The following discussion contains a review of Pacific Continental Corporation and its wholly-owned subsidiary Pacific Continental Bank operating results and financial condition for the three and nine months ended September 30, 2009. When warranted, comparisons are made to the same period in 2008 and to the previous year ended December 31, 2008. The discussion should be read in conjunction with the financial statements (unaudited) and related notes contained elsewhere in this report. The reader is assumed to have access to the Company's Form 10-K for the previous year ended December 31, 2008, which contains additional statistics and explanations. All numbers, except per share data, are expressed in thousands.

This report and the documents incorporated herein by reference may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "should," "projects," "seeks," "estimates," "suggests" or words of similar meaning. These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. In addition to the factors set forth in (i) this report,
(ii) the sections titled "Risk Factors," "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations", as applicable, from our 2008 Annual Report on Form 10-K, and (iii) the other documents incorporated by reference in this report, the following factors, among others, could cause actual results to differ materially from the anticipated results:

• local and national economic conditions could be less favorable than expected or could have a more direct and pronounced effect on us than expected and adversely affect our ability to continue internal growth at historical rates and maintain the quality of our earning assets;

• the local housing/real estate market could continue to decline;

• the risks presented by a continued economic recession, which could adversely affect credit quality, collateral values, including real estate collateral, investment values, liquidity and loan originations and loan portfolio delinquency rates;

• interest rate changes could significantly reduce net interest income and negatively affect funding sources;

• projected business increases following any future strategic expansion or opening of new branches could be lower than expected;

• competition among financial institutions could increase significantly;

• the goodwill we have recorded in connection with acquisitions could become impaired, which may have an adverse impact on our earnings and capital;

• the reputation of the financial services industry could deteriorate, which could adversely affect our ability to access markets for funding and to acquire and retain customers;

• the efficiencies we may expect to receive from any investments in personnel, acquisitions and infrastructure may not be realized;

• the level of non-performing assets and charge-offs or changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements may increase;

• changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, executive compensation and insurance) could have a material adverse effect on our business, financial condition and results of operations;

• acts of war or terrorism, or natural disasters, such as the effects of pandemic flu, may adversely impact our business;

• the timely development and acceptance of new banking products and services and perceived overall value of these products and services by users may adversely impact our ability to increase market share and control expenses;

• changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters may impact our results of operations;

• our success at managing the risks involved in the foregoing items will have a significant impact upon our results of operations and future prospects.

Please take into account that forward-looking statements speak only as of the date of this report. We do not undertake any obligation to publicly correct or update any forward-looking statement whether as a result of new information, future events or otherwise.

SUMMARY OF CRITICAL ACCOUNTING POLICIES

We follow accounting standards set by the Financial Accounting Standards Board, commonly referred to as the "FASB." The FASB sets generally accepted accounting principles (GAAP) that we follow to ensure we consistently report our financial condition, results of operations, and cash flows. References to GAAP issued by the FASB in this report are to the "FASB Accounting Standards Codification", sometimes referred to as the "Codification" or "ASC". The FASB finalized the Codification effective for periods ending on or after September 15, 2009. Prior FASB Statements, Interpretations, Positions, EITF consensuses, and AICPA Statements of Position are no longer being issued by the FASB. The Codification does not change how the Company accounts for its transactions or the nature of related disclosures made. However, when referring to guidance issued by the FASB, the Company refers to topics in the ASC rather than the specific FASB statement. We have updated references to GAAP in this report to reflect the guidance in the Codification.

The SEC defines "critical accounting policies" as those that require the application of management's most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in future periods. Significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2008 in Item 8 in the Company's Form 10-K. Management believes that the following policies and those disclosed in the Notes to Consolidated Financial Statements should be considered critical under the SEC definition:

Allowance for Loan Losses and Reserve for Unfunded Commitments

The allowance for outstanding loans is classified as a contra-asset account offsetting period-end loans, and the allowance for unfunded commitments is classified as an "other" liability on the balance sheet. The allowance for loan losses is established through a provision for loan losses charged against earnings. The balances of the allowance for loan losses for period-end loans and unfunded commitments are maintained at amounts management believes will be adequate to absorb known and inherent losses in the loan portfolio and commitments to loan funds. The appropriate balance of the allowance for loan losses is determined by applying loss factors to the credit exposure from period-end loans and unfunded loan commitments. Estimated loss factors are based on subjective measurements including management's assessment of the internal risk classifications, changes in the nature of the loan portfolios, industry concentrations, and the impact of current local, regional, and national economic factors on the quality of the loan portfolio. Changes in these estimates and assumptions are reasonably possible and may have a material impact on the Company's consolidated financial statements, results of operations, or liquidity.

Goodwill and Intangible Assets

At September 30, 2009, the Company had $22,737 in goodwill and other intangible assets. FASB ASC 350, "Intangibles - Goodwill and Other", requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition or sale or disposition of a significant portion of a reporting unit. Application of the goodwill impairment test

requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated using a discounted cash flow of forecasted earnings, estimated sales price multiples based on recent observable market transactions and market capitalization based on current stock prices. This analysis requires significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth, the useful life over which cash flows will occur, and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for the Company's single reporting unit. We allocate goodwill to reporting units based on the reporting unit expected to benefit from the combination. We evaluate our only reporting unit, Commercial Banking, on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach.

