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      &lt;font style="FONT-FAMILY: Times New Roman, Times, serif; FONT-SIZE: 10pt"&gt;&lt;b&gt;Note

      1 &amp;#8211; Basis of Presentation and Management

      Representations&lt;/b&gt;&lt;/font&gt;

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      &lt;font style="FONT-FAMILY: Times New Roman, Times, serif; FONT-SIZE: 10pt"&gt;The

      unaudited consolidated financial statements include accounts

      of Mission Community Bancorp (&amp;#8220;the Company&amp;#8221;) and

      its subsidiaries, Mission Community Bank (&amp;#8220;the

      Bank&amp;#8221;) and Mission Asset Management, Inc.

      (&amp;#8220;MAM&amp;#8221;), and the Bank&amp;#8217;s subsidiary, Mission

      Community Development Corporation. All material inter-company

      balances and transactions have been eliminated.&lt;/font&gt;

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      &lt;font style="FONT-FAMILY: Times New Roman, Times, serif; FONT-SIZE: 10pt"&gt;These

      financial statements have been prepared in accordance with

      the Securities and Exchange Commission&amp;#8217;s rules and

      regulations for quarterly reporting and, therefore, do not

      necessarily include all information and footnote disclosures

      normally included in financial statements prepared in

      accordance with generally accepted accounting principles.

      These financial statements should be read in conjunction with

      the Company&amp;#8217;s Form 10-K for the year ended December 31,

      2012, which was filed on March 27, 2013.&lt;/font&gt;

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      &lt;font style="FONT-FAMILY: Times New Roman, Times, serif; FONT-SIZE: 10pt"&gt;Operating

      results for interim periods are not necessarily indicative of

      operating results for an entire fiscal year. In the opinion

      of management, the unaudited financial statements for the

      three-month and six-month periods ended June 30, 2013 and

      2012 reflect all adjustments, consisting only of normal

      recurring adjustments, necessary for a fair presentation of

      the Company&amp;#8217;s financial position and results of

      operations.&lt;/font&gt;

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      &lt;font style="FONT-FAMILY: Times New Roman, Times, serif; FONT-SIZE: 10pt"&gt;The

      Bank has been organized as a single reporting segment and

      operates five branches in the Central Coast area of

      California (in the cities of San Luis Obispo, Paso Robles,

      Atascadero, Arroyo Grande and Santa Maria). In addition, the

      Bank operates a loan production office in San Luis Obispo,

      with a primary focus on Small Business Administration

      (&amp;#8220;SBA&amp;#8221;) lending, and a Food and Agriculture

      Division, operating through a loan production office in

      Oxnard, California.&lt;/font&gt;

    &lt;/p&gt;&lt;br/&gt;&lt;p style="TEXT-ALIGN: left; LINE-HEIGHT: 1.25; MARGIN: 0pt" id="PARA4423"&gt;

      &lt;font style="FONT-FAMILY: Times New Roman, Times, serif; FONT-SIZE: 10pt"&gt;The

      Bank&amp;#8217;s primary source of revenue is providing real

      estate, commercial and industrial (including SBA-guaranteed

      loans) and agricultural loans to customers, who are

      predominately small and middle-market businesses and

      individuals.&lt;/font&gt;

    &lt;/p&gt;&lt;br/&gt;&lt;p style="TEXT-ALIGN: left; LINE-HEIGHT: 1.25; MARGIN: 0pt" id="PARA4425"&gt;

      &lt;font style="FONT-FAMILY: Times New Roman, Times, serif; FONT-SIZE: 10pt"&gt;The

      Bank&amp;#8217;s deposits are insured by the Federal Deposit

      Insurance Corporation (FDIC) up to applicable legal

      limits.&lt;/font&gt;

    &lt;/p&gt;&lt;br/&gt;&lt;p style="TEXT-ALIGN: left; LINE-HEIGHT: 1.25; MARGIN: 0pt" id="PARA4427"&gt;

      &lt;font style="FONT-FAMILY: Times New Roman, Times, serif; FONT-SIZE: 10pt"&gt;Certain

      reclassifications have been made to prior period balances to

      conform to classifications in 2013, with no impact to

      previously reported net income (loss) or shareholders&amp;#8217;

      equity.&lt;/font&gt;

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