively.

The Bank is a member of the Federal Home Loan Bank of San Francisco (FHLB), which provides an additional source for short and long-term funding.  Borrowings from the FHLB were $210,000,000 at June 30, 2008 and were secured by loans available as collateral at the FHLB.  As of June 30, 2008, the Bank has additional borrowing capacity at the Federal Home Loan Bank of $261,188,000.

Total shareholders’ equity was $159,298,000 and $174,619,000 as of June 30, 2008 and December 31, 2007, respectively.  The Company’s and the Bank’s capital ratios for those dates in comparison with regulatory capital requirements were as follows:

	June 30, 2008		December 31, 2007
Leverage Ratio (Tier 1 Capital to Average Assets
Regulatory requirement	4.00	%	4.00	%
Company	8.86	%	10.86	%
Bank	9.58	%	11.67	%

The “regulatory requirement” listed represents the level of capital required for Adequately Capitalized status.

In addition, bank regulators have issued risk-adjusted capital guidelines, which assign risk weighting to assets and off-balance sheet items and place increased emphasis on common equity.  The Company’s and the Bank’s risk adjusted capital ratios for the dates listed in comparison with the risk adjusted regulatory capital requirements were as follows:

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	June 30, 2008		December 31, 2007
Tier 1 Capital to Risk-Weighted Assets:
Regulatory requirement	4.00	%	4.00	%
Company	8.12	%	9.89	%
Bank	8.85	%	10.67	%

	June 30, 2008		December 31, 2007
Total Capital to Risk-Weighted Assets:
Regulatory requirement	8.00	%	8.00	%
Company	11.08	%	12.56	%
Bank	10.10	%	11.67	%

At June 30, 2008, the Company and the Bank meet all applicable capital ratio standards and believe that they will continue to meet all applicable capital standards.

During July 2005, as a result of an examination by the FDIC and the California Department of Financial Institutions (DFI) of First Regional Bank (the Bank), the Bank had identified certain deficiencies and other concerns principally relating to the Bank Secrecy Act (BSA). At the same time, the Bank noted that it had taken corrective action directed toward achieving full compliance with BSA and addressing the other concerns so identified. The Bank further noted that it believed that the Bank’s corrective action had addressed the majority of such concerns. The Bank later announced that it had entered into an informal agreement with the FDIC and DFI with respect to such corrective action.

At the conclusion of an examination by the FDIC and DFI of the Bank in 2007, the FDIC and DFI noted that the Bank had satisfactorily addressed the specific BSA concerns previously identified which were the subject of the informal agreement. However, at the same time, the FDIC focused on a previously unidentified BSA concern relating to the Bank’s program of providing custodial services to individual retirement accounts (IRAs) administered by non-bank third parties.

As a result, in the first quarter of 2008 the Bank resigned as custodian from all individual retirement accounts administered by non-bank third parties which presented BSA concerns, and completed the process of terminating these accounts in the second quarter of 2008. While this meant the loss of approximately $40 million in deposits, the Bank concluded that such action was advisable because the cost of performing enhanced BSA and custodial compliance work would render the business unprofitable.

Notwithstanding the fact that the Bank expected all such accounts to be terminated in the near future, the Bank entered into a cease and desist order with the FDIC, principally addressing the Bank’s BSA duties in connection with such third party administered retirement accounts. While the Bank questioned the need for such a cease and desist order, the Bank concluded that it was advisable for the Bank to enter into, rather than undertake a formal challenge to, the requested cease and desist order, particularly in light of the imminent departure of all such accounts, which the Bank expects will completely resolve all associated BSA concerns. While no financial penalties have been or are expected to be assessed in connection with the claimed deficiencies, and the Company does not expect such development to have a material adverse monetary or other impact on its financial condition or results of operations, no assurance can be given that the FDIC will not require further action if the Bank fails to comply with the terms of the cease and desist order or otherwise fails to correct the deficiencies identified.