Share-based Compensation

We account for stock-based compensation in accordance with FASB ASC 718, "Compensation - Stock Compensation". Under the fair value recognition provisions of this statement, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period. Liability classified share-based awards are remeasured at fair value each reporting period. Determining the fair value of share-based awards at the grant date requires judgment, including estimating expected dividends. In addition, judgment is required in estimating the amount of share-based awards that are expected to be forfeited. If actual results differ significantly from these estimates, stock-based compensation expense and our results of operations could be materially impacted.

The Company adopted the guidance for accounting for stock based compensation using the modified prospective method. Therefore, previously reported financial data was not restated, and expenses related to equity-based payments granted and vesting during 2008 and 2009 were recorded as compensation expense.

Fair Value

FASB ASC 820, "Fair Value Measurements and Disclosures", which among other things, requires enhanced disclosures about financial instruments carried at fair value. This section of the FASB ASC establishes a hierarchical disclosure framework associated with the level of pricing observability utilized in measuring financial instruments at fair value. The degree of judgment utilized in measuring the fair value of financial instruments generally correlates to the level of pricing observability. Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of pricing observability and a lesser degree of judgment utilized in measuring fair value. Conversely, financial instruments rarely traded or not quoted will generally have little or no pricing observability and a higher degree of judgment utilized in measuring fair value. Pricing observability is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established and the characteristics specific to the transaction. See Note 8 of the Notes to Consolidated Financial Statements for additional information about the level of pricing transparency associated with financial instruments carried at fair value.

Recent Accounting Pronouncements

In December 2007, the FASB issued FASB ASC 805, "Business Combinations." FASB ASC 805 establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquired entity and the goodwill acquired. Furthermore, acquisition-related and other costs will now be expensed rather than treated as cost components of the acquisition. FASB ASC 805 also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This statement applies prospectively to business combinations for which the acquisition date is on or after January 1, 2009. We do not expect the adoption of this guidance will have a material impact on our consolidated financial statements as related to business combinations consummated prior to January 1, 2009. We expect the adoption of this guidance will increase the costs charged to operations for acquisitions consummated on or after January 1, 2009.

In December 2007, the FASB issued FASB ASC 810-10-65-1, "Consolidations", specifically, "Noncontrolling Interest in Consolidated Financial Statements." FASB ASC 810-10-65-1 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The standard also requires additional disclosures that clearly identify and distinguish between the interest of the parent's owners and the interest of the noncontrolling owners of the subsidiary. This statement is effective on January 1, 2009 for the Company, to be applied prospectively. We do not expect the adoption of this guidance will have a material impact on the Company's consolidated financial statements.

In June 2008, FASB issued FASB ASC 260, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities." FASB ASC 260-10 concludes that nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and shall be included in the computation of EPS pursuant to the two-class method. This statement is effective for fiscal years beginning after December 15, 2008, to be applied retrospectively. The Company had no restricted stock that qualifies as participating securities as described under this pronouncement. The impact of adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

On January 12, 2009, FASB issued FASB ASC 325-40-65-1, "Amendments to the Impairment Guidance of EITF Issue No. 99-20." FASB ASC 325-40-65-1 addresses certain practice issues in preceding guidance by making its other-than-temporary impairment assessment guidance consistent with FASB ASC 320-10, "Accounting for Certain Investments in Debt and Equity Securities." This guidance removes the reference to the consideration of a market participant's estimates of cash flows, and instead requires an assessment of whether it is probable, based on current information and events, that the holder of the security will be unable to collect all amounts due according to the contractual terms. If it is probable that there has been an adverse change in estimated cash flows, an other-than-temporary impairment is deemed to exist, and a corresponding loss shall be recognized in earnings equal to the entire difference between the investment's carrying value and its fair value at the balance sheet date of the reporting period for which the assessment is made. This guidance is effective for interim and annual reporting periods ending after December 15, 2008, and shall be applied prospectively. The impact of adoption did not have a material impact on the Company's consolidated financial statements.

On April 1, 2009, the FASB issued FASB ASC 805-20, "Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies." FASB ASC 805-20 amends and clarifies FASB ASC 805 (revised 2007), Business Combinations, to address application issues raised by preparers, auditors, and members of the legal profession on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. This guidance is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the second annual reporting period beginning on or after December 15, 2008. The impact of adoption is not expected to have a material impact on the Company's consolidated financial statements.

On April 9, 2009, the FASB issued FASB ASC 820-10-65-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly." FASB ASC 820-10-65-4 clarifies the application of previous guidance when the volume and level of activity for the asset or liability has significantly decreased and guidance on identifying circumstances when a transaction may not be considered orderly. This guidance is effective for interim and annual reporting periods ending after June 15, 2009. The impact of adoption did not have a material impact on the Company's consolidated financial statements.

