REVOLVING LINE OF CREDIT

3 Months Ended

Mar. 31, 2012

(NOTE 12) REVOLVING LINE OF CREDIT

The Corporation has a line of credit with BMO Harris Bank N.A., as successor to M & I Marshall & Ilsley Bank, in the amount of $3,000,000, at a floating interest rate based on the one-month LIBOR rate plus 3.75%, with a floor rate of 6.50% and a maturity date of October 31, 2011. The line of credit is secured by a pledge of 100% of the common stock issued by the Bank. At March 31, 2012, $2,700,000 was outstanding on the line of credit. At March 31, 2012 accrued and unpaid interest totaled $74,000. Management is in discussion with BMO Bank regarding a forbearance of principal and interest payments until 2013 or settlement of the debt from proceeds of a capital raise.

The loan agreement contains covenants requiring the Bank to maintain certain financial ratios. At March 31, 2012 the Bank did not satisfy the following covenants:

Finanical Covenant	Required		Actual

Capital Raios:

Tier 1 Leverage Ratio	>=9.00	%	5.96	%
Total Risk-Based Capital Ratio	>=12.00	%	9.55	%

Non-Performing Assets to Tangible Capital plus Loan Loss Reserve	< 115.00	%	165.79	%

BMO Harris Bank N.A. has in the past agreed to the issuance of forbearance agreements for the covenant defaults, most recently as of September 29, 2011 for the quarter ended March 31, 2011. While it is anticipated that BMO Harris Bank N.A. will continue to forebear, no assurances can be given in that regard. If BMO chooses not to forebear, it could potentially take possession of 100% of the outstanding common stock of the Bank, thereby leaving Northern California Bancorp, Inc. insolvent. Such a change in control, however, would require regulatory approval.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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NORTHERN CALIFORNIA BANCORP INC 10-Q