The accompanying notes are an integral part of these financial statements. California Bank of Commerce 10 2011 2010 Interest income: Interest and fees on loans  $  10,145,984  $  8,320,135 Interest on investment securities  452,533  788,149 Interest on Federal funds sold  1,903  119 Interest on deposits in banks  88,639  87,600 Total interest income 10,689,059 9,196,003 Interest expense: Interest on deposits (Note 7)  1,149,344  1,227,546 Interest on borrowings (Note 9)  406,105  328,369 Total interest expense 1,555,449  1,555,915 Net interest income before provision for loan losses 9,133,610 7,640,088 Provision for loan losses (Note 5)  1,328,061  2,094,697 Net interest income after provision for  loan losses 7,805,549  5,545,391 Noninterest income: Service charges and fees  233,926  188,676 Net gains on sales of loans  240,640   -  Net gains on sales of investment securities (Note 3)  124,100  372,895 Other  235,152  145,400 Total non-interest income  833,818  706,971 Non-interest expenses: Salaries and employee benefits (Notes 4 and 14)  4,597,721  3,589,139 Occupancy and equipment (Notes 6 and 10)  634,498  630,254 Other (Note 15)  1,931,384  1,717,747 Total non-interest expenses 7,163,603  5,937,140 Income before provision for income taxes  1,475,764  315,222  Provision for income taxes (Note 8)  682,616  (3,050,674) Net Income 793,148 3,365,896 Preferred stock dividend  (159,556)  (218,000) Income to common shareholders  $ 633,592  $ 3,147,896 Basic and diluted earnings per common share $  0.23 $ 1.14 Weighted average number of shares outstanding – basic and diluted  2,750,000  2,750,000 STATEMENT OF INCOME For the Years Ended December 31, 2011 and 2010