Discovery Bancorp is a California corporation registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, and is headquartered in San Marcos, California. The Company was incorporated in October 2004 and acquired all of the outstanding shares of Discovery Bank (the "Bank") in June 2005. The Company's principal subsidiary is the Bank, and the Company exists primarily for the purpose of holding the stock of the Bank and of such other subsidiaries it may acquire or establish. The Company's only other subsidiary is Celtic Capital Corporation, a commercial finance lender which the Company acquired in August 2005 as described immediately below.

On August 31, 2005, the Company, through its then wholly owned subsidiary, Celtic Merger Corp., acquired certain assets and assumed certain liabilities of Celtic Capital Corporation, a commercial finance lender. The acquisition totaled $19.3 million of commercial loans and other assets, including $1.7 million of goodwill established as part of the purchase. Funding for the purchase was provided by a borrowing line established with an unaffiliated bank, $5.2 million in cash and 53,613 shares ($831,000 worth) of the Company's newly issued common stock from a public stock offering of 827,425 shares which was completed in November 2005. All 53,613 of these shares were issued to principals of Celtic on August 31, 2005 as part of the Celtic asset acquisition. Celtic Merger Corp. was renamed Celtic Capital Corporation ("Celtic") and continues to operate as a commercial finance lender. See Notes 1 and 15 to the financial statements for additional information regarding the Celtic asset purchase. For further information concerning Celtic, please refer to "-Celtic Capital Corporation" below.