CLFC Center Financial Corporation (MM)

Center Financial Corporation (NASDAQ: CLFC), today reported record financial results, posting net income of $9.4 million, equal to $0.22 per diluted common share, for its 2011 third quarter. This compares with prior-year third quarter net income of $6.0 million, or $0.13 per diluted common share.

“Center Financial’s 2011 third quarter was an outstanding quarter on numerous fronts,” said Richard S. Cupp, president and chief executive officer. “First, the steady, consistent and sustainable improvements in the overall condition of the bank led to the lifting of Center Bank’s informal memorandum of understanding with the FDIC and California DFI. Second, our shareholders showed their support for the proposed merger agreement with Nara Bancorp with an overwhelming approval of the transaction. And finally, this quarter represents a record performance in terms of earnings for any given quarter in the 25-year history of the company. This performance was supported by positive trends and improvements in asset quality, loans and deposits and operations. With these achievements, we believe we are well poised to complete our merger of equals with Nara later this year, upon receipt of all required regulatory approvals.”

2011 THIRD QUARTER FINANCIAL HIGHLIGHTS

  At or for the Three Months Ended     9/30/2011     6/30/2011     9/30/2010   Net income   $ 9,393       $ 4,895       $ 5,963   Net income available to common shareholders   $ 8,636       $ 4,141       $ 5,215   Net income per diluted common share   $ 0.22       $ 0.10       $ 0.13   Gain on sale of loans   $ 1,896       $ 1,800       $ 257   Income before income tax provision (benefit)   $ 9,808       $ 5,180       $ 5,117   Income tax provision (benefit)   $ 415       $ 285       $ (846 ) Net interest margin     3.19 %       3.21 %       3.20 % Total risk-based capital ratio     21.10 %       20.67 %       19.32 % Tier 1 leverage ratio     13.51 %       13.20 %       12.55 % Tangible common equity per common share   $ 6.00       $ 5.76       $ 5.41   Tangible common equity to tangible assets     10.62 %       10.14 %       9.52 % Non-covered nonperforming loans, net of SBA guarantee   $ 29,022       $ 36,044       $ 40,159   Delinquent non-covered loans 30 to 89 days past due, net of SBA guarantee   $ 2,387       $ 6,138       $ 10,788   Non-covered net loan charge-offs   $ 3,692       $ 6,420       $ 7,975   Provision for loan losses   $ 1,200       $ 5,000       $ 4,000   Allowance for non-covered loan losses to total non-covered loans     3.21 %       3.41 %       3.71 % Total non-covered loans   $ 1,469,433       $ 1,455,423       $ 1,467,201   Total deposits   $ 1,796,904       $ 1,791,981       $ 1,792,281   Noninterest-bearing deposits as a % of total deposits     27.8 %       25.5 %       21.4 % Annualized average cost of deposits     0.86 %       0.96 %       1.13 %        

2011 THIRD QUARTER OPERATIONAL HIGHLIGHTS

Net interest income before provision for loan losses for the 2011 third quarter rose to $17.2 million from $17.0 million in the preceding second quarter and $17.1 million in the prior-year third quarter.

The average yield on loans of 5.40% for the 2011 third quarter reflects continuing pressures from the prolonged low interest rate environment. This compares with 5.54% in the preceding second quarter and 5.85% in the 2010 third quarter. The average cost of interest-bearing deposits continued to improve, decreasing to 1.16% for the 2011 third quarter from 1.27% for the 2011 second quarter and from 1.44% for the 2010 third quarter. Total cost of deposits improved to 0.86% for the 2011 third quarter, compared with 0.96% for the 2011 second quarter and 1.13% for the prior-year third quarter. The company’s net interest margin (NIM) for the 2011 third quarter remained relatively stable at 3.19%, compared with 3.21% in the preceding second quarter and 3.20% in the prior-year third quarter.

Noninterest income was also steady at $6.0 million for the 2011 third quarter, compared with $6.0 million in the preceding second quarter. These periods include gains on sale of loans from its SBA portfolio of $1.9 million and $1.8 million, respectively, and reflect the company’s practice of selling approximately $20 million of SBA loans on a quarterly basis, which practice began in the 2010 fourth quarter. In the 2010 third quarter, noninterest income totaled $4.4 million and included a gain on sale of loans of $257,000.

Total noninterest expense for the 2011 third quarter declined to $12.2 million, compared with $12.8 million in the preceding second quarter and $12.4 million in the prior-year third quarter. The company’s efficiency ratio for the 2011 third quarter improved to 52.49% from 55.66% in the preceding second quarter and 57.61% in the 2010 third quarter.

An income tax provision of $415,000 for the 2011 third quarter reflects a reduction in the company’s deferred tax asset (DTA) valuation allowance by approximately $3.4 million from the June 30, 2011 balance. The income tax provision for the preceding second quarter was $285,000, and the company posted an income tax benefit for the 2010 third quarter of $846,000.

