SecProbe.io

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      February 17, 2005

Mail Stop 0408

By U.S. Mail and facsimile to (760) 736-8906

Mr. James P. Kelley, II
President and Chief Executive Officer
Discovery Bancorp
338 Via Vera Cruz
San Marcos, CA 92078

Re:	Discovery Bancorp
	Form S-4 filed January 18, 2005
	File No. 333-122090

Dear Mr. Kelley:

	We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your document in
response
to these comments.  If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary.  Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.

      The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing.  We look forward to working
with you in these respects.  We welcome any questions you may have
about our comments or any other aspect of our review.  Feel free
to
call us at the telephone numbers listed at the end of this letter.

General

1. Please note the updating requirements of Rule 3-12 of
Regulation
S-X.

2. Please file updated consents for all audited financial
statements
included in your next filing.

3. Immediately following the Introduction, please provide a
section
under the caption "Risk Factors" which provides a discussion of
the
most significant factors contributing to the risk involved in this
transaction.  For example, consider including risk factors
pertaining
to the impact this transaction may have on shareholder rights, the
risks associated with the contemplated acquisition of Celtic Corp,
and the risks posed by dilution.  Please see Item 503(c) of
Regulation S-K.

4. The staff notes that you have included a brief discussion of
the
changes in the rights enjoyed by shareholders of Discovery Bank
and
those enjoyed by shareholders of Discovery Bancorp.
Supplementally,
provide the staff with a copy for Discovery Bank`s charter and
bylaws.

5. Please provide your legal analysis as to how you determined
that
shareholder approval of Discovery Bancorp`s charter and bylaws was
not required.  To the extent that you determine that shareholder
approval is required; consider the need to unbundle the approval
of
the new charter and bylaws from the shareholders` approval of the
merger.  Please see Rule 14a-4 and the September 2004 supplement
to
the Telephone Interpretations Manual.

6. Please confirm that the company will not utilize the proxies
that
they are seeking with this registration statement to vote for any
motion to adjourn the meeting in order to solicit additional
proxies.
Such an action exceeds the discretionary power granted as part of
the
proxy and therefore must receive specific approval.

7. On page 11, you state that the holding company is not a party
to
any material legal proceedings.  Please add disclosure that
discusses
any legal proceedings to which Discovery Bank is a party.

Calculation of Registration Fee

8. We note that you are registering 1,217,798 shares.  We also
note
that you have 1,037,298 shares outstanding.  Please revise the
table
to identify the reason you are registering the additional 180,500
shares.  Do these represent the shares issuable upon the exercise
of
the warrants?

Available Information; Cautionary Statement Regarding Forward-
Looking
Statements

9. Please remove the Cautionary Statement Regarding Forward-
Looking
Statements and the Additional Information sections as this
information is not required by Item 501 of S-K and therefore
should
not appear in the forepart of the registration statement.

Available Information - page iii

10. In the last paragraph of this section, you reference the SEC`s
website.  Please make it clear that investors can obtain the same
information on the website as they can from the Public Reference
Room.  From this paragraph, it seems that the investors can not
access the Registration Statement, exhibits and schedules from the
website.

Introduction - page 1

11. Substantially expand your discussion of the acquisition of
Celtic, including a brief discussion of Celtic`s business,
management`s plan to use the assets acquired and the price that
Discovery will pay for Celtic.

12. Revise this section to briefly describe the material changes
to
the rights of shareholders under the holding company compared to
their current rights as bank shareholders.

13. Please clarify the record date for shareholders to participate
in
the vote.

Vote Required - page 2

14. Expand this section to clarify how you will treat abstentions
and
broker non-votes.  Please refer to Item 21(b) of Schedule 14A.

15. Please revise to note whether Discovery Bank has a quorum
requirement and disclose the quorum size.

Proposal 1: Bank Holding Company Reorganization
Reasons for the Merger: General - page 7

16. Revise this section to provide all the information regarding
the
acquisition of Celtic Merger Corp and Celtic Capital Corporation
required by Item 14 of Schedule 14A. Please Refer to Note A to
Schedule 14A.  In addition, please ensure that your revised
discussion regarding the acquisition covers the following:
* When, how, and why Celtic Merger Corp. became a wholly owned
subsidiary of the Holding Company.
* How the Board of Directors identified Celtic Capital as a good
acquisition and how they determined the fair purchase price and
premium offered for their assets.
* Whether the Board of Directors entered into the purchase
agreement
with Celtic before or after Celtic experienced a loss for the nine
months ending September 30, 2004.
* The principals and directors of Celtic Capital and any
affiliation
with the Bank or holding company.
* Any provisions existing in the purchase agreement that may be
triggered in the event shareholders do not approve the merger.