As previously noted, the third party administered IRA account program that was terminated is separate and apart from the Bank’s Trust Administration Services Division whereby the Bank (rather than non-bank third parties) provides administrative services on behalf of self-directed individual retirement accounts.

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INFLATION

The impact of inflation on the Company differs significantly from other industries, since virtually all of its assets and liabilities are monetary.  During periods of rising inflation, companies with net monetary assets will always experience a reduction in purchasing power.  Inflation continues to have an impact on salary, supply, and rent expenses, but the rate of inflation in general and its impact on these expenses in particular has remained moderate in recent years.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

There were no material changes outside of the ordinary course of business pertaining to contractual obligations during the quarter ended June 30, 2008.

BORROWINGS

Junior Subordinated Deferrable Debentures

During 2007, 2006, 2005, 2004, 2002 and 2001, the Company established First Regional Statutory Trusts I through VIII (collectively, the “Trusts”), statutory business trusts and wholly owned subsidiaries of the Company. The Trusts were formed for the sole purpose of issuing securities and investing the proceeds thereof in obligations of the Company and engaging in certain other limited activities.

During 2007, 2006, 2005, 2004, 2002 and 2001, the Trusts issued Cumulative Preferred Capital Securities (the “Trust Securities”) in private placement transactions, which represent undivided preferred beneficial interests in the assets of the Trusts. Concurrent with the issuance of the Trust Securities, the Trusts purchased Junior Subordinated Deferrable Debentures (the “Debentures”) from the Company, which aggregated $100,517,000 at June 30, 2008 and at December 31, 2007.  After each applicable issuance and purchase, the Company invested a substantial majority of the net proceeds from the applicable sale of Debentures in the Bank as additional paid-in capital to support the Bank’s future growth. The structure of these transactions enabled the Company to obtain additional Tier 1 capital for regulatory reporting purposes while permitting the Company to deduct the payment of future cash distributions for tax purposes. The debentures, must be redeemed within 30 years and are recorded in the liability section of the consolidated balance sheet in accordance with accounting principles generally accepted in the United States of America even though they are treated as capital for regulatory purposes.  Holders of the debentures are entitled to receive cumulative cash distributions, payable quarterly in arrears, equal to three-month LIBOR plus an interest factor.

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Since customer deposits are the Company’s principal funding source outside of its capital, management has attempted to match rates of its deposits with its investment and loan portfolios as part of its liquidity and asset and liability management policies.  The objective of these policies is to manage the Company’s interest rate sensitivity and limit the fluctuations of net interest income resulting from interest rate changes.  The table which follows indicates the repricing or maturity characteristics of the major categories of the Bank’s assets and liabilities as of June 30, 2008, and thus the relative sensitivity of the Bank’s net interest income to changes in the overall level of interest rates.

(In Thousands)