For the 2011 third quarter, Center Financial posted record quarterly net income of $9.4 million and net income available to common shareholders of $8.6 million, equal to $0.22 per diluted common share. For the preceding 2011 second quarter, net income amounted to $4.9 million and net income available to common shareholders of $4.1 million, equal to $0.10 per diluted common share. For the 2010 third quarter, net income amounted to $6.0 million and net income available to common shareholders was $5.2 million, equal to $0.13 per diluted common share.

For the 2011 third quarter, Center Financial’ return on average assets (ROAA) improved significantly to 1.63% from 0.86% in the preceding second quarter and 1.04% in the 2010 third quarter. Return on average equity (ROAE) rose considerably to 12.89%, from 6.97% in the preceding second quarter and 8.83% in the 2010 third quarter.

ASSET QUALITY

At September 30, 2011, total non-covered nonperforming assets net of SBA guarantees declined to $30.0 million from $36.2 million at June 30, 2011 and $44.7 million at September 30, 2010. As a percentage of gross non-covered loans and other real estate owned (OREO), total non-covered nonperforming assets net of SBA guarantees was 2.04% at September 30, 2011, compared with 2.49% at June 30, 2011 and 3.04% at September 30, 2010. As of September 30, 2011, the company’s non-covered OREO portfolio had a carrying value of $947,000, compared with carrying values of $133,000 at June 30, 2011 and $4.5 million at September 30, 2010.

Non-covered nonperforming loans net of SBA guarantees declined to $29.0 million at September 30, 2011 from $36.0 million at June 30, 2011, as outflows of $10.8 million exceeded new inflows of $3.7 million into nonperforming status. Of the new nonaccruals, Commercial real estate (CRE) and commercial and industrial (C&I) loans accounted for the bulk of new nonaccruals, representing 78% and 18%, respectively. During the 2011 third quarter, the company initiated a relatively small bulk sale that included 11 loans aggregating $5.0 million and concluded the transaction in October 2011. Including this $5.0 million, a total loan balance of $10.2 million was transferred to loans held for sale during the 2011 third quarter. At the close of the 2010 third quarter, non-covered nonperforming loans net of SBA guarantees totaled $40.2 million.

Delinquent non-covered loans 30 to 89 days past due net of SBA guarantees declined to $2.4 million at September 30, 2011 from $6.1 million at June 30, 2011 from $10.4 million at March 31, 2011, as the levels of inflows into non-covered past due status posted another decline from the preceding quarter. Non-covered loans past due 30 to 89 days at September 30, 2010 totaled $10.8 million.

Performing troubled debt restructurings (TDRs) that are not accounted for in non-covered nonaccrual or delinquent loans increased to $34.2 million at September 30, 2011 from $19.1 million at June 30, 2011 and $23.9 million at September 30, 2010. The company noted the increase in performing TDRs from the preceding quarter includes a concession of interest rates related to one large credit with a balance of $7.2 million.

Non-covered loan net charge-offs during the 2011 third quarter fell to $3.7 million, compared with $6.4 million in the preceding 2011 second quarter and from $8.0 million in the year-ago third quarter.

Largely reflecting the steady and continuing asset quality improvements and a considerable reduction in net loan charge-off levels, Center Financial recorded a provision for loan losses of $1.2 million in the 2011 third quarter. This compares with a provision for loan losses of $5.0 million in the preceding second quarter and $4.0 million in the third quarter a year ago.

At September 30, 2011, the company’s allowance for loan losses for non-covered loans totaled $47.1 million, reflecting decreases from $49.6 million at June 30, 2011 and $54.5 million at September 30, 2010. As a percentage of gross non-covered loans, the allowance for loan losses equaled 3.21% at September 30, 2011, 3.41% at June 30, 2011, and 3.71% at September 30, 2010.

LOANS & DEPOSITS

Non-covered loans at September 30, 2011 rose moderately to $1.47 billion from $1.46 billion at June 30, 2011, but was down when compared with $1.53 billion at December 31, 2010. Covered loans at September 30, 2011 declined to $93.6 million from $102.6 million at June 39, 2011 and $117.3 million at December 31, 2010. Total loans at September 30, 2011 amounted to $1.56 billion.

Total deposits at September 30, 2011 rose moderately to $1.80 billion from $1.79 billion at June 30, 2011 and from $1.77 billion at December 31, 2010. The company posted a 9.3% sequential increase in noninterest-bearing demand deposits, which increased the contribution to total deposits to 27.8% at September 30, 2011, compared with 25.5% at June 30, 2011. The sizeable increase in noninterest-bearing demand deposits was partially offset by a strategic reduction in higher rate money market accounts. The company’s loan-to-deposit ratio equaled 84.2% at September 30, 2011, compared with 84.1% at June 30, 2011 and 89.9% at December 31, 2010.

BALANCE SHEET SUMMARY & CAPITAL

Total assets at September 30, 2011 amounted to $2.26 billion, compared with $2.27 billion at June 30, 2011 and December 31, 2010. Average interest-earning assets equaled $2.14 billion for the 2011 third quarter, compared with $2.13 billion for the 2011 second quarter and $2.14 billion for the 2010 fourth quarter.

