UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.               )

FIRST COMMUNITY BANCORP
401 West “A” Street
San Diego, CA 92101

NOTICE OF 2007 ANNUAL MEETING OF SHAREHOLDERS

To be Held on May 16, 2007

The 2007 Annual Meeting of Shareholders (the “Meeting”) of First Community Bancorp (the “Company”) will be held on Wednesday, May 16, 2007 at 10:00 a.m. Pacific Time at The Inn, 5951 Linea del Cielo, Rancho Santa Fe, California 92067, for the following purposes:

1.      To elect thirteen (13) members of the Board of Directors who shall hold office until the next annual meeting of shareholders and until their successors are duly elected and qualified.

2.      To approve the material terms of First Community’s 2007 Executive Incentive Plan to ensure the Company can deduct payments made pursuant thereto as compensation expense under Section 162(m) of the Internal Revenue Code.

3.      To consider and act upon such other business and matters or proposals as may properly come before the Meeting or any postponements or adjournments thereof.

The Board of Directors has fixed the close of business on April 2, 2007 as the Record Date for determining which shareholders have the right to receive notice of and to vote at the Meeting or any postponements or adjournments thereof.

You are cordially invited to attend the Meeting. A Proxy Statement, form of proxy, and a copy of the Company’s Annual Report for the fiscal year ended December 31, 2006 accompany this notice.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT AS MANY SHARES AS POSSIBLE MAY BE REPRESENTED AT THE MEETING. Your vote is important and we appreciate your cooperation in returning promptly your executed proxy card. Your proxy is revocable and will not affect your right to vote in person at the Meeting.

If you plan to attend, please note that admission to the Meeting will be on a first-come, first-served basis. Each shareholder may be asked to present valid picture identification, such as a driver’s license or passport. Shareholders holding stock in brokerage accounts (“street name” holders) will need to bring a picture i.d. and a copy of a brokerage account statement reflecting stock ownership as of the Record Date. Cameras, recording devices and other electronic devices will not be permitted at the Meeting.

TABLE OF CONTENTS

FIRST COMMUNITY BANCORP

PROXY STATEMENT
FOR THE 2007 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2007

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board of Directors” or the “Board”) of First Community Bancorp, a California corporation (the “Company,” “we” or “our”), to be used at our 2007 Annual Meeting of Shareholders (the “Meeting”) and at any postponements or adjournments thereof. The Meeting is scheduled to be held as follows:

This Proxy Statement and the accompanying form of proxy are first being sent to shareholders on or about April 12, 2007.

INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

          1.  What is being voted on at the Meeting?

The matters to be considered and voted upon at the Meeting are as follows:

1.      Election of Directors.   To elect thirteen (13) members of the Board of Directors who shall hold office until the next annual meeting of shareholders and until their successors are duly elected and qualified.

2.      Approval of 2007 Executive Incentive Plan.   To approve the material terms of the Company’s 2007 Executive Incentive Plan (the “EIC Plan”) to ensure the Company can deduct payments made pursuant thereto as compensation expense under Section 162(m) of the Internal Revenue Code.

3.      Other Business.   To consider and act upon such other business as may properly come before the Meeting or any postponements or adjournments thereof.

1

          2.  Who is entitled to vote? How many votes am I entitled to?

Only shareholders of record as of April 2, 2007 (the “Record Date”) may vote at the Meeting. According to U.S. Stock Transfer Corporation, our transfer agent, there were 28,832,985 shares of common stock outstanding, excluding 898,147 shares of unvested time-based and performance-based restricted stock, held by approximately 2,499 shareholders as of the Record Date.

Each holder of the Company’s common stock is entitled to one vote for each share recorded in their name on the books of the Company as of the Record Date on any matter submitted to the shareholders for a vote, except that shareholders may vote their shares cumulatively for the election of directors if certain conditions are met at the Meeting. Cumulative voting provides each shareholder with a number of votes equal to the number of directors to be elected multiplied by the number of shares held by such shareholder, which such shareholder can then vote in favor of one or more nominees. For example, if you held 100 shares as of the Record Date, you would be entitled to 1,300 votes which you could then distribute among one or more nominees since there are thirteen (13) directors to be elected. Cumulative voting may only be exercised at the Meeting if (i) the name of the candidate or candidates for whom such votes would be cast has been placed in nomination prior to the voting; and (ii) at least one shareholder has given notice at the Meeting prior to the voting of such shareholder’s intention to cumulate his/her votes.

          3.  What is the vote necessary to approve each of the matters being considered at the Meeting?

The election of directors requires a plurality of the votes cast for the election of directors. Accordingly, the thirteen (13) directorships to be filled at the Meeting will be filled by the nominees receiving the highest number of votes. In the election of directors, votes may be cast in favor or withheld with respect to any or all nominees. Votes that are withheld will be excluded entirely from the vote and will have no effect on the outcome of the vote.

The affirmative vote of the holders of a majority of the outstanding shares of common stock represented and voting at the Meeting (which shares voting affirmatively also constitute at least a majority of the required quorum) is required to approve the material terms of the EIC Plan.

The affirmative vote of the holders of a majority of the outstanding shares of common stock, represented and voting at the Meeting (which shares voting affirmatively also constitute at least a majority of the required quorum), is required to approve any other matters properly brought before the Meeting.

With respect to each matter to be acted upon, an abstention from voting will be treated as “present” for quorum purposes. However, since an abstention is not treated as a “vote” for or against the matter, it will not have any impact on the vote.

          4.  If I hold shares of First Community common stock pursuant to the First Community 401(k) Plan, will I be able to vote?

Yes. You will receive a proxy card for the shares allocated to your 401(k) plan account, which you should return as indicated on the instructions accompanying the proxy card.

          5.  How does the Board of Directors recommend I vote?

The Board of Directors recommends a vote FOR each of the nominees for director and FOR approval of the material terms of the EIC Plan.

          6.  How many shares must be represented at the Meeting to constitute a “quorum”?

A majority of the outstanding shares must be present at the Meeting, either in person or by proxy, to constitute a quorum. There must be a quorum for the Meeting to be held. If you return a signed proxy card, you will be counted as being present, even if you abstain from voting. Broker non-votes (i.e., proxies from banks, brokers or other nominees indicating that such persons have not received instructions from

2

the beneficial owners or other persons entitled to vote as to a matter which such bank, broker or other nominee does not have discretionary power to vote) will also be counted as being present for purposes of determining a quorum.

          7.  What do I have to do to vote?

Holders of record—If you are a holder of record (that is, if your shares are registered in your own name with our transfer agent), you may vote by marking, signing and dating the enclosed proxy card and returning it in the enclosed postage-paid envelope. If you mark the proxy card to show how you wish to vote, your shares will be voted as you direct. If you return a signed proxy card but do not mark the proxy card to show how you wish to vote, your shares will be voted FOR each of the Board of Directors’ nominees for election as directors, FOR approval of the material terms of the EIC Plan and otherwise in accordance with the judgment of the person or persons voting the proxy on any other matter properly brought before the Meeting. You may change or revoke your vote at any time before it is counted at the Meeting by:

·                    Notifying our Secretary at the address shown above in writing that you wish to revoke your proxy;

·                    Submitting a later dated proxy card; or

·                    Attending the Meeting and voting in person.

Attending the Meeting will not automatically revoke your prior proxy. You must comply with one of the methods indicated above in order to revoke your proxy.

Street name holders—If you hold your shares in “street name” (that is, through a bank, broker or other nominee), you should receive a proxy from your bank or brokerage firm asking you how you want to vote your shares. If you do not, you may contact such bank or brokerage firm in whose name your shares are registered and obtain a proxy from them. Please refer to the information in the materials provided by your bank or brokerage firm for an explanation of how to change or revoke your vote and of the effect of not indicating a vote.

