There is little question that 2009 was one of the most difficult years in recent memory for both businesses and consumers alike. With 2009 now in the proverbial “rear-view mirror” and first quarter of 2010 nearly gone, the economic outlook for San Diego is beginning to look more promising. Consumers’ confidence is improving and home prices are stabilizing. The difficult part of this economic recovery, however, remains the high unemployment rate. This, too, is stabilizing and should show signs of improvement later this year as recovery continues. In 2009, California Bank & Trust (CB&T) approved more than $365 million in new credit to local San Diego businesses. The newly-approved loans were primarily for commercial real estate, working capital lines of credit and term financing for small- to mid-sized businesses. As we move further into 2010, what we, and banks of all sizes, are seeing is that demand for loans has dropped significantly. To grow the balance sheet, banks must work with their current clients to offer them financial solutions to support their plans for both growth and long-term financial health and stability. At CB&T, we actively manage our existing relationships while continuing to reach out to new clients with our community-based brand of banking. Community banks like us are very connected to their clients and to their community. This enables us to understand the economic conditions in the local marketplace in a way that larger, national institutions cannot. Decision-making and lending authority is also kept at the local level. This is critical in being able to actively meet the financial and credit needs of small- to mid-sized businesses in the San Diego market. Expanding new areas of business, such as our mortgage and multi-family lending is also of interest and important in meeting the needs of the communities we serve. In addition, CB&T continues to have a strong presence in SBA lending, and we will continue to stay active in that market. Overall, our goal at CB&T is to create and deliver the best financial solutions possible to meet the financial needs of the San Diego market place. Troy Nixon California Bank & Trust Executive vice president President, San Diego Division