Total shareholders’ equity at September 30, 2011 rose to $294.7 million from $285.0 million at June 30, 2011 and from $274.0 million at December 31, 2010. Tangible common equity per common share, which is a non-GAAP financial measure, increased to $6.00 at September 30, 2011 from $5.76 at June 30, 2011 and $5.49 at December 31, 2010. Tangible common equity as a percentage of tangible assets, which is a non-GAAP financial measure, rose to 10.62% at September 30, 2011 from 10.14% at June 30, 2011 and from 9.65% at December 31, 2010.

With its seventh consecutive profitable quarter of operations, Center Financial’s capital position further strengthened and continued to be well in excess of both minimum guidelines for “well-capitalized” institutions and regulatory requirements. At September 30, 2011, Total Risk-Based capital ratio was 21.10%, Tier 1 Risk-Based capital ratio equaled 19.83% and Tier 1 Leverage ratio amounted to 13.51%, all reflecting increases from the levels at June 30, 2011 and December 31, 2010.

Use of Non-GAAP Financial Measures

This news release includes “non-GAAP financial measures” within the meaning of the Securities and Exchange Commission rules. Tangible common equity per common share and tangible common equity to tangible assets are non-GAAP financial measures. Tangible common equity was calculated as total shareholders’ equity less preferred stock and related dividend and accretion of preferred stock discount and net intangible assets. Tangible common equity to tangible assets represents tangible common equity divided by total assets less net intangible assets. The calculation of tangible common equity may differ among companies in light of diversity in presentation in the marketplace. Management believes that these measures are useful when comparing banks with preferred stock due to TARP funding to banks without preferred stock on their balance sheet and for evaluating a company’s capital levels. This information is being provided in response to market participant interest in these financial metrics. This information is not intended to be considered in isolation or as a substitute for the relevant measures calculated in accordance with U.S. GAAP. The reconciliations of these non-GAAP financial measures to GAAP financial measure included in this news release are attached herein.

Investor Conference Call

The company will host an investor conference call on Tuesday, October 25, 2011 at 10 a.m. PDT (1 p.m. EDT) to review financial results for its 2011 third quarter. The institutional investment community is invited to participate in the call by dialing 800-295-3991 (domestic) or 617-614-3924 (international) and entering passcode 52881668. Other interested parties are invited to listen to the live call through a listen-only audio Web broadcast via the Internet in the Investor Relations section of www.centerbank.com. Listeners are encouraged to visit the Web site at least 15 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software. For those who are not available to listen to the live broadcast, the audio broadcast will be archived for one year. A telephonic replay of the call will be available through Monday, October 31, 2011 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering replay passcode 74499659.

About Center Financial Corporation

Center Financial Corporation is the holding company of Center Bank, a community bank offering a full range of financial services for diverse ethnic and small business customers. Founded in 1986 and specializing in commercial and SBA loans and trade finance products, Center Bank has grown to be one of the nation’s leading financial institutions focusing on the Korean-American community, with total assets of $2.26 billion at September 30, 2011. Headquartered in Los Angeles, Center Bank operates a total of 21 full-service branches and two loan production offices. The company has 16 full-service branches located throughout Southern California and two branches in Northern California. Center Bank also operates two branches and one loan production office in the Seattle area, one branch in Chicago and a loan production office in Denver. Center Bank is a California state-chartered institution and its deposits are insured by the FDIC to the extent provided by law. For additional information on Center Bank, visit the company’s Web site at www.centerbank.com.

This release contains forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and actual results and performance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Factors that might cause such differences include, but are not limited to, those identified in our cautionary statements contained in Center Financial Corp.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, as amended (See Business, and Management’s Discussion and Analysis), and other filings with the SEC are incorporated herein by reference. These factors include, but are not limited to: the health of the national and California economies; competition in the financial services market for both deposits and loans; the ability of Center Financial and its subsidiaries to increase its customer base; customers’ service expectations; changes in interest rates; loan portfolio performance; the company’s ability to sustain profitable operations; and the company’s ability to capitalize on strategic growth opportunities. Factors also include, but are not limited to: the successful completion of the proposed merger of equals between Center Financial Corporation and Nara Bancorp; difficulties and delays in integrating the two institutions and achieving anticipated synergies, cost savings and other benefits from the transaction; higher than anticipated transaction costs; deposit attrition, operating costs, customer loss and business disruption following the merger, including difficulties in maintaining relationships with employees; the companies’ ability to receive required regulatory and shareholder approvals. Such forward-looking statements speak only as of the date of this release. Center Financial expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in the company’s expectations of results or any change in events.