          8.  How will voting on any other business be conducted?

We do not know of any business to be considered at the Meeting other than the election of directors and the approval of the EIC Plan. For holders of record, if any other business is properly presented at the Meeting, any of the persons named on the proxy card as your designated proxies may vote on such matter in their discretion. If you hold your shares in “street name,” please see the materials provided by your bank or brokerage firm for an explanation of how your shares will be voted on any other business. Any such matter must be authorized by a majority of the votes cast at the Meeting by the shareholders entitled to vote thereon (or any higher vote required by the California General Corporation Law) in order to be approved.

          9.  Who pays the cost of soliciting proxies on behalf of the Company?

The Company will pay the cost of preparing, assembling and mailing the proxy materials and soliciting proxies for the Meeting. In addition to the solicitation of proxies by mail, solicitation may be made by certain directors, officers and employees of the Company or its subsidiaries telephonically, electronically or by other means of communication. Such directors, officers and employees will receive no additional compensation for their services. We will reimburse brokers and other nominees for costs incurred by them in mailing proxy materials to beneficial owners in accordance with applicable rules.

   10.  Can I attend the Meeting?

Any shareholder entitled to vote at the Meeting may attend the Meeting and vote in person. If you hold shares in “street name” and would like to attend the Meeting and vote in person, you will need to

3

bring a picture i.d. and brokerage account statement or other acceptable evidence of ownership of common stock as of the Record Date. Alternatively, in order to vote, you may contact the person in whose name your shares are registered and obtain a proxy from that person and bring it to the Meeting.

   11.  How do I get more information about the Company?

With this Proxy Statement, we are also sending you our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, which includes our consolidated financial statements. If you did not receive our Annual Report, we will send it to you without charge. The Annual Report includes a list of exhibits filed with the Securities and Exchange Commission (the “SEC”), but does not include the exhibits. If you wish to receive copies of the exhibits, please write to:

Investor Relations
First Community Bancorp
275 N. Brea Blvd.
Brea, California 92821

You may also send your request by facsimile to (714) 674-5377 or by e-mail to investor-relations@firstcommunitybancorp.com.

We also maintain a website at http://www.firstcommunitybancorp.com where you may view, print and download our public filings. In addition, the SEC maintains a website at http: //www.sec.gov that also contains our public filings.

To reduce costs, we may send only one copy of the Annual Report and Proxy Statement to shareholders who share the same last name and address, unless we receive contrary instructions from you. We will continue to mail a proxy card to each record shareholder.

If you prefer to receive multiple copies of the Annual Report and Proxy Statement at the same address, we will provide them promptly upon request. If your household is receiving multiple copies of the Annual Report and Proxy Statement, you may request to receive only one copy. If you hold your Company stock directly, you may contact us by writing to our mailing address or e-mail address listed above. If you hold your Company stock through a bank or broker, you should request additional copies of the Annual Report and Proxy Statement, or you may request to receive only one copy to your household by notifying them.

4

BENEFICIAL OWNERS OF MORE THAN FIVE PERCENT

The following table sets forth information as of the Record Date regarding the beneficial owners of more than five percent of the outstanding shares of the Company’s common stock (the only class of equity outstanding). To the Company’s knowledge, based on the public filings which beneficial owners of more than five percent of the outstanding shares of the Company’s common stock are required to make with the SEC, there are no other beneficial owners of more than five percent of the outstanding shares of the Company’s common stock as of the Record Date other than those set forth below.

(1)                 Based on 28,832,985 shares of common stock of the Company issued and outstanding as of the Record Date, excluding 898,147 shares of unvested time-based and performance-based restricted stock. For purposes of computing the percentage of outstanding shares of common stock held by each person or group of persons named above, any shares which such person or persons has the right to acquire within 60 days of the Record Date, are deemed to be outstanding for such person or persons but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

(2)                 Based on a Schedule 13G filed February 14, 2007 by Wellington Management Company, LLP (the “Wellington 13G”). According to the Wellington 13G, Wellington Management Company, LLP has sole voting power over 1,612,936 shares of Company common stock and sole dispositive power over 2,111,956 shares of Company common stock.

(3)         Mr. Eggemeyer has direct beneficial ownership of 426,836 shares of Company common stock,  and indirect ownership of 2,646 shares held by a trust of which Mr. Eggemeyer is trustee. Mr. Eggemeyer shares voting power and investment power (i) through Castle Creek Capital Partners Fund IIa, LP, of which he is a principal, with respect to 973,506 shares; and (ii) through Castle Creek Capital Partners Fund IIb, LP, of which he is a principal, with respect to 411,210 shares. Mr. Eggemeyer’s ownership excludes 7,333 shares of unvested time-based restricted stock granted to Mr. Eggemeyer in December 2004; this restricted stock began vesting in December 2005 in annual one-third increments and vests in full upon a change in control of the Company. Mr. Eggemeyer’s ownership excludes 46,498 shares of common stock held by the trustee of the Deferred Plan (described below under the Section entitled “Compensation of Directors—Directors’ Deferred Compensation Plan” on page 17 of this Proxy Statement) and for which the participant does not have voting or investment power.

(4)                 Based on a Schedule 13G filed January 23, 2007 by Barclays Global Investors, N.A., Barclays Global Fund Advisors, Barclays Global Investors, Ltd, Barclays Global Investors Japan Trust and Banking Company Limited and Barclays Global Investors Japan Limited (the “Barclays Schedule 13G”). According to the Barclays Schedule 13G, in aggregate, the Barclays entities hold sole voting power over 1,410,213 shares of Company common stock and sole dispositive power over 1,480,414 shares of Company common stock.

5

BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table indicates the beneficial ownership of the Company’s common stock (the only class of equity outstanding) as of the Record Date by: (1) each of the Company’s current directors and nominees for election; (2) the Company’s Chief Executive Officer (the “CEO”), the Company’s Chief Financial Officer (the “CFO”) and the three most highly compensated executive officers of the Company during 2006 other than the CEO and the CFO (together as a group, the “Named Executive Officers”); and (3) all current directors, nominees for director, and executive officers of the Company as a group, based on the Company’s records and data supplied by each of the current directors, director nominees and executive officers.

6

                  * Represents less than 1.0% of the outstanding shares of the Company’s common stock calculated in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). See footnotes (1) and (2) below.

              (1) For purposes of this table, “beneficial ownership” is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days. This includes options which will vest within 60 days of April 2, 2007. Unless otherwise indicated, the nature of the beneficial ownership is sole voting and investment power over the shares indicated.

              (2) Based on 28,832,985 shares of common stock of the Company issued and outstanding as of April 2, 2007, excluding 898,147 shares of unvested time-based and performance-based restricted stock. For purposes of computing the percentage of outstanding shares of common stock held by each person or group of persons named above, any shares which such person or persons has the right to acquire within 60 days of April 2, 2007, are deemed to be outstanding for such person or persons but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

              (3) Mr. Eggemeyer has direct beneficial ownership of 426,836 shares of Company common stock  and indirect ownership of 2,646 shares held by a trust of which Mr. Eggemeyer is trustee. Mr. Eggemeyer shares voting power and investment power (i) through Castle Creek Capital Partners Fund IIa, LP, of which he is a principal, with respect to 973,506 shares; and (ii) through Castle Creek Capital Partners Fund IIb, LP, of which he is a principal, with respect to 411,210 shares. Mr. Eggemeyer’s ownership excludes 7,333 shares of unvested time-based restricted stock granted to Mr. Eggemeyer in December 2004; this restricted stock began vesting in annual one-third increments beginning in December 2005 and vests in full upon a change in control of the Company. Excludes 46,498 shares of common stock held by the trustee of the Deferred Plan and for which the participant does not have voting or investment power.

7

              (4) Mr. Baker has shared voting and investment power in 28,817 shares that are held in a trust of which he is co-trustee.

