1st Centennial Bancorp Announces Third Quarter Financial Results.

www.1stcent.com

REDLANDS, Calif. -- 1st Centennial Bancorp (OTCBB:FCEN), ("the Company") parent holding company of 1st Centennial Bank (the "Bank"), today announced third quarter operating results. The Company reported a net loss for the quarter ended September 30, 2008 of ($15.5) million or ($3.18) diluted loss per share, compared to a net loss of ($2.8) million or ($0.57) diluted loss per share for the second quarter of 2008.

Patrick J. Meyer, Chairman of the Board, commented, "During the current quarter we built up our loan loss reserves to a very conservative level in order to reflect the current condition of our loan portfolio at quarter end, which decreased our capital levels. We are continuing to work with our investment bankers and financial consultants towards raising additional capital, in addition to reviewing recent governmental programs to determine if they are available to us. We are also in the process of increasing our authorized number of shares of common stock and authorizing a class of shares of preferred stock to enhance our ability to raise capital during these unprecedented times for our nation, our region and our Company. We have currently received the approval of a majority of our outstanding shares for these changes to our authorized capital, although the solicitation process will remain open until November 5, 2008.

Additionally, given the current financial market conditions, shareholder and depositors' concerns regarding the financial services industry, we increased our cash levels at the Bank in order to bolster our liquidity by attracting additional funds using broker certificate of deposits."

Meyer continued; "The Board of Directors and senior management remain keenly focused on our objectives to effectively manage our credit related issues, loan loss reserves and capital requirements. We are diligently working on plans to resolve and/or restructure our nonperforming assets in an effective and efficient manner in order to maximize shareholder value and to operate the Bank in a safe and sound manner. With the restructuring of our management team during the third quarter and the implementation of cost reductions throughout the Company, we are laying the foundation for strategically positioning ourselves to take advantage of the economic recovery that will occur once the housing industry recovers from the economic downturn."

Highlights of our operating results for the three months ended September 30, 2008, as compared to the previous quarter ended June 30, 2008 are as follows:

* Provision for loan losses increased $18.7 million to $24.9 million for the quarter ended September 30, 2008 as compared to $6.2 million for the previous quarter ended June 30, 2008. The increase in provision for loan losses was primarily due to a $13.0 million increase in the level of nonperforming assets to $105.8 million as compared to the previous quarter of $92.8 million and an increase in net loan charge-offs of $12.9 million as compared to $2.6 million for the previous quarter ended June 30, 2008.

* Net interest margin decreased 135 basis points to 2.22% for the quarter ended September 30, 2008 as compared to 3.57% for the previous quarter ended June 30, 2008. This decrease was primarily due to the reversal of interest income relating to the $4.8 million net increase in nonaccrual loans as compared to June 30, 2008. The $4.8 million increase in nonaccrual loans is net of $12.9 million in additional loan charge-offs and addition of $9.3 million to Other Real Estate Owned ("OREO").

* OREO increased $7.7 million due to the addition of $10.5 million in new OREO, partially offset by OREO write-downs of $1.2 million and OREO sales of $1.7 million. Expenses related to OREO, including write-downs, rose to $1.5 million for the quarter ended September 30, 2008, as compared to $655,000 for the previous quarter ended June 30, 2008.

* Noninterest income decreased to $1.0 million for the quarter ended September 30, 2008 as compared to $1.2 million for the previous quarter ended June 30, 2008, primarily due to lower gains on sales of mortgage-backed securities and conduit loan fee income, partially offset by an increase in customer service fees, gain on sale of loans, gain on sale of OREO and Bank Owned Life Insurance income.

* Noninterest expense increased $1.1 million to $6.8 million for the quarter ended September 30, 2008 as compared to $5.7 million for the quarter ended June 30, 2008, primarily due to higher costs associated with OREO and FDIC insurance.

The change in operating results for the three months ended September 30, 2008 as compared to the same period last year was due primarily to increases in the provision for loan losses and noninterest expense, and a decrease in the net interest margin. The $24.6 million increase in the provision for loan losses for the third quarter of 2008 as compared to the same period last year was due primarily to increased net charge-offs and the increase in nonaccrual loans. The 275 basis point decrease in the net interest margin to 2.22% as compared to 4.97% for the same period last year was primarily due to the 325 basis point reduction in the Federal Reserve federal funds rate from September 2007 through September 2008 and the reversal of interest income relating to the $82.7 million net increase in nonaccrual loans as compared to June 30, 2007. The increase in noninterest expense of $2.2 million to $6.8 million was primarily due to an increase in OREO expense of $1.5 million and FDIC insurance expense of $345,000 for the quarter ended September 30, 2008 as compared to OREO expense of $62,000 and FDIC expense of $36,000 for the same period last year.

For the nine months ended September 30, 2008, the net loss totaled ($19.8) million or ($4.05) diluted loss per share, as compared to net income of $6.2 million or $1.18 diluted earnings per share for the nine months ended September 30, 2007.