On April 9, 2009, the FASB issued FASB ASC 320-10-65-1, "Recognition and Presentation of Other-Than-Temporary Impairments." FASB ASC 320-10-65-1 clarifies the interaction of the factors that should be considered when determining whether a debt security is other-than-temporarily impaired. For debt securities, management must assess whether (a) it has the intent to sell the security and (b) it is more likely than not that it will be required to sell the security prior to its anticipated recovery. These steps are done before assessing whether the entity will recover the cost basis of the investment. Previously, this

assessment required management to assert it has both the intent and the ability to hold a security for a period of time sufficient to allow for an anticipated recovery in fair value to avoid recognizing an other-than-temporary impairment. This change does not affect the need to forecast recovery of the value of the security through either cash flows or market price. In instances when a determination is made that an other-than-temporary impairment exists but the investor does not intend to sell the debt security and it is not more likely than not that it will be required to sell the debt security prior to its anticipated recovery, this guidance changes the presentation and amount of the other-than-temporary impairment recognized in the income statement. The other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income. This guidance is effective for interim and annual reporting periods ending after June 15, 2009. The impact of adoption did not have a material impact on the Company's consolidated financial statements.

On April 9, 2009, the FASB issued FASB ASC 825-10-65-1, "Interim Disclosures about Fair Value of Financial Instruments." FASB ASC 825-10-65-1 amends previous guidance to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This guidance also requires those disclosures in summarized financial information at interim reporting periods. This guidance is effective for interim and annual reporting periods ending after June 15, 2009. The impact of adoption did not have a material impact on the Company's consolidated financial statements, although additional interim disclosures have been provided (see Note 8 of the Notes to Consolidated Financial Statements).

On May 28, 2009, the FASB issued FASB ASC 855, "Subsequent Events." FASB ASC 855-10 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This guidance is effective for interim and annual reporting periods ending after June 15, 2009. The impact of adoption did not have a material impact on the Company's consolidated financial statements, although additional disclosure is provided in the Notes to Consolidated Financial Statements.

On June 12, 2009 the FASB issued FASB ASC 860, "Accounting for Transfers of Financial Assets." FASB ASC 860 is a revision to preceding guidance and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a "qualifying special purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures. This statement is effective for interim and annual reporting periods beginning January 1, 2010. The impact of adoption is not expected to have a material impact on the Company's consolidated financial statements.

On June 29, 2009, the FASB issued FASB ASC 105, "The FASB Accounting Standards Codification ("Codification") and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162." The Codification is not expected to change U.S. GAAP, but will combine all authoritative standards into a comprehensive, topically organized online database. Following this Statement, the Board will not issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates to update the codification. After the launch of the Codification on July 1, 2009 only one level of authoritative U.S. GAAP for non governmental entities exists, other than guidance issued by the Securities and Exchange Commission. In May 2008, the FASB issued, "The Hierarchy of Generally Accepted Accounting Principles", to identify the sources of accounting principles and the framework for selecting the principles used in preparing the financial statements in conformity with U.S. GAAP for nongovernmental entities, and arranged these sources of GAAP in a hierarchy for users to apply accordingly. Since the Codification

is in effect, all of its content carries the same level of authority, effectively superseding preceding guidance. In other words, the GAAP hierarchy is now modified to include only two levels of GAAP, authoritative and non-authoritative. This statement is effective for interim and annual reporting periods ending after September 15, 2009. The impact of adoption did not have a material impact on the Company's consolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update No. 2009-04, "Accounting for Redeemable Equity Instruments - Amendments to
Section 480-10-99." This Update amends Topic 480, "Distinguishing Liabilities from Equity," reflecting the SEC staff's views regarding the application of Accounting Series Release No. 268, "Presentation in Financial Statements of Redeemable Preferred Stocks." This guidance did not have a material impact on the Company's consolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update No. 2009-05, "Fair Value Measurements and Disclosures - Measuring Liabilities at Fair Value." This Update provides clarification for Topic 820 for circumstances in which a quoted price in an active market for the identical liability is not available. The guidance in this Update is effective for the first reporting period, including interim periods, beginning after August 27, 2009. This guidance did not have a material impact on the Company's consolidated financial statements.

HIGHLIGHTS



                                               For the three months ended September 30,                 For the Nine months ended September 30,
                                            2009                2008               % Change              2009                2008          % Change
Net income (loss)                        $      279         $      3,020                 -90.8 %    $       (4,903 )      $     9,106          n.m.

Earnings (loss) per share
Basic                                    $     0.02         $       0.25                 -92.0 %    $        (0.38 )      $      0.76          n.m.
Diluted                                  $     0.02         $       0.25                 -92.0 %    $        (0.38 )      $      0.76          n.m.

Assets, period-end                                                                                  $    1,150,508        $ 1,051,884           9.4 %
Loans, period-end (1)                                                                               $      959,102        $   924,102           3.8 %
Core Deposits, period end (2)                                                                       $      751,653        $   639,439          17.5 %
Deposits, period-end                                                                                $      826,520        $   711,640          16.1 %

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