              (5) Mr. Deems has shared voting and investment power in 8,005 shares that are held in a trust of which he is a co-trustee and with respect to 299 shares held by family members sharing his household.

              (6) Mr. Dunn has indirect ownership of 4,900 shares held by the Romar Company Employees Profit Sharing Plan pursuant to which Mr. Dunn acts as trustee, and 17,300 shares held by Stephen M. Dunn doing business as W.S. Properties, a sole proprietorship. Excludes 4,669 shares of common stock held by the trustee of the Deferred Plan and for which the participant does not have voting or investment power.

              (7) Mr. Fitzpatrick has shared voting and investment power in 12,993 shares that are held in a trust of which he is co-trustee. Excludes 9,070 shares of common stock held by the trustee of the Deferred Plan and for which the participant does not have voting or investment power.

              (8) Mr. Langley has shared voting and investment power in 113,661 shares that are held in a trust of which he is a co-trustee. Excludes 965 shares of common stock held by the trustee of the Deferred Plan and for which the participant does not have voting or investment power.

              (9) Excludes 4,669 shares of common stock held by the trustee of the Deferred Plan and for which the participant does not have voting or investment power.

          (10) Mr. Messer has shared voting and investment power in 25,000 shares, which are held in joint tenancy with his wife, and with respect to 497 shares held by family members sharing his household. Excludes 2,613 shares of common stock held by the trustee of the Deferred Plan and for which the participant does not have voting or investment power.

          (11) Excludes 1,179 shares of common stock held by the trustee of the Deferred Plan and for which the participant does not have voting or investment power.

          (12) Mr. Stine has shared voting and investment power with respect to 19,703 shares that are held in a trust of which he is co-trustee. Excludes 8,883 shares of common stock held by the trustee of the Deferred Plan and for which the participant does not have voting or investment power.

          (13) Mr. Williams has sole voting and investment power with respect to 3,000 vested stock options, and shared voting and investment power with respect to 5,100 shares that are held in a trust of which he is co-trustee. Excludes 4,670 shares of common stock held by the trustee of the Deferred Plan and for which the participant does not have voting or investment power.

          (14) Mr. Wagner’s beneficial ownership amount does not include 4,175 shares of time-based restricted stock granted to Mr. Wagner in June 2004, which began vesting in annual one-third increments beginning June 14, 2005 and vests in full upon a change in control of the Company. Amounts also do not include 25,000 shares of time-based restricted stock granted to Mr. Wagner in January 2006 that vest in full in four years or upon a change in control of the Company. Amounts also do not include 100,000 shares of performance-based restricted stock granted to Mr. Wagner in January 2006 and 100,000 shares of performance-based restricted stock granted to Mr. Wagner in February 2007 that vest in full upon the Company obtaining the designated financial targets or upon a change in control of the Company. Excludes 25,949 shares of common stock held by the trustee of the Deferred Plan and for which the participant does not have voting or investment power.

          (15) Mr. Borgman has shared voting and investment power with respect to 63,313 shares that are held in a trust of which he is co-trustee. Mr. Borgman’s beneficial ownership amount does not include 1,670 shares of time-based restricted stock granted to Mr. Borgman in June 2004, which began vesting in annual one-third increments beginning June 14, 2005 and vests in full upon a change in control of the Company. Amounts also do not include 20,000 shares of performance-based restricted stock granted to Mr. Borgman in January 2006 that vest in full upon the Company obtaining the designated financial target or upon a change in control of the Company.

          (16) Mr. Santoro has shared voting and investment power with respect to 26,445 shares that are held in joint tenancy with his wife. Mr. Santoro’s beneficial ownership amount does not 1,670 shares of time-based restricted stock granted to Mr. Santoro in June 2004, which began vesting in annual one-third increments beginning June 14, 2005 and vests in full upon a change in control of the Company. Amounts also do not include 40,000 shares of performance-based restricted stock granted to Mr. Santoro in January 2006 and 40,000 shares of performance-based restricted stock granted to Mr. Santoro in February 2007 that vest in full upon the Company obtaining the designated financial targets or upon a change in control of the Company. Excludes 14,213 shares of common stock held by the trustee of the Deferred Plan and for which the participant does not have voting or investment power.

          (17) Mr. Thompson has shared voting and investment power with respect to 49,368 shares that are held in joint tenancy with his wife. Mr. Thompson’s beneficial ownership does not include 1,113 shares of time-based restricted stock granted to Mr. Thompson in June 2004, which began vesting in annual one-third increments beginning June 14, 2005 and vests in full upon a change in control of the Company. Amounts also do not include 25,000 shares of performance-based restricted stock granted to Mr. Thompson in January 2006 that vest in full upon the Company obtaining the designated financial target or upon a change in control of the Company.

8

          (18) Mr. Wolff’s holdings for which he has sole voting and investment power include 20,000 vested stock options. Mr. Wolff has shared voting and investment power with respect to 18,589 shares that are held in a trust of which he is co-trustee. Mr. Wolff’s beneficial ownership amount does not include 1,448 shares of time-based restricted stock granted in June 2004 to Mr. Wolff, which began vesting in annual one-third increments beginning June 14, 2005 and vests in full upon a change in control of the Company. Amounts also do not include 25,000 shares of performance-based restricted stock granted to Mr. Wolff in January 2006 and 25,000 shares of performance-based restricted stock granted to Mr. Wolff in February 2007 that vest in full upon the Company obtaining the designated financial targets or upon a change in control of the Company.

9

PROPOSAL 1: ELECTION OF DIRECTORS

Size of Board

The bylaws of First Community provide that the authorized number of directors shall not be less than 7 nor more than 15 with the exact number of directors to be fixed from time to time by resolution of a majority of the Board of Directors. The number of directors is currently fixed at 13 and the Board is currently composed of 13 directors. Ten directors were elected at the 2006 annual meeting of shareholders held on April 19, 2006.

Resignations and Appointments

In April 2006, Charles H. Green did not stand for re-election as a director and resigned from service on the Board of Directors. George E. Langley was appointed to the Board of Directors in July 2006 following the Company’s acquisition of Foothill Independent Bancorp in May 2006, and Mark N. Baker and Gary W. Deems were each appointed to the Board of Directors in November 2006 following the Company’s acquisition of Community Bancorp Inc. in October 2006.

Nominees

First Community’s Board of Directors has nominated 13 candidates for election. The persons named in the following table have been recommended by the Compensation, Nominating and Governance Committee of the Board (the “CNG Committee”) and approved by the Board of Directors as nominees for election to serve as directors of the Company until the next annual meeting of shareholders and until their successors are duly elected and qualified. All director nominees are current directors.

With respect to such election, absent any specific instruction in the proxies solicited by the Board, the proxies will be voted in the sole discretion of the proxy holders to effect the election of all 13 of the Board’s nominees, or as many thereof as possible under the rules of cumulative voting, if any persons are nominated other than by the Board of Directors. In the event that any of the Board’s nominees are unable to serve as directors, it is intended that each proxy will be voted for the election of such substitute nominees, if any, as shall be designated by the Board of Directors. To the best of its knowledge, the Company has no reason to believe that any of the nominees will be unable to serve as directors.

10

11

Each holder of First Community common stock may vote their shares cumulatively for the election of directors if certain conditions are met at the Meeting. Cumulative voting provides each shareholder with a number of votes equal to the number of directors to be elected multiplied by the number of shares held by such shareholder, which such shareholder can then vote in favor of one or more nominees. For example, if you held 100 shares as of the Record Date, you would be entitled to 1,300 votes which you could then distribute among one or more nominees since there are 13 directors to be elected. Cumulative voting may only be exercised at the Meeting if (1) the name of the candidate or candidates for whom such votes would be cast has been placed in nomination prior to the voting and (2) at least one shareholder has given notice at the Meeting prior to the voting of such shareholder’s intention to cumulate his/her votes.