  CENTER FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) (Dollars in thousands)       9/30/11 6/30/11 12/31/10 ASSETS Cash and due from banks $ 41,644 $ 33,738 $ 28,181 Federal funds sold 870 650 136,180 Money market funds and interest-bearing deposits in other banks   263,631   298,040   94,559 Cash and cash equivalents 306,145 332,428 258,920   Securities available for sale, at fair value 310,983 305,058 289,551 Non-covered loans held for sale, at the lower of cost or fair value 66,608 58,776 60,234 Federal Home Loan Bank and FRB stock, at cost 13,199 13,810 15,019

Non-covered loans, net of allowance for loan losses of $47,098 and $52,047 as of Sep 30, 2011 and December 31, 2010, respectively

1,353,440 1,345,740 1,415,646 Covered loans, net of allowance for loan losses of $1,010 as of Sep 30, 2011 and December 31, 2010 92,581 101,597 116,283 Premises and equipment, net 12,281 12,659 13,532 Core deposit intangible, net 418 434 464 Customers' liability on acceptances 3,313 2,748 2,287 Non-covered other real estate owned 947 133 937 Covered other real estate owned 1,028 1,132 1,459 Accrued interest receivable 5,089 5,096 5,509 Deferred income taxes, net 19,995 13,898 14,383 Investments in affordable housing partnerships 9,876 10,110 10,824 Cash surrender value of life insurance 18,147 17,991 12,791 Income tax receivable 13,236 13,216 14,277 Prepaid assessment fees 5,387 5,949 7,864 FDIC loss share receivable 17,503 21,964 23,991 Other assets   6,911   5,588   6,308 Total $ 2,257,087 $ 2,268,327 $ 2,270,279   LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Deposits: Noninterest-bearing $ 499,556 $ 457,182 $ 396,973 Interest-bearing   1,297,348   1,334,799   1,374,021

Total deposits

1,796,904 1,791,981 1,770,994   Acceptances outstanding 3,313 2,748 2,287 Accrued interest payable 4,317 4,660 5,113 Other borrowed funds 132,130 157,299 188,670 Long-term subordinated debentures 18,557 18,557 18,557 Accrued expenses and other liabilities   7,186   8,043   10,646 Total liabilities 1,962,407 1,983,288 1,996,267 Commitments and Contingencies Shareholders' Equity Preferred stock, Series A 53,607 53,538 53,409 Common stock 188,208 188,031 187,754 Retained earnings 48,914 40,277 32,000 Accumulated other comprehensive income, net of tax   3,951   3,193   849 Total shareholders' equity   294,680   285,039   274,012 Total $ 2,257,087 $ 2,268,327 $ 2,270,279     Tangible common equity per common share $ 6.00 $ 5.76 $ 5.49 Tangible common equity to tangible assets 10.62 % 10.14 % 9.65 %   CENTER FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)             Three Months Ended Nine Months Ended 9/30/11 6/30/11 9/30/10 9/30/11 9/30/10   Interest and Dividend Income: Interest and fees on loans $ 20,668 $ 20,755 $ 22,472 $ 62,584 $ 64,430 Interest on federal funds sold 1 1 127 44 289 Interest on investment securities 2,011 2,109 1,499 5,902 7,290 Interest on money market funds and interest-earning deposits   182     211     41     487     111   Total interest and dividend income 22,862 23,076 24,139 69,017 72,120   Interest Expense: Interest on deposits 3,947 4,294 5,137 12,875 15,658 Interest on borrowed funds 1,570 1,648 1,747 4,760 5,021 Interest expense on long-term subordinated debentures   143     142     155     427     438   Total interest expense 5,660 6,084 7,039 18,062 21,117   Net interest income before provision for loan losses 17,202 16,992 17,100 50,955 51,003 Provision for loan losses   1,200     5,000     4,000     12,200     16,000   Net interest income after provision for loan losses 16,002 11,992 13,100 38,755 35,003   Noninterest Income: Customer service fees 1,727 1,782 2,043 5,308 6,161 Fee income from trade finance transactions 623 685 684 1,924 2,062 Wire transfer fees 330 344 321 987 933 Gain on business acquisition - - - - 5,900 Gain on sale of loans 1,896 1,800 257 7,448 1,460 Net gain on sale of securities available for sale - - - - 2,209 Loan service fees 526 708 565 1,896 1,153 Increase in FDIC loss share receivable 308 114 105 471 105 Other income   560     532     434     1,509     1,174   Total noninterest income 5,970 5,965 4,409 19,543 21,157   Noninterest Expense: Salaries and employee benefits 5,214 5,327 4,653 15,654 13,640 Occupancy 1,260 1,389 1,388 3,994 4,020 Furniture, fixtures, and equipment 549 519 756 1,671 1,903 Data processing 615 654 832 1,938 1,950 Legal fees 239 305 567 941 1,152 Accounting and other professional service fees 466 340 309 1,378 1,170 Business promotion and advertising 206 382 376 942 1,048 Supplies and communication 280 337 440 965 1,100 Security service 303 309 320 905 840 Regulatory assessment 771 998 1,073 2,821 3,096 Merger related expenses 477 200 - 1,114 129 OREO related expenses 577 638 170 1,689 1,529 Other operating expenses   1,207     1,379     1,508     3,907     3,950   Total noninterest expense   12,164     12,777     12,392     37,919     35,527     Income before income tax provision 9,808 5,180 5,117 20,379 20,633 Income tax provision   415     285     (846 )   1,205     4,400     Net income 9,393 4,895 5,963 19,174 16,233   Preferred stock dividends and accretion of preferred stock discount   (757 )   (754 )   (748 )   (2,261 )   (31,246 ) Net income (loss) available to common shareholders   8,636     4,141     5,215     16,913     (15,013 )   Other comprehensive income (loss) - Unrealized gain (loss) on available-for-sale securities, net of income tax expense (benefit)   758     1,936     144     3,102     (91 )   Comprehensive income $ 10,151   $ 6,831   $ 6,107   $ 22,276   $ 16,142     Earnings (loss) per share: Basic $ 0.22   $ 0.10   $ 0.13   $ 0.42   $ (0.44 ) Diluted $ 0.22   $ 0.10   $ 0.13   $ 0.42   $ (0.44 )   Weighted average shares outstanding - basic   39,876,029     39,868,773     39,902,114     39,865,808     33,762,755   Weighted average shares outstanding - diluted   39,932,601     39,936,146     39,912,160     39,931,507     33,762,755                   CENTER FINANCIAL CORPORATION SELECTED FINANCIAL DATA (Unaudited) (Dollars in thousands)       Three Months Ended 9/30/11 6/30/11 9/30/10 Interest Annualized Interest Annualized Interest Annualized

