Regulatory Order and Written Agreement

6 Months Ended

Jun. 30, 2011

Regulatory Order and Written Agreement

Regulatory Order and Written Agreement

Note 11.  Regulatory Order and Written Agreement

On March 4, 2010, the FDIC and the DFI issued a Consent Order (the “Order”) to the Bank that requires, among other things, the Bank to increase its capital ratios, reduce its classified assets and increase Board oversight of Management. The Board and Management are aggressively responding to the Order to ensure full compliance and have taken actions necessary to comply with the Order within the required time frames. Such actions include the completion of the capital raise discussed above which, following a contribution of a portion of the proceeds to the Bank, brought the Bank into compliance with the capital requirements of the Order.  Additionally, a Written Agreement was entered into between the Company and the Federal Reserve Bank of San Francisco on March 4, 2010. Although the Company and Bank believe that the requirements of both the Order and the Written Agreement have been addressed, a recently completed examination did not alter any of the provisions of the Order or the Written Agreement.

Please also refer to the Company’s current reports filed on Form 8-K with the SEC on March 10, 2010 and March 8, 2010 and the Company’s Note 22 to the consolidated financial statements filed as part of its Annual Report on Form 10-K with the SEC on March 10, 2011, for a more complete description of the provisions of the Order and Written Agreement, respectively.