Vote Required and Recommendation of the First Community Board of Directors

Directors are elected by a plurality of votes cast for election of directors. Accordingly, the 13 director seats to be filled at the Meeting will be filled by the nominees receiving the highest number of votes. In the election of directors, votes may be cast in favor or withheld with respect to any or all nominees. Votes that are withheld will be excluded entirely from the vote and will have no effect on the outcome of the vote.

Board of Directors Recommendation.

The Board of Directors unanimously recommends that shareholders vote “FOR” all of the nominees listed above. Unless a contrary choice is specified, proxies solicited by the Board of Directors will be voted FOR each nominee listed above.

12

CORPORATE GOVERNANCE AND BOARD COMMITTEES

The Company is committed to maintaining good corporate governance practices and adhering to high standards of ethical conduct. The Board regularly reviews its governance procedures and to ensure compliance with rapidly changing laws, rules and regulations that govern the Company’s business. The Company’s website at www.firstcommunitybancorp.com includes important information regarding Company policies and Board charters, including the Company’s Corporate Governance Guidelines and its Code of Business Conduct and Ethics, as well as all of the Company’s SEC filings and press releases.

During the fiscal year 2006, the Board of Directors of the Company met seven times. The independent directors also met three times in executive session during 2006. The sessions of the independent directors were presided over by Mr. Robert Stine, who was elected by the independent directors as lead independent director for 2006. Mr. Robert Stine has been re-elected by the independent directors as lead director for 2007. No director attended less than 75% of the Company’s Board meetings or the Committee meetings on which he or she served during 2006, except for Mr. Steven Dunn who attended 75% (3 out of 4) of the Executive Committee’s regular meetings but missed the one special meeting of the Executive Committee due to late notice for the meeting. In 2006, two directors attended the 2006 Annual Meeting of Shareholders. The Board’s policy regarding director attendance at the Annual Meeting of Shareholders is that directors are welcome to attend, and that the Company will make all appropriate arrangements for directors that choose to attend and reimburse their reasonable expenses in connection therewith.

The current members of the committees of the Board of Directors are as follows:

X = Member   C = Chair

Independence

A majority of the Board is composed of independent directors. At least annually, the Board, with the assistance of the CNG Committee, evaluates the independence of the directors based on the independence requirements of The Nasdaq Stock Market LLC (“Nasdaq”) listing standards and applicable SEC rules and regulations.

13

In February 2007, the Board affirmatively determined, upon the recommendation of the CNG Committee, that each director who served the Company during 2006 and each director and director nominee, with the exceptions of Mr. Wagner and Mr. Eggemeyer, meets the independence requirements of the Nasdaq listing standards and applicable SEC rules and regulations, including the independence requirements for committee membership. In making such determinations, the Board evaluated banking, commercial, service, familial or other transactions involving each director or immediate family member and their related interests and the Company, if any. For further information on Mr. Eggemeyer’s relationship with the Company, please see the Section entitled “Certain Relationships and Transactions with Related Persons” on page 38 of this Proxy Statement.

Asset Liability Management (“ALM”) Committee

During 2006, the ALM Committee met four times. The ALM Committee monitors compliance by the Company and its subsidiaries with the Company’s ALM policies and receives reports from the Company’s executive management ALM committee which oversees the management of the Company’s investment portfolio and asset/liability strategy on a day-to-day basis. The objective of the Company’s ALM policy is to manage balance sheet and off-balance sheet assets and liabilities in order to maximize the spread between interest earned and interest paid, to maintain acceptable levels of interest rate risk and to ensure that the Company has the ability to pay liabilities as they come due and to fund continued asset growth. The executive management members responsible for managing the Company’s ALM activities generally meet monthly to discuss ALM activities. The ALM Committee reviews management reports and management’s recommendations for the Company’s ALM strategies on a going forward basis, and oversees management’s development and implementation of asset/liability pricing in order to attain the overall strategic objectives of the Company.

Audit Committee

During 2006, the Audit Committee met ten times. The Board has determined that each member of the Audit Committee is financially literate and that each of Ms. Susan E. Lester and Mr. Daniel B. Platt is qualified as an audit committee financial expert and that each of them has accounting or related financial management expertise, in each case in accordance with the rules of the SEC and the listing standards of Nasdaq. For additional information regarding the background and relevant experience of Ms. Lester and Mr. Platt, please see the table of director nominees on page 10 of this Proxy Statement. Information regarding the functions performed by the Audit Committee is set forth in the “Report of the Audit Committee” included in this Proxy Statement, as well as in the Audit Committee charter. The charter of the Audit Committee was last amended as of February 6, 2007, a copy of which may be obtained on the Company’s website at http://www.firstcommunitybancorp.com under the section entitled “Corporate Governance.”

Compensation, Nominating and Governance (“CNG”) Committee

During 2006, the CNG Committee met five times. The CNG Committee reviews and approves or makes recommendations to the Board of Directors on matters concerning the salaries and benefits, including equity compensation, of the Company’s executive officers, and compensation of the directors and director independence, and reviews and approves the Company’s incentive compensation plans and equity-based plans, 401(k) plan(s), deferred compensation plan and other employee benefit plans. The CNG Committee also assists the Board of Directors in promoting the best interests of the Company and its shareholders through the implementation of sound corporate governance principles and practices, including the review and approval or ratification of related-party transactions of the Company. The CNG Committee also makes recommendations to the Board of Directors regarding the composition and size of the Board and its committees. In furtherance thereof, the CNG Committee identifies, evaluates and recommends candidates for the Company’s Board of Directors and considers nominees for director nominated by the Company’s shareholders in accordance with the Company’s bylaws. The CNG

14

Committee operates under a charter that was last amended as of February 7, 2007, a copy of which may be obtained on the Company’s website at www.firstcommunitybancorp.com under the section entitled “Corporate Governance.”

In identifying and recommending nominees for positions on the Board of Directors, the CNG Committee places primary emphasis on the criteria set forth under “Selection of Directors” in our Corporate Governance Guidelines, namely: (1) personal qualities and characteristics, accomplishments and professional reputation; (2) current knowledge and contacts in the communities in which the Company does business and in the Company’s industry or other industries relevant to the Company’s business; (3) ability and willingness to commit adequate time to Board and committee matters; (4) the fit of the individual’s skills and personality with those of other directors and potential directors in building a Board that is effective, collegial and responsive to the needs of the Company; (5) diversity of viewpoints, backgrounds and experience; and (6) the ability and skill set required and other relevant experience.

The CNG Committee does not set specific, minimum qualifications that nominees must meet in order for the CNG Committee to recommend them to the Board of Directors, but rather believes that each nominee should be evaluated based on his or her individual merits, taking into account the needs of the Company and the composition of the Board of Directors. Members of the CNG Committee may seek input from other members of the Board in identifying possible candidates, and may, in its discretion, engage one or more search firms to assist in the recruitment of director candidates. The CNG Committee will consider candidates recommended by shareholders against the same criteria as nominees not proposed by shareholders. Shareholders who wish to submit nominees for director for consideration by the CNG Committee for election at our 2008 Annual Meeting should follow the process detailed in the section entitled “Other Business—Director Nominations” on page 41 of this Proxy Statement.

For further information on the Company’s processes and procedures for the consideration and determination of director compensation, please see the Section entitled “Compensation of Directors” on page 16 of this Proxy Statement. For further information on the Company’s processes and procedures for the consideration and determination of executive compensation, please see the Section entitled “Executive Compensation—Compensation Discussion and Analysis” on page 22 of this Proxy Statement.

Executive Committee

During 2006, the Executive Committee met five times. The Executive Committee reviews and makes recommendations to the Board of Directors with respect to strategy, acquisitions and other opportunities for the Company and acts on behalf of the Board, to the full extent permitted by law, when it is impractical for the full Board to meet. In addition, the Executive Committee is a forum to review other significant matters not addressed by the other Board committees and to make appropriate recommendations to the Board of Directors.