 

Average Income/ Rate/ Average Income/ Rate/ Average Income/ Rate/ Balance Expense Yield Balance Expense Yield Balance Expense Yield Assets: Interest-earning assets: Loans $ 1,518,771 $ 20,668 5.40 % $ 1,502,416 $ 20,755 5.54 % $ 1,523,012 $ 22,472 5.85 % Federal funds sold 1,094 1 0.36 1,377 1 0.29 228,116 127 0.22 Investments 319,131 2,011 2.50 317,930 2,109 2.66 299,601 1,499 1.99 Money market funds and interest-earning deposits   302,254   182 0.24   304,633   211 0.28   72,172   41 0.23 Total interest-earning assets   2,141,250   22,862 4.24   2,126,356   23,076 4.35   2,122,901   24,139 4.51 Noninterest - earning assets: Cash and due from banks 37,640 35,636 37,695 Bank premises and equipment, net 12,567 12,981 13,091 Customers' acceptances outstanding 2,902 2,032 2,100 Accrued interest receivables 4,761 4,734 5,012 Other assets   88,803   89,766   102,399 Total noninterest-earning assets   146,673   145,149   160,297   Total assets $ 2,287,923 $ 2,271,505 $ 2,283,198   Liabilities and Shareholders' Equity: Interest-bearing liabilities: Deposits: Money market and NOW accounts $ 564,554 $ 1,275 0.90 % $ 540,246 $ 1,419 1.05 % $ 519,943 $ 1,499 1.14 % Savings 90,292 537 2.36 89,222 548 2.46 92,288 589 2.53 Time certificates of deposit over $100,000 394,967 1,095 1.10 424,761 1,240 1.17 505,758 1,757 1.38 Other time certificates of deposit   301,363   1,040 1.37   305,345   1,087 1.43   301,881   1,292 1.70 1,351,176 3,947 1.16 1,359,574 4,294 1.27 1,419,870 5,137 1.44 Other borrowed funds 148,942 1,570 4.18 160,201 1,648 4.13 169,844 1,747 4.08 Long-term subordinated debentures   18,557   143 3.06   18,557   142 3.07   18,557   155 3.31 Total interest-bearing liabilities   1,518,675   5,660 1.48   1,538,332   6,084 1.59   1,608,271   7,039 1.74 Noninterest-bearing liabilities: Demand deposits   464,340   434,702   379,286 Total funding liabilities 1,983,015 1.13 % 1,973,034 1.24 % 1,987,557 1.41 % Other liabilities   15,857   16,792   27,722 Total noninterest-bearing liabilities 480,197 451,494 407,008 Shareholders' equity   289,051   281,679   267,919 Total liabilities and shareholders' equity $ 2,287,923 $ 2,271,505 $ 2,283,198   Net interest income $ 17,202 $ 16,992 $ 17,100 Cost of deposits 0.86 % 0.96 % 1.13 % Net interest spread 2.76 % 2.77 % 2.77 % Net interest margin 3.19 % 3.21 % 3.20 %   CENTER FINANCIAL CORPORATION SELECTED FINANCIAL DATA (Unaudited) (Dollars in thousands)       Nine Months Ended 9/30/2011   9/30/2010   Interest   Annualized   Interest   Annualized Average Income/ Rate/ Average Income/ Rate/ Balance Expense Yield Balance Expense Yield Assets: Interest-earning assets: Loans $ 1,525,759 $ 62,584 5.48 % $ 1,539,882 $ 64,430 5.59 % Federal funds sold 24,779 44 0.24 173,785 289 0.22 Investments 314,332 5,902 2.51 325,373 7,290 3.00 Money market funds and interest-earning deposits   273,373   487 0.24   61,412   111 0.24 Total interest-earning assets   2,138,243   69,017 4.32   2,100,452   72,120 4.59 Noninterest - earning assets: Cash and due from banks 36,591 37,430 Bank premises and equipment, net 12,990 13,099 Customers' acceptances outstanding 2,360 2,283 Accrued interest receivables 4,812 5,890 Other assets   90,485   82,536 Total noninterest-earning assets   147,238   141,238   Total assets $ 2,285,481 $ 2,241,690   Liabilities and Shareholders' Equity: Interest-bearing liabilities: Deposits: Money market and NOW accounts $ 543,589 $ 4,120 1.01 % $ 500,282 $ 4,163 1.11 % Savings 89,111 1,644 2.47 93,068 1,819 2.61 Time certificates of deposit over $100,000 426,845 3,753 1.18 511,853 5,930 