						One month			Six months			One year				Non-interest
	Floating		Less than			but less than			but less than			but less than		Five years		earning
Category	Rate		one month			six months			one year			five years		or more		or bearing			Total
Federal funds sold	$	17,145	$	0		$	0		$	0		$	0	$	0	$	0		$	17,145
Interest-bearing deposits in financial institutions	0		0			2,003			0			0		0		0			2,003
Investment securities	0		0			1,242			0			2,601		20,755		0			24,598
Subtotal	17,145		0			3,245			0			2,601		20,755		0			43,746
Loans, net of allowance for losses	2,098,461		2,850			314			4,610			172,623		2,746		0			2,281,604
Total earning assets	2,115,606		2,850			3,559			4,610			175,224		23,501		0			2,325,350
Cash and due from banks	0		0			0			0			0		0		35,084			35,084
Premises and equipment	0		0			0			0			0		0		5,320			5,320
Other real estate owned	0		0			0			0			0		0		0			0
Federal Home Loan Bank stock	18,532		0			0			0			0		0		0			18,532
Other assets	0		0			15,000			0			0		0		73,102			88,102
Total non-earning assets	18,532		0			15,000			0			0		0		113,506			147,038
Total assets	$	2,134,138	$	2,850		$	18,559		$	4,610		$	175,224	$	23,501	$	113,506		$	2,472,388
Federal Home Loan Bank advances	$	0	$	210,000		$	0		$	0		$	0	$	0	$	0		$	210,000
Federal Funds Purchased	0		0			0			0			0		0		0			0
Subtotal	0		210,000			0			0			0		0		0			210,000
Other deposits	76,968		0			0			0			0		0		0			76,968
Money market deposits	873,181		0			0			0			0		0		0			873,181
Time deposits	0		85,356			242,819			169,151			136,026		0		0			633,352
Subordinated debentures	0		0			100,517			0			0		0		0			100,517
Total interest bearing liabilities	950,149		295,356			343,336			169,151			136,026		0		0			1,894,018
Demand deposits	0		0			0			0			0		0		398,251			398,251
Note payable	0		38			0			0			0		0		0			38
Other liabilities	0		0			0			0			0		0		20,783			20,783
Shareholders’ equity	0		0			0			0			0		0		159,298			159,298
Total non-interest bearing liabilities and shareholders’ equity	0		38			0			0			0		0		578,332			578,370
Total liabilities and shareholders’ equity	$	950,149	$	295,394		$	343,336		$	169,151		$	136,026	$	0	$	578,332		$	2,472,388
GAP	$	1,183,989	$	(292,544	)	$	(324,777	)	$	(164,541	)	$	39,198	$	23,501	$	(464,826	)	$	0
Cumulative GAP	$	1,183,989	$	891,445		$	566,668		$	402,127		$	441,325	$	464,826	$	0		$	0

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As the table indicates, the vast majority of the Company’s assets are either floating rate or, if fixed rate, have short maturities. Since the yields on these assets quickly adjust to reflect changes in the overall level of interest rates, there are no significant unrealized gains or losses with respect to the Company’s assets, nor is there much likelihood of large realized or unrealized gains or losses developing in the future.

The Bank’s investment portfolio continues to be composed of high quality, low risk securities, including U.S. Treasury or Government Sponsored Enterprises debt securities. The balance of the Bank’s investment portfolio contains investments that qualify for CRA investment status. During the first six months of 2008, the Company realized a gain of $2,758,000 on the redemption of restricted stock of Visa Inc. No losses on securities sales were realized in the first six months of 2008. In comparison, no gains and $29,000 in losses were recorded on securities sales in the first six months of 2007. As of June 30, 2008 the Bank’s investment portfolio contained $158,000 gross unrealized gains and gross unrealized losses of $186,000, a net loss of $28,000, for unrealized losses of $16,000 net of tax benefit. By comparison, at June 30, 2007 the Company’s investment portfolio contained no gross unrealized gains and gross unrealized losses of $429,000, for unrealized losses of $249,000 net of tax benefit. Because the Company’s holdings of securities are intended to serve as a source of liquidity should conditions warrant, the securities have been classified by the Company as “available for sale,” and thus unrealized gains and losses have no effect on the Company’s income statement.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, evaluated the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange act of 1934, as amended (the “Exchange Act”)) as of June 30, 2008. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of such date. There were no significant changes in the Company’s internal controls over financial reporting that occurred during the quarter ended June 30, 2008 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Litigation

In the ordinary course of business, the Company and the Bank are involved in litigation. Management does not expect the ultimate outcome of any pending legal proceedings to have a material effect on the Company’s financial position or results of operations.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risk factors associated with First Regional’s business activities, which are discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2007. These include risks associated with the Company’s financial and operating results and with an investment in the Company’s common stock, and have not changed materially from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2007, except that the Company has updated one of those risk factors, concerning liquidity, as follows:

Economic conditions could affect the Company’s liquidity

The banking industry, including First Regional, has long focused on the importance of liquidity.  The current economic environment has had an uneven impact on First Regional's liquidity.  On the one hand, demands upon First Regional’s liquidity sources have declined in a number of respects.  For one, loan demand in general has slowed.  For another, First Regional remains highly selective in its loan production, particularly in light of deteriorating conditions in some real estate markets.  On the other hand, First Regional has found that loan payoffs have slowed, as a result of declining real estate sales and a tightened credit market for the long-term financing that has historically been accessed by our borrowers to refinance properties.  In addition, First Regional has undisbursed commitments for existing loans, which results in ongoing demand for funding even with constrained new loan production.  In order to effectively manage its liquidity, First Regional has recently increased deposits from previously underutilized sources, such as institutional time deposits.  The Company has done this as part of a plan to reduce First Regional’s outstanding Federal Home Loan Bank borrowing levels, so as to hold this source available as a reserve fund of liquidity.  First Regional also maintains other supplemental sources of liquidity, including marketable assets, credit lines with correspondent banks, and access to the Federal Reserve’s discount window.  Nevertheless, there is a risk that if loan repayments continue to slow, and/or First Regional’s traditional deposit levels are reduced, the Company may need to utilize these supplemental liquidity sources, which could have an adverse impact on First Regional’s financial condition and/or results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On July 30, 2007, the Company announced that its Board of Directors had approved and adopted a share repurchase program authorizing First Regional to repurchase up to 1,000,000 shares, or approximately 8%, of its outstanding common stock through July 30, 2008. The repurchase program authorizes the Company to purchase shares from time to time in the open market, depending on market price and other considerations. The timing of purchases and the prices to be paid are at the discretion of management. All repurchased shares are expected to be retired. The repurchase program is intended to be structured to conform with the safe harbor provisions of Securities and Exchange Commission Rule 10b-18.

There were no repurchases of the Company’s securities during the second quarter of 2008.

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

The Company held its Annual Meeting of Shareholders on May 22, 2008.

Election of Directors

Four Class 2 Directors were elected as follows (Class 2 Directors serve until the 2010 Annual Meeting):

Class 2	Votes For	Votes Against or Withheld	Abstentions
Jack A. Sweeney	8,257,560	2,280,255	670,465
H. Anthony Gartshore	8,259,917	2,277,898	670,465
Lawrence J. Sherman	10,484,925	52,890	670,465
Fred M. Edwards	10,489,057	48,758	670,465

The term of office of all Class 1 Directors continues until the next annual meeting of shareholders, scheduled for May of 2009. The Class 1 Directors are Gary M. Horgan, Thomas E. McCullough and Richard E. Schreiber.

No other matters were submitted for shareholder vote.

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ITEM 6. EXHIBITS

                The following is a table of exhibits to this Quarterly Report on Form 10-Q.

Exhibit No.	Description
31.1	Certification of the Chief Executive Officer furnished pursuant to Section 302 of the Sarbanes-Oxley Act
31.2	Certification of the Corporate Secretary furnished pursuant to Section 302 of the Sarbanes-Oxley Act
31.3	Certification of the Chief Financial Officer furnished pursuant to Section 302 of the Sarbanes-Oxley Act
32	Certification furnished pursuant to Section 906 of the Sarbanes-Oxley Act

Items 3 and 5 of Part II of Form 10-Q are not applicable and have been omitted.

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SIGNATURES

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

	FIRST REGIONAL BANCORP
Date: August 11, 2008	/s/ H. Anthony Gartshore
	H. Anthony Gartshore,
	President & Chief Executive Officer
Date: August 11, 2008	/s/ Thomas E. McCullough
	Thomas E. McCullough, Corporate Secretary
Date: August 11, 2008	/s/ Elizabeth Thompson
	Elizabeth Thompson, Chief Financial Officer

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Exhibit Index

Exhibit No.	Description
31.1	Certification of the Chief Executive Officer furnished pursuant to Section 302 of the Sarbanes-Oxley Act
31.2	Certification of the Corporate Secretary furnished pursuant to Section 302 of the Sarbanes-Oxley Act
31.3	Certification of the Chief Financial Officer furnished pursuant to Section 302 of the Sarbanes-Oxley Act
32	Certification furnished pursuant to Section 906 of the Sarbanes-Oxley Act

33