Family Relationships

There are no family relationships among any of the directors or executive officers of the Company.

Compensation Committee Interlocks and Insider Participation

During 2006, Stephen M. Dunn, Barry C. Fitzpatrick, Timothy B. Matz, Arnold W. Messer and David S. Williams served on the CNG Committee. Prior to retiring from the Board in April 2006, Mr. Charles H. Green also served on the CNG Committee. None of these directors was formerly an officer or employee of the Company or any of its subsidiaries. No executive officer of the Company serves on the board of directors of any other company that has one or more executive officers serving as a member of the CNG Committee. In addition, no executive officer of the Company serves as a member of the compensation committee of the board of any other company that has one or more executive officers serving as a member of the Company’s Board of Directors. No such interlocking relationships existed during 2006.

15

COMPENSATION OF DIRECTORS

The Company compensates its non-management directors through an annual cash retainer, paid quarterly. The Company does not pay per Board meeting or per committee meeting fees. The Company’s directors have the option of participating in the Company’s Deferred Compensation Plan, which is further described below in this Section under “—Directors’ Deferred Compensation Plan” on page 17 of this Proxy Statement. The CNG Committee of the Board annually evaluates director compensation, and compares the compensation of the Company’s directors to that offered by peer companies. The Company also subscribes to surveys to further provide information on director compensation at peer companies. The CNG Committee recommends compensation for directors to the full Board, which in turn determines director compensation for each fiscal year. The compensation is designed to attract and retain qualified directors, and to compensate them for the time and risk associated with being a director. The Company reimburses its directors for their reasonable travel, lodging, food and other expenses incurred in connection with their service on the Board and its committees. The table below details director compensation for 2006.

2006 Director Compensation Table

(1)                 Includes (i) $6,521,000 paid to Castle Creek Financial LLC, of which Mr. Eggemeyer is chief executive officer, in connection with services provided by Castle Creek Financial to the Company during 2006 pursuant to an agreement with Castle Creek Financial, dated November 17, 2005, and (ii) $3,370 for life insurance premiums paid by the Company. Please refer to the section entitled “Certain Relationships and Transactions with Related Persons” on page 38 for more information regarding this agreement.

16

(2)                 Amounts listed under “Fees earned or paid in cash” were deferred under the Company’s Directors’ Deferred Compensation Plan (the “Deferred Plan”). Please see the description of the Deferred Plan on page 17 of this Proxy Statement for more information.

(3)                 Mr. Baker and Mr. Deems were appointed to the Board in November 2006, following the completion of the Company’s acquisition of Community Bancorp Inc.

(4)                 Mr. Green retired from the Board in April 2006 following the 2006 Annual Meeting of Shareholders. Mr. Green did not stand for re-election.

(5)                 Mr. Langley was appointed to the Board in May 2006, following the completion of the Company’s acquisition of Foothill Independent Bancorp.

On February 7, 2007, based on recommendations from the CNG Committee, the Board of Directors approved the following compensation to be granted to non-employee directors of the Company for service on the Board during 2007:

Directors’ Deferred Compensation Plan

The Company has adopted a Directors’ Deferred Compensation Plan, or the Deferred Plan, that allows all directors of the Company and certain executive officers of the Company to elect by written notice to defer payment of all or a portion of their directors’ fees, in the case of outside directors, or base salary, bonus or other compensation in the case of employee directors, for the next succeeding calendar year into the Deferred Plan. The Deferred Plan permits participants to elect to have deferred amounts invested in a money market account or common stock of the Company. The Deferred Plan has been designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. Participation in the Deferred Plan is voluntary and participants may not change their investment elections once made.

The Company has established a rabbi trust, or the Trust, that maintains a separate bookkeeping account for each of the participants in the Deferred Plan and holds the deferred amounts. U.S. Bank, N.A. has been appointed trustee of the Trust and recordkeeper of the Deferred Plan. All deferred amounts are deemed invested in a money market fund or deemed invested in shares of common stock of the Company depending on the election made by the participant. No preferential earnings rates are paid on deferred amounts. The value of a participant’s account is measured by the value of and income from Company common stock as well as by the value of interest received from funds invested in a money market account. Full power to construe, interpret and administer the Deferred Plan is vested with an Administrative Committee, which consists of certain executive officers of the Company and is chaired by the chief financial officer of the Company.

The Deferred Plan allows amendments to be made by the Board from time to time, provided that no such amendment may (without a director’s consent) alter rights to payments of amounts already credited or delay the time at which deferred amounts are scheduled to be paid. The Company intends to maintain the Deferred Plan and Trust in a manner that will allow ongoing availability of the exemption under SEC Rule 16b-3 (unless a ruling is received indicating that such exemption is not necessary) and therefore currently intends to submit to shareholders for approval any amendments which would materially increase the benefits available or the number of shares of common stock which may be issued under the Deferred Plan, or which would materially modify the requirements for participation in the Deferred Plan.

The Company pays all administrative expenses of the Deferred Plan for its participants as well as the applicable portion of the trustee’s and recordkeeper’s fees and expenses. Fees paid to the trustee and recordkeeper for administration of the Deferred Plan in 2006 were $8,293.

17

Not later than the next regularly scheduled meeting of the Administrative Committee following a participant’s termination of service, the Administrative Committee must direct the trustee to commence distribution of the amounts payable to such participant under the Deferred Plan and direct the trustee of the Trust as to the form of payment (whether in cash or in Company common stock). Amounts due under the Deferred Plan are paid in a lump sum or in annual installments, consistent with the method of payment selected by the participant at the time of his or her deferral election.

In the event of death, a participant’s payment shall be made to the persons named in the last written instrument signed by the participant and received by the Administrative Committee prior to the participant’s death, and in the event the participant fails to name any person, the amounts shall be paid to the participant’s estate.

The Company contributes deferred amounts into the Trust, which was established to aid in the accumulation of assets for the payment of amounts deferred. The Company may, in its discretion, contribute to the Trust an amount equal to the amounts deferred by the participants. As of December 31, 2006, the Trust had assets of $7.1 million and no accrued liabilities.

If the Company becomes insolvent, the trustee is required to cease payments from the Trust and dispose of Trust assets pursuant to the direction of a court of competent jurisdiction.

18

EXECUTIVE OFFICERS

The following table sets forth, as to each of the persons who currently serves as an executive officer of the Company, such person’s age (as of the Record Date), current position and the period during which such person has served in such position. Following the table is a description of each executive officer’s principal occupation during the past five years.

Christopher D. Blake is President of the Eastern Region of Pacific Western Bank. Mr. Blake joined Pacific Western National Bank in October 1994 and served as Chief Credit Officer until being appointed Chief Operating Officer in December 1999. He became President of the Eastern Region when the bank was acquired by the Company on January 31, 2002.

19

Robert M. Borgman is Executive Vice President, Credit Administration of the Company and Pacific Western Bank. Mr. Borgman is also a director of Pacific Western Bank. Previously, Mr. Borgman served as President and Chief Executive Officer and a director of First National Bank from July 2003 to October 2006, and as Executive Vice President and Chief Credit Officer of the Company from the Company’s formation in May 2000 until July 2003. Prior to joining the Company, Mr. Borgman was Executive Vice President and Chief Credit Officer of Western Bancorp from August 1997 to November 1999. Prior to joining Western Bancorp, Mr. Borgman was the founder, President and Chief Executive Officer of National Business Finance, Inc., a national commercial finance and factoring organization headquartered in Denver, Colorado, from July 1987 to August 1997.

Joe Cecala is President of the Inland Empire Region of Pacific Western Bank. Prior to joining the Company in May 2006, Mr. Cecala was Executive Vice President and Chief Credit Officer, of Foothill Independent Bank from January 2003 to May 2006, and Senior Vice President and Chief Credit Officer from March 2001 to January 2003.

