Discovery Bancorp Reports First Quarter Profit.

SAN MARCOS, Calif. -- Discovery Bancorp (OTCBB:DVBC) and its operating subsidiaries, Discovery Bank and Celtic Capital, today reported net income for the first quarter of 2008 of $116 thousand, or $0.06 per diluted share, compared with net income of $337 thousand, or $0.17 per diluted share for the first quarter of 2007 and a loss of $517 thousand, or $(0.27) per diluted share for the fourth quarter of 2007. The return on average assets and average equity for the quarter was 0.23% and 1.88%, respectively, compared with returns of 0.70% and 5.38%, respectively, for the first quarter of 2007 and (0.99%) and (7.98%) respectively, for the fourth quarter of 2007.

Assets at the end of the quarter totaled $198.0 million compared to $212.0 million and $193.0 million at December 31, 2007 and March 31, 2007, respectively. Net loans at March 31, 2008 equaled $160.2 million compared with net loans of $169.9 million and $154.0 million, respectively, at December 31, 2007 and March 31, 2007.

Noninterest bearing deposits rose to $40.9 million at the end of the quarter compared to $32.0 million and $23.7 million at December 31, 2007 and March 31, 2007, respectively. Noninterest bearing deposits represented 29% of total deposits at March 31, 2008 compared to 22% and 17% respectively at the December and March 2007 quarter end periods. Total deposits declined to $140.9 million from $147.9 million and $139.7 million, respectively, at the December and March 2007 quarter end periods reflecting the intentional run-off of higher cost certificates of deposit to correspond with the reduction in loans outstanding.

President and Chief Executive Officer, Frank J. Mercardante commented, "While this was another challenging quarter for the Company we are encouraged by several positives. The Company's subsidiary, Celtic Capital is having an excellent year and is on track to exceed our budgeted forecast in both outstandings and earnings for all of 2008. The Bank has experienced growth in core, noninterest bearing deposits along with an increase in noninterest income during the quarter. And, despite the current volume of nonperforming loans we are cautiously optimistic that we will make meaningful reductions in this area in the next few quarters."

Operating Results for the Quarter

Net interest income before provision for loan losses in the current quarter declined by 8% to $2.5 million from $2.7 million in the first quarter of 2007 despite the increase in loans outstanding and the better mix of noninterest bearing deposits to total deposits. The decline was largely attributed to the Bank having a higher volume of rate sensitive assets than rate sensitive liabilities, which negatively impacts interest income in a declining rate environment and the higher volume of nonaccrual loans during the current quarter. The net interest margin for the current period was 5.45% compared to 6.22% for the first quarter of 2007.

Noninterest income increased 8% in the current period to $442 thousand from $410 thousand in the 2007 first quarter. The increase was largely due to an increase in loan sales during the quarter, which generated fee income of $162 thousand, and in Other Income, which increased $82 thousand. These increases more than offset the $230 thousand one time gain on sale of other real estate owned in the March 2007 quarter. Noninterest expense increased 8% in the 2008 quarter to $2.7 million from $2.5 million in the comparable 2007 period with salaries, other operating expenses, and occupancy representing the largest increases.

Asset quality:

Total non-accrual loans at March 31, 2008 equaled $12.2 million, an increase of $1.4 from the $10.8 million at December 31, 2007. Nonperforming assets, which consist of loans on non-accrual or past due for 90 days or more, totaled $12.2 million at the end of the quarter compared with $12.5 million at December 31, 2007. Subsequent to the close of the quarter total non-accrual and nonperforming loans were reduced by $0.9 million as part of a workout with one borrower. Loans are placed on non-accrual status if there is reasonable doubt as to the collectibility of principal and interest in accordance with the original credit terms.

The allowance for loan and lease losses as of March 31, 2008 represented 2.02% of loans outstanding compared to 2.02% at December 31, 2007.

Capital ratios at both the Company and Discovery Bank remain above the levels required for a "well capitalized" designation by regulatory agencies. The Tier 1 Leverage capital ratios for the Company and the Bank at December 31, 2007 were 12.23% and 9.99%, respectively.

Discovery Bancorp is a bank holding company serving the financial needs of small to medium-sized businesses, professionals and individuals through two principal subsidiaries: Discovery Bank and Celtic Capital Corp. The bank, founded in 2001, has offices in San Marcos, Poway, and Los Angeles, Calif.; Celtic Capital, founded in 1982, maintains offices in Santa Monica, Phoenix, and Bellevue, Wash.

Shares of the Company's common stock are traded on the OTC Bulletin Board under the symbol DVBC. For more information, visit our web site at www.discovery-bank.com.

Forward-Looking Statements: 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. There can be no assurance that future developments affecting the Company will be those anticipated by management. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties.

[TABLE OMITTED]