17. Please confirm that there are no affiliations between the
owners
of Celtic and the Officers and Directors of Discovery.

18. Please advise the staff regarding all actions taken by the
Board
to determine that the price paid for Celtic was fair to Discovery
and
its shareholders.  Did the Board receive a fairness opinion?  If
not,
please disclose the fact that the Board did not seek an
independent
appraisal and state how they determined that not seeking expert
advice was consistent with their fiduciary duty to the
shareholders
of Discovery.

19. Please provide a legal analysis of how you determined that
shareholder approval of the acquisition of Celtic was not required
under California law.

Description of Discovery Bancorp Common Stock - page 9

20. We are unable to find a description of the warrants that you
are
registering in this transaction.  Please refer to Item 202 of
Regulation S-K.

The Holding Company: General - page 11

21. In the second paragraph of this section, you disclose that the
Holding Company has not yet engaged in business activity.
However,
the board has entered into a Purchase Agreement with Celtic
Capital
as referenced four paragraphs later.  Please explain the
distinction
on which you rely for this conclusion.

Directors and Executive Officers - page 11

22. In accordance with Item 401(h) of Regulation S-K, please
disclose
which of the directors will serve as Audit Committee Financial
Expert.

Federal Income Tax Consequences - page 18

23. Please advise the staff how you determined that a Item
601(b)(8)
tax opinion was not required.

24. To the extent that the disclosure in this section is not
supported by a tax opinion of counsel, remove the disclaimers in
the
middle of page 19.

Business of Discovery Bank - page 20

25. In the fourth paragraph, you refer to "asset based loans,"
please
change your reference to the loan product to "asset backed loans"
or
explain the distinction.  Similarly, on page 30 you refer to
"mini-
perm" financing, please review the document and either explain
industry jargon as you use the terms or replace the jargon with
more
readily understandable terminology.

26. Please confirm that the bank`s status as a "preferred lender"
of
the SBA, as discussed in the fifth paragraph, will not be altered
by
the merger discussed.

Management`s Discussion & Analysis of Financial Condition &
Results
of Operations

General - page 24

27. You project that the Poway branch will become profitable in
the
first quarter of 2005.  Please confirm that this projection is
still
accurate or detail any reason that management`s initial
expectations
have changed.

Distribution of Assets, Liabilities and Shareholder`s Equity -
page
25

28. Please include a footnote for your average balance sheet table
detailing how the non-accruing loans have been treated.   Please
refer to the Instructions to Item I.B of Industry Guide III.

Loan Categories - page 29

29. Please consider revising, by providing a further breakdown and
quantification of your current sub-categories of loans comprising
"Other Real Estate" and "Commercial".  We note these two
categories
represent approximately 60% to 70% of the loan portfolio for the
periods reported.  Please carefully review the Instructions to
Item
III.A of Industry Guide III.

30. We note that the Net Loans balance provided in both the
comparative September 30, and comparative December 31, tables do
not
agree with the balances shown in the comparative September 30,
Balance Sheet (page F-1) and the comparative December 31, Balance
Sheets (page F-10).  Please provide a reconciliation of these
amounts
by revising the table and any other ancillary disclosures.

Loans  -  page 31

31. We note you discussed each individual loan category with the
exception of your other real estate loan classification.  Please
revise to include a discussion similar to those already provided
for
other categories in your next amendment.  As a related matter, we
are
unclear whether your limited discussion on page 20 regarding
specialized banking products relates to this category.  Please
also
revise the discussion on page 20 as necessary, giving effect to
the
above comment and to eliminate any potential inconsistent
disclosures.

Loan Origination and Underwriting - page 31

32. Please include a discussion of your process for managing and
mitigating the risks factors inherent in loan origination and
underwriting.