Mark Christian is Executive Vice President, Manager of Operations and Systems, of the Company and Pacific Western Bank. Prior to May 2005 when he assumed his current position, Mr. Christian was Senior Vice President, Operations and Systems, of the Company. Mr. Christian joined the Company in May 2000 with its acquisition of Rancho Santa Fe National Bank, where he had been Senior Vice President of Operations, since 1997.

Robert G. Dyck is Executive Vice President and Chief Credit Officer of the Company and Pacific Western Bank. Mr. Dyck also serves as a director of Pacific Western Bank. Prior to becoming Chief Credit Officer of the Company in November 2003, Mr. Dyck was Senior Vice President and Chief Credit Officer of Pacific Western National Bank since January 2001. Mr. Dyck was Senior Vice President and Chief Credit Officer of First Professional Bank from January 2000 to December 2000, when it was acquired by the Company. Mr. Dyck served as Senior Vice President and Senior Credit Officer for Western Bancorp from April 1997 to November 1999.

William A. Hanna is President of the Los Angeles Region of Pacific Western Bank. Prior to joining the Company in January 2006, he was President and Chief Executive Officer of Cedars Bank from July 1987 to January 2006 when Cedars Bank was acquired by the Company. Mr. Hanna also served as Chairman of Cedars Bank from October 2004 to January 2006.

Lynn M. Hopkins is Executive Vice President of the Company and Executive Vice President, Chief Financial Officer of Pacific Western Bank. Prior to joining the Company in January 2002, Ms. Hopkins was a Senior Vice President and Controller of California Community Bancshares, Inc., a California-based bank holding company, from February 2000 through December 2001 and, in addition, served as Chief Financial Officer of its wholly-owned subsidiary, Bank of Orange County, from July 2000 through December 2001. From August 1998 to January 2000, Ms. Hopkins was the Controller of Western Bancorp and the Chief Financial Officer of Southern California Bank.

Michael J. Perdue is President of Company and President of Pacific Western Bank. He also serves as a director of Pacific Western Bank. Prior to joining the Company in October 2006, Mr. Perdue was President, Chief Executive Officer and a director of Community Bancorp Inc. from December 2003 to October 2006, and Chief Operating Officer from July 2003 until December 2003. Prior thereto, he was Executive Vice President of Entrepreneurial Corporate Group and President of its subsidiary, Entrepreneurial Capital Corporation.

William T. Powers is President of the Desert Region of Pacific Western Bank. He formerly served as the President and Chief Executive Officer of First Community Bank of the Desert, a position he held from October 1993 to January 2002, when the bank was merged with Pacific Western National Bank and First Professional Bank, N.A.

20

Victor R. Santoro is Executive Vice President and the Chief Financial Officer of the Company, and Executive Vice President and a director of Pacific Western Bank. Prior to joining the Company in September 2003, Mr. Santoro was with KPMG LLP, where he had been a partner since 1980, focusing primarily on clients in the banking industry.

Michael L. Thompson is Executive Vice President, Human Resources of the Company and Pacific Western Bank. Prior to joining the Company in September 2000, Mr. Thompson was an Independent Consultant from November 1999 to September 2000. Mr. Thompson served as Senior Vice President—Human Resources of Western Bancorp from December 1998 to November 1999. Prior to joining Western Bancorp, Mr. Thompson was Senior Vice President of Human Resources for Citizens Business Bank from April 1989 to December 1998.

Matthew P. Wagner is Chief Executive Officer and a director of the Company. Mr. Wagner is also Chairman of the Board and Chief Executive Officer of Pacific Western Bank. Prior to joining the Company in September 2000, Mr. Wagner was President and Chief Executive Officer of Western Bancorp from October 1996 to November 1999.

Jared M. Wolff is Executive Vice President, General Counsel and Corporate Secretary of the Company and Pacific Western Bank. Mr. Wolff is also a director of Pacific Western Bank. Prior to joining the Company in October 2002, Mr. Wolff was associated with the Los Angeles office of the law firm Sullivan & Cromwell LLP, from January 2001 through September 2002. From October 1998 to August 2000, Mr. Wolff was Executive Vice President, Operations for eNutrition, Inc., a California retailer of nutritional supplements. Mr. Wolff is a member of the bars of the State of California and the State of New York.

21

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

In addition to its responsibilities to make recommendations for nominees to the Company’s Board and its committees and to oversee the governance and evaluation process of the Board and its committees, it is the duty of the CNG Committee to administer the Company’s compensation system and various incentive plans, including the Company’s 2003 Stock Incentive Plan, which we refer to as the 2003 Plan, the Executive Incentive Plan, or EIC Plan, and the Deferred Compensation Plan, or Deferred Plan. The CNG Committee reviews and approves compensation levels of members of executive management, including the five executives who are identified in the Summary Compensation Table on page 28 of this Proxy Statement (whom we refer to as our Named Executive Officers), evaluates the performance of the executive management team and considers executive management succession and related matters. With respect to the compensation of the CEO, the CNG Committee evaluates and recommends such compensation to the Board for approval. The CNG Committee reviews with the Board, at least annually, all material aspects of compensation for the Company’s executive officers.

Compensation Philosophy and Objectives

The primary goal of our compensation program is to link a substantial portion of executive compensation to the profitability of the Company. The CNG Committee achieves this goal by tying meaningful grants of equity compensation and an annual bonus to what it believes are the most significant measures of profitability: diluted earnings per share, or EPS, and in some cases EPS adjusted to exclude certain extraordinary charges as well as the effects of noncash expense items, or Cash EPS. The target goals for annual bonuses as well as for long term incentive awards, such as performance stock grants, are generally based on substantial increases in either EPS or Cash EPS performance.

The second goal of our compensation program is to align the interests of our executive officers with the interests of our shareholders. We accomplish this by establishing performance goals for incentive compensation and performance-based restricted stock that are tied to objectives that are meaningful to our shareholders, such as growth in EPS.

The third goal of the compensation program is to retain highly competent executives. Our executives, and particularly our Named Executive Officers, are talented managers and they are often presented with opportunities at other institutions, including opportunities at potentially higher compensation levels. The Company does not have employment agreements with any of its employees. Accordingly, we seek to retain our executives by setting base compensation and incentives at competitive levels and by awarding meaningful stock-based awards. The CNG Committee reviews executive compensation levels paid by peer companies across a range of asset sizes, based on available data. Key elements of compensation to our Named Executive Officers and other executive officers include payout following the achievement of long-range financial objectives. The CNG Committee intends to pay at the high end of the compensation scale, but only if the Company achieves financial performance at the high end of the peer group.

We combine the compensation elements for each of our Named Executive Officers and other executive officers in a way we believe will maximize such executive’s contribution to the Company. The CNG Committee has not established a policy or target for the allocation between either cash and non-cash or short-term and long-term compensation. Rather, the CNG Committee reviews and considers information provided by its independent compensation consultant, as well as surveys to which the Company subscribes, to determine the appropriate level and mix of base compensation, performance-based pay and other elements of compensation.