1.55 Other time certificates of deposit   310,531   3,358 1.45   275,656   3,746 1.82 1,370,076 12,875 1.26 1,380,859 15,658 1.52 Other borrowed funds 164,553 4,760 3.87 166,811 5,021 4.02 Long-term subordinated debentures   18,557   427 3.08   18,557   438 3.16 Total interest-bearing liabilities   1,553,186   18,062 1.55   1,566,227   21,117 1.80 Noninterest-bearing liabilities: Demand deposits   432,014   370,831 Total funding liabilities 1,985,200 1.22 % 1,937,058 1.46 % Other liabilities   17,919   42,879 Total noninterest-bearing liabilities 449,933 413,710 Shareholders' equity   282,362   261,753 Total liabilities and shareholders' equity   2,285,481 $ 2,241,690   Net interest income $ 50,955 $ 51,003 Cost of deposits 0.96 % 1.20 % Net interest spread 2.77 % 2.79 % Net interest margin 3.19 % 3.25 %   CENTER FINANCIAL CORPORATION SELECTED FINANCIAL DATA (Unaudited) (Dollars in thousands)       Non-covered Loans 9/30/11 6/30/11 3/31/11 12/31/10 9/30/10 Real Estate: Construction $ 9,407 $ 9,525 $ 14,182 $ 14,803 $ 14,987 Commercial 894,686 895,662 880,723 914,003 918,882 Commercial: Commercial 281,711 272,643 276,180 315,285 279,450 Trade Finance 63,860 65,476 66,243 71,174 65,666 SBA 112,207 104,272 100,712 101,683 69,029 Others: Consumer 57,514 67,813 69,699 71,279 68,968 Other   50,048     40,032     40,038     40,039     50,219 Total Non-covered Loans 1,469,433 1,455,423 1,447,777 1,528,266 1,467,201   Less: Allowance for Losses 47,098 49,590 51,010 52,047 54,460 Net Deferred Loan Fee (454 ) (629 ) (649 ) (523 ) 31 Discount on SBA Loans Retained   2,741     1,946     1,617     862     936 Net Non-covered Loans $ 1,420,048   $ 1,404,516   $ 1,395,799   $ 1,475,880   $ 1,411,774       Covered Loans   9/30/11     6/30/11     3/31/11     12/31/10     9/30/10 Real Estate: Construction $ - $ - $ - $ - $ - Commercial 51,725 63,352 61,605 63,503 73,043 Commercial Commercial 14,106 9,332 15,375 18,307 9,698 Trade Finance - - - - - SBA 27,300 29,456 34,102 35,000 29,022 Others: Consumer - - - - - Other   486     486     688     486     911 Total Covered Loans 93,617 102,626 111,770 117,296 112,674   Less: Allowance for Losses 1,010 1,010 1,010 1,010 - Net Deferred Loan Fee   26     19     7     3     - Net Covered Loans $ 92,581   $ 101,597   $ 110,753   $ 116,283   $ 112,674       Total Loans   9/30/11     6/30/11     3/31/11     12/31/10     9/30/10 Real Estate: Construction $ 9,407 $ 9,525 $ 14,182 $ 14,803 $ 14,987 Commercial 946,411 959,014 942,328 977,506 991,925 Commercial: Commercial 295,817 281,975 291,555 333,592 289,148 Trade Finance 63,860 65,476 66,243 71,174 65,666 SBA 139,507 133,728 134,814 136,683 98,051 Others: Consumer 57,514 67,813 69,699 71,279 68,968 Other   50,534     40,518     40,726     40,525     51,130 Total Loans 1,563,050 1,558,049 1,559,547 1,645,562 1,579,875   Less: Allowance for Losses 48,108 50,600 52,020 53,057 54,460 Net Deferred Loan Fees (428 ) (610 ) (642 ) (520 ) 31 Discount on SBA Loans Retained   2,741     1,946     1,617     862     936 Net Loans $ 1,512,629   $ 1,506,113   $ 1,506,552   $ 1,592,163   $ 1,524,448       As a percentage of total loans:   9/30/11     6/30/11     3/31/11     12/31/10     9/30/10 Real Estate: Construction 0.6 % 0.6 % 0.9 % 0.9 % 0.9 % Commercial 60.6 61.6 60.4 59.4 62.8 Commercial: Commercial 18.9 18.1 18.7 20.3 18.3 Trade Finance 4.1 4.2 4.2 4.3 4.2 SBA 8.9 8.6 8.6 8.3 6.2 Others: Consumer 3.7 4.4 4.5 4.3 4.4 Other   3.2     2.5     2.7     2.5     3.2 Total Loans   100.0     100.0     100.0     100.0     100.0         9/30/11     6/30/11     3/31/11     12/31/10     9/30/10 Deposits Demand deposits (noninterest-bearing) $ 499,556 $ 457,182 $ 408,843 $ 396,973 $ 383,508 Money market accounts and NOW 503,251 530,615 531,580 471,132 497,362 Savings   89,579     90,085     88,423     87,484     89,067 1,092,386 1,077,882 1,028,846 955,589 969,937 Time deposits Less than $100,000 307,011 304,735 309,311 334,341 302,745 $100,000 or more   397,507     409,364     441,449     481,064     519,599 Total deposits $ 1,796,904   $ 1,791,981   $ 1,779,606   $ 1,770,994   $ 1,792,281     As a percentage of total deposits: Demand deposits (noninterest-bearing) 27.8 % 25.5 % 23.0 % 22.4 % 21.4 % Money market accounts and NOW 28.0 29.6 29.9 26.6 27.8 Savings   5.0     5.1     5.0     4.9     5.0 60.8 60.2 57.9 53.9 54.2 Time deposits Less than $100,000 17.1 17.0 17.4 18.9 16.9 $100,000 or more   22.1     22.8     24.7     27.2     28.9 Total deposits   100.0     100.0     100.0     100.0     100.0   CENTER FINANCIAL CORPORATION SELECTED FINANCIAL DATA (Unaudited) (Dollars in thousands)       9/30/11   6/30/11   3/31/11   12/31/10   9/30/10 Non-covered nonperforming loans: Real estate: Construction $ 1,270 $ 1,269 $ 5,738 $ 6,108 $ 4,029 Commercial - Real Estate 19,129 25,182 21,490 29,167 28,639 Commercial Commercial - Business 7,275 7,504 5,263 5,696 7,631 Trade Finance 355 355 100 - - SBA 5,534 7,885 5,278 3,896 2,653 Other Consumer   820   1,096   383   651   229 Total non-covered nonperforming loans 34,383 43,291 38,252 45,518 43,181 Guaranteed portion of nonperforming SBA loans   5,361   7,247   4,110   3,293   3,022 Total non-covered nonperforming loans, net of SBA guarantees 29,022 36,044 34,142 42,225 40,159 Other real estate owned   947   133   144   937   4,548   Total non-covered nonperforming assets, net of SBA guarantees $ 29,969 $ 36,177 $ 34,286 $ 43,162 $ 44,707   Performing TDR's not included above $ 34,208 $ 19,090 $ 19,894 $ 21,377 $ 23,898   Ratios: Nonperforming loans, net of SBA guarantees as a percent of total non-covered loans 1.98 % 2.48 % 2.36 % 2.76 % 2.74 Nonperforming assets, net of SBA guarantees as a percent of non-covered loans and OREO 2.04 2.49 2.37 2.82 3.04 Allowance for loan losses to non-covered nonperforming loans, net of SBA guarantees 162.3 137.6 149.4 123.3 135.6   Delinquency: Delinquent non-covered loans 30-89 days past due, net of SBA guarantees $ 2,387 $ 6,138 $ 10,352 $ 12,732 $ 10,788 Total non-covered nonperforming loans, net of SBA guarantees   29,022   36,044   34,142   42,225   40,159 Total delinquent non-covered loans $ 31,409 $ 42,182 $ 44,494 $ 54,957 $ 50,947     Covered nonperforming assets: Covered nonperforming loans $ 19,069 $ 18,541 $ 22,578 $ 24,874 $ 19,748 Covered other real estate owned   1,028   1,132   1,405   1,459   1,459 Total covered nonperforming assets $ 20,097 $ 19,673 $ 23,983 $ 26,333 $ 21,207   Ratios: Covered nonperforming loans to total covered loans 20.37 % 18.07 % 20.20 % 21.21 17.53 Covered nonperforming assets to total assets 0.89 0.87 1.06 1.16 0.94     Total nonperforming assets, net of SBA guarantees (combined): Total nonperforming loans, net of SBA guarantees $ 48,091 $ 54,585 $ 56,720 $ 67,099 $ 59,907 Other real estate owned   1,975   1,265   1,549   2,396   6,007 Total nonperforming assets, net of SBA guarantees $ 50,066 $ 55,850 $ 58,269 $ 69,495 $ 65,914   Ratios (combined): Nonperforming loans, net of SBA guarantees to total gross loans 3.08 % 3.50 % 3.64 % 4.08 % 3.79 Nonperforming assets, net of SBA guarantees to total assets 2.22 2.46 2.58 3.06 2.91       Nine Months Six Months Three Months Year

Nine Months

Ended Ended Ended Ended Ended 9/30/11 6/30/11 3/31/11 12/31/10 9/30/10 Balances (non-covered loans): Average total non-covered loans outstanding during the period $ 1,469,886 $ 1,470,025 $ 1,494,492 $ 1,493,526 $ 1,498,908 Total non-covered loans outstanding at end of period $ 1,467,146 $ 1,454,106 $ 1,446,808 $ 1,527,928 $ 1,466,234   Allowance for Loan Losses (non-covered loans): Balance at beginning of period $ 52,047 $ 52,047 $ 52,047 $ 58,543 $ 58,543 Charge-offs: Construction Real Estate 1,932 1,932 371 947 419 Commercial Real Estate 8,380 6,350 5,246 20,296 16,178 Commercial - Business 5,562 4,545 1,251 8,114 5,011 Trade Finance 444 444 200 767 563 SBA 1,285 534 370 1,075 1,448 Consumer 956 488 303 1,448 1,008 Other   -   -   -   -   - Total charge-offs 18,559 14,293 7,741 32,647 24,627 Recoveries Construction Real Estate 366 366 366 561 123 Commercial Real Estate 576 195 191 1,357 1,357 Commercial - Business 208 126 63 2,890 2,817 Trade Finance - - - - SBA 46 25 18 189 151 Consumer 214 124 66 154 96 Other   -   -   -   -   - Total recoveries   1,410   836   704   5,151   4,544 Net loan charge-offs 17,149 13,457 7,037 27,496 20,083 Provision for loan losses (non-covered loans)   12,200   11,000   6,000   21,000   16,000 Balance at end of period $ 47,098 $ 49,590 $ 51,010 $ 52,047 $ 54,460   Ratios (non-covered loans): Net loan charge-offs to average non-covered loans 1.56 % 1.85 % 1.91 % 1.84 % 1.79 Provision for loan losses to average non-covered loans 1.11 1.51 1.63 1.41 1.43 Allowance for loan losses to gross non-covered loans at end of period 3.21 3.41 3.53 3.41 3.71 Allowance for loan losses to non-covered nonperforming loans 136.98 114.55 133.35 114.34 126.12 Net loan charge-offs to allowance for loan losses at end of period 48.68 54.72 55.95 52.83 49.30 Net loan charge-offs to provision for loan losses 140.57 122.34 117.28 130.93 125.52   CENTER FINANCIAL CORPORATION SELECTED FINANCIAL DATA (Unaudited)                 As of and

for the three months ended

As of and

for the nine months ended

  Performance ratios: 9/30/11 6/30/11 3/31/11 9/30/10 9/30/11 9/30/10 Return on average assets 1.63 % 0.86 % 0.86 % 1.04 % 1.12 % 0.97 % Return on average equity 12.89 6.97 7.17 8.83 9.08 8.29 Efficiency ratio 52.49 55.66 53.26 57.61 53.79 49.23 Net loans to total deposits at period-end 84.18 84.05 84.66 85.06 84.18 85.06 Net loans to total assets at period-end 67.02 66.40 66.66 67.23 67.02 67.23   Capital ratios: Leverage capital ratio Consolidated Company 13.51 % 13.20 % 12.85 % 12.55 % Center Bank 13.38 13.04 12.67 12.31 Tier 1 risk-based capital ratio Consolidated Company 19.83 19.39 19.14 18.04 Center Bank 19.64 19.15 18.86 17.68 Total risk-based capital ratio Consolidated Company 21.10 20.67 20.42 19.32 Center Bank 20.91 20.43 20.14 18.96   CENTER FINANCIAL CORPORATION RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (Unaudited) (Dollars in thousands, except per share data)           9/30/11 6/30/11 3/31/11 12/31/10 9/30/10   Total shareholders' equity $ 294,680 $ 285,039 $ 278,907 $ 274,012 $ 270,690 Less: Preferred stock (53,607 ) (53,538 ) (53,472 ) (53,409 ) (53,347 ) Common stock warrant (1,026 ) (1,026 ) (1,026 ) (1,026 ) (1,026 ) Intangible assets, net (418 ) (434 ) (449 ) (464 ) (474 )

Tangible common equity

$ 239,629 $ 230,041 $ 223,960 $ 219,113 $ 215,843   Total assets $ 2,257,087 $ 2,268,327 $ 2,260,118 $ 2,270,279 $ 2,267,439 Less: Intangible assets, net (418 ) (434 ) (449 ) (464 ) (474 ) Tangible assets $ 2,256,669 $ 2,267,893 $ 2,259,669 $ 2,269,815 $ 2,266,965   Common shares outstanding 39,919,952 39,913,660 39,908,514 39,914,686 39,902,811   Tangible common equity per common share $ 6.00 $ 5.76 $ 5.61 $ 5.49 $ 5.41 Tangible common equity to tangible assets 10.62 % 10.14 % 9.91 % 9.65 % 9.52 %