Loan Maturities - page 32

33. We note that the total balances by loan category for the
Maturity
table did not agree with the balances provided in the Loan
Category
table.  The disclaimer provided in the last paragraph on page 32
is
not sufficient explanation for the large variance between the
depictions of these categories.  Please provide reconciliation
between the two tables and revise your relevant disclosures and
tables as necessary.

34. Please revise the interest rate portion of your loan maturity
table by separately presenting the required specific loan
categories
detailed in Item III.B of Industry Guide III.

Non-Performing Assets  -  page 33

35. We are unclear from your disclosures whether or not you had
balances of any non-accrual loans, loans 90 days past due and
accruing and/or restructured loans for the periods presented.
Please
present a table detailing the balances of these amounts in
accordance
with Item III.C of Industry Guide III.  If you did not have any
balances of any non-performing loan components for the periods
presented, please include an affirmative statement to that effect
in
your next amendment.  Please also more fully explain the
relationship
between those loans on your internal watch list and those
guaranteed
by government and other agencies, including why they are or are
not
included in the balances of non-performing loans for the purposes
of
Industry Guide III.

Borrowings - page 37

36. It was noted that the borrowings shown on the balance sheet
were
not identified as short or long-term in nature.  Please carefully
review the requirements and related instructions to Item VII of
Industry Guide III and include the relevant disclosures, or tell
us
why you believe they are not required.

Liquidity and Liquidity Management - page 38

37. Please more clearly define "Abrokered deposits@" described in
the
first paragraph of this section.

38. Revise the discussion of your available sources of liquidity
to
state the total amount of outstanding advances or funding from the
line of credit that you have secured from the FHLB San Francisco
as
of the end of each reporting period.

39. We note that your liquidity position and your net capital
ratios
have declined from 2003 to the first three quarters of 2004.
Please
provide management`s analysis of why your liquidity has declined
and
managements view as to how the change affects the risks that
affect
Discovery and your profitability.

Interest Rate Risk  -  page 41

40. We note that in your cumulative gap table, you have
significant
positive gap percentages in several of your measurement windows.
Please revise your textual discussion to discuss whether you have
policies and procedures in place designed to limit nominal and
cumulative gap amounts and/or percentages.  Disclose any
correction
action measures should any amounts exceed your established limits
or
how you would manage those situations if you do not have currently
have such policies as applicable.

41. We note that all your time deposits comprising in excess of
$38
million will mature within the next year.  Please revise your
discussion to detail how you plan on retaining a significant
portion
of these deposits and your plans if you are unable to or unwilling
to
pay market interest rates upon maturity.  Discuss and quantify
additional funding sources should you experience significant
disintermediation or deposit run-off.

Interest Rate Risk - page 42

42. Please provide a description of the model and the assumptions
used to generate the data in the Interest Rate Scenario table.
Please refer to Reg. S-K Item 305 a(1)(ii)(A&B).

Unaudited Pro Forma Selected Financial Data - page 54

43. We note the disclosures throughout the document regarding the
proposed acquisition of Celtic Capital Corporation.  It would
appear
to us that there are various levels at which the terms and
conditions
of the agreement would constitute an acquisition of a business for
accounting purposes.  Specifically, we are referring to the
following:
* Your plans to acquire loans, fixed assets and outstanding debt
and
operate Celtic as a separate subsidiary going forward;
* Your plans to retain and offer employment contracts to two of
Celtic`s principals and a consulting agreement with one of
Celtic`s
principals, together with non-compete agreements;
* The apparent significance of this acquisition to your historical
financial statements and satisfaction of the tests in Articles 1-
02(w)(2) and 3-05 of Regulation S-X potentially requiring
additional
disclosures, pro forma financial statements and audited financial
statements of Celtic.

44. Please revise to include audited financial statements and
revised
complete pro forma financial statements reflecting the acquisition
of
Celtic as a business or provide persuasive evidence as to why this
is
not required.  Please also include a complete Management`s
Discussion
and Analysis for Celtic for any required audited and interim
periods.
We note Articles 3-05 and 11 of Regulation S-X and Item 303 of
Regulation S-K.

45. As a related matter, please include a full purchase price
allocation in a tabular format and discuss how you valued all
assets
and liabilities acquired, including any goodwill.

46. Include an introductory paragraph prior to presenting all
required pro forma information detailing the specific terms and
conditions of the purchase agreement including, but not limited to
employment contracts, the consulting agreement and the existence
of
any