22

Annual Review of Executive Compensation Program

Generally, an overall review of compensation is conducted by the CNG Committee at the end of each fiscal year in advance of salary and compensation recommendations made at the beginning of the subsequent fiscal year in conjunction with the annual budgeting process. The CNG Committee engaged compensation consultants, Clarity One, Inc., in the fourth quarter of 2005 to conduct a competitive review of our executive compensation program in advance of compensation and budgeting decisions made in February 2006. The consultant analyzed the program against a peer group of publicly traded, regional financial institutions. The analysis included data generated from a variety of surveys and peer groups; the CNG Committee focused on peers in the range of $3 billion to $10 billion in assets. The consultant’s overall finding was that our executive compensation was generally in line with the peer group and our compensation philosophy. The CNG Committee also received guidance from compensation consultants Semler Brossy Consulting Group, LLC, in the fourth quarter of 2006 in advance of compensation determinations for 2007. The consultant provided a framework against which the CNG Committee, with assistance of certain members of management, evaluated compensation data. The peer group against which the Company evaluated its compensation ranged in assets from $3 billion to $12 billion and included the following financial institutions, among others: Bank of Hawaii Corporation, Boston Private Financial Holdings, Inc., Capitol Bancorp, Ltd., Cathay General Bancorp, CVB Financial Corp., East West Bancorp, First Republic Bank, Greater Bay Bancorp, Hanmi Financial Corporation, ITLA Capital Corporation, Pacific Capital Bancorp, Private Bancorp, SVB Financial Group and Umpqua Holdings Corp. Following the reviews in 2005 and 2006, the compensation of certain Named Executive Officers and other executive officers was adjusted upward, and grants of long-term equity awards were made, to ensure the overall compensation paid to our executives remains competitive and consistent with our compensation philosophy.

Components of Compensation

The Company compensates its executive officers in three ways: base compensation, annual cash bonus opportunity under our EIC Plan, and periodic grants of time-based and performance-based restricted stock under our 2003 Stock Incentive Plan. Our executives can defer base salary through our tax-qualified 401(k) plan and can defer base salary and bonus payments and invest in our common stock through our deferred compensation plan, which we refer to as the Deferred Plan (which is not tax-qualified). In addition, we provide change in control severance protection to our executive officers through our Executive Severance Pay Plan. We also provide certain perquisites to our executive officers, such as an auto allowance or use of company vehicle, reimbursement of club dues and life and disability insurance. The CNG Committee reviews at least annually all components of compensation payable to the CEO and the other executive officers, in terms of current compensation, long-term and incentive compensation, perquisites and payouts upon or following a change in control of the Company, to ensure that the compensation program is meeting the goals of the Company’s compensation philosophy described above.

Base Salary—The CNG Committee reviews the base compensation of the CEO and of the executive officers reporting to him. The CNG Committee makes compensation recommendations for the CEO to the full Board (excluding the CEO). Based on recommendations from the CEO, the CNG Committee evaluates and determines compensation levels for the other members of the Company’s executive management team. The CNG Committee reviews banking-related salary survey data related to the peer group, and may request guidance from an outside compensation consultant, before making any significant adjustment to overall base compensation. The CNG Committee does not tie its base compensation decisions to any particular formulas, measurements or criteria, but the Committee considers the Company’s performance, individual executive performance and compensation levels paid by comparable financial institutions, as well as economic conditions in the Company’s market areas and refers to analyses or guidance from consultants during the annual review process, as described above.

23

Annual Cash Bonus—Pursuant to the Company’s EIC Plan, annual cash bonuses are paid to executives based on the achievement of certain financial goals and satisfactory individual performance. Not all eligible executive officers will necessarily receive a bonus and not all eligible executive officers will necessarily receive the same bonus. Additional amounts may be paid as bonuses to members of the Company’s executive management team who are deemed by the CNG Committee to have achieved superior performance during the fiscal year.

Stock-Based Awards—Stock-based awards granted to executive officers of the Company under our 2003 Stock Incentive Plan, or 2003 Plan, may be granted from time to time at the discretion of the CNG Committee upon its own determination or recommendation from the CEO, and may be granted to the CEO upon recommendation of the CNG Committee and approval of the Board. Typically, grants to our Named Executive Officers and other executive officers of long-term incentive compensation in the form of performance-based restricted stock occur during the first quarter along with the formal annual evaluation of such executive’s total compensation. Additionally, grants may also coincide with promotions or the vesting of a previous grant. In considering whether to recommend the grant of an equity award and the size of the grant to be awarded, the CNG Committee considers, with respect to the executive officer, the salary level, the contributions expected toward the growth and profitability of the Company and survey data indicating grants made to similarly situated officers at comparable financial institutions, as detailed in reports or peer groups advised by its consultants, as described above under “—Annual Review of Executive Compensation Program.” The CNG Committee decides whether to approve the grant of equity awards, and the terms of such grant, after discussion with executive management presenting the grant proposals. The Company has chosen to grant time-based and performance-based restricted stock in lieu of granting stock options as future incentive compensation. Historically, the Company’s executive officers typically have been granted performance-based restricted stock. However, certain of the Company’s executive officers have been granted time-based restricted stock as a result of the Company’s recruiting efforts. The Company has not granted stock options since 2003, though it reserves the right to do so in the future, pursuant to the terms of the 2003 Plan. The Company decided to use performance-based restricted stock instead of stock options as a significant component of the incentive compensation for its senior executives employees because it more closely ties the incentive pay of executives to the performance of the Company and has a less dilutive effect to shareholders than stock option grants. While stock options and time-based restricted stock link an executive’s interests to those of shareholders, they do not have a performance component or measure. Because restricted stock generally has value whether or not the Company’s stock price fluctuates, the Company can grant fewer shares of restricted stock, resulting in less dilution to shareholders. The value of both time-based and performance-based restricted stock fluctuates directly with changes in our stock price and, with respect to performance-based restricted stock, only vests to the extent that specific internal financial performance targets are achieved. No vesting occurs, and the granted shares are forfeited, if the minimum or set performance target is not met. All granted shares accelerate vesting upon a change in control of the Company, as defined in the 2003 Plan.

401(k) Plan and Deferred Plan—Our 401(k) plan allows executives and other participants to defer a portion of their compensation, and provides a match of 3% of contributions up to 6% of their base salaries, subject to IRS limitations. Our Deferred Plan allows executives officers to defer a portion of their base salary and up to 100% of their bonus or incentive compensation, or equity awards, until termination or upon the occurrence of other specified events, and permits participants to elect to have deferred amounts deemed to be invested in a money market mutual fund or Company common stock.

Change in Control Protection—The Company has adopted an Executive Severance Pay Plan, which provides for severance compensation for our executive officers in the event of termination without “cause” or for “good reason” (as each is defined in the severance plan) within two years following a change in control. The purposes of the severance plan are to assist in recruiting, encourage retention and minimize the uncertainty and distraction caused by the current climate of bank acquisitions, and to allow our

24

executive officers to focus on performance by providing transition assistance if there is a change in control. In addition, the program is intended to align executive and shareholder interests by enabling the executive officers to consider corporate transactions that are in the best interests of the shareholders and other constituents of the Company without undue concern over whether the transactions may jeopardize the executives’ own employment. The Company believes that change in control arrangements should compensate executives who are displaced by a change in control and not serve as an incentive to increase an executive’s personal wealth. Therefore, the severance plan requires that there be both a change in control and an involuntary termination without “cause” or a voluntary termination for “good reason”, which is often referred to as a “double-trigger.” The double-trigger ensures that the Company will become obligated to make payments under the severance plan only if the executive is actually or constructively discharged as a result of the change in control. In addition, under the Company’s 2003 Plan, all granted equity awards fully vest upon a change in control. The Company determined that accelerated vesting is appropriate under this circumstance as a means to attract and retain executives in light of the uncertainty that accompanies increasing consolidation in the banking sector. For more information on the Severance Plan, please see the section entitled “Potential Payments on Termination and Change of Control” beginning on page 31 of this Proxy Statement.

2006 Executive Compensation

The CNG Committee (and the Board, in the case of the CEO) reviewed and approved the compensation of Matthew Wagner, the CEO, Victor Santoro, the CFO, and each of the other Named Executive Officers and executive officers for 2006.

2006 Base Salary.   The CNG Committee approved 2006 base salaries in February 2006, to take effect March 1, 2006. With respect to the Named Executive Officers, the CNG Committee increased base salaries for Mr. Wagner, Mr. Santoro, Mr. Wolff and Mr. Thompson following review of survey data as described above under “—Annual Review of Executive Compensation Program.”

2006 Annual Bonus.   No cash bonuses were awarded to the Named Executive Officers or other executive officers for 2006. The CNG Committee established the performance target, achievement levels and corresponding award opportunities under the EIC Plan in February 2006 for 2006 cash bonuses. Award opportunities are expressed as a percentage of base salary for each different level of performance target attainment. If the Company does not achieve at least threshold performance for a year, no bonus is earned under the EIC Plan. For 2006, target performance was established as discussed below, and threshold and maximum performance were set at 90% and over 100% of the target, respectively.

The following are the target performance levels and corresponding award opportunities that were approved for the Company’s executive officers for 2006:

The performance target under the EIC Plan generally represents a meaningful increase in fully-diluted EPS over the previous fiscal year and is the EPS set forth in the Company’s annual approved budget. Not all eligible executive officers will necessarily receive a bonus and not all eligible executive officers will necessarily receive the same bonus. Additional amounts may be paid as bonuses to members of the Company’s executive management team who are deemed by the CNG Committee to have achieved superior performance during the fiscal year.

The EPS Target for 2006 was set at $3.72 (as adjusted to include the acquisitions of Foothill Independent Bancorp and Community Bancorp Inc., a 25% increase over 2005 fully-diluted EPS). In

25

February 2007, the CNG Committee evaluated Company performance in 2006 relative to the EIC Plan. For fiscal 2006 the Company achieved fully diluted EPS of $3.21, or 86% of the EPS Target. Although the CNG Committee evaluated the numerous accomplishments achieved during the year, and the substantial effect on earnings from certain one-time events, the CNG Committee determined that the Company did not achieve the minimum threshold for 2006 of 90% of the EPS Target, and accordingly the CNG Committee did not award bonuses to the Named Executive Officers or other executive officers for 2006 under the EIC Plan.

The EPS Target for 2005 was set at $2.66 (a 17% increase over 2004 fully-diluted EPS of $2.27) and for fiscal 2005 the Company achieved fully diluted EPS of $2.98. Based on the substantial increase in EPS representing 112% of the EPS Target, pursuant to the terms of the EIC Plan, the CNG Committee exercised its discretion to award bonuses for 2005 performance to the Named Executive Officers representing anywhere from 80% to 120% of 2005 base salary, and in the case of Mr. Wagner recommended a bonus equal to 150% of his 2005 base salary, which the Board approved.

We are proposing certain changes to the EIC Plan and seeking shareholder approval for such changes. Please see Proposal 2 on page 35 of this Proxy Statement for more information regarding the proposed changes to the EIC Plan.

Stock-Based Awards.   In January 2006, the CNG Committee granted performance-based restricted stock to the Company’s executive officers, including the Named Executive Officers, as a long term incentive grant. Mr. Wagner was also granted shares of time-based restricted stock in February 2006. These grants were made to enhance shareholder value and executive retention by providing further long-term performance incentives to executive officers of the Company following vesting of three-fourths of a performance grant made in July 2003, which vested in full in January 2007. The grant to Mr. Wagner of time-based restricted stock was made in order to increase his overall compensation following the CNG Committee’s recommendation, and the Board’s concurrence, that Mr. Wagner’s compensation should be increased based on the CNG Committee’s annual compensation review.

The performance-based restricted stock grants vest in whole upon the achievement of a substantial increase in EPS. Any unvested shares of existing performance-based restricted stock grants expire and are forfeited if the performance targets are not met by the expiration date in 2013. The CNG Committee set the EPS target at a level that would require consistent, high performance by the Company for several years and that would provide a meaningful return to shareholders. All currently outstanding grants of performance-based restricted stock vest upon attainment of 100% of the performance target, or a change in control. The Company believes that its future earnings performance is inherently uncertain, and subject to a variety of risks, such as competitive and economic risks. The performance target is likely to be achieved only if the Company is able to deliver meaningful growth in EPS.

Events in 2007 Affecting Executive Compensation

As described above, the CNG Committee reviewed all components of executive compensation in the first quarter of 2007. In addition to determining that the Company did not meet its criteria under the EIC Plan to award bonuses for 2006, based on its review of the Company’s performance, the growth of the Company and peer compensation, the CNG Committee approved certain increases in base salary for executive officers, and recommended, and the Board approved, changes in salary for the CEO, Matt Wagner. The CNG Committee also approved, and in the case of Mr. Wagner the Board approved, grants of performance-based restricted stock to Mr. Wagner and certain Named Executive Officers and other executive officers under the 2003 Plan. Additionally, the CNG Committee established the performance target, achievement levels and award opportunities for 2007 under the Company’s EIC Plan. Please see Proposal 2 on page 35 of this Proxy Statement for more information regarding the EIC Plan.

26

Statement Regarding Deductibility

Under Internal Revenue Code Section 162(m), the Company’s tax deduction may be limited to the extent total compensation paid to the CEO, CFO or any of the other three most highly compensated executive officers exceeds $1 million in any one tax year. The deduction limit does not apply to payments that qualify as “performance-based” provided certain requirements are met, including receipt of shareholder approval. Regulations under Section 162(m) also permit stock options to be excluded from compensation if certain conditions are met, but restricted stock and restricted stock awards (other than performance-based stock and performance-based stock awards) may not be exempt if the aggregate compensation of the executive officer would exceed the limit. The CNG Committee believes that all performance-based restricted stock granted under the 2003 Plan meet these conditions. Generally, it is the intent of the CNG Committee to structure the Company’s cash and stock-based compensation programs so that compensation payments and stock-based awards are tax deductible. We are seeking shareholder approval of the Company’s EIC Plan, in order to ensure future bonus awards under that plan meet the requirements for deductibility under Section 162(m). Please see Proposal 2 on page 35 of this Proxy Statement for more information with respect to the EIC Plan. However, the CNG Committee reserves the discretion to make payments or stock-based awards that are not tax deductible.

COMPENSATION COMMITTEE REPORT

The Compensation, Nominating and Governance Committee, or CNG Committee, of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the CNG Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Compensation, Nominating and
Governance Committee

Stephen M. Dunn
Barry C. Fitzpatrick, Chairman
Timothy B. Matz
Arnold W. Messer
David S. Williams

27

2006 Summary Compensation Table

The following table sets forth for 2006 the compensation for the Company’s CEO, CFO and for each of the three most highly compensated executive officers of the Company during 2006, other than the CEO and CFO, serving as executive officers at the end of 2006. These five persons are referred to collectively as our Named Executive Officers.

(1)                 Reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006 in accordance with FAS 123(R), and thus may include amounts from awards granted in and prior to 2006. For further information on these amounts, see footnote 16 to the Company’s audited financial statements for the fiscal year ended December 31, 2006 included in the Company’s Annual Report on Form 10-K.

(2)                 Dividends on the unvested performance-based or time-based restricted stock are paid at the same rate as that paid on the Company’s outstanding common stock when declared by the Board of Directors. The amounts of such dividends paid are included in “All Other Compensation” in the above table.

(3)                 Includes Company contributions to the 401(k) plan for Messrs. Wolff, Thompson and Borgman of $6,300, $5,387 and $6,300, respectively. Includes either personal use of Company owned automobiles or cash automobile allowance of $2,046 for Mr. Wagner, $11,500 for Mr. Santoro, $942 for Mr. Wolff, $12,000 for Mr. Thompson, and $3,345 for Mr. Borgman. Includes reimbursement of club dues for Mssrs. Wagner, Santoro, Wolff and Borgman of $9,766, $4,170, $4,319 and $9,495, respectively. Includes life and disability insurance premiums paid by the Company of $8,197 for Mr. Wagner, $5,854 for Mr. Santoro, $1,691 for Mr. Wolff, $7,932 for Mr. Thompson, and $5,556 for Mr. Borgman.

28

2006 Grants of Plan-Based Awards