The provision for loan losses for the quarter ended September 30, 2008 was $24.9 million as compared to $6.2 million for the previous quarter ended June 30, 2008. The increase in the provision for loans losses was primarily attributable to the increase in the level of nonperforming assets and the increase in net loan charge-offs. Nonperforming assets increased $13.0 million to $105.8 million at September 30, 2008 as compared to the increase of $39.5 million in nonperforming assets for the previous quarter ended June 30, 2008. The increase in nonperforming assets for the quarter ending September 30, 2008, includes net loan charge-offs of $12.9 million as compared to net loan charge-offs of $2.6 million for the quarter ended June 30, 2008.

The Return on Average Equity ("ROAE") and Return on Average Assets ("ROAA") for the three months ended September 30, 2008 were (133.03)% and (7.20)%, respectively, compared to 17.73% and 1.33% for the same period in 2007, respectively. The ROAE and ROAA for the nine months ended September 30, 2008 were (52.65)% and (3.47)% respectively, compared to 18.33% and 1.41% for the same period in 2007, respectively.

Total loans, net of unearned income, before the allowance for loan losses, increased $10.7 million, or 2% from $521.4 million to $532.1 million from December 31, 2007 to September 30, 2008. The net increase in loans was primarily related to commercial loans of $10.2 million, commercial real estate of $10.4 million, residential loans of $3.4 million and equity lines of credit of $3.1 million, partially offset by a net decrease of $16.8 million in construction and land loans. Total non-performing assets increased $90.5 million to $105.8 million at September 30, 2008 from $15.3 million at December 31, 2007. The increase in nonperforming assets for the nine months ended September 30, 2008 was primarily due to a net increase of $79.5 million in nonaccrual loans, net of $21.1 million in net loan charge-offs and a net increase in OREO of $12.6 million. The increase in nonaccrual loans was primarily related to residential construction and land loans.

As of September 30, 2008, non-performing assets as a percentage of total loans and other real estate owned equaled 19.34% compared to 2.92% at December 31, 2007.

Total cash and due from banks was $208.9 million or 22% of total assets at September 30, 2008, as compared to $11.1 million or 2% at December 31, 2007. Total deposits, as of September 30, 2008 were $711.7 million, representing an increase of $233.8 million or 49% from $478.0 million at December 31, 2007. We increased our cash levels at the Bank in order to strengthen our liquidity by attracting additional broker certificates of deposits, which contributed to the increase in our deposit portfolio. Total assets increased to $939.1 million from $689.5 million at December 31, 2007, up $249.6 million, or 36%.

As of September 30, 2008, the Bank's Tier 1 capital to average assets ratio ("leverage capital ratio") was 4.43%, the Tier 1 risk-based capital ratio was 6.89%, and the total risk-based capital ratio was 8.18%. On a consolidated basis, as of September 30, 2008, the Company's leverage capital ratio was 4.42%, the Tier 1 risk-based capital ratio was 6.87%, and the total risk-based capital ratio was 8.43%. As of the same date, the Company and Bank were classified as "adequately capitalized" as defined by applicable regulatory definitions.

Suzanne Dondanville, Interim President and Chief Executive Officer of the Bank (also Executive Vice President /Chief Operating Officer), stated, "We are obviously disappointed with our financial results for the quarter, however, we feel confident that we have identified the complex issues regarding our loan portfolio and are focused on managing the nonperforming loan problems in an orderly fashion so as to maximize shareholder value and to operate the Bank in a safe and sound manner. We have hired additional loan workout consultants to analyze and restructure our nonperforming loans, so we can effectively execute action plans to resolve them. Additionally, every day we are working diligently with our investment banking firm and consultants in developing strategic plans to enhance shareholder value. We are in a very tough operating environment and we are clearly in unprecedented economic times for our nation, the financial services industry and the capital markets. Most importantly, we value our customer and shareholder relationships, which are the backbone of our community banking franchise."

1st Centennial Bank operates its main office and construction/real estate loan production offices in downtown Redlands, California; its Religious Lending Group and its SBA/Commercial Lending Group and a full-service branch in Brea, California; its Homeowners Association and a full-service branch in Escondido, and full-service branches in Palm Desert, Irwindale and Temecula, California.

The statements contained in this release that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Readers are cautioned not to unduly rely on forward-looking statements. Actual results may differ from those projected. These forward-looking statements involve risks and uncertainties including but not limited to the health of the National and California economies, the Company's ability to implement its strategy and expand its lending operations, the Company's ability to attract and retain skilled employees, customers' service expectations, the Company's ability to successfully deploy new technology and gain efficiencies there-from, the success of branch expansion, changes in interest rates, loan portfolio performance, and other factors detailed in the Company's SEC filings.

Additional information is available on the Internet at www.1stcent.com or by contacting Beth Sanders, Executive Vice President and Chief Financial Officer at [e-mail].

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1 Adjusted for the 50% stock distribution declared for shareholders of record on May 1, 2007, and distributed May 15, 2007.

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1 Computed on an annualized basis.

2 Net interest income divided by average interest-earning assets.

3 Total general and administrative expense divided by net interest income plus non-interest income.

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1 Total loans consist of loans receivable, net of deferred fees.

2 Stated book value minus goodwill.

3 Net of undisbursed balances of $76.4 million and $115.7 million at September 30, 2008 and December 31